How to Evaluate a Franchise Opportunity

Important criteria for evaluating a franchise opportunity:

Investment & Costs: What is the total initial investment? What are the ongoing fees? Do you have adequate capital to afford this business? Are the benefits you gain worth outweighed by the royalty fees and advertising fees that will come off your top line?

Demand: Is there an adequate market for the product or service that you are offering? What are the trends in this particular market? Is the franchise you are considering well-positioned to meet the needs of a growing base of consumers?

Competition: Who is the competition? Are the numbers of competitors growing? Will this franchise give you a clear competitive edge over those who will try to take your customers with lower prices, a wider product line, or aggressive advertising?

Concept Operation: How well is the operational concepts designed. Is it designed for operational efficiency as well as customer appeal? Do you have the requisite skills to effectively operate this business? To grow it?

Clear brand image and/or name recognition: Does the franchise have a recognized and respected name in the marketplace? Does it have a clear brand image that is both appealing and easy to communicate? does this company know who it is, and where it’s going and how to get there?

Marketing Programs: A main concern should be: How will I attract customers? How will I get them to return for a second and third time? How can I turn them into loyal customers for life? A franchisor should be able to answer these questions, and show you the programs and tools they’ll provide to win your market.

Training & Support: Buying a franchise is no mystical path to success. Think of your franchise fee and royalty payments as investments in specific services that should provide a return on that investment. If you do not see training and support programs that are worth the money you’re spending, it’s probably not a good investment.

Growth: Companies are either growing or they’re dying. Make sure that there’s an energy and a desire for growth, so that the benefits of being part of the network continue to build.

Franchisor Experience & Trustworthiness: Don’t buy a franchise from a franchisor or an organization that you don’t like or you don’t trust. You are turning over a good bit of your autonomy to them. Be sure they are worthy of that trust, and that you’re confident that they’ll act in your best interest.


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