WHAT’S THE LATEST AND GREATEST FRANCHISE OPPORTUNITY?
It’s not an uncommon question; I get it all the time. What I read into that is: What franchise can I buy that will make me a lot of money with minimal effort? I’m sorry to report, there is no such thing. If you could work for a half hour and make a million dollars, everybody would be doing it.
Every business presents its challenges. Unless your business is buying lottery tickets and you happen to win on your first try, there will be no substitute for putting in time and effort in order to succeed. With that being said, let’s reframe the question: What should I be considering when looking for the right franchise for me?
The answer to that question has many components. I would suggest considering the following when selecting a franchise:
- Your skill set – What franchise’s systems will allow you to utilize your personal talents in a way that makes you most effective in running a business? You can truly learn any business system but selecting something that allows you to utilize your talents will increase the probability you will enjoy what you do every day. You shouldn’t be looking at a franchise that doesn’t interest you in the first place.
- Demographics – Where is the business located, and how many people populate that particular area? If the business model is dependent on dealing with customers face-to-face, make sure you choose an operation in an area that has enough of a population to draw from.
- Target markets and potential customers – Who will most benefit from your company’s services, and how many of them are located in the demographic area? If your business caters to an aging population (a home healthcare business, for example) then set up in an area that has an aging population. Similarly, if you are establishing a high energy fitness studio, then an aging population won’t be a great source of potential business.
- Industry phase/maturity – Is the franchise being considered in an industry that has reached full maturity (or beyond)? Is it likely there will still be a demand for your company’s services 5 or 10 years down the road? If not, is the franchisor doing something to move the business towards something that will be in demand in the future? It is critical to stay ahead of the curve.
- Market saturation – What is your competition? Are there so many competitors that you could potentially be exposed to a limited market share, creating a direct impact on your ability to attract new customers?
- Geographic location – Is the business appropriate for where you’re looking to operate? A frozen yogurt company will generate the greatest proportion of its sales in 4 months out of 12 in the northern states; a company that offers snow plowing services will not do much business in the lower 48.
- Start-up cost – Budgetary restrictions are something that need to be dealt with at every phase of a business’ life. Everybody would like to acquire a McDonald’s but not everybody has the financial ability to meet a seven-digit investment requirement.
- Potential for return on investment – Can the business meet your financial goals? Is the potential profitability and return on investment worth the amount you are investing in the business, or are your funds better invested elsewhere?
- Local resources for labor – Are there resources available to satisfy the needs for personnel, especially if a specific skill is involved? A martial arts business will need qualified people to lead classes and provide individualized instruction. If the location you’re looking to establish your business doesn’t have a reasonable number of qualified people, then servicing your customers will be a challenge.
- Local resources for other critical business components – Are goods required for use in your business in close proximity, or can they make it to your location in a timely and cost-effective manner? Opening a soft pretzel franchise in Florida will present more challenges than a South Jersey location. (Water makes soft pretzels taste special, and the best water comes from sources in the greater Philadelphia/New York area. Opening in the mid-West could require establishing a shipping schedule dependent on the amount of available freezer space and oven capacity you have.)
It’s critical to do your homework when buying a franchise. If you’re going to invest your time and money, make sure you do your investigative work as well. Utilize the tools available to you in the pre-acquisition phase, including knowledgeable consultants who can assist you through the process. Doing so will significantly increase your chances of success as well as your potential for truly enjoying your time, making it seem less like work.
Herbein + Company has been servicing clients in the franchise world for over 30 years. Reach out to our franchise team at firstname.lastname@example.org today.