Her Magazine is New Zealand’s only women’s business lifestyle magazine! Her Magazine highlights the achievements of successful and rising New Zealand businesswomen. Her Magazine encourages a healthy work/life balance.
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:on the money On the money A beginner's guide to finding and funding a franchise work harder than you ever have in your life – especially at first – so you need to be confident that your family is totally behind you. The next thing you need to do is consider what you can afford. The investment required to buy a franchise can range from $20,000 or less to over $1 million, but you don't have to have all that in spare cash and HAVING WORKED IN FRANCHISING for over 30 years, most recently as publisher of Franchise New Zealand magazine & website, I'm used to people asking, "What's the best franchise?" As far as I'm concerned, it's a question without an answer. Franchises, like clothes, come in all shapes and sizes – and, just like clothes, what suits one person may not suit another. However, if you buy a franchise then decide it doesn't really suit you, changing your mind is a bit more costly than putting a hastily-purchased dress on TradeMe or giving it to the Hospice Shop. That's why, if you're considering buying a franchise, it's important to choose the right one in the first place. The first thing to do is think about what interests you. Don't buy a business just because you know the name and think it will make money. The chances are that you're going to be running it for several years – the average in New Zealand is six years – so you need to be sure it's something you'll enjoy doing. If you're new to self-employment, you should also be warned that you'll probably 46 | www.hermagazine.co.nz Don't buy a business just because you know the name and think it will make money. most franchise buyers require some sort of finance. While a few franchises do offer joint ownership, lease-to-own schemes or internal financing, most people go to the bank. This can be very helpful because most of the main banks have specialist franchise divisions with detailed knowledge of the franchise you're considering. That doesn't mean you don't need to check out the business yourself – you should still consult an accountant and lawyer who have specialist franchise experience – but it does provide another valuable source of information. When you go to the bank, you'll find you will probably be able to borrow up to 50 percent of the sum required provided you can offer some form of security. This often takes the form of equity in your property, so be aware that you may be putting your home on the line – another reason for caution. You should also be aware that finding the money to purchase the franchise is one thing; finding the money to run it is another. Most new businesses don't provide an income straight away, so you need to allow for that in your budgeting, and you will also need to provide for working capital as your business grows – lack of capital kills a lot of businesses. Add in the need to structure your borrowing in the most tax efficient way possible, and you'll see why a friendly banker and a good accountant are essential. Of course, there are a lot more factors to take into account (see Six Steps to Buying A Franchise at www.franchise.co.nz) but if you choose carefully and follow the franchise system properly, you should find that your new business will provide three different types of return. First, it should pay you a fair wage for the hours you put into it. Second, it should provide a return on investment for the money you have tied up in it. And third, it should provide a tax-free capital gain when you sell it. Get all three of those right and you can make a big difference to your life. Lorraine Lord www.franchise.co.nz