FAQ’s

Investing in a franchise is a very important step, and it can be a stressful and sometimes daunting process.  At Wet-seal we aim to make this as easy a process as possible and we believe the key to this is to be completely open and up front with as much information as possible about who we are, what our offer is, and what you get for the money.

In this information document we have listed a number of the most frequently asked questions – the type of questions we think you should be asking any potential franchisor whose system you are looking at.  And of course we have provided answers to all these questions as they relate to Wet-seal.

We hope you find this information helpful to your assessment of Wet-seal but remember, just because we have given so many answers it doesn’t mean you can’t ask more questions.  We welcome them.

Business Experience FAQ’s

How many years of experience do you have in this industry?

Wet-seal has been involved in waterproofing for over twenty five years.

What is the previous relevant experience of the key people?

Two of the founding partners of the business still work in it full time.  Another founding partner works part time.  Full details of the extensive experience of the complete management team are provided in our Disclosure Document which can be obtained from our National Franchisee Manager.

How many franchised businesses do you have at the moment?

We currently have just a little under sixty franchisees in Australia and New Zealand.

How many company owned franchises do you run?

We do not operate company owned franchises.

Did you run your own pilot scheme before franchising?

The company was started over 25 years ago and operated successfully for many years before we began franchising.

Has any franchised business of yours ever failed?

Yes, Adelaide SA & Gladstone QLD.  Both were abandoned by the Franchisees but Gladstone has since been taken on and is going ahead in leaps and bounds.

Are you a member of a Franchise Association?

We are members of both the Australian (Franchise Council of Australia) and New Zealand (Franchise Association of New Zealand) associations.

Research FAQ’s

What do you see as the future of the industry you are in?

As Councils and Governments become more and more aware of the ramifications of not doing waterproofing to the Code they will increase enforcement, which in turn will drive many of the shoddy operators out of this industry leaving more opportunities for our franchisees.

Where does this company stand in its industry?

We can honestly say we set the Standards, as in fact many of the Standards in the relevant Codes and Regulations are based on our systems.

What do you do to keep up with developments?

We are members of all relevant associations and Government bodies, and constantly undertake our own research and development.

Is there a viable market for the franchise’s product/service?

Definitely.  Every new home built and every existing bathroom renovation requires waterproofing and could require underfloor heating.

Is there still room for growth?

Yes there is.  Whilst we are the largest franchise waterproofing company in Australia and New Zealand we are still gaining new clients every day.  Also, as previously mentioned, there are still many shoddy, untrained operators in the industry and when they are forced out we are in an excellent position to take up the slack.  With the addition of underfloor heating to the Wet-seal stable we have allowed our franchisees the possiblity to grow even further.

What is its marketing positioning, e.g. price, image, quality?

Our pricing in waterproofing is considered mid-range, and our underfloor heating is considered very competitive. Our image is one of expertise and security, our quality is the best on the market.

How dependent is the business on price competitiveness?

Price matters, but the builders understand that they get what they pay for.

How good is the competition?

They range from complete cowboys to a small number of waterproofers &/or tilers.

What direction is the franchise company moving in?

We are in the middle of our most significant move, and that is the changeover to more environmentally friendly products manufactured in-house.

Is this important?

It is extremely important if we are to meet emerging market demands and have entry into the commercial building markets.

What exclusive rights to a territory do I get?

Your territory is exclusive to you.  No other franchisee is allowed to do work in your area except in a few special circumstances.

Can my territory be eroded by the franchisor?

Only in circumstances where you chose not to service an area.  In these circumstances we would consult with you to find the best solution to the problem.

At a later stage, can I sell off part of it if I choose to?

Yes, provided that it can be shown to be a viable franchise area.

Can I have a complete list of your franchisees?

Yes.  We encourage you to contact our existing franchisees.

Can I contact them by phone and visit if appropriate?

Yes.

May I choose whom I interview?

Yes.

Can I see the Profit & Loss and Balance Sheet for your existing operations?

Yes.  These are provided in our Disclosure Document.

Financial/Costs FAQ’s

What are the total costs?

For new territories the franchise purchase fee of $50,000 + GST, plus the cost of a white commercial vehicle, plus any legal or accounting costs you may incur.

Are they paid all in one go, or in stages?

The franchise purchase fee must be paid prior to the commencement of training, and the vehicle needs to be purchased prior to the commencement of training.

What do the costs include?

The costs include everything you will need to commence operations of your franchise.  This includes your training, all the costs of travel and accommodation during training, computers, phone, uniforms, tools, stationery, signwriting, and start up materials.  A full explanation of what you get for the money is provided in our Fact Sheet, provided separately.

How much working capital (i.e. cash to run the business) do I need?

Working capital is essential to maintain your lifestyle and commitments until the money starts coming in.  How much will depend on your financial commitments but the more you have the better.  (In some circumstances we can offer a scheme that could assist with this requirement).

What assistance do you provide in obtaining finance?

We can assist with loan applications and in some special cases we can offer funding assistance.

Do I buy or lease the necessary equipment?

The only equipment required apart from what we provide is a vehicle.  This can be leased/financed or purchased.

How do you, the franchisor, make your money?

Like all franchisors we make money by charging you a royalty on sales.

What fees are charged, and how are they calculated?

We charge a royalty fee of 20% (although in reality our franchisees only pay a little over eighteen percent when various waivers and exemptions are taken into account) on all your sales.  The only other fee that is charged is a $200 per annum for a contribution towards your yellow pages advertising costs.

Do I have to buy all or just scheduled items from the franchisor?

Most of the materials and consumables you will need are supplied by us, but some common items such as rollers etc., can be purchased from elsewhere.

Are there any other fees?

There is a once a year charge of $200 for Yellow Pages advertising.  You also need to have $20 million Public Liability Cover.  You can arrange this yourself or take advantage of a Group Policy we negotiate on behalf of most of our franchisees.

What levels of support or assistance do I get for the royalty?

Extensive support is available for all areas of operation of the franchise. They are:-

• Technical
• Sales
• Business
• Marketing
• Franchise
• Financial – in this area, we assist Franchises by creating a Material Account that allows all material purchases to be charged directly and only paid for as a percentage of sales that are collected. This is a great saving towards cash flows for Franchisees.

What level of income can I make?

Like most businesses that will depend on how much effort and time you are prepared to put in.  Some of our franchisees are happy turning over around $10,000 in sales a month; others achieve over $100,000 a month.  The average is around $20,000.  You would obviously need to deduct expenses from this sales figure to determine how much you earn.

Marketing FAQ’s

What kinds of marketing programmes do you run for the product or service offered by the franchisees?

Because most of our clients are builders we do very little traditional advertising as such.  Most of our resources are spent on direct involvement with the larger building groups.  We do of course provide franchisees with brochures and other marketing and promotional material that they can use when contacting local builders.

May I see examples?

Yes.  Some samples are provided with our information pack.

Am I required to spend additionally on promotions in my area?

Yes, but local promotion will generally involve more of your time than an outlay of money.

Do you have a launch package for a new franchised territory?

Yes.

What experience is this based on?

Our new franchise launch strategy is based on the opening of many new franchise areas over the period we have been a franchise.

What does it include?

While you are in training, letters and brochures with special offers are sent to all builders in your proposed territory.  The final week of your training is done in your territory in the company of our National Training Manager (an ex-franchisee himself) and most of that week will be spent meeting with potential customers.

Who pays?

We do.  This is included in the startup price of the franchise.

What help will I receive in arranging local advertising and promotions?

Should you wish to do some local media advertising assistance in the design and production of the advertising is available from our Promotions & Events Manager.

Are there standard promotions (e.g. artwork) available for my use?

Yes.

How do I make sales?

By building relationships with local builders, developers and home renovators.

Do I need to cold-call?

Yes.  An effective way to establish a relationship with builders in your area is to call on them on site.

Do you provide training in this area?

Yes.

Do I need to have sales experience?

It helps, but is not essential.  More important is the desire to succeed.

Is there a centralised 1800 or 0800 number for the franchise?

Yes.

How are leads from it allocated to individual franchisees?

Everything is based on the location of the job.  If it is in your territory it is given to you.

Is there a website promoting the franchise?

Yes. ( www.wet-seal.ws )

How are leads allocated?

The same as calls to the Toll Free numbers.

Can customers buy direct from the website?

No.  We do not sell products on their own.  All our products need to be installed by our franchisees.

Legal FAQ’s

How soon in my investigation of the franchise can I take away a franchise agreement for a legal opinion?

We can provide draft copies of our agreement as soon as you decide that you are seriously interested in what we offer.

Is there a disclosure document which meets the requirements of the Code of Practice?

Yes.

Do I get this at least 14 days prior to signing the franchise agreement, as required by the Code?

Yes.

Do you have minimum performance criteria, or a minimum fee, or a minimum purchase level for goods?

We only have a Minimum Sales Quota which is set at a very reasonable figure for your area.

How realistic/stretching are they?

They are very realistic.

What happens if I don’t meet them?

We take steps to provide you with additional training and support.

How is my compliance with the franchise system measured?

Our Compliance Officer conducts regular audits of your workmanship and your office systems.

What happens if I don’t comply?

You are shown what you are doing wrong, and provided with extra training (if required).

How long do I have to remedy any problems?

This depends on the nature of the non-compliance.  Some, like actual application methods need to be remedied immediately and training is provided on the spot to ensure you know what you should be doing.  For other items that require monetary investment (e.g. new signwriting on a vehicle) you are given several months to remedy the non-compliance.

What is the term (length) of the franchise agreement?

The franchisee agreement is for a term of five years, with options to renew for a further two terms of five years.

Do I have the automatic right of renewal?

Yes, provided you are not in serious breach of your agreement when renewal is due.

What if I want to sell my business?

You can sell your business at any time.

What is the procedure?

You must offer us first right of refusal at the price you are offering the franchise to others.

Do I have to sell it back to you, or can I sell it externally, and what approval do you need to give?

Yes you can sell it externally.  We do however have to approve the prospective purchaser to ensure they meet our selection criteria.

What restrictions are there affecting my right to sell the business?

The only restriction is that we have a legal obligation to ensure that the price someone is willing to pay is not unreasonably high compared to historical prices achieved by other franchisees.

Do you help me to find a new owner?

Yes we can.  We have listings of areas available on various websites we can add your franchise to.

Do you charge a fee?

Yes.  The assignment fee is $5,000 + GST or 10% of the sale price, whichever is the greater.  This is charged to offset the costs of training the buyer to same standards you were trained.  All this is explained in your agreement

Does a new owner get a new full term on the franchise agreement, or take over my existing one?

A new full term.

Who would train any new owner?

The new franchisee must complete the same training course that you did.  The only requirement on you is that you spend at least two weeks with them after they have finished training to introduce them to your customers.

If it is the franchisor, is any fee payable for training?

No.  This is included in the transfer fee.  We do not however cover travel and accommodation for the new franchisee.

What insurances am I required to have?

You are required to have $20 million public liability cover.  If you have employees, you will need to have your State’s workers’ compensation cover.

Do you have an arrangement with an insurance broker or company offering special rates?

We have a group policy that most of our franchisees find to be more economical than anything they can arrange individually.

How can I be sure you will do what you promise?

If we didn’t it would be unlikely we would still be here after more than twenty five years of operation. Also, if you don’t succeed, it’s also our loss as we are in it together.

What will happen if I don’t like the business?

You would need to put the business up for sale.

On what basis can I terminate the agreement?

Our Franchise Agreement lists all the requirements to terminate.

On what basis can the franchisor terminate the agreement?

Our Franchise Agreement lists all the requirements and procedures that are needed to terminate.

Selection & Training

How do you assess the suitability of individuals?

By meeting with you face to face and ensuring that you have the capability and willingness to do what you need to do to be successful.

What are the most important attributes of a successful franchisee, and do they match mine?

That will be determined during the various communications between us prior to a final decision, but apart from being able to do the work physically you need to be prepared to proactively look for more work in your territory on a regular and on-going basis.

How well am I likely to fit with the organisation in terms of personal standards, aspirations and values?

That will be determined during the various communications between us prior to a final decision.

How long does the initial training last?

A total of six weeks.

Where does it take place?

Four weeks at Corporate Office in Coffs Harbour, one week with an existing franchisee in another area, and one week in your territory.

Who pays for transport, accommodation and meals during training?

This is all included in your initial franchise fee.

Who conducts training, and how well-equipped are they to do so?

Training is conducted in our Corporate Office by our National Training Manager who has over twenty years experience with us, and is conducted in a specially designed training area.

What does it cover and in what depth?

At Corporate Office in Coffs Harbour twelve days are spent “on the tools” learning the actual waterproofing and underfloor heating systems, then another eight days are spent learning administration, finance and sales and undertaking two TAFE modules.  The week in the field is spent learning more about waterproofing as well as how to relate to clients, and the final week is spent in your territory generating leads.

Is there any practical experience with existing franchisees?

One week is spent with a franchisee as previously explained.

Would you stop at any stage if you felt I was not suitable after all?

We would generally know before you were approved but yes, we would if we didn’t think you could handle what was involved.

Would any money I had paid be refunded?

Yes.

What proportion?

What you paid less what expenses we had incurred.

Do you provide on-going training in the form of courses, workshops, conferences, seminars, regional meetings, refresher or follow-on courses?

We provide all of these methods and opportunities for on-going training.

Who pays?

There is no charge for the training, but if it was being conducted at a central location for a group of franchisees you would be responsible for travel and accommodation.

Do you provide training for any staff I employ?

Yes.  They need to spend one week with us at Corporate Office in Coffs Harbour to be signed off to work on their own.

Who pays?

We do not charge for the training, but you need to cover travel and accommodation.  To assist your costs, Wet-seal will reduce its royalty for the next full month after the employee is returned to your territory to 15% on all jobs invoiced.

Support FAQ’s

Where is your franchise support office based?

We have our main support office in Coffs Harbour, with additional offices in Melbourne and the Gold Coast.

What does it consist of?

The corporate team at Wet-seal can provide training and support for all aspects of the operation of a successful waterproofing and underfloor heating franchise business.

Exactly what level of support can I expect and in what areas?

During the early days of your franchise you will be provided support in all areas of operation, be it administration, sales, IT or technical.  Once established the main area of support you will require will be from our Technical Department.

How many people are employed by the franchisor?

Wet-seal currently employs eighteen full-time staff.

Is there any technical support, or on-going research and development?

Yes.  Our Technical Division of Wet-seal handles all waterproofing & underfloor heating assistance through our help line or in person on site.  We are also given the responsibility of continuing R & D to improve the Wet-seal Systems.

Do you have specialists in individual functions as well as generalists who understand the overall business?

Yes, we have specialists manning the technical help line at all times, experienced staff available for onsite visits, qualified accounting staff to assist in business, accounting & tax information and highly trained management team to assist franchisees in all aspects of the franchise.

Can I meet some of your staff?

Yes.  The person you will be mainly dealing with during your initial inquiry will be our National Franchise Manager, but we are more than happy to have you talk to and/or meet any other members of our team.  This will certainly happen during your training period at Corporate Office in Coffs Harbour.

What support would I receive during the opening period of my business?

While you are in training we will direct mail a range of marketing material to all builders in your territory.  In addition our National Training Manager will be with you in your territory for your first week after training.  After that time the full corporate office teams are available to assist when required and keep a watchful eye on you.

Do you have a programme of visits and meetings to monitor progress and advice on improvements?

Yes.  When you first start we will have a program of visits scheduled over the first 38 weeks.  After that we hold two meetings in four regions each year that are attended by Franchisees in those respective States.  These meetings generally have a training component as well as an information sharing component.  We also relax and have dinner together.  We have a Compliance Officer who visits all franchisees to ensure that they are operating their businesses in the most effective manner.  From time to time you will also have visits/meetings with the National Franchisee Manager and the National Sales Manager.

What would happen if I encountered a problem that I was unable to solve?

A phone call to our Technical Support Team will resolve the vast majority of issues you will encounter and if the Support Team can’t rectify the problem by telephone then a visit will be organised at no cost to the Franchisee.

Is there any support system between franchisees?

Whilst there is no formal franchisee association at this stage the level of communication and co-operation between franchisees is very strong.

Would I receive feedback on my performance?

Every month you receive a comprehensive sales report as well as a ranking that you can use to compare your results with other franchisees. Also material usage reports, aged debtor trial balance reports and reports to assist in the completion of your BAS Returns.

Can you demonstrate your capacity to provide the follow-up services needed?

The best way to satisfy yourself that we can and do, is to talk to our franchisees.

Operations FAQ’s

What would I actually be doing on a daily basis?

You will be installing waterproofing systems, installing underfloor heating systems, communicating with existing and potential customers, and processing jobs completed by you.

What will the opening hours of the business be?

One of the advantages of a Wet-seal franchise is that you determine what hours you work.  There aren’t any landlords dictating what time you must open and close your doors.

How many hours will I need to work?

The hours you will work will be governed to a large extent by the volume of work you are producing.

What are the hours required outside official business hours, e.g. for paperwork?

Wet-seal does everything it can to minimise the amount of “paperwork” you have to do, but there is still the ordering of materials and processing of jobs that needs to be attended to.  Again, when you do this will be governed by the volume of work you are doing.  Some franchisees make sure they leave themselves enough time during the day to attend to these matters, while others prefer to do them at night or on weekends. Some Franchisees make great husband /spouse teams (spouse undertakes the office while husband undertakes the applications)

Is the business seasonal?

Only in one respect, and that is that most of the construction industry closes down between late December and mid January, so many of our franchisees take this opportunity to have a break themselves.

What are the most important keys to success in the business?

First of all quality of work, but in addition you need to be reliable, you need to be able to build relationships with existing customers, and finally you need to be able to generate new customers.

What are the most common pitfalls?

One of the most common pitfalls in all areas of life is “letting it happen” rather than “making it happen.”  Wet-seal provides you with all the skills and tools you need to be successful, so make sure you use them.

Do I need to employ staff, or do all the work myself?

Initially in a new franchise you can do all the work yourself.  However as you build sales to the extent that you are consistently achieving sales of around $20,000 a month you will need to start looking at putting someone on to help you.

Is there the potential for my partner to work in the business, too?

Many of our franchisees have their partners doing all the administration work.

How do I run the business, and where?

You basically run the business from your Wet-seal vehicle and a home office.

What equipment do I need? (e.g. a home office, vehicle and computer)

You need to provide a white commercial vehicle.  We provide everything else (computer, printer, phone, stationery, uniforms, tools etc).

Can I spend some time with an existing franchisee to see if I like it?

Definitely.  We can arrange for this to happen.

What can I sell and not sell?

Once you are fully trained you can sell and install all the products we offer.  You cannot sell products or services outside the Wet-seal System without our approval.

Do you provide operational manuals and instructions?

Yes.

Are they regularly updated?

Yes.

Are they online?

Yes.

How will I do my bookkeeping and meet the legal requirements of running a business?

Small business management is a part of our training program and you will be shown how to deal with all matters relating to the operation of your own business.

Is any administration included in the support available?

Yes.  Once you have completed a job and entered the details in the computer we take over.  We issue invoices, installation certificates, statements, and any other statutory forms.  We also handle the processing of payments.

How often do you pay money collected for jobs to your franchisees?

Any money paid to us for jobs done by you that has been deposited in our bank account will be paid to you every Tuesday or Thursday night as cleared funds so you can access it straight away.

Can you assist with the collection of money owed to me by customers?

If required we can contact your customers and collect money owed to you.

How soon will I be required to spend money on replacing equipment?

Small items such as roller covers will need to be replaced regularly.  The majority of the tools you use are long lasting and should not need replacing for years. Your vehicle will be the only major capital item that may be needed to be looked at on a regular basis.

Is there any custom-designed software?

We don’t issue software as such.  All your processing and ordering is done online and can be done from any computer with access to the internet.

What does it cover: quoting, ordering, invoicing, and reporting?

It covers all of these areas.

Can I access it via the Internet when away from the business?

Yes.

How often is it upgraded?

It is updated regularly as new functions become necessary or improvements suggested. Wet-seal have an in-house IT Manager to oversee all computer & software applications.

Communications

What systems do you have for keeping franchisees in touch with you and each other? (e.g. email, telephone support, personal visits, newsletters, seminars, regional meetings, conferences).

Wet-seal uses all of these as a means of communications.

Is there a formal system for franchisees to make suggestions?

We are always open to new ideas.  In fact most of the improvements to our System come from franchisees.

Test new ideas?

When a new product is developed or a change to the System made we always involve some franchisees in field trials.