When Is the Right Time to Franchise Your Business?

You’ve built a successful business with loyal customers and a strong reputation. But have you ever wondered whether your business could become Australia’s next successful franchise?

Many Australian business owners reach a point where the business is performing well and they start thinking about expansion. Perhaps you’ve considered opening another location, entering a new market or taking your brand interstate.

Expansion takes capital, management expertise and time, three things business owners rarely have in unlimited supply. This is where franchising your business may be an option.

At Gartly Advisory, we work with business owners who are looking beyond day-to-day operations to focus on growth, succession and long-term financial value.

Franchising may be a way to take your business to the next level. But the real question isn’t simply whether you can franchise your business. It’s whether you should.

When should you start thinking about franchising your business?

The right time to consider franchising isn’t necessarily when your business makes its first significant profit, or when customers start suggesting you open another store.

It’s when you’ve developed a business model that is consistently profitable, runs efficiently and, most importantly, can be replicated by someone else.

Think about your own business. If another capable operator came in tomorrow, could they deliver the same customer experience, maintain your standards and make a reasonable profit?

Every business should be working towards running without the boss. Would your systems work without your daily involvement? Could someone else understand your systems, particularly pricing, manage staff, control expenses and deliver the same quality of service?

If the answer is yes, you may already have the foundations of a franchise business. Successful Australian brands such as Bakers Delight, Boost Juice and Jim’s Group show how businesses can expand through franchising.

But behind every sustainable franchise network is something more important than a recognisable name: a business model that works financially for an independent operator.

Franchising is more than selling your business name

One of the biggest misconceptions about franchising is that it simply involves selling someone the right to use your business name and collecting ongoing royalties.

In reality, franchising means creating an entirely new business structure. Instead of managing one successful business, you’re responsible for establishing and supporting a network of independently operated businesses.

Franchising involves developing operating procedures, training programs, marketing systems, purchasing arrangements and quality controls. It also means understanding the financial position of your franchisees.

As an example, consider a café turning over $1.5 million a year. On the surface, that might sound like a wonderful franchise opportunity. But once wages, rent, food costs, utilities, royalties and other operating expenses are taken into account, how much profit is left for the franchisee? And what happens when business conditions change?

A successful franchise model must work financially for both the franchisor and the franchisee. If franchisees struggle to make a reasonable return on their investment, the long-term sustainability of the whole network suffers. (We look at this from the buyer’s side in Making Dough from Dough: Can a Bakers Delight Franchise Really Make You Money?)

Franchising your business: where to begin

Start with a detailed review of your existing business, particularly its profitability, cash flow, management systems and ability to operate without you. Before investing in legal documents or franchise marketing, confirm that the numbers support expansion.

The review should assess a franchisee’s likely establishment costs, expected sales, operating expenses, working capital needs and realistic profitability.

You also need to work out how the franchisor will earn revenue. Most franchise systems charge an initial establishment fee and ongoing royalties, usually calculated as a percentage of revenue. Some also require marketing contributions or have product supply arrangements.

However, royalties aren’t simply extra profit for the franchisor. They must cover training, administration, ongoing support, compliance and the continued development of the network. Once you’ve established the financial model, the next step is to document your operating systems and develop the legal structure.

In Australia, franchisors must comply with the mandatory Franchising Code of Conduct. A new Code commenced on 1 April 2025, with some rules applying from 1 November 2025. Its changes include disclosure of significant capital expenditure and a reasonable opportunity for franchisees to make a return on their investment. See the ACCC’s Franchising Code of Conduct guidance for details.

Specialist franchise legal advice is essential, as are appropriate franchise agreements, disclosure documents, intellectual property protection and registration on the Franchise Disclosure Register. That’s why franchising should be approached as a carefully planned business investment, not simply an opportunity to sell more locations.

Could franchising increase the value of your business?

Here’s something many business owners don’t initially consider. Franchising isn’t necessarily just about expanding your operations. It could also be part of your long-term wealth creation and business succession strategy.

A well-managed franchise network may generate recurring royalty income, build national brand recognition and reduce the business’s reliance on its founder.

For owners considering retirement, succession or a future sale, this can be particularly attractive. Imagine developing your single-location business into a network of 10, 20 or even 50 independently operated locations. Rather than earning income solely from your original business, you could build a business whose value is supported by an established network, ongoing royalties and recognised intellectual property.

Of course, franchising doesn’t automatically increase business value. Potential buyers will look at profitability, franchisee performance, legal obligations, management capability and the sustainability of future income. Sometimes opening more company-owned locations or entering joint ventures produces a better financial outcome.

The important thing is to understand your options before committing to an expansion strategy, and to think about how it fits your exit strategy.

Don’t wait until you’re ready to open your next location

One of the biggest opportunities for established business owners is starting the expansion conversation early. You don’t need a franchise agreement prepared or a prospective franchisee waiting to invest.

In fact, it’s often better to explore franchising before you’ve committed significant funds to opening another location. A financial assessment may show your business is well positioned for expansion. Or it might identify areas to improve before franchising becomes viable.

Either way, you’re making an informed commercial decision. And that’s what good business planning is all about.

Frequently asked questions about franchising your business

How do I know if my business is ready to franchise?

Your business may be ready to franchise when it has consistent profitability, established operating systems, strong customer demand and a business model another operator can replicate. Financial modelling and an operational review can help determine whether franchising is commercially viable.

How much does it cost to franchise a business in Australia?

The cost varies considerably depending on the complexity of your business and the systems already in place. Expenses may include specialist franchise legal advice, trademark registration, operating manuals, training systems, financial modelling and marketing. Prepare a realistic establishment budget before you proceed.

Specialist legal advice is essential but not cheap. As a ballpark, allow $50,000 to $120,000 in legal fees, depending on the complexity of the franchise system. That’s why it’s important to work with an accountant first to make sure the concept works.

Can I franchise my business if I only have one location?

Yes, it’s possible to franchise a business with one successful location. However, a single profitable operation doesn’t necessarily prove your business model will succeed elsewhere. Testing the concept at a second location or through a structured pilot can reduce expansion risk.

How does a franchisor make money?

Franchisors generally earn income through initial franchise fees, ongoing royalties and sometimes other commercial arrangements. But franchisors also carry the costs of training, marketing, administration and franchisee support. Both franchisor and franchisee need a sustainable financial model.

Should I franchise my business or open another company-owned location?

That depends on your financial position, growth ambitions and management resources. Franchising lets you expand using franchisees’ capital, while company-owned locations give you more operational control. Comparing financial forecasts for both approaches can help you choose the right growth strategy.

Thinking about franchising? Your next step starts with Gartly Advisory

We believe many successful Australian businesses have growth potential their owners haven’t fully explored.

Perhaps you’ve been thinking about opening another location. Maybe customers have asked whether you offer franchises. Or perhaps you’re simply wondering how to build a business that’s more valuable and less dependent on you.

Whatever your situation, the first step isn’t necessarily engaging a franchise lawyer or investing thousands of dollars in a franchise structure. The first step is understanding whether franchising makes financial sense for your business.

Gartly Advisory can help you examine your current business performance, assess profitability, develop financial forecasts and compare franchising with other expansion strategies. We’ll help you weigh the commercial opportunities, financial risks and long-term implications before you make your next major business decision. Where specialist franchise legal or operational expertise is needed, we work alongside the right professionals. Learn more about our franchise accounting services.

Could your business be the next Australian franchise success story?

There’s only one way to start finding out. Contact Gartly Advisory today to arrange a business growth and franchising discussion.

Let’s explore what your business could become, and whether franchising is the right way to get there.