Deciding to get a franchise is only the first of several major decisions a prospective franchisee will have to make. The next is determining the best franchise opportunity.
The best franchise opportunity is a totality of many factors. These factors are like parts that make up a whole. They work together to achieve a beneficial result.
Foremost of these factors is the prospect’s financial capability or ready access to financing since a large amount of money is required for the franchise fee, down payment on the lease, and other expenses. In addition to being financially ready, he should make a complete self-examination to determine his personality and preferences so that he can find the right kind of business that will match his style.
Preferably, the prospect must have conducted his own research and market study before setting up a meeting with the franchisor. This will enable him to inquire intelligently about important details relative to the company and the arrangements under the franchise. This way, he does not enter into something that he does not know much about, wherein he will have to depend mainly on the franchisor for information. This kind of information is unreliable since it has already been edited to come up with a highly convincing franchise presentation.
In asking questions, the prospect must solicit important information such as those about the track record of the company insofar as its franchises are concerned; how committed it is in providing continuous support to the franchise and ensuring its success; how effective its training and marketing programs are; and if the company has an continuing product research and development program to make the business updated and competitive. The franchisor must be able to provide this information to the prospect’s satisfaction.
If the business is large and enormously popular in the market, its franchise network is most probably successful. Accordingly, the franchise fee alone will cost the prospect a large sum of money. If he does not possess the financial capability required by large companies, the next best thing is to look for a lesser-known company that has a high market potential but a lower franchise fee. However, the risks involved here are definitely higher than with a large-company franchise.
In considering the franchise offer of a less popular franchisor, the prospect has to conduct a thorough study on the background of the company, its present management, and the market potential of its products or services in his intended business location. He must also be able to find substantiated answers to the following questions: Is the business concept innovative enough to attract customers? Will it draw enough interest in the marketplace to make loyal customers? Is the company willing to allot a reasonable budget to fund marketing programs in the area to help the franchisee realize more profits? Am I willing to risk my money on a novel concept such as this? If so, am I up to the challenge of turning the franchise into a profitable venture? If the answer to all these questions is “yes,” the other equally important factors must also be considered.
The planned business site for the franchise unit is another crucial factor if the business is to succeed. Ideally, the business must be established in a place where there is a lot of human traffic, possibly inside a shopping centre, near a school, or downtown where all the shops are situated. It must also be easily accessible to its target market. In this regard, the franchisor’s willingness to provide support in pinpointing determining the ideal location and negotiating the lease will be a good indication of his sincerity.
In addition, the prospect has to determine the availability of competent people in the area who can be considered for possible employment in his franchise. Staffing the business with quality employees who can be trained in operations and management will be an essential factor in running the business smoothly.
As the prospective chief operations officer of a franchise unit, the prospect must be assured of an effective training program that will arm him with adequate knowledge in starting the business and running it smoothly later on. A good training program for the employees should also be in place.
Furthermore, local legislations that are favorable to business will make the franchise opportunity more encouraging, assuming, that is, that the general economic condition is good for business.
The best franchise opportunity materializes when the prospective franchisee is financially ready; he has made a thorough study of his chosen company, its viability, products, and franchise network; he is assured of the commitment of the company to provide him continuous support; he has a good business site in mind; and the prevailing economic condition is conducive to starting a business.
The moment this opportunity presents itself, seize it!