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Factors By Which You Should Judge A Franchise Opportunity

Trying to figure out if a franchise opportunity is a grime or gold? In this article, I would explain which & what factors will help you judge a franchise. In particular, I will show you which aspects to consider:

1. Growth – Is a franchise growing or shrinking?

2. Average Sales per Unit and its history.

3. Success Rates of units in general.

4. Continual Support provided by the franchiser.

Considering a Franchise opportunity or Investing in a Franchise Business Company? Did you know that if you have at least $5000 in your account you can use this money to start or buy a business?

1. Growth
One of the easiest ways to measure how well a franchise is doing is to look at their growth: How many units have they added or lost in recent years? From my experience, the best place to find this information is Entrepreneur.com. There you can search for any franchise opportunity provider and view a profile that details their growth over the last 5 years, as well as franchise agreement terms and other facts.

2. Average Sales
Is this going to be a profitable franchise? What kind of profits can I expect?

This is probably one of the first questions you’ll be asking when you start your research after a franchise opportunity comes before you, although, unfortunately, the answer can be tough to find. Franchisors/company are not required to tell you the average sales per unit, and many choose not to since inaccurate earnings claims can be grounds for litigation. If they do release this data, however, it will be in Franchise Disclosure Document (FDD).

3. Rate of Success
What percentage of new franchisees succeeds?

Again, this is not something franchisors are required to disclose, but it’s certainly good to know before you get too far into a relationship. According to statistics from the Franchising Association of India, franchises currently account for only two percent of retail revenues in India compared to almost 50 percent in the US. However, that two percent is growing at a fast pace, and the implications point to astounding market potential, and since franchise businesses are based on proven systems, the success rate for Indian franchises should be comparable.

4. Continual Support provided by the franchisor
Once you go ahead with the franchise opportunity in front of you & get associated with the company, it is necessary to see what’s the level of support you will receive from the franchisor? In other words, how much training and ongoing support do you get for things like marketing, client acquisition, advertising, recruiting and litigation? Unlike the other questions, this one is not all about the numbers. Nonetheless, it can’t have much of a huge impact on the profitability of your business, especially as you’re first starting out.

Pivot Point: Is This a Profitable Franchise Opportunity?
Taken all together, you can get a pretty good idea of whether or not a franchise opportunity is good or a bust. Once you’ve identified a great Franchise Business Opportunity, it’s time to consider financing options, human resource management & location selection. Remember your analysis and understanding of the factors is critical.
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