How to choose a franchise with a good future
Almost all franchise brands follow the same basic model. So, at the outset, it can sometimes prove quite difficult to assess the potential of an individual franchise that interests you.
Of course, you’re looking for something which will be a safe bet as a future investment, but you’ll also want to be sure the brand is (or could become) actively successful.
In essence, that’s down to you and any advisors you may consult. And what this task really depends on is how well-acquainted you are prepared to become with the franchise and the precise terms of your franchisor’s offer.
So, to inform your final purchase decision, it’s very much in your interests to learn all you can about your target franchise, its market position, and its growth potential.
How to research
Do your market research thoroughly. You must not only identify your potential market but also clearly establish that there will be a demand for the product/service – which can include matters such as whether you can achieve sufficient footfall and much more.
How well you really know your market will be critical to your later success. Learn to recognise the different segments of that market, and know which ones will be more, or less, attracted to your product or service.
In addition, you will need to accurately quantify that market’s size and growth potential – not just right now, but also projected three, five and more years into the future.
And most importantly, you will also need to become acquainted with your competitors in that market. What is their own market share? And is it growing or declining? And what are the reasons for that performance
Furthermore, you will need to gain a detailed knowledge of the strengths and weaknesses of your competitors – information which will show the areas where you can best compete and gain within the franchise.
When learning about your market, establish what measures will give you the best sense of that commercial environment.
An in-depth enquiry should help you to know which indicators are the best guide to market stability, and what stats and figures will give you the best indication of the likely future for your would-be franchise.
Such information must, of course, also give you a clear idea of your future earning potential within that franchise, as well as some perspective on how rewarding a career it will prove in terms of job satisfaction.
Beyond the bottom line
Remember too that the future of your chosen franchise is about more than just what the business earns.
It’s also about the public perception of that business. You will need to find out whether the franchise brand has been involved in any scandals or PR issues which are likely to affect the franchise going forward in the future.
You will also certainly need to get close enough to the market to know, for instance, whether any competitors are on the verge of developing something which will make that franchise offering obsolete.
And in addition, you must also get a feel for the extent to which the franchise brand plays a vibrant part in today’s market. For instance, are they staying current by continuing to release exciting new products or services which are at least on par with those of rival companies?
Undertaking thorough market research will, of course, take time, effort, and a lot of careful thought. However, none of this time spent will ever be wasted.
Either it will warn you to avoid a dodgy franchise deal or give you invaluable reassurance you are very much on the right track.
And if it’s that latter option, then the information you have discovered will form an important part of a strong strategic plan to get your fledgling franchise up and running and into profit as soon as possible.
By Jo Thornley, Head of Brand and Partnerships at Dynamis. Joining in 2005 to co-ordinate PR and communications and produce editorial across all business brands. She earned her spurs managing the communications strategy and now creates and develops partnerships between BusinessesForSale.com, FranchiseSales.com and PropertySales.com and likeminded companies.