When looking for a franchise opportunity, how can you tell whether the one you want is a strong one? Here are 5 characteristics of a strong franchise opportunity that will help you know when you have found something worth pursuing.
1) Location is favorable.
The phrase "location, location, location" originated for a reason. If the franchise is not in a location that is easily accessible to a large number of people that need or desire its goods and services, it may be difficult to achieve profitability no matter how good the business and marketing plans may be.
For businesses whose model is to provide goods or services at the customer’s home or business, the location of the office may be less important, but other factors such as rental cost, parking for employees and safety still make location an important component to consider.
2) Sales at existing locations show steady growth.
Businesses grow at different rates, but the businesses that are most likely to be profitable over a long term are those that show steady growth, rather than a huge spike in sales in a short time period. Trends come and go, so the huge spike today could turn into a freefall next month or next year as customers get bored and move on to the next big thing. Finding a franchise that meets customers’ ongoing needs is a better opportunity than jumping on a bandwagon that may not last more than a few years.
3) Little competition for the same goods or services.
Some competition is not always a bad thing, since it can show steady demand. But finding a relatively untapped market for needed goods and services will allow your franchise to gain maximum sales. Some franchisees even try to find out what construction projects are scheduled in the area to be sure that a similar business won’t pop up a year or two down the road.
4) Ample support from franchisor.
Finding out ahead of time what kind of support a franchisor will offer is a wise idea for any franchisee. Strong franchise opportunities will include franchisor help with training, marketing and wholesale pricing for supplies. Franchisees who have their own sources for some of these needs may still find good opportunities outside these parameters, but typically, the more help given by the franchisor, the better the chances for success.
5) Contract is simple to understand.
Franchise contracts are notoriously complex, sometimes spelling out in specific detail the business practices franchisees are expected to follow. Having consistency across franchise locations helps customers know what to expect and contributes to brand loyalty, so specificity isn’t always a bad thing.
It is important, however, to fully understand the terms of any contract so that you know what you’re getting into before you sign on the dotted line. It’s a good idea to have a lawyer experienced in franchise contracts review the paperwork and explain any details that don’t seem reasonable or customary.
Franchise Gator helps people find the right franchise opportunities to start them on the road to success.