HOW TO SPOT A FRANCHISING OPPORTUNITY
What should you look for when looking for a franchise to buy?
There are a lot of franchises out there, and a would-be franchise owner needs to be able to differentiate between a good opportunity and a potential disaster. Franchise owners want you to buy their product (the franchise) because that is how they make money. But you need to be able to tell the difference between the shiny sales pitches and the real diamonds underneath all the hype. Here are some simple things you can do to spot a great franchising opportunity:
1. Do your homework. The simplest, most effective way to ensure you know how you can find a good franchise is first learn everything you can about business, franchising and all that goes with it. If you can’t tell the difference between a balance sheet and a sales invoice, you need to take some time to learn some more. Nothing is more reassuring than being able to rely upon your own knowledge instead of taking someone’s word for it.
2. Find out about the company. In addition to increasing your knowledge about business basics, you’ll want to research the company as well. How long have they been in business? What do their numbers look like? Do they belong to a professional organization like the International Franchise Association? If not, why not? There are some scam franchises out there, so you’ll need to ensure the company is on the up and up before you commit. You may need to hire a reliable accountant or business analyst to evaluate some of the details for you, as they know what to look for when searching for strong business fundamentals.
3. Where do they stand? If you are interested in a franchise, you’ll want to learn as much about them as you can. Though you don’t need to know everything, the most important thing you can look for is their performance as compared to others in the industry. If a restaurant is seeing sales increases of 15% per year, that probably sounds pretty good. But what if everyone else in the industry is experiencing 25% growth? Not so good now, is it? Finding which business is on top, and why, is key to finding a good franchising opportunity.
4. How do they spend their time? A great way to determine whether or not a franchise will be successful is to look at how the franchiser (the business that sells you the franchise) spends their time. Are they focused on growing the franchise base, or are they focusing on the franchises they already sold? Be careful here. Though the latter may seem to be the better indicator of success, it isn’t. A company that is focused on growing their franchise, increasing name recognition and getting a broader customer base is much better than a franchise that spends all their time helping their franchisee to get going. The first is building a long-term business, while the second doesn’t have a strong growth plan.
How to spot a solid franchise opportunity - To learn more about this author, visit Ian Macleod's Website.
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Ian Macleod
(Visit Ian's Website)
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