Let’s face it. If you have been planning to buy a franchise for long and believe that investing in a franchise is a sure shot to success, then no other approach can be worse!
While running a franchise might be less challenging than running a start-up business, it is challenging nevertheless and you need to make smart choices right from the word ‘go’, or else regret it!
Picking a franchise has to be considered astutely and a little market research about what the audience wants can help you get answers.
A few factors that you MUST study before you buy a franchise:
Picking the right niche is critical to your success. If you love running a food joint, then look for that kind of a franchise. Combine market research as well. They are available online and see which niche of your preference has the best success ratio. Invest in a niche, which has an established success ratio and where your heart is. Do not go in blind on picking the franchise on the basis of market rush, rather pick what you think suits you.
- Franchise Training:
An advantage with franchise is the business intelligence transfer from the top to bottom. Look for how comprehensive the training is and whether there are any investments involved. In case, training is absent or rather shoddy, you may do better by moving onto other options present within the niche.
- Property Specification:
Most franchises would ask for certain property perimeter and dimensions. Assess them before you go ahead. See whether you would be able to arrange that or not. If the property dimensions are too big for the budget but the franchise option looks lucrative, look for financing.
- Initial Cost:
This is often the factor that seems prohibitive. Study the initial cost carefully and compare it against your budget. The good thing is there are franchises available from $20,000 to $50,000. Keep looking till you find a good deal; one that fits your budget. The franchise fee usually covers you for training, site selection and support. However, there are times when the franchise fee is levied for just letting you use the brand name, therefore read the fine print carefully.
- Recurring Cost, Commissions:
Franchises may charge you a royalty fee based on percentage. That means the more you make, the more you have to pass on to them. Try to find franchises that mandate a fixed payment than a percentage.
- Customer Service:
Since you are starting off, you would need support from time to time. Check how efficient their customer service is and how easily you can access them. You don’t want to wait for days to get replies. In idle cases, there should be a hotline.
- Market Credibility:
Enough cannot be said about how important it is to have a franchise with ‘solid’ market credibility. On the other hand, a franchise known to delay services and deliver below par products is best to be avoided.
While searching for good franchises, always look for how the given market location would respond to the idea and whether there is a genuine need or not. Do not get overawed by tall claims.