Franchises

[DreamBig]

I am looking at purchasing a franchise in the next 6-12 months to increase my cashflow and was wondering if anybody else on this site has owned or currently owns a franchise business.
Currently I am investigating two very similar franchises in the fitness industry-
Aussie owned 'Jetts Fitness'
American owned 'Anytime Fitness'
These are both 24/7 businesses and I have a passion for fitness and this is why i'm interested in these.

I am also open to other well known franchises such as Dominos or maybe something like a Dymocks or Angus & Robertson book store.

I am interested to learn about how you would go about financing a purchase of a franchise and what capital/equity is needed and if you can use equity in an IP.

If anyone can offer advice or feedback on their own experiences with franchising I would be very grateful and it would be much appreciated.

Feel free to PM me if you would rather not disclose your experiences publicly.

Thanks in advance

 

[BayView]

Franchises are good from the point of view that you are buying into an established and successful business system.

It can provide you with a lot of knowledge on how to operate a business, and you have the back-up support from the parent company (hopefully).

The downside is you have no individual say. Your personal creativity is stymied because the system is in place and you have to follow it.

Another downside (if you want to view it this way) is they take a chunk of turnover and there is a franchise fee to buy in.

With financing, we are buying another business right now, and I can tell you that because of the GFC the Banks are being total pr*cks.

The hoop-jumping is ridiculous, and you will need to fund the purchase with a large amount of the price from equity elsewhere. The days of 60% and 70% LVR lends for businesses are over for the time being.

 

[soyabean]

Dreambig,
I have not bought a franchise but did investigate the purchase of one. I believe most well known franchises have some sort of agreement with a particular bank to lend a % of the purchase price to qualified purchasers.

If you could arrange a LOC using your IPs equity and then fund the purchase totally from this LOC it would be best. Otherwise the business would need a few years clear financial records as well as your business plan etc before the bank would seriously look at it.

Regards,

 

[BayView]

Otherwise the business would need a few years clear financial records as well as your business plan etc before the bank would seriously look at it.

Even this won't cut it.

The business we are buying is over 20 years old, and we provided official tax returns (to the Bank) from the company for the last 3.

Gross profits of 50% and netts of approx 30% all years.

 

[BlackSpider]

DreamBig,

I've heard of Jetts Fitness.
The thing is, they have very low membership rates and claim to have half the memberships of other operators, so the gym is never crowded.
The thing is, how do you make money by limiting memberships which are low priced as well?

I don't know?

But if you do go ahead and they let you source your own equipment which they should, let me know, I can supply you equipment for about 50%, of what some other commercial suppliers would.


Spider
www.gymdirect.com.au

 

[tubs]

The downside is you have no individual say. Your personal creativity is stymied because the system is in place and you have to follow it.

In other words, you're just buying yourself a job. If you can't make the decisions, you're really a hired manager, so you may as well avoid some stress and get a job as a gym manager.

The thing is, if you learnt how to market and grow a business, you could start your own (or buy one in bad condition) and build it up, re-investing what you WOULD have paid in franchise fees into bringing customers in, and you'd be way ahead.

Look at Jim's. You could take that money you'd pay for the franchise and put it into giving away free lawn mowings instead, and you'd have a FAR bigger business at the end for a much lower price (and you wouldnt be paying Jim every time you did a job).

 

[jrc]

My understanding of Jim's Lawnmowing is that it actually gives you a means of getting a return from your ability to build up the business by being able to sell excess lawns back to Jim's ie if you're a good salesman it's more than just a job.