Search
  • Nick Sutherland

5 Signs Of A Great Franchise Opportunity

Key Considerations when looking into a new franchise opportunity


Whether you’re a first time buyer, or seasoned pro, how do you know when you’ve found the right franchise for you? What are the key things you look for when doing your homework to provide you with a sense of future performance?


1). Industry Growth (and unit growth)


I combine these two together, because one should eventually speak for another. When considering a new franchise opportunity, or an addition to your portfolio, one of the first things to consider is “what’s the market tell us?”. What is the growth potential of the industry you’re considering? A lot of franchisors provide some very useful market research and data that will offer some wonderful leading indicators as to this, however, do your own research. What is it that you’re looking to open, and how would that be received in the market you’re looking at? Is it saturated with businesses like that already? Is it not? If not, why not? Is it for a reason, or is there a true opportunity here? In addition to that, once you think you have an opportunity to your market, what’s the actual growth within the franchise org? How many units have been sold? How many are open? (Don’t glance over the second part there). Asking how many are open is also a KEY question. A franchisor might be great at selling, but how quick are they getting things open and supporting their franchisees in order to do so? If there’s traction, and units are selling like hot cakes, and opening at a reasonable clip, that’s a great start. But don’t stop there. Dig in a bit. What’s the franchisor’s success rate? How many have had to close? What are some other statistics they can share on the open units? Don’t be afraid to dig deep. If you were buying a house, you’d likely have an inspector come in and do a thorough inspection before proceeding. That right stands true here as well. Don’t be shy.


2). Franchisor Support

The one that can separate itself as the best from the rest (especially as it relates to your experience or lack thereof in that particular industry). What’s the level of support the franchisor provides? What’s onboarding a new franchise look like? And from there, what’s the continued training and support? Can they share some examples on what that looks like? Are there franchisees they can connect you with to have a “discovery call” with and do some Q&A to learn more from the feet on the street? Franchisor support can be monumental to helping you get your footing and set you up for success.

3). Financial Performance

Though these are usually shared as “averages” on the FDD, don’t be afraid to ask about some financials from current locations. Businesses obviously grow at different rates, in different locations, but if they can prove steady growth across their territories, that speaks volumes that they A). Have a good system in place and B). Have demand from the market.

4). Marketing and Advertising Support


I think we can all agree that great marketing and advertising can make a brand that much more attractive and marketable. In addition, with a great opportunity might require some ‘market education’. Is the franchise you’re looking at a new concept that people aren’t familiar with? If so, that will likely take quite a bit of education. And the best way to educate the market to gain traction and show the value/impact that concept can have, is by thoughtful marketing and brand awareness. Ask what that looks like. Can they share examples on the types of programs they have in place and the different channels they’re leveraging for these campaigns?

5). Competitive Advantage


Now that we’ve uncovered the marketing/advertising strategy with this particular brand, we still need to sell. What’s the “pitch’ look like. What are some of the USP’s (unique selling points) and value/impact this service or solution provides? How does it resonate with the market and do you feel it has a unique enough differentiator to gain traction and convert into sales? If it’s not an entirely new concept, and there’s some competition nearby, what are some of the common objections they hear, and how do they address those to stay ahead of the competition? Is it a good story? Put yourself in the consumer’s shoes and get a feel for the “pitch”.


Certainly not limited to, but these are some key leading indicators to get you started on your decision making journey of "is this a good opportunity for me?"

68 views0 comments