Page 6

Do you have a real passion for property? Do you love to renovate or are you a property investor looking for a full time career in the industry? Are you stuck in the corporate world and really want your own business before it's too late? We have a fantastic opportunity with MAINTAIN TO PROFIT licences


• Equipment • Fit-out

WELLINGTON (2 Areas – City and The Hutts) CHRISTCHURCH (2 Areas – North and South)

• Signage • Vehicles

That can make a big difference to the cost of getting up and running. Apart from the fact that you’ll pay less than an independent business would, the franchisors’ experience should mean that you are buying exactly what you need when you first get started. That saves you spending your muchneeded capital on the wrong things: equipment that won’t last or isn’t up to the job as you grow.

$180—$245k net profit


Although franchises are made up of independently-owned businesses, the franchise group as a whole uses the same brand name, the same operating systems and, crucially, offers the same products or services. This means that the franchisor can negotiate volume discounts on supplies based on the needs of the whole group, rather than each individual franchisee having to do their own deals.

When you’re first getting started, for example, buying power applies to one-off expenses such as:

$1m revenue

12 licences have already been awarded, with just 9 more currently available - BE QUICK:

f you’re looking at buying a franchise, you’ll soon come across the phrase ‘buying power’. But what does it actually mean, how does it work and what advantages does it give you?

Getting started

$2m revenue

...And if you can ensure on-time $80—$110k delivery within budget, then net profit you have the opportunity of Year 2 enjoying a highly satisfying business and substantial growth with a MAINTAIN TO PROFIT licence.


For example, a café franchise with 75 outlets which buys all its milk from the same supplier will be able to get better prices for its franchisees than an independent café can get, even from the local wholesaler. A reduction of, say, 5c per litre might not seem like much, but when you apply the same principles across a whole range of ingredients, it starts to add up – and when you look at other areas where buying power can be put to good use, the value becomes obvious.

If you are passionate about customer service and can be sharply focussed on communication with clients and tradies... ...If you can bring a very high level of detailed planning to each project...

Simon Lord investigates one of the biggest advantages franchising has to offer and talks to the experts about how it benefits franchisees

Year 3

Another area where the size of the group can make a big difference when you first set up is funding. A well-established franchise with a strong track record will be able to access better funding options for franchisees from its preferred banks. These may include funding against the value of the business itself (see page 22).

Ongoing advantage

Buying power is even more important on an ongoing basis. Every day, it can affect the price you pay for essentials such as: • Products • Ingredients • Packaging • IT

• Telecoms • Marketing • Insurance • Accounting

• Leasing • Finance • Fuel

As a franchisee, this can make a considerable difference to your bottom line. Having group rates on all these things benefits your margins, profitability and – vitally – competitiveness. It gives you an advantage over independents and enables you to compete with the corporates while still owning your own business.


So how is buying power actually applied? Stuart Deeks, the former franchisor who took Esquires Coffee around the world, explains: ‘Let’s say that in your sector the industry standard gross margin is 70 percent – that’s before all the fixed overheads such as wages, rent, rates and so on. As a franchisor, my job was to ensure that franchisees could achieve at least that margin (after franchise fees) and beat it where possible, while still getting all the other benefits the franchise offers – marketing, support, systems, training and so on.’ Matthew Everest of Pack & Send says that in their business, ‘Obviously we receive significant discounts on our freight rates otherwise we would be out of business pretty quickly. But with regard to consumables and equipment, we ensure a certain standard, rather than just always buying the cheapest. Obviously volume helps with negotiations, but building good solid relationships with suppliers is also really important.’

Mark Trafford on 027 573 6688 6

Grant McLauchlan provides an example from the commercial cleaning industry. ‘CrestClean franchisees use chemical systems manufactured in New Zealand, and licensed by Environmental Choice, so they have proper environmental accreditation,’ says Grant, who is managing director of the franchise. ‘These are supplied at wholesale prices, as there are no middle Franchise New Zealand

Winter 2019

Year 28 Issue 02

Profile for Franchise New Zealand

Franchise New Zealand - Year 28 Issue 02 – Winter 2019  

Buying power – it’s one of the biggest benefits of joining a franchise. In our cover story this issue, we outline the many benefits that a f...

Franchise New Zealand - Year 28 Issue 02 – Winter 2019  

Buying power – it’s one of the biggest benefits of joining a franchise. In our cover story this issue, we outline the many benefits that a f...

Profile for paul52