Franchising in Australia - FAQs

Is there a minimum period of commitment?

No. A franchisee may sell at any time; however, the incoming franchisee must have the ‘reasonable approval’ of the franchisor.

What returns/profit can I expect?

This depends on the size and nature of the franchise chosen, as well as the franchisee’s talents, willingness, and commitment to closely follow the system’s established business formula.

However, note that under the (legally binding) code, franchisors are not permitted to make representations regarding returns. Typically you can get the best idea from other franchisees in the system, the contact details of whom the franchisor is required to provide.

What are the risks?

Every business entails risk. However, franchised businesses have a far greater success rate than stand alones because the concept is likely to have been proven many times over, and centralised resources are available that few individual businesses could afford.

How much will it cost me?

The cost can range anywhere from AU$20,000 to AU$500,000+, depending on the size and scope of the franchise business.

Typically the cost quoted will include the franchisee fee, set up and stock. Don’t forget you then you must allow for working capital. From that point some franchisors charge a flat monthly fee, some charge a royalty on turnover, and some make their money from supplying raw goods.

In return, the franchisee receives the continued support – for example, centralised buying, marketing initiatives, field visits, IT, networking – of the system.

How do I organise the finance?

Many mature franchisors have established relationships with banks that have come to know their systems and have followed the progress of their franchisees. Some will lend up to 80%, with no security other than their faith in the brand. It is rare for a franchisor to provide finance directly.

What kind of visa will I need?

You will need to apply for a Business Development Visa - Provisional. Migrants looking to establish, manage or invest in a new or existing business in Australia must apply through the Skilled Business category. All visas within this category, excluding the Investor Retirement visa, offer the option of permanent residency.