There is nothing more sure in life than change. Each industry has seen a rise, fall and rise again – and sometimes this can all take place in one year. So when it comes to acquiring your own franchise, where do you even start? In matters of business, it is important to keep emotion out of the picture because no customer or client will care if you think it is the best around – they need to see value for themselves. When choosing an industry, start questioning which industries are on the rise, who the market is, where they are and if the overheads are quantifiable.
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Is the industry on the rise?
If you don’t think market relevance is an importance factor, then ask a Blockbuster or Video Ezy franchisee how things have been travelling. You should operate very objectively when buying a franchise as certain industries grow at faster rates. The health industry has seen good growth, with health and wellness an increased focus for more and more individuals around the world. Cafe and tea store cultures are growing at fast speed, with instant coffee and tea a thing of the past. In addition to pouring over reports and projections, keep your eyes peeled next time you head to the shops or airport. This will give you an idea of which franchises are surviving and which are excelling.
Is the target market sustainable?
Knowing who your market is would have to be the most important insight you should know as a franchise owner. If you can’t describe who will buy your product or service, you may as well close the doors because you are just gambling. A sustainable target market would be corporates needing a coffee or tea in the morning, families needing large an reliable cars, and so on. An unsustainable market would be tourists, holiday crowds and the tradesmen across the road who need lunch but will be packing up their tools and moving on in the next few months. Knowing where you product sits in the customer’s preference list is also valuable insight. There is no shame in being the more affordable version of another product, and it may even earn you more revenue than the high-end version.
Is the location right for the product/service?
Location is key. Where you choose to open your franchise can make or break a business. A busy shopping centre may bring the customers, but at a rent price that is not sustainable. And opening a franchise on the side of a popular highway might get people looking at your sign, but if there is nowhere to turn-off then you are essentially just a billboard. Do your location research on which neighborhoods, shopping centers and even levels of the shopping centre that bring the most amount of traffic in a way that is consistent with your service delivery.
What are the overheads?
Don’t you miss the humble lemonade stand? A sign, table and a jug of lemonade. When considering your franchise you want to be looking at the overheads and what maintenance they need and how often. Hotel franchises are on the rise, but be under no dissolution that this is an easy operation to run. There is connectivity, car parking, air-con and phones in every room and a kitchen that can feed guests all day, as well as its staff. Deciding on overhead limits is a great way to exclude opportunities that are not viable as well as saving you one might headache (and bill!) in your first quarter of trading.
It can be dizzying thinking about the many franchise opportunities that are available to us. Whether it is products or services, it’s hard to uncover a bad investment – although it does happen.survey the market with an objective eye and notice the red flags before you put pen to paper.
About Carson Derrow
