Franchise buyers don't understand two crucial things according to Peter Knight, after he spoke with dozens of them at a Franchising Expo.

"Hi there, Peter Knight here from Franchise Accounting and Tax and we're actually here at the Sydney Franchise Expo.

I just wanted to give you a couple of insights that we've gained from talking to dozens of potential business owners over the weekend.

Two Standouts

Probably there's been two things that have stuck out to me more this year than any other year.

Lack of financial basics

The first one, I'd have to say is that the understanding of potential franchise buyers in regard to the financial aspects. 

Poor, very low. There's actually, if I say no financial acumen, nobody really understands what they're looking at as far as the numbers are concerned.

They don't get an understanding of what the profitability needs to be.

They don't understand sort of the finance aspects of a business or how the whole profitability and analysis needs to be done, even when they get a business going, or beforehand where they're looking to assess the business before they buy.

Expectation gap

The second thing that we've seen has been - is the expectation gap. 

We call it 'zero to hero' in two steps. They don't seem to have an awareness of the steps they need to go through to buy a business.

The whole due diligence, it's like, 'I want to get this thing. When can I get it? Let's open up that store now.'

We think it's really important to be very clear on the steps what that journey, what the buying journey is for the franchisee or the potential franchisees before they get one.

So they're the two takeaways that we've got.

A lack of financial acumen, and so I think it's important that we're very clear on the financial aspects of the business and what the opportunity is there for them.

And the second thing is their expectations of how quickly they can get one going and more of an awareness of the steps they need to go through to get to that end goal."

Want or need Help?

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