Tips to Look Out for When Buying a Franchise in Melbourne

Buying a franchise in Melbourne can be an attractive way to step into business ownership. With a large population, strong consumer demand, busy shopping centres, and thriving food and service industries, Melbourne is one of Australia’s most popular cities for franchise business opportunities.

However, the Melbourne franchise market is also highly competitive, tightly regulated, and often more expensive than regional locations. Before committing your capital, it’s critical to understand exactly what you are buying and whether the franchise suits your personal circumstances, future needs and investment.

Below are the key tips every prospective franchise buyer in should consider before signing a franchise agreement.

Speak to Existing Franchisees of your chosen Brand or Franchise Group

One of the most important steps when buying a franchise in Melbourne is to talk directly to existing franchisees, particularly those operating in similar locations such as shopping centers, strip retail, or food courts. Franchise disclosure documents rarely tell the full story. Existing franchisees can provide real insights into:

• Actual turnover and profit levels in Melbourne locations
• Foot traffic realities in different suburbs
• Staffing challenges and wage pressure
• Support provided by head office after settlement

Whether the business performs as expected in peak and off-peak seasons all these are vital questions that you need from someone the ground. Make sure you ask about both positives and challenges so you understand the full picture before proceeding.

Get a Specialist Franchise Lawyer to Review the Agreement

Franchise agreements in Australia are complex and usually heavily favour the franchisor. In Melbourne, where rents and operating costs are higher, a poorly understood agreement can quickly become financially stressful. Before buying a franchise, engage a lawyer experienced in franchise law to review:

• Franchise term and renewal conditions
• Royalty fees, marketing levies, and compliance costs
• Personal guarantees and restraint clauses
• Termination rights and dispute resolution
• Your ability to sell or exit the franchise in the future

Never assume the agreement is “standard” or negotiable without professional advice.. Verbal promises can be denied so tread carefully when someone makes a verbal assertion . If its contingent to the business put it in writing.

Understand the Melbourne Competitive Landscape

The reality is Melbourne is a crowded franchise market, especially in areas such as Shopping centers and food courts where there are lots of Café and takeaway precincts

Even some High street retail strips such as Chapple or Brunswick areas can be full of existing businesses all chasing the customer dollar. If you’re entering a center or precinct with competing brands, you must understand:

• How your franchise compares to similar brands nearby
• Whether exclusivity applies to your territory
• The popularity of the brand with Melbourne consumers
• How new competitors could impact your sales

A franchise that works well interstate or regionally may struggle in Melbourne if the market is oversaturated.

Make Sure You Have Enough Capital and Cash Flow Buffer

One of the biggest risks for franchise buyers in Melbourne is underestimating total capital requirements. You need more than just the franchise purchase price. You should also budget for items that may impact oin cashflw that often overlooked

• Fit-out and compliance costs
• Working capital for the first 6–12 months
• Higher Melbourne wages and penalty rates
• Rising rent and outgoings
• Unexpected repairs, upgrades, or staff shortages especially ion the first few months
• Personal living expenses while the business stabilises

Many Melbourne franchises take longer to reach consistent profitability than expected as its a big learning curve or previous owner really has let the business wind down.

Inspect Equipment and Fit-Outs Carefully

If you are buying an existing franchise in Melbourne, do not assume the current fit-out complies with franchise standards. Many franchise agreements require stores to Match updated brand specifications when they bring in a new service or upgrade an old product. Check out hjow new your shot fitout is . Many franchisees require you to undertake refurbishments every few years. TYhis could incluyde decor , painting ,signage, equipment, or layout

Older franchises often require costly upgrades shortly after purchase. These costs can significantly impact your return on investment if not identified early.

Be Cautious with Franchise Financial Projections

Franchise business models often look excellent on paper, but they may not reflect the reality of operating in Melbourne. This is where we can assist you. Financial impacts not often identified include

• Labour shortages and wage inflation
• Weekend and public holiday penalty rates
• Rent increases in prime Melbourne locations
• Marketing levies and compliance costs
• Owner working hours versus paid management

What works in theory may not align with your lifestyle expectations or financial goals.

Understand Staffing and Owner Involvement

Many franchise buyers assume they can step into a semi-passive role. In Melbourne’s tight labour market, this is often unrealistic. You may end up doing more than you think or would like in the business. Can the business run if staff don’t show up? With labor rate penalties etc are staff costs sustainable at Melbourne wage levels?

There is a big chance you will need to work long hours initially which then leads to is the business still profitable without you on-site?If the franchise relies heavily on owner labor, this should be factored into your expected return.

The final but critical point Have a Clear Exit Strategy Before You Buy

Before entering a franchise agreement, always understand how easy it is to sell the franchise in Melbourne

• What approvals the franchisor requires if you find a new owner and whether exit fees or transfer fees apply
• How long past franchisees have taken to sell
• Whether the franchisor controls the resale process

Some franchise systems make exiting difficult, which can limit your flexibility and capital recovery.

9. Get Independent Advice Before Committing

This is where speaking with an independent advisor who understands Melbourne franchises can be invaluable. Not every franchise opportunity is right for every buyer, even if the brand is well known.: Buying a Franchise in Melbourne is a big business decision – but only when approached with proper planning, realistic expectations, and thorough due diligence. If you’re considering buying a franchise in Melbourne, reach out for a conversation. Taking the time to properly assess the opportunity now can save you from costly mistakes later and help ensure the franchise you choose genuinely supports your long-term goals.