Prospective franchisees will have access to a free online education program, funded by the Australian Competition and Consumer Commission (ACCC) in a bid to prevent franchisees going into the sector with the unrealistic expectations.
The program, which starts in July, will consist of five 45 minute online training modules. Participants will learn about franchise specific issues including franchise fees, royalties, operation manuals, marketing funds and site selection.
General business concepts will also be covered such as working capital and cashflow, leasing arrangements and dispute resolution.
The program will be run by Griffith University’s Asia-Pacific Centre for Franchising Excellence and will be available nationally.
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“It’s all about finding about what they need to know to properly explore a franchise opportunity,” says lead researcher and director of the centre, Professor Lorelle Frazer says.
“We’ve done some research that looked at what causes conflict in relationships between franchisees and franchisors and the major finding was that people go in with certain expectations and then reality is different and this causes conflict.”
“We saw a really important need for accessible pre-entry franchise education,” she says. “People don’t want to invest time or money in this education so we wanted to have free information available and very luckily the ACCC offered to sponsor the program.”
“We are sure the program will lead to a decrease in the conflicts we’ve seen. If people investigated things upfront, they may make different decisions and have a more realistic understanding of what franchising is like,” says Frazer. “This will avoid the shock later on.”
ACCC deputy chair Michael Schaper says that early education of potential franchisees is a critical factor in their business success and compliance with the Franchising Code.
“The need for earlier and better information was underscored by recent research from Griffith University, which revealed that 49% of the franchisees surveyed relied heavily upon their ‘gut feeling’ when deciding to go into franchising,” Shaper says.
“The program will be a one-stop shop, providing franchisees with a better understanding of their rights and obligations under the Franchising Code. Anyone thinking about franchising should enroll in the program.”
Frazer says the response from potential franchisees has been overwhelming with 40 pre-registrants already signed up in 24 hours.
“It’s massive because it was only released to the media yesterday and we haven’t even promoted it yet,” she says. “It’s a great response and there must be a need for it because people are willing to pre-register.”
The ACCC will monitor the program’s effectiveness and continue to develop the training along with its other franchise education efforts.