What makes a good franchise opportunity

Written on the 8th of May 2008

Want to buy a franchise, but not quite sure what to look for?  Here is a quick guide to help you evaluate the franchise opportunities you are considering.  

A good franchise opportunity will have all of the following things:

Well-known respected brand

While it doesn’t ensure success, buying a franchise of a well-known brand will certainly be a lot easier than investing in one that hasn’t established itself yet.  

An established company means brand awareness and guaranteed customers for your franchise, which will save you a lot of work and stress.

Experienced franchisor

Something that goes hand-in-hand with a well-know brand is an experienced franchisor – if they’ve built their business into a successful franchise, they obviously know what they are doing.

Look for a franchisor that has a variety of experts in the management team (a franchise expert is essential, and so is marketing and finance), has been working with the business model for a long time and has streamlined systems and processes.

Good location

You know what they say – location is everything.  You need to be able to operate your franchise business from a place that suits you and suits your target market.

Make sure your location isn’t already full of your competitors and that you have a large enough marketing area and population to attract new customers.  When it comes to your premises, make sure you can afford it and also that it meets the needs of your market.

Quality product

If the franchise doesn’t have a good product, you’re wasting your time and money.  It needs to be high-quality, marketable and priced competitively so you have a chance at success.

The franchisor should invest a significant amount of their profits into research and development so they can continuously improve the product.  It also helps if they and you are passionate about what you are selling.

Profitability

When it comes down to it, money will be the most important factor in your decision to buy a franchise – if it’s not profitable, then it’s not a good franchise opportunity.

Once you get past the initial enquiry phase in the franchise process, you will get access to detailed financial information about the franchise.  Get an expert to go over the information with you to find out if the business is profitable – look at things like franchise fees, residual income and resale value of the business to determine if it is a worthwhile investment.

Support

The main reason why people choose franchise businesses over starting from scratch themselves is because they don’t want to go it alone – so make sure the franchisor offers adequate support.

You will need initial and ongoing training on the products, the industry and running the business, as well as technical and marketing support and access to a franchise manager to help you overcome challenges and keep you motivated.

Suit your situation

This is probably the most important part of a good franchise opportunity.  It’s essential that you choose a franchise business that suits your personality, your schedule, your goals, your budget and most importantly your skills.

If you’ve done some research into a business and aren’t sure if it’s for you, go and chat to some of its most successful franchisees and find out what they are like.  If you have a lot in common with them, then you’re on the right track.  Also, it’s important that you be honest with yourself about what you can do, what you can afford and what you want to achieve.

A final word of advice - make sure you do your research so you can make an informed decision about the franchise opportunity.  Choose one that meets the criteria above and you’re off to a great start!