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Retail tenancy laws through out Australia have been developed to protect the interests of small business consumers and to assist in levelling the playing field for the parties involved. They seek to provide this protection by making sure that prospective tenants have sufficient information to make a sound business decision about entering into or renewing a Retail Shop Lease rental Agreement.
The type of lease you enter into will depend on a number of factors, including the premises itself and what you wish to use it for. Each state has its own Legislation or Act that defines the type of premises and whether the act will apply. Whether you are a landlord or a tenant its imperative you understand your rights and obligations under the relevant Act and honour your obligations under the lease agreement to ensure you stay out of the legal minefield.
The retail tenancy law is very clear in most Australian states:
A landlord in a retail lease must not, in connection with the lease, engage in conduct that that is misleading or deceptive to a tenant or guarantor. A party who suffers damage by reason of misleading or deceptive conduct of another party may make a claim for compensation.
Because the laws are different in each state we’ve outlined the requirements of each state on the following pages
Whether you are going into business or want to rent a property to tenants, you are going to have to enter a lease agreement. Commercial property lease agreements are necessary whenever you intend to rent a property for commercial use, or when you want to fill your commercial space with paying tenants. No matter which side of the equation you are on, there are qualities to commercial property rental agreements you will need to know before you enter one. Even if you are just looking for a simple lease of some office space or buying a property to lease it as commercial property, be ready before you take that step. Here is what you need to know:
WHAT IS A COMMERCIAL PROPERTY LEASE? Just like any other lease, be it for a car, flat or home, commercial property leases allow landlords and tenants to enter an agreement where the tenant can use the space and pay the landlord rent for that privilege. The difference is commercial properties are for business purposes. No matter if it is a dentist’s office, a factory or a store, if you want to use a space for commerce purposes, you’ll have to enter a commercial lease.
WHEN CAN I USE A COMMERCIAL LEASE? If you want to rent a property out for commercial purposes, or if you want to rent such a space, you’ll need a commercial lease. Because commercial endeavours usually see much higher traffic (customers, deliveries, employees.) These leases are to regulate the property and the special conditions that arise in commercial spaces. Commercial leases are distinctly different from residential leases, and you need to be aware of this.
WHAT MAKES A COMMERCIAL LEASE DIFFERENT FROM A RESIDENTIAL LEASE? Commercial properties are intended to be used as business spaces. No matter if it’s a convenience store, a tailor shop or a factory, all of them place special demands on the owner and the tenant. Commercial leases typically have special clauses stating what activities can go on, who is permitted on the site, safety and security concerns, privacy rights and landlord access rights, as well as other business-specific clauses. Even office space leases will typically have many such clauses and conditions.
WHAT NEEDS TO BE STATED IN THE LEASE? There is a lot that needs to go into any lease for a commercial property. Since it will hold a business, Commercial Leases often last for many years at a time. They also need to explicitly state the terms of liability, renewal, assignment rights and other issues. Commercial leases are typically much longer than residential leases, and their individual clauses are designed to meet the needs of the businesses that plan to operate on the property.
Business may be complicated. If you want to rent office space or store-front space, you need to be sure your lease gives you enough latitude so you can run your business your way. But also enough security to make sure you can’t be kicked out at will. If you are a landowner, you want to make sure you protect your property and not compromise its value by renting to a party that will cause you problems. Either way, knowing how to make a complete Commercial Property LeaseAgreement is essential.
Commercial Property Lease Agreement
This Commercial Property Lease Agreement is suitable for the tenancy of most types of Australian Commercial premises such as offices, warehouses or industrial property. If you have a retail shop to lease please see the Retail Shop Leasing pages.
A solid real estate lease can protect your investment by defining your relationship with your tenants and shielding you from potential liability. In fact, a well-crafted lease should be the foundation for the ongoing relationship between you and your tenant.
Our professional Commercial Tenancy Contract with easy to follow instructions, give you the confidence that your interests are protected.
Decide on a negotiating style. You may be a competitor, looking only for the best deal; others are compromisers, seeking middle ground; or are you the collaborator, valuing good communication and a fair solution for both parties? Try to asses which style works best for your personality.
Assessing the buyer
Your best asset in any negotiation is information. Qualify the buyer by asking for a personal financial statement. There’s no point wasting time with a buyer who can’t afford your business.
AT THE TABLE
Momentum
Delays destroy deals. Once a prospective buyer emerges, do everything in your power to keep the deal moving. Set up meetings, provide information, and keep trying to move the buyer forward to an offer. Respond promptly to all buyer requests and proposals. If you drag out the process, the buyer will lose interest and move on.
Goals
Set goals at the start so you and the buyer are aware of what you want to get out the negotiation process. A clear plan on both sides should prevent either party from taking the lead. A good negotiator will always win on the more important issues and let the other party win on the minor ones. You can do this if you keep your goals in mind.
Understanding basic psychology may help during this process. A good tactic for the seller would be to emphasize the growth of the business, and how well the purchaser would fair in the future.
Negotiating structure
The order of negotiation should be: needs, terms, price. Draft a list of your needs in the sale of the business. Do you seek employment after the transfer for yourself or others? A discussion of needs should take place before any talk of terms or price.
Terms drive the deal. Discuss terms before price—they are more important, and will have a tremendous impact on the final price. In the majority of deals, terms decide the deal.
Price and flexibility
Have the buyer make the first offer. You have probably already listed an asking price on your ad, so when the buyer asks “What do you really want for the business?” try not to deviate. You want the buyer himself to make up the ground between his valuation and your own.
Avoid emotions as much as possible. Banging the table and refusing to budge on matters of price are good ways to scare the buyer away. There will always be a set of terms to offset a lower price. Likewise, a higher price may be able to offset less favourable terms. Everything is flexible. Both buyer and seller should know this.
Don’t lose focus!
Nitpicking and getting stuck on tiny details are sure ways to irritate a buyer, increase legal costs and kill the momentum of a deal. Don’t pick dirt with the chickens.
KEY POINTS
Selling Price
While it may sound like a simple number to reach, the selling price may actually be divided into the following pricing sections:
Equipment, supplies, and inventory
Price for buildings and company-owned land
Purchase of owners shares of stock, and that of other shareholders
Non-compete agreement compensation
Decide on Contingencies
Conditions which have to occur before the completion of a sale are called contingencies. They might include:
A good review of the businesses financial records
Earnest money or escrow receipt
Buyer qualification by their lender
Lease transfer for building deemed acceptable
Buyer bank financing deemed acceptable
Consider Covenants (Promises)
Promises made by one party to another are called covenants. They might include:
A ‘business as usual’ promise from the new owner. The new owner promises not to distort the business by making unusual agreements, and to provide the customers with the same level of service as that under the previous owner.
Representations and Warranties
Warranties are reassurances made from one party to the other in a business sale. Including:
Accuracy and completeness of financial records
Accuracy of goods and products inventory
Seller possesses full authority in the selling of assets, and is not in default on any contracts
Leases are in order, taxes are paid, liabilities are current, and there are no liens (claims) against any assets that have not been disclosed
Validity of all permits, licenses and certifications
Transition Issues
Transition issues include:
Inventory or customer work that is ‘in-progress’
How to deal with ‘hidden’ liabilities showing up after the closing of the sale
How customer contact is to be handled, and by whom
Employment of current employees
Vendor contracts and contact details
HOW MUCH TO REVEAL, AND WHEN
It’s necessary to disclose everything about your business before receiving or accepting an offer. Let the buyer know there will be time for a books-check (due-diligence) – and that if there are problems they can withdraw. You may hold back on information that would be damaging if disclosed too early (e.g. customer information or key processes) – if the buyer needs to see such information for a valid reason, (for instance, to assess the size of the customer base) you can always change the names on the list.
Negative information should always be cleared before any offer is made. Honesty is crucial in negotiation. Despite the fact that honesty will always be reciprocated, dishonesty strips you of credibility and may compromise the entire sale.
At some point a sale of business purchase agreement will be needed. The buyer’s attorney would usually draft this agreement, which saves the seller legal fees. However, a sale of business kit and contract agreement package is available through our website, which can save a lot of unnecessary legal fees. If you have to negotiate any extra hurdles then these changes can be made in the contract as they arise. This prevents having to pay a solicitor the very costly re-drafting fee.
Next comes the Letter Of Intent (LOI), stating terms and price – the two crucial negotiating points. Make sure you are happy with the terms and price before the LOI is issued. Don’t accept a LOI and assume you will be able to do further negotiating later on.
WHEN TO CALL IT QUITS
Never negotiate with a messenger. In giving all the information to a person who can’t make a final decision, you are relinquishing most of your negotiating strength. The buyer will have the information relayed to him and can pull apart the deal as a whole, rather than point by point, as would happen in a meeting. If you have to meet with a right-hand man early on, be sure to keep some information up your sleeve for later on.
Set a condition on which you will “walk away” from the deal (price and terms). Know when to move on to the next buyer. Don’t waste your time with someone who can’t meet your needs, terms and price.
CREATING YOUR AD AND HOW TO MARKET YOUR BUSINESS FOR SALE
After going to all the trouble of preparing your business, and collecting the necessary information for its sale, it’s important not to rush the advertising portion of the process. By posting limited, ineffective ads you may only receive calls from buyers whom you consider unqualified and unprofessional. In short, if you are not thorough in your marketing you might be wasting a lot of time, both for yourself and potential buyers.
A basic idea for most classified ads is to whet the potential buyer’s appetite. You want legitimate offers, so avoid big promises and overstated claims. Try to write your ad in layman’s terms; industry talk and technical terms may discourage potential buyers.
The More the Better.
Your goal is to whet the appetite, but in this case less information is not more. Common thinking suggests that buyers will be more likely to call if they are teased by your ad. In most cases the effect is the opposite. Buyers will bypass your business if they feel there is too little information.
More information gives buyers a sense of security: they may feel they already know a lot about you and your business just by reading your ad. If you include enough information in the description section the buyer will be pre-qualified when they contact you—this saves both parties a lot of hassle. Buyers feel more trustful of a seller with comprehensive advertising, which helps when it comes time to negotiate a sale
Serious buyers find it helpful if you put some of the following information in the detail section of your ad:
Length of time in business, business history
Number of employees
Information on the geographic area surrounding the business (very important for lifestyle retreats/B&Bs). If you are selling the property with the business, be sure to include the square footage or acreage and the property’s value.
General industry info – how it’s growing, changes etc.
How you would grow the business in the future – give them a “vision”
Include photographs of the business. Make sure they show a clean and well looked after premises. Photos on the business for sale websites get more buyers. You may think buyers would be more interested in the info behind the photos, but photos are an easy way to transmit the essence of the business to a large amount of eyes.
True adjusted net income (know precisely how you arrive at this figure)
Competitive analysis
Include any business website. Is the business computerised?
Multiple phone numbers ensure you can be reached at any time
You may wish to offer to stay on during the transition to the new owners. If so, indicate this.
Including this information will improve the quality of the calls you receive from buyers, and you will spend much less time answering the same old questions.
Get their attention – ‘featuring’ your ad improves exposure
Find out if your business sale advertising site has the option to ‘feature’ a business on the front page. This also usual means the ad will automatically appear at the top of listing results or in its own picture bar on each page—serious buyers will see it repeatedly and respond quicker. This option is usually worth purchasing.
This site offers featured listings as well as offering a bonus listing on a leading Business Directory which is seen by hundreds of business owners and potential business operators every day. It’s a chance of extra exposure which shouldn’t be missed.
FOLLOWING UP ON THE AD
Keep tabs on your advertising results
After posting, check that your ad ran properly in your chosen outlet. Track your results. Find out where each caller or emailer came across your ad. Once you have determined where the better, more qualified buyers are coming from, focus your advertising on that outlet.
If you do post your business online, make sure your anonymity is maintained and that any enquiries are made through a ‘contact form’ on the site or if you wish by a phone number you want to use.
The first month is critical
First impressions count. A huge number of interested buyers will see your ad when it first comes out. Having sufficient information in your ad, and being able to explain any peculiarities over the phone, will give you a greater chance of meeting with buyers.
Get back to potential buyers immediately
One of the biggest complaints from business buyers about advertisers is that they take too long to respond. Always return calls and emails promptly, within 3-6 hours as a rule. You are in competition with others, trying to sell their own business, and they are calling and emailing others while you wait.
Don’t stop marketing/advertising until the check comes
Half of all offers to purchase businesses are never finalised. Keep your advertising running until you have the check from the buyer. Have backup buyers at all times. Never stop taking phone calls/emails from potential buyers: record their names in a folder and follow them up if things go south with the current buyer. Don’t let things stagnate while waiting for any one buyer.
Advertising your business for sale on general online listing sites, in residential housing magazines or on television will not be the most efficient way to market your business.
The best results come from advertising in a medium which specifically targets the largest number of prospective buyers. Good advertising must cater to likely buyer groups. For this reason, advertising your business on a dedicated business sales website, and representing it in a business specific format, is the preferred option when seeking more qualified buyers.Make the entire process easier on yourself and advertise in the right medium.
Selling your business through a site catering specifically to business buyers will maximise your exposure to quality buyers in all areas local, national, and international.Limiting your advertising to one or two mismanaged or misplaced ads only exposes your business to a small portion of the buyer field. Clumsy advertising may also inadvertently alert employees, customers and suppliers that the business is for sale, a fact you may not wish to disclose early on in the sale process.
Advertising in the classified section of local or national newspapers, the trading post or specific business sales magazines is a good backup to internet exposure. Put small ads on local notice boards if you are comfortable with people knowing you are selling a business. With these methods you are getting your business in front of a group of people who may not use the internet on a regular basis.
Discretion
Selling your business may require you to maintain a level of secrecy. You may not want your competition to attract customers concerned about a transfer of owners, nor have employees leave the business prematurely.
Fortunately, there are ways to advertise without revealing too much about yourself or your business. Non-identifying classified ads can be placed in newspapers or online, and you can use a cell phone number or create a blind email address, rather than use the business’ contact details.
By following this advice you can improve the marketing of your business for sale. Using these techniques will give you a head start to a successful sale.
This sale of business site can offer you a great marketing opportunity AND some bonuses and services you won’t find anywhere else. It is a small investment with huge potential.
Business Brokers
If your business is selling for under $2 million dollars, you may be considering using a broker. Keep in mind that for small business sales brokers are not essential and more often than not they are very costly.
A broker can place ads for you and provide advice on how to word those ads; they can also field inquiries, allowing you can take care of day-to-day business operations.
Do you really need to use a broker?
Brokers typically handle upwards of 10 business-for-sale listings at a time, and really don’t have time to do much, if any, custom marketing. What marketing they do is usually limited to running ads on business-for-sale web sites such as this one. In the end, whether you hire a broker or not, you will still have to do a lot of the selling work yourself.
Handling a sale yourself saves you the broker’s commission (usually around 10 percent of the final sale price), and, since most small business sales these days are marketed on the Internet, the work a broker can do is limited. A seller will hit many buyers by advertising on top business for sale sites. Business for sale websites make sense for many small business sellers, since these sites are geared to individual buyers, which make up the majority of small business buyers.
Additionally, if you have a buyer in mind (such as an employee or relative) and feel comfortable doing the selling work with your current lawyer and accountant, you won’t need a broker.
One of the mains reasons many sellers use brokers is for their expertise in fielding responses to your ads. Responding to inquiries and steadily moving a deal forward (or opting to decline) can be difficult, and may be worth the broker’s fee . But it pays to consider improving these skills in yourself if you would like to have a lot more of the sale price end up in your own pocket.
So now you have prepared the business for sale and it’s out in the public eye…now what? Well the next stage is how you deal with all the phone calls and emails you will receive. The way you are with prospective buyers is very important to making a good and lasting impression with those interested in buying your business.
For help with anything related to selling a business please go here;selling a business
Selling a business is one of the most crucial financial decisions most business owners will ever make. Unless you have been through the process before it can be difficult to know what to expect, and the emotions involved in selling a business you may have spent years building, can make things even harder.
As you prepare to sell your business it is important to prepare yourself as well. When it comes time to negotiate with potential buyers you should have a solid idea of what would appeal to you if you were the buyer. What makes your business different, and why? Know your businesses strong points and not-so-strong points.
When to sell?
Timing is everything. The price you get for your business can be greatly improved by choosing the right time to sell. If sales are increasing, profits are on the up, and the business is performing well in a growing market, all signs point to a good sell.
Readying a business for sale can be complicated and may carry added financial stress if you are worried about recouping large investments. It has been said that the best time to start preparing to sell a business is during its conception, however, if that moment has passed, allow yourself 6 to 12 months for the various stages of preparation. These include:
Valuing your business
The best way to get the maximum sale price and ensure the buyer feels satisfied with their purchase is to attain an accurate valuation of your business. It will pay to seek professional assistance. An accountant, solicitor or corporate adviser will be able to give you an appropriate method for valuation and ensure the valuation is realistic. They can also help with identifying and marketing your business sale to potential buyers.
Know as much as possible about the dynamic (e.g. day-to-day operation, contracts, stock control methods) of your business. When you meet a potential buyer being able to convey this information clearly will increase your chances for a sale.
General preparation / Increasing the value of your business
Like dressing a house before its sale, making your business more attractive can do a lot for a buyer’s perception of its value. Try to streamline your business. This includes getting rid of excess stock, having any debtors under control and making sure the general appearance of the premises and staff are up to scratch.
Having your accounts and the suppliers books in order will show you have made an effort to make the new owner’s transition an easy one:
Prepare audited accounts and forecasts for the prospective buyer.
Ready financial statements and projections demonstrating the growth and revenue potential of your business. Cash-flow projections are important for small business buyers.
Rectify any equipment leases, return unnecessary equipment. Supplier contracts, staff contracts, etc. should be in order.
Itemise company assets, moveable and immovable.
Close pending customer accounts.
Tie up all similar loose ends.
Make yourself redundant!
A new owner needs to be assured that the success of the new purchase doesn’t rest solely on the previous owner’s connections and expertise. Are you reliant on a key supplier, staff member or customer? Consider what the impact would be if someone else was running your business. If the business is a house of cards dependent on your presence to stay upright, there may not be much to sell.
Comprehensive documentation and systemisation will reduce the reliance on any one employee or operator.
Create an operation manual to document precisely how best to run your business:
Detail unwritten rules and effective techniques the business may rely on.
Describe daily activities, information on any local competition, relevant industry information, and the business’ history. This document is also known as an Information Memorandum; it is the most important documentation in the sale of a business. Buyers can and will use this document to gauge their interest in the business.
Consider the tangibility of your business. Is it possible to demonstrate the worth of the business to the buyer clearly and concisely? The value of solid, well-developed relationships with customers can be difficult to convey to buyers. Contracts and trusted sales staff give the business a concrete sense.
Keep staff in the loop. Inform them of your plans and let them know that you will do your best to secure continued employment under the new owners, if they wish. A contented staff gives a good impression to a buyer.
Seeking tax advice
Getting tax advice early will point out issues which may impact the deal down the line, this is crucial to minimising the tax burden.
Seek advice on tax structures from a professional. Conditions may need to be in place for some time before becoming beneficial.
Preparing To Put A Business On The Market
Planning. A business has no value other than what the buyer can create from it. There’s no point selling a hair salon to a mechanic. Who is best served to make money from your business? Cater to them. Discipline is essential. Find ways to reach the buyers who will be interested in your business. Be thorough in deciding who potential candidates may be, and equally thorough in describing the business in terms those candidates will appreciate.
Use the internet. Listing with online sale of business sites and keeping your own business website gives a huge increase in market saturation and greatly improves the chance of a quick, satisfactory sale. That’s where we can help!
Once you are happy that you have prepared your business as best as you can it is now ready to put on the market. The next stage is to get your business in front of as many prospective buyers as possible.
How to rent equipment and draft a rental agreement.
Whether you want to open you own Jet Ski rental shop, need to use some temporary scaffolding or simply want to rent a car while yours is out for repair, you’ll need to use an Equipment Rental Agreement. These agreements can cover almost anything, and can be used by anyone who wants to rent equipment, be they renter or owner. No matter if it’s a car, computer or camera, if the owner of the property is letting someone else use that property, and charging them a fee to do it, they’ll need an Equipment Rental Agreement.
WHAT DOES AN EQUIPMENT RENTAL AGREEMENT DO? Exactly what it sounds like it does. It allows two parties to enter into an agreement where one party uses the other party’s property for a specific time. The Rental Agreement states how much the rental costs, how long it lasts, who can use the equipment. It’s a simple, yet essential document whenever you want to rent equipment, vehicles or other non-real estate properties.
WHO CAN ENTER A RENTAL AGREEMENT? Usually, anyone can rent or allow to be rented a piece of property. With age requirements, there may be security deposits, insurance information or other necessary conditions that must be met before the equipment can be used. If more than one person is going to use the equipment, they will probably have to give the rental agent the required information as well.
HOW DO I USE AN EQUIPMENT RENTAL AGREEMENT? All you need to do to use these agreements is make sure they express your needs. If you are renting the equipment, you’ll want to keep an eye out for late fees and other clauses that can cost you more money than the first rental amount. If you are the owner of the property, make sure the renters know about and understand everything in the agreement before you rent to them.
WHAT NEEDS TO BE WRITTEN INTO THE AGREEMENT? Whenever renting equipment, both parties will want to make sure their interests are protected. If you are an owner, you need to protect yourself against liability, make sure you consider potential damage or loss of value, as well as many other factors. If you are renting the equipment, you’ll want to know what you need to do if you need extra time, or how and when to return the equipment so you don’t incur a late fee.
CAN’T I JUST MAKE AN ORAL AGREEMENT? Of course you can, but you’d be better off with a written one. Oral agreements are notoriously difficult to enforce, not to mention people will often forget, or remember differently. The number of disputes that have come from two people remembering an event differently is many. All you have to do to prevent this from happening is make sure you have a proper written agreement, one that everyone can understand.
Renting equipment for fun or work is a simple, cost-effective way of using something you don’t want to buy. Renting equipment to others can be a great way to start a business. Either way, if you are renting to others or renting something for your own use, you need to make sure the terms of any Equipment Rental Agreement are clear and understandable. You’ll be glad you did.
Distributors or sales professionals are always trying to find the next market, customer or potential lead. Whether you are a manufacturer looking for a new distributor or a sales professional eager for a new challenge, you’ll likely come across the need for Distribution Agreements.
WHO NEEDS A DISTRIBUTION AGREEMENT? If you are a seller, manufacturer, distributor or sales professional, you will probably want to get your sales agreements in writing. Not only do the sales need to be addressed with the proper agreements, but if you enter a distributorship arrangement, you’ll need to be sure the details are written down.
WHAT NEEDS TO BE IN A DISTRIBUTION AGREEMENT? Your agreements need to be thorough. This means you must ensure nothing is missed or stated wrongly. The products in question, advertising, supply chains, territories, the terms and length of the contract, all of these must be included. A good Distribution Agreement makes it clear to all parties involved what they can or cannot do, as well as what their obligations to the other parties are.
AREA DISTRIBUTORS AGENTS? Maybe. You can grant distributors the powers of an agent, or you can rely on them solely as distributors. A good Distributors Agreement will make it clear whether the distributor is also an agent, and if so, what their powers and limits are. An agreement that grants power to a distributor but does not clearly state whether the distributor is an agent is trouble waiting to happen. Be sure each party knows what to do, what their status is, and whether they are an agent.
WHAT ABOUT TRADE SECRETS? You can provide for proprietary protections in Distribution Agreements as well. If your business involves intellectual property, trade secrets or other confidential information, it’s important you draft a Distribution Agreement that clearly states the conditions under which these concerns are dealt with. Nothing is more troublesome than being unsure of what you can or can’t reveal when it comes to proprietary information.
CAN I BECOME AN EXCLUSIVE DISTRIBUTOR? Sure, if it’s in the agreement. Some manufacturers have multiple distributors, some have regional or territorial distributors, and others have sole distributors. All of these can be granted exclusive or non-exclusive rights, depending on the terms of the agreement. Being knowledgeable of exactly what the Distribution Agreement states it essential whenever you consider entering into one.
HOW MANY DISTRIBUTORS CAN I USE? If you are a manufacturer or party who uses distributors, the number you use is up to you. However, if you plan to grant exclusive distributorships, non-exclusive distributorships or other set-ups, you’ll need to make sure your distributors are aware of their responsibilities. You can run your business the way you wish, but ensuring each party knows what they can and can’t do is essential.
The use of a distributor, or going into business as a distributor, is a common business practice that all too often is left to a conversation and a handshake. If you are serious about your business, you will want to make sure your Distributor Agreements are drafted correctly. A good Distribution Agreement is one that all parties can rely on so no-one is left in the dark.
What should you look for when looking for a franchise to buy?
choosing a franchise
There are a lot of franchises out there, and a would-be franchise owner needs to be able to differentiate between a good opportunity and a potential disaster. Franchise owners want you to buy their product (the franchise) because that is how they make money. But you need to be able to tell the difference between the shiny sales pitches and the real diamonds underneath all the hype. Here are some simple things you can do to spot a great franchising opportunity:
Do your homework. The simplest, most effective way to ensure you know how to find a good franchise is first learn everything you can about business, franchising and all that goes with it. If you can’t tell the difference between a balance sheet and a sales invoice, you need to take some time to learn some more. Nothing is more reassuring than being able to rely upon your own knowledge instead of taking someone’s word for it.
Find out about the company. In addition to increasing your knowledge about business basics, you’ll want to research the company as well. How long have they been in business? What do their numbers look like? Do they belong to a professional organization like the International Franchise Association? If not, why not? There are some scam franchises out there, so you’ll need to ensure the company is on the up and up before you commit. You may need to hire a reliable accountant or business analyst to evaluate some of the details for you, as they know what to look for when searching for strong business fundamentals.
Where do they stand? If you are interested in a franchise, you’ll want to learn as much about them as you can. Though you don’t need to know everything, the most important thing you can look for is their performance as compared to others in the industry. If a restaurant is seeing sales increases of 15% per year, that probably sounds pretty good. But what if everyone else in the industry is experiencing 25% growth? Not so good now, is it? Finding which business is on top, and why, is key to finding a good franchising opportunity.
How do they spend their time? A great way to determine whether or not a franchise will be successful is to look at how the franchisor (the business that sells you the franchise) spends their time. Are they focused on growing the franchise base, or are they focusing on the franchises they already sold? Be careful here. Though the latter may seem to be the better indicator of success, it isn’t. A company that is focused on growing their franchise, increasing name recognition and getting a broader customer base is much better than a franchise that spends all their time helping their franshisee trying to get going. The first is building a long-term business, while the second doesn’t have a strong growth plan.
There are a few simple guidelines for writing an effective reference letter.
Firstly if you don’t feel comfortable writing the reference or don’t feel you can’t say anything positive about the person involved then its better to tactfully decline. It is far better for the individual to find another person who can provide a positive reference for them.
References should contain the following points -
Date
Name and address of recipient if known.
Salutation , for example, ‘To whom it may concern’, ‘Dear Sir / Madam’ or ‘Dear ‘Name’
Statement of Confidentiality – if written to a specific organization for a specific purpose rather than just a general reference. – optional
State the dates of employment, job title and capacity under which the individual was employed.
State any other details that may be relevant eg, salary, benefits – optional.
State the persons responsibilities – optional.
Confirm that the individual’s performance and attitude was satisfactory or exceptional.
Briefly describe the individual’s skills, talents, strengths – optional. Aim to be specific rather than vague.
Say that you would re-hire the person – optional
Offer to provide further information or provide your contact details for same – optional
Signature – Yours Faithfully or Yours Sincerely if writing to a named addressee.
It’s up to you how much information and detail you provide in the reference letter.
Be as factual and honest as you can and remember if you can’t say something nice about someone – don’t say anything at all.
