Buying a franchise does not remove the risk of failure and thoroughly researching and evaluating a franchise before you buy it can play a huge role in determining its success.
The first step would be to determine the different types of franchises available and this can be done by:
- Reading franchise directories
- Reading articles and ads in franchise business publications
- Attending franchise exhibitions and tradeshows
- Researching on the internet
Once franchises have been shortlisted you need to evaluate the strength of the franchisors. You can go about this by:
- Evaluating the history of the franchisor
- Seeking professional legal advice regarding the franchise disclosure document and franchise agreement
- Interacting with existing franchise owners
Key Criteria for Selecting a Franchise
While deciding on which franchise to purchase there are a number of factors to take into consideration including:
Costs
- How much will you have to spend before you being to see profits from a particular franchise?
- Do you have the necessary finances to purchase this franchise?
- Will the profits it generates be worth the time and effort?
Your skills and talents
- Do you possess the requisite skills to develop the franchise successfully?
- Are your business skills developed enough to manage the franchise?
Product/service demand
- Does the franchisor’s product/service have enough demand in the prospective area of operation?
- Is the demand consistent or seasonal?
- Is there scope for growth in demand in the future?
- Will the product/service have repeat customers?
Competition
- How many competitors operate in the prospective area including other franchise owners?
- How established is the competition?
- Is there any variance in the competition’s offerings?
- Are there any niches in the market that you can capture?
Brand name
- How well known is the franchisors brand?
- Do they enjoy a reputation of providing a quality product/service?
- Is there a lot of negative comments and complaints against them both online and offline?
Training & Support
- What is the level of training and support that the franchisor provides?
- Have the existing franchise owners found the level of support and training satisfactory?
Franchisor Experience
- Has the franchisor’s business existed long enough to have established the level of business strength that you are seeking?
Expansion Plans
- What are the expansion plans of the franchisor and do you find them to be feasible?