Question: What capital or other costs will be incurred in addition to the cost of establishing the business?
Answer: Other payments/costs:
Franchise Fee - $15,000 plus GST. Payable to the franchisor on signing the franchise agreement and before the franchisor training and induction.
Initial Training Fee - $8,000 plus GST plus cost of air travel, meals and accommodation. Payable to the franchisor prior to training.
Royalties (10% plus GST). Payable to the franchisor twice monthly.
Technology Fee - $3.50 p/w payable twice monthly.
Establishment of Business costs
Prepayment / Deposit - $5,000 on signing and accepting of Letter Of Offer.
Equipment, fixtures and other fixed assets – Vending Machines from $25,000k to $200,000k to the supplier / exiting franchise owner.
Vehicle costs (van) – from $10-45k estimate to the supplier or existing franchise owner. Can use own vehicle if suitable. Provender signage is available but not mandatory.
Stock inventory required to begin operation - $250 per vending machine estimate.
Security deposits (licenses including business name and company set up costs) - $550 - $3,300 estimate – to the Office of Fair Trading in NSW or other State equivalents.
Insurance - $1,500 - $5,000 per annum to insurance supplier.
Working capital additional investment – from $5,000.
Question: Do I have to pay a deposit? Are there any circumstances in which if I do not proceed, I will lose my deposit, or any part of it? If so, please explain.
Answer: Yes, you will have to pay a deposit (pre-payment). The cost is used to cover the Franchisor’s administration costs and legal costs relating to the recruitment and induction of new franchisees, including the preparation, negotiation and execution of a franchise agreement. The deposit is $5,000 and is refundable from 40%-100% if you do not proceed.
Question: How much working capital do I need? What is the basis for your calculation of this requirement?
Answer: At least the equivalent of 4 weeks stock purchases.
Question: What level of gross profit margin should I expect to achieve? Please itemize the expenses that I shall expect to incur? What level of turnover do I need to achieve to break even and how long should it take to reach that level?
Answer: Typical GP margins in our business range from 25-40%. For an existing run, consult the vendor and Provender can provide a profitability report on request.
Question: May I see actual accounts that confirm, or fail to confirm, your projections? Can they be relied upon? Or are they merely illustrations?
Answer: Provender does not provide any projections. If a machine hasn’t performed sales for 365 days, Provender provides an annualised estimate of a 12 month period. The existing franchisee can provide individual P&L’s and financial accounts upon request.
Question: What financing arrangements are available and what terms for repayments will there be? What rate of interest will be required and will the bank or finance company want security?
Answer: There are NO financing arrangements. Neither Provender nor any associate or agent of the franchisor offers or provides to franchisees any financing arrangement for the establishment or operation of the franchised business. Your own bank and lending institutions will need to be sourced.
Question: Is the business seasonal?
Answer: Yes, in the sense that sales peak over the summer and reduce over the winter in line with workplace occupancy and weather conditions, although summer produces the greatest number of cold drink purchases.
Question: How do you (The Franchisor) make your money?
Answer: Royalties and technology fee. Equipment sales.
Question: Does the franchise group receive any supplier rebates?
Question: What advertising and promotional support do you provide?
Answer: Market Research Targeted Company Listings. Paid Google advertising and Google Ad Words which gives us excellent search optimization for our website. Social Media presence, competitions and tender propoosals.
Question: What point-of-sale and promotional literature do you supply, and what do I have to pay for it?
Answer: Machine brochures and marketing folders, included in marketing packs and available free of charge. Business cards and uniforms. Vary according to need.
Question: Can I meet some of your other field support staff?
Question: How long have they each been with you and do they have service contracts that will ensure continuity?
Answer: Yes. Terms vary from 2-8 years.
Question: Please explain the procedure that you will adopt to get me ready to open for business?
Answer: Field training with existing franchise owner along with franchisor training and induction including classroom and practical sessions.
Question: What will be the operating hours of the business?
Answer: Will vary franchise to franchise (1-7 days) and provender franchise management office operates only during business hours.
Question: Will I own the equipment necessary to operate the business?
Question: What systems do you have for keeping Franchise Owners in touch with you and each other?
Answer: Through their franchise council telephone tree, contact lists, Office 365 Sharepoint and intranet and email system.
Question: Do you publish a newsletter?
Answer: Yes, we publish an e-newsletter which comes out fortnightly on Friday.
Question: Do you hold seminars, conferences?
Answer: Yes: We hold conferences which are attended by all franchise owners, spouses or partners, guest speakers, suppliers and the franchisor staff. Additional roadshows / workshops are held in VIC, QLD, NSW & WA.
Question: Is there a Franchise Owner association within your franchise?
Answer: Yes, it is called the Franchise Council and is a policy implementation and recommendation body to speak both for franchise owners and work with the franchisor. Among the matters covered are marketing, advertising and promotions and working together to introduce, initiate and implement any concept, idea or product that will contribute to the Provender Franchise System’s goals or increased profit, sales and customers.
Question: How will I cope with my accounting and record keeping?
Answer: Assistance is available if required.
Question: What restrictions will there be on what products I can sell?
Answer: All products are subject to franchisor approval but the good news is we will approve anything as long as it will vend and sell and make you a good margin!
Question: Do you provide instructional and operational manuals?
Answer: Yes, Provender provides operational manuals, technical manuals and much more.
Question: What would happen if I ran into operational problems that I was unable to solve? What help would I get?
Answer: Provender Franchise Management staff are equipped to assist you with you challenges.
Question: How can I be sure you will do what you promise?
Answer: Talk to other franchisees who have been in your position before.
Question: What are you prepared to guarantee in writing?
Answer: That you will have the opportunity to create a successful business, by employing our systems and processes, and then implementing them in the marketplace.