There are many advantages to owning a franchise. For starters, it allows a franchisee to own their own business, with the advantage of selling an already established product or service. But not all franchises are created equal. Choosing a franchise is a major business decision and requires research into certain brands and market trends, as well as a close examination of your own personal finances.
Here is 4 Key Questions to Consider as You Evaluate Different Franchise Opportunities:
- How much control will you have of your franchise unit? Most franchises are legally obligated to uphold most of the corporate brand’s rules and processes, including anything from accounting and hiring to marketing and customer service. Some franchise contracts are more restrictive than others.
- What will your financial commitment be in the short and long term? First, make an assessment of your own assets and capital, as many companies require a minimum financial requirement during the application process. Next, find out what the upfront financial investment is for running a franchise unit as well as the ongoing funding needed. Also, find out all of the specific fees you’ll be responsible for, including royalties, advertising and property leases
- How established is their franchise program? Is this a newer franchise program in its early days of formalizing their franchise program, that doesn’t have a long-term history of success? Or, is this a well-established bigger brand, such as Dunkin’ Donuts or McDonalds that may be a lower risk. A well-established franchise program will include general operations training, an introduction to its brand, plus support in areas of advertising, employee development and supply chain management.
- What is your local market potential and demand for this product? Before delving into a specific franchise, it’s important to consider the industry, geographic market demographics. Find out if any competition exists in your area for the same type of business. Consider how demand will be on an ongoing basis and into the future. Be wary of trendy franchises that go in and out of style.
Overall, conduct a thorough due diligence before you make a decision on a franchise. There are so many franchises to choose from, but only a few that are the best choice for you.
“Faced with a growing pool of options, potential franchise owners need a methodical approach to choosing the best fit business.”