It’s true that franchising has promising success rates, but it’s also true that not all franchises are created equal and not all franchises are a good investment. With that said, franchising can carry less risk than starting an independent business, making it an attractive option for aspiring entrepreneurs.
If you’re interested in franchise ownership, then it’s crucial to find a franchise that will help you succeed as a business owner. Understanding the following characteristics of a strong franchise system will help you choose the right franchise partnership.
#1 – Solid Business System & Proven Business Model
A proven business model is what makes franchising a smart choice for prospective business owners. It is a model with processes and procedures that can be replicated in order to achieve similar results. Make sure you choose a franchise that meets this standard.
It’s also important to take a close look at the daily operational tasks to make sure you can stand behind the quality of product or service the franchise is offering its customers. Examples of what to look at include:
- Point of sale system
- Credit card system
As a franchise owner, you will want to embrace the standard procedures while being able to recommend your products or services with 100% confidence.
#2 – Innovation & Adaptability
A strong franchise system will have a consistent flow of creativity in an effort to keep the business relevant. It’s smart to offer staple products or services, but a business that is monotonous will inevitably lead to bored or restless customers. You should choose a franchise that offers solid staples along with a solid stream of new items or offers to keep customers interested.
#3 – Reliable Location
Visibility is key to driving profit, even for online franchises. There are various factors to consider when looking for the right franchise location. Businesses that rely on in-person customers will need to find a location with a decent amount of foot traffic, even if it means a higher rent. However, a business that primarily finds its customers online might prioritize finding a location with cheaper rent.
You should be deliberate and strategic in choosing your location since your business’s success could depend on it. Fortunately, most franchisors offer their franchisees guidance for choosing a spot that can be profitable while avoiding areas that are too competitive.
#4 – Dedicated & Involved Franchisor
While most franchisors provide some level of training and support to their franchisees, you want to find a franchisor that is dedicated to its franchisees’ success. After all, the franchisor benefits when its franchisees succeed.
You can speak with existing franchisees to determine the franchisor’s level of involvement. If current franchisees speak well of their franchisor, this is a good sign of a strong franchise system.
#5 – Reasonable Cost & Workload
The specifics on what is reasonable will change depending on the buyer. All franchises require potential buyers to have a minimum amount of liquid capital and net worth. In addition, you will need to be able to acquire sufficient financing to purchase the franchise. Everyone’s financial status is different, which means a “reasonable cost” will vary from person to person.
A “reasonable workload” will also depend on each individual’s skills and time they have available. You should look for a franchise that matches well with your personal abilities.
Related reading: How to Buy a Franchise With No Money: Is it Possible?
#6 – Good Earning Potential
While there isn’t a way to pinpoint exactly how much you will make as a franchise owner, you can have a general idea of your earning potential. While Item 19 in the Franchise Disclosure Document will give some insights regarding this, you will get a more realistic picture if you speak to existing franchisees. Make sure you choose a franchise that offers the potential for you to meet your financial goals.
#7 – Franchisee Satisfaction
Speaking to existing franchisees will give you helpful insights about the various franchise systems you’re interested in, which will help you cross off the maybes on your list. A few questions to ask include:
- What did you do to research the franchise initially?
- How did the first year look compared to your expectations?
- Does your personality match with your ownership responsibilities?
- Is your business thriving or struggling?
Franchisees in your community offer sneak peeks into your own franchise ownership future, so make sure you take advantage of this resource.
Are You Ready to Get Started?
There is no such thing as a perfect franchise. However, you should be able to find a franchise that aligns with your wants and needs. The right franchise is out there, and FranNet is here to help you get started. Our expert franchise consultants will help you evaluate your skills and abilities and match you with a franchise that fits. They will also help you understand your funding options. You won’t have to pay us a dime! Schedule your free consultation today!