Written by Condon Associates on 31 May 2009

On Thursday, 28 May 2009, I was part of a panel on insolvency at the Franchise Council of Australia’s state conference.

It’s funny you know, over the years, no matter how often I’m a panelist or key note speaker, I always get asked the same question first – when do you get a turnaround/insolvency specialist involved, I understand it needs to be early, but how early?

As much as I’d like to say it is when you miss your first BAS, or when you bounce your first cheque, there is no definitive answer. Yet, in terms of franchises, there are three signs to look out for:

1. when there is a consistent negative trend that the franchisor and the franchisee are unable to identify a method of rectification for,
2. when an event of significant financial or economic loss occurs, or
3. when there is a breakdown in the relationship between the franchisor and the franchisee.

If any of the above three points apply to you, it is imperative that you make sure that you consult a turnaround/insolvency expert who will proactively and responsibly advise you on how to best rectify the situation.

The best possible news that you can receive in this situation is if you are advised that there is a way out that you can actually control yourself.

However, if the meeting results in the development of a turnaround strategy, then surely it was not too early to seek advice and the whole approach has been proven correct.

Yes I acknowledge that there are some unfortunate advisers who only know how to say ‘liquidate’, but surely the point is to get good advice early – not bad advice late.

Also, remember that trading while insolvent does not start when you don’t have any money left, it starts when you begin making decisions that leave you without money.

If you believe that this applies to your franchise call our office today on 02 9893 9499.