In both Australia and New Zealand, franchising is growing at a very fast rate. The results of the 2021 Survey of Franchising in New Zealand confirmed that there are 590 business format franchisors with 32,300 units operating and over 156,000 people employed in business format franchisees.
Having said that, your choice of the franchise system is very important and if you choose the health, fitness and beauty sectors then proper due diligence must be undertaken.
Procedure
Firstly you must find the franchise system which appeals to you. In New Zealand we have Caci which is a health and beauty franchise, very successful with over 60 franchisees. Australia Laser Clinics is also available and if you want to get into the hairdressing sector, it would be hard to go past Rodney Wayne or Just Cuts. An intending franchisee should consult an accountant and lawyer experienced in franchising before buying any franchise. Once you have identified the system, you will be asked to sign a confidentiality agreement and you will receive a lot of information. Having sat down with the franchisor in a two-way interview, if the franchisor is interested in you, then you will be required to provide a statement of personal position. After that, the next stage would be to provide you with the disclosure document which is mandatory in Australia but only mandatory in New Zealand if the franchisor belongs to the Franchise Association of New Zealand. Remember that as part of your due diligence, you should talk to at least five or six franchisees in the system to find out what they think of the franchisor, its support, how effective is the training and any problems in the system. Answers to these questions are crucial in your decision-making process. You should also check on rules and regulations which might affect the health, fitness and beauty sectors and be assured that it can comply and handle them.
Phenix Salon Suites
A fast-growing US property management franchise called Phenix Salon Suites is wanting to expand in both Australia and New Zealand. This is an innovative franchise business which harnesses two booming trends – the meteoric rise of sole operator lifestyle service providers and the COVID-accelerated trend of shared working spaces, to transform traditional commercial property spaces into bustling hubs for lifestyle professionals. Founded in 2007 by beauty expert and celebrity hair stylist, Gina Rivera, Phenix provides unique knowledge and systems to locate, design and operate successful Salon Suites locations. The real estate co-working concept provides an opportunity to manage a property that is rented out to motivated entrepreneurs and life-style professionals such as hair stylists, barbers, massage therapists, skin and body treatments, chiropractors and more. The proven model provides an innovative way for customers to receive beauty, health and wellness services and offers a strong return on investment for franchise owners to scale this recurring revenue business. Even if you do not want to pursue the master franchise route, you could be an operator within a Phenix Salon Suite by being involved as a hair stylist or a provider of skin and body treatments.
Franchise Agreement
If the disclosure document for the particular franchise system which you are interested in provides the answers to your questions, then the next stage would be for a prospective franchisee to be provided with the franchise agreement. This is a legal and complex document which requires careful reading and also professional advice from a lawyer experienced in franchising. From a franchisee’s point of view, its obligations will include payment of royalty and marketing fees, completing a suitable training course and meeting minimum performance objectives. In summary, there are a number of franchise systems available in the health, fitness and beauty sectors. Go forth and choose a particular system which interests you, complete your due diligence thoroughly, check out the franchisor carefully, receive expert accounting and legal advice and then make a decision. To own a franchised business is exciting because you will be an independent business operator within a well-known brand and able to plug into the business format system developed over many years by the franchisor.
Stewart Germann founded Stewart Germann Law Office (SGL) in 1993 as a boutique law firm at Auckland, New Zealand, specialising in franchising, licensing and business law. Stewart has over 40 years’ experience in franchising law and acts for franchisors in New Zealand, Australia, USA and the UK. SGL also act for franchisees and provides legal advice. Stewart has spoken at franchising conferences in New Zealand, Australia, Italy, South Korea and USA and he was on the Board of the Supplier Forum of the International Franchise Association (“IFA”) for 6 years until March 2007. Email: [email protected] | Web: www.germann.co.nz Stewart Germann Franchising Lawyer Auckland, New Zealand [email protected]
