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Investing in a Business: How to Buy (and Sell) a Profitable Franchise

Clark Rubber | Blog Categories | 5 min read |
Investing in a Business: How to Buy (and Sell) a Profitable Franchise

Starting a business should be profitable each year, as well as profitable if you decide to sell down the line. Read on to learn how to cultivate success and create a profitable business.


There are 2,314,647 small businesses in Australia, with more and more new businesses popping up each day. With small businesses contributing $418 billion, equivalent to roughly one-third of Australia’s economy, you may have been thinking about starting a new business too.

When it comes to investing in your business journey, there are two primary options:

  • Growing a business from the ground up
  • Buying a ready-made franchise business

There’s no “right” or “wrong” decision here, rather, the best decision will come down to your goals as a business owner, the industry you’re looking to enter, and the level of investment you’re looking to make.

Read on for a comparison between investing in your own business and buying a franchise in Australia.


Should you invest in a franchise?


This is the million-dollar question (though investing in a franchise is far more affordable than that).

While running your own franchise is an exciting opportunity, it’s important you take into account what comes with the role of a franchisee. Instead of starting your own business brand from scratch (and the marketing and admin set-up that comes with it), you’re tapping into an established brand.

For example, a Clark Rubber franchisee gets more than a physical store. They receive 75 years of trust and national presence. Still, taking the plunge to become a franchise owner requires you to do your homework, so we’ll compare the level of investment required for buying a franchise in Australia vs. starting your own business.

We’ll also show you whether a franchise represents a profitable asset you can sell in the future, so read on for help investing in a business.


Steps to take when investing in your own business


Imagine you’re starting a business from scratch. You have a name picked out, you’ve mentally mapped out the next 5 years, and you’re ready to start selling to customers. Well...almost ready.

The barrier to starting a business in Australia is low. If you’ve organised an ABN, registered a business name, and picked a simple website, then you can start running a business. But that lack of organisation is also why over 60% of Australian small businesses fail in the first 3 years.

Although the list of new business essentials is long, some of the most important steps include:

  • Check your legal obligations: This includes licenses, registration, insurance, and tax.
  • Site availability: A brick-and-mortar site requires available businesses premises, leasing arrangements, property insurance, to name a few pre-requisites.
  • Find staff: You may need to hire a team which means recruiting, interviews, and staff training.
  • Digital Marketing: This is crucial to make sure people are aware of your new business. X new businesses are launched every year in Australia, so you’ll need a strategy to stand out.

This list is by no means exhaustive, but it’s an indication of what goes into investing in a business that you’re starting from the ground up. If you’d like to compare these steps with a more streamlined way to invest in a business, read on to learn about franchising. 


Steps to take when buying a franchise


Although starting a business is the dream of many Australian entrepreneurs, it’s helpful to compare the pros and cons against an increasingly popular business model - franchising.

When looking at buying a franchise, you’re able to tap into rusted-on support for many (if not all) of the challenges that come with starting a business on your own. Most notably, you unlock instant brand equity in a way that’s impossible when starting your own business.

The difference between ‘John Smith’s Hamburgers’ and ‘McDonald’s’ is vast, and cannot be understated. Even if you’re not planning on investing in a McDonald’s franchise, nationally recognised names like Subway, 7/11, and Clark Rubber provide instant trust and credibility.

In terms of cost, investing in a business that’s up and running, i.e. the franchise model does come with higher fees upfront. This can be offputting to entrepreneurs who don’t want to outlay capital at the start of their business journey. But again, perspective is crucial.

We’ve already touched on the (numerous) business essentials from legal to marketing and recruitment, all of which add costs to a new business owner. In contrast, the franchise fees and service fees payable go towards buying an existing IP with ongoing business support to help you navigate the hurdles of a new business.


Let’s use Clark Rubber as an example…


Our value proposition is one of convenience and support. While our franchise fee shares our highly trusted brand name with your new franchise, our service fees help navigate the many challenges that come with a new business.

  • Need help finding a location and negotiating a lease? Your franchisor will help with that
  • Need help learning how to interview and recruit? Your franchisor will help with that
  • Need help arranging suppliers and negotiating deals? Your franchisor will...you get the idea

From setting up arrangements with banks to ensuring you’ve crossed every necessary legal bridge, buying a franchise can be the simple path to a profitable business. Naturally, as a franchisee, you’ll be responsible for getting your business in the black and turning a profit. But with your branding and marketing already in place, you save money on upfront costs and start your journey as a business owner with systems in place.

Whether it’s having uniforms ready for your new team, or above-the-line advertising in place to announce local store opening plans in catalogues, on TV, and radio, there’s plenty of advantages in store.


Which business model has the higher resale value?


There’s no definitive answer, but selling a franchise does come with advantages that selling your own business doesn’t offer.

In terms of resale value, a franchisor helps to value your business, prepare a business overview, manage the advertising, right up to fielding enquiries. Naturally, the business you build will contribute to your resale value, as new business owners will be more likely to invest in your business if you’ve built a thriving company.

If you’d like to learn more about your potential ROI, click here to learn about the revenue potential of a Clark Rubber franchise or to speak to an expert.