Common Building Franchisee Questions

Common Building Franchisee Questions

Here we answer some common questions from builders who are interested in joining a Stroud Homes building franchise.


Video Transcript:

Ann Marie: I’m here again with James Stroud from Stroud Homes. We’re interested in purchasing a franchise. But before my husband and I move forward, we thought we’d sit down with James again, just to get a bit more information. So, James, we’ve almost made a decision but we’ve got a few tough questions. Tell me, how much will it cost for us to join your team?

James: Okay. Well, look, that’s a really important question, Ann Marie, and we really need to look at your area on its own. No two areas are the same. We have a business planning program, which we would like to work through and show you how to plan your own business. That’s really what it comes down to.

You have to think of your business plan as three separate parts. You’ve got your start up costs, and then you’ve got your sales venue fit out costs, which is basically just a little fit out project. And then the last part is your working capital. And your working capital is just the money that you need to absorb the ups and downs that come with building homes. If it rained for three weeks and you’re not getting progress claims for that period of time, you need a little bit of money to absorb that.

The start up package that we offer includes a new computer, all the software to run the business, a lot of marketing materials, a marketing allowance for your grand opening, which is $10,000 on its own. Any other costs unique to the area over and above that, we include in a payment plan, which is spread across your first eight houses. It’s very important to us that we keep those start up costs as low as we can to enable you to get into the business and start building houses. That’s more important to us.

Ann Marie: So, James, can you tell us a little bit more about what areas or regions are available?

James: Okay. So you can go to our website and see all the areas that are available. We’re also looking to see what consumer behavior is in that area, where are they willing to drive to, to talk to a new home builder. We’re going to select a suitable amount of market share to make sure that you’ve got enough market potential to build your business on.

Ann Marie: Have other builders had finance when they’ve started a business with you?

James: Most builders don’t have that sort of capital sitting around in their bank account. But what most builders do have is they have a house with some equity in it or a rental property. And that’s normally how it happens. You have to find a finance company and try to release some equity from your property, start your building company with.

Ann Marie: We’d also like to know, can we have our own suppliers? And how does your supply chain work?

James: Okay. So we give you flexibility to choose the best supplier. We do steer you towards suppliers that have proved to be acceptable in other areas. But if you come to me and you say, “Look, the rep in my area is terrible,” we will give you the option to use another supplier. We try to bring the flexibility that you need to deliver the best service and product to your customers.

Ann Marie: I guess I can safely assume, but are you able to tell me if we need a builder’s license to be able to purchase a franchise?

James: Whatever the local authorities require, you have to be licensed in that regard to build new homes, and we will help you work through that for your area if that’s something that you need to establish. You can hire someone who has a building license, but the reality is in most cases, the builder who owns and runs the business holds a building license. We kind of believe that being a builder is a little bit like being a fisherman or a farmer. It’s sort of in your blood. And we don’t have many of our franchisees who come from background other than building.

Ann Marie: Well, thanks, James, for answering all my questions. I now know what the next step is. And I’ll talk it over with my husband. Clearly, we’ve got some homework to do but we’re keen to get the ball rolling.

James: Excellent.

More Information

You can read through more of our Frequently Asked Questions here.

We have a number of exclusive territories available around New Zealand. Please view our current building franchises for sale and if you’re interested in learning more about starting your own building business, get in touch with our franchise team today!

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