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7 Things A First-Time Franchisee Should Know

user imageEden Exchange
March 26, 2024

At Eden Exchange, we work with a number of well-known Australian franchisors to help match them with the perfect franchisees for their vacant locations. Becoming a franchisee is a fantastic way of learning the business world. You can take on the running of a business, but you have the added support of the franchisor.

If you’ve been considering becoming a franchisee, then there are a few things you will need to know. We’ve rounded up seven things we think every first-time franchisee should know to ensure they make the most of this opportunity and get as much out of it as possible. Take a look below.

What is a Franchisee?

Before we get into what you need to know as a franchisee, we’re going to give you a brief overview of what a franchisee actually is, just to reiterate your role in a franchise agreement.

In a franchise agreement, the franchisee is the individual who pays for access to the brand, propriety knowledge, and products from the franchisor. The franchisee takes on a location and pays the franchisee royalties to the franchisor throughout the agreement while using everything from the brand name to the products and services offered by the franchisor.

The franchisee benefits from the well-known brand name, the tried and tested methods, and the training offered by the franchisor. 

Inspiring Australian franchises you can look to for a better understanding of this kind of business structure include Roll’d, Gutter Vac, Urban Clean, The Cheesecake Shop, and The Touch Up Guys.

7 Things a First-Time Franchisee Needs to Know

So, what do you need to know when you take on the role of a franchisee? Below are the top pieces of advice we would give to new franchisees based on our experience in the industry.

#1 You’ll Need Capital

Sometimes, people think that becoming a franchisee makes more sense if they don’t have the capital to start their own business, but this is a common misconception. To become a franchisee, you need to pay, too. You pay the franchisor a fee for the use of their branding, marketing, products, services, training, and knowledge.

You will also need to pay franchisee royalties throughout the course of your franchisee agreement, and some franchisors even require marketing fees, so make sure you read the fine print to ensure you know what you’re paying before you sign.

At Eden Exchange, we want to give everyone a shot at becoming a franchisee or business owner, which is why we offer financing solutions to our clients.

#2 You’re the Boss Only to an Extent

It’s important when going into the world of franchising to understand that you’re the boss, but only to a certain extent. If you don’t want to be overseen and you want to have the final say in everything that goes on within your business, then becoming a franchisee might not be for you.

Being a franchisee means running your own location, but you’re still subject to the franchisor's regulations and rules. If you’d like to run a business but want the safety net of having someone above you, then becoming a franchisee might just be the perfect solution for you.

#3 It’s Going to be Hard Work

Another common misconception about becoming a franchisee is that you don’t really have to do much work because the franchisor does it for you. This is entirely false. While a franchisor will give you training and the opportunity to use their tried and tested methods, that doesn’t mean you’re not going to have to do anything.

Being a franchisee means you skip the working things out phase that businesses go through. You don’t have to test new services and work out how best to market to your audience because the franchisor has already done this, likely before they even began franchising. However, there is work to be done.

As a franchisee, you’ll need to know the clientele in your location. The audience of your franchise might not vary much, but each location will have unique demographics, values, and attitudes toward your franchise, so knowing this information is key.

You’ll have to work to establish yourself as a viable option in the community, build local ties, ensure staff are trained properly and follow franchise rules, engage in marketing, and ensure that your franchise is up to the standards of the franchise as a whole.

Being a franchisee is not going to be easy, but it will be worth it.

#4 Training is There to be Taken Advantage Of

Franchisors will often offer extensive training to ensure that their franchisees will be successful. They want you to do well because if you do well, then they do too. So, as a new franchisee, we recommend taking full advantage of all the training offered. Ensure that you stay up to date, too, so that you’re always operating with the newest information.

In addition, you should ensure that all your staff are up to date on their training and fulfil the requirements set out by the franchisor. The training is designed to ensure your entire location meets the standards of the wider franchise, so make sure your staff are taking it seriously, too.

#5 A Franchise Agreement Has an End Date

As with many kinds of contracts, your franchise agreement will have an expiration date. Now, this doesn’t mean you should work with an end date in mind, but it does mean that you can leave if you don’t feel like the role is a good fit.

On the other hand, the end date for some means it's time to talk about renewal. When you renew your contract, you will have to pay a renewal fee, which is something to consider. Keep the end date in mind and be ready to decide whether you want to continue the contract or not.

#6 Follow the Rules

We’ve said it before, and we’ll say it again: if you don’t want to have someone overseeing your work, then being a franchisee is not for you. And this couldn’t be more obvious than when it comes to the rules and regulations set out by your franchisor.

These are in place for a reason. Whether safety standards or marketing guidance, the franchisor is using their tried and tested methods, and they expect you to do the same. A franchise will always aim for consistency. They want customers to be able to step into any location on earth and to be consistent with all the other locations that customers have visited.

If you’re looking to stand out, being a franchisee isn’t for you. You can stand out in the profits you make or the efficiency of your team, but when it comes to things like marketing, customer interactions, products, and services, you’re part of something bigger, so you need to stick to their rules.

#7 Get to Know Other Franchisees

Other franchisees, particularly ones with a long tenure, are a fountain of knowledge that you should tap into when possible. You will likely meet other franchisees in your region, and getting to know them will be beneficial for you as a newbie.

Networking will give you people to turn to when you run into challenges. They can share knowledge, help you overcome issues, and give support when you need it. They may even be able to give you insights into local behaviours and give you a benchmark to measure your success.

Final Thoughts

Being a franchisee will be hard work, but it is a fantastic opportunity for anyone looking to try their hand at business management. Becoming a franchisee will require capital and an openness to doing things someone else's way. We recommend always taking advantage of training offers and getting to know other franchisees for support and guidance.

Eden Exchange works with franchises across Australia and the rest of the world to match qualified franchisees with franchisors. Our platform, DealXchange, is the perfect place to look for opportunities that suit your skill set and start your journey as a new franchisee.

For more information on how we can help you become a franchisee, contact us now.

Who we are

Eden Exchange is an integrated multi-channel platform, simplifying business buying and selling. We match, refer and connect business buyers, sellers & brokers in an ecosystem that facilitates frictionless franchise, business and finance transactions. Visit and connect with our engaged and multidimensional transaction network today.