Jim Penman – How do you decide which franchise business to buy?

In this video, Jim Penman goes through the best way to make a decision about which franchise to buy. He informs us that most of the Australian franchising code is useless, as they first require you to get a layer that’ll get the contract; which brings us into our first problem as layers do not understand franchise contracts and can’t tell a good one from a bad one. The other problem is that, the way a franchise works doesn’t have anything to do with the contract itself, that is connected to the way it is administered and its ethics which is hard to tell from a contract. You can have a really great franchise, and a terrible franchise, both using the same contracts. And the same goes for the disclosure document. Jim explains that one of the most useful things which the franchising code does is provides you with a list of current franchisees. If a franchisor does not want to give you this list, be concerned, this is not a good sign as there is a reason why they don’t want you to be in touch with other franchises. After you get the list, ring as many as you can to investigate what that franchise, asking questions like ‘Would you do it again?’ Even calling past franchisees who have left, and asking them why it didn’t work, will give you very valuable information on that franchise and well help you to see the difference in quality between you’re competing options.