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How To Tell If A Franchise Opportunity Is A Strong One

With fewer risks and potentially many more advantages than starting a business from scratch, franchise businesses can be a wonderfully rewarding investment, but how do you know which one to choose?

To help you decide whether a franchise opportunity is likely to be a strong one, here are 5 characteristics to look out for:

  1. It’s in a good location

Even if a business has a really great idea and strong target audience, if the franchise is in a location that’s not easy to access, it could still end up failing. That said, if a business delivers its products or services direct to customers, then location may not be such of an issue, but there are still other considerations to pay attention to when assessing the worth of a franchise opportunity, such as the cost of renting the premises, parking and safety, among others. 

  1. Existing sales show steady growth

While no two businesses grow at the same rate, if one shows steady growth since its inception, it’s much more likely to be profitable in the long term compared to those that exhibit big sales spikes over a shorter period. It’s important to remember that trends come and go, so while one business may have had great sales for a few months when they released a new product, maintaining those numbers month on month, year on year, may be tricky to achieve, especially as competitors move in with similar products, or customers simply get bored. 

Opting for a franchise opportunity that offers dependable growth, may be a more sensible choice.

  1. There isn’t much competition for the product or service

While a degree of competition can help show steady demand, if your franchise opportunity has a product or service that’s relatively new and unique, you’ll have the most chance of getting solid sales. Some franchisees go one step further and try to find out what upcoming construction projects are scheduled for the area, to help determine just how unique the franchise will be. 

  1. Lots of support from the franchisor

It’s important only to sign up for a franchise opportunity in which the franchisor is offering plenty of help with training, marketing and wholesale pricing for supplies. While you may be able to source some of the things you need yourself, it’s generally better to receive as much help as possible from the franchisor, if you’re to achieve success. 

  1. The contract isn’t overly complex

Unfortunately, franchise contracts are notorious for being complicated and longwinded, and while much of the information contained within them is important and helpful, you must make sure that you understand it all before even contemplating signing the document. You may find it helpful to engage with a lawyer who has experience of dealing with franchise contracts, to be sure of what you’re signing up for. 

There are so many franchise opportunities available, that knowing which one offers the best chance of success, isn’t always straightforward. But armed with the guidance above, you can at the very least, make an informed choice.