Starting a franchise in NT
Looking to purchase a franchise in the Northern Territory? Here's how to get finance.
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The Northern Territory is a unique area of Australia, one that is projected to offer sustained growth in the long term. The NT is an important military base, boasts vast mineral assets and relies heavily on the tourism trade.
While more than 100,000 people live in Darwin alone, regional areas of the NT such as Tennant Creek, Alice Springs, and Katherine continue to grow in population and popularity. To reflect its growth, the government in the Northern Territory gave a $1.47 million boost for businesses in regional areas in its 2015 budget that included launching a Business Development Officer program. This will give businesses and potential franchisees in the NT a dedicated go-to person for all commerce-related matters.
What type of franchises could be successful in the Northern Territory?
Those interested in opening a franchise in the Northern Territory could take advantage of the new Business Development Officer program and associated funding to launch a Darwin-based franchise with a decent success rate in a NT region.
The Northern Territory has a strong reliance on exports, making up approximately 35% of its overall trade. This has caused somewhat of a lag in other trade areas, and franchise opportunities exist for people willing to provide goods and services to those in the NT, particularly in areas other than Darwin.
Laws relating to business and franchising in the Northern Territory
In the Northern Territory, businesses are subject to laws administered by the Australian Federal government as well as local territory laws. The Competition and Consumer Act 2010 (CCA), which is administered by the Australian Competition and Consumer Commission (ACCC), is the relevant federal legislation. The CCA deals with many aspects of business operations, from dealing with suppliers to product safety and product labelling.
The Franchising Code of Conduct is part of the CCA and relates directly to franchisors and franchisees. The ACCC is located on Level 8, National Mutual Centre, 9-11 Cavenagh Street, Darwin.
In the Northern Territory, the relevant territory legislation is the Consumer Affairs and Fair Trading Act.
Costs of starting a franchise
Example initial costs of franchises currently available in the Northern Territory are as follows:
- Wasabi Warriors is a quick-service restaurant franchise that specialises in sushi and boasts sustainable business practices. Its initial investment requirements are from $350,000.
- Snap Printing is a printing and business services franchise that requires an initial investment from $210,000.
- Bucking Bull Roast & Grill is a fast food retail franchise that is a staple of many shopping centre food courts. The initial investment required starts from $150,000.
Loan options for financing a franchise in the NT
How can I finance to purchase a franchise in the Northern Territory?
Some of the most common options to finance for purchasing a franchise in the Northern Territory are as follows.
Business loans can be either secured or unsecured. Most banks will require residential or commercial security and offer loan terms of between 25-30 years. Unsecured business loans will come with shorter loan terms, usually up to five years. The terms and loan amounts will vary greatly depending on the lender and the franchise you've chosen, so it pays to shop around for the best deal.
A franchise loan term is capped by the length of the initial term of the franchise agreement, which is typically between five and ten years. This shorter loan term means that less interest will be paid on the loan overall, but the individual payments will ultimately be higher since the entire loan amount will be paid off within a shorter period. A franchise loan is similar to a secured business loan, except that you will be borrowing against the business itself rather than against a residential property. The lender will determine the perceived franchise value, which may correspond differently than the purchase price you have agreed upon with the franchisor.
Rather than requiring potential franchisees to obtain their own finance to purchase the business, some franchise opportunities offer in-house schemes to assist with finance. For example:
- Buy Australian Properties, a professional property investment business, offers vendor finance for approved applicants to allow them to fund their own franchise.
- The Jolly Miller offers vendor finance to franchise applicants who are unable to obtain franchise financing elsewhere.
More questions about starting a franchise in the NT
How long does a franchise agreement last?
A franchise agreement term length can vary significantly from one franchise to another, but most franchise agreements last between three and five years. A franchise agreement is unlikely to be for a term less than one year. Most franchise agreements allow for the agreement to be renewed at the end of the initial term.
Can a mobile franchise be profitable?
The beauty of mobile franchises is that they do not require office space. Instead, they use some kind of vehicle to bring goods and services directly to their customers. For example, a coffee van delivers hot drinks and snacks to people at their place of business, while a mobile sport or dance class franchise could arrange classes at schools, daycares, or even birthday parties. Lower initial purchase fees and reduced ongoing overhead costs can make mobile franchises more accessible while still being profitable for the franchisee.
Should I speak with other franchisees before buying a franchise?
Absolutely. Franchisors are required to provide potential franchisees with a list of existing franchisees during the disclosure period, and it is always a good idea to contact several franchise holders before deciding on the franchise.
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