It is no surprise to many that finding the best franchise opportunity is a difficult task. Many aspiring entrepreneurs come across a wide range of opportunities, many of which offer their own take on how something should be done. Whether it is the way things are being portrayed, the way the products and services are provided, or a company’s historical performance, many entrepreneurs select a franchise based on their opinion on one preference or another.
Before you begin exploring the opportunity of owning a franchise, it is important to understand the importance of a wide range of factors which will ultimately impact your ability to start, operate, and grow your franchise.
The Growing Selection
It is becoming increasingly popular to consider opening a franchise business rather than starting a business concept from scratch. As the condition of the market changes over time, many entrepreneurs are looking for unique brands and franchises in order to begin a business which benefits from an established and dominant business model while also appearing to be an original concept or idea. As a result, there is a growing selection of franchises ranging from a wide variety of industries.
The rankings we produce on our website are cut into different industries in order to assist aspiring entrepreneurs in finding the franchise opportunities which are most relevant to their interests and business experience. It is important to take a close look at all of the franchise opportunities which are relevant to your interest prior to investigating the opening of a single franchise. Our rankings and directory can become a great starting point to identify the few franchises you’re interested in opening for your business.
Selecting a Type of Business
Prior to investigating which franchise to run, it is important to take a close look at your business expertise and experience. Most business owners have a particular niche or industry where they are most effective and will therefore be more successful in starting a business relevant to that industry. For instance, if you have experience in operating or working within restaurants, food franchises are going to be the most relevant franchise opportunity.
In addition to determining the right type of business, it is also important to understand exactly what a franchise brings to the table. When researching different franchises, it is important to take into consideration what types of products and services they provide to their audience and whether those offerings are relevant to your experience. For instance, it can be difficult for someone with a lot of experience in running a pet salon to start a hair salon and vice versa. It is important to take into consideration your own personal strengths and the requirements of a business prior to searching for a franchise operating under those conditions.
Financial Requirements and Availability
When you have an understanding of what type of franchise you’re willing to operate, it is important to take a close look at the financial requirements of starting the business and the financial requirements of operating the business over time. The end goal of a franchise opportunity is to turn the business into not only a profitable operation, but to be able to achieve a long-term return on the initial investment and a continued return over time. Many entrepreneurs start a business with the misguided goal of longevity or working to get as many sales as possible without taking the consideration of whether or not the business is going to actually achieve a return on the initial investment.
Each franchise often provides entrepreneurs with an expectation of the capital required in order to open and operate a store. It is important to connect with the franchiser in order to obtain information about the initial startup costs associated with starting the business, the average monthly costs associated with running the business, and the average amount of sales achieved by franchises operating in similar markets. Armed with this information, it becomes possible to take a closer look at the capital you will need to start the business and what expectation you should have in terms of monthly costs.
There are a large range of different costs associated with a business including paying for the training and education which your employees will require prior to providing the products and services your business will offer. It is important to take into consideration the amount of time it will take to equip a single location with the equipment and items required to operate the business and to get individuals with enough experience and a strong enough background to elevate your business.
Once you have a good understanding of what is required from both a time investment and a financial investment, it becomes important to understand where you’re going to receive your capital for the business. Understanding how much liquid capital you have available to invest is important as this is your first line of financing the business. This is cash you have available to you without an interest rate attached to it, allowing you to invest directly into the business with less risk involved.
It is also important to understand the opportunities availability to your for financing either from a financial institution or through the franchiser. Many franchises offer their aspiring entrepreneurs with the opportunity to receive a loan directly from them to start the business. In addition, there are also a number of SBA-backed loan programs which allow for an entrepreneur to start a franchise rather than starting up their own business concept. It is important to identify the amount of capital available through different loan programs, the interest rates associated with the loans, and the repayment program associated with these loans.
History of the Business
In addition to the financial requirements of starting and operating the business, the history of the business is a solid indicator of how well the business will do over the long-term. Businesses which enjoy a long history of operating prior to franchising are generally more equipped to handle change and growth than businesses which have a history of operating one or two businesses for a short period of time.
As a market grows and changes over a time, some businesses are less equipped to deal with the change than others. It is important to select a franchise which will handle change and growth much more effectively by determining which businesses operate within an industry where rapid change occurs and to determine whether the franchise has done well to survive through growth and industry change. Many food businesses often deal with the changing trends associated with their businesses as competitors add new menu items or new prices to their offerings. Franchises which have operated within the food services industry for a long period of time are going to be more experienced in introducing new products on their menu to compete with those in their particular niche.
Another important factor to take into consideration is the average age of a franchised business operating under that particular franchise. If a franchise has experienced a period of exponential growth, it can be a good indicator that the business is heading in the right direction. On the other hand, it can also mean a riskier investment as there is no indication of whether those newly opened businesses are going to continue operating over time. That means a large number of new businesses under the franchise label. If the franchise has a long history of operation it will significantly reduce the risk compared to a start-up launching a large number of locations.
History of the Business in Your Market
Some businesses experience great success in markets where the target audience represents a large portion of the potential customers in the area. For instance, companies selling heating systems are particularly successful in climates where the temperature drops for large periods of time whereas a heating company is not going to be as successful in locations where the temperature remains fairly consistently high.
It is important to take into careful consideration the type of market which you’re considering opening the business and the types of businesses located in your area. How do residents and guests tend to spend their money? Do they have an interest in the type of business you’re planning to start up? Are there already businesses similar to the one you’re starting, and if so, is there enough of a market to survive multiple businesses operating in the same area?
If the franchise has a history of success operating in markets similar to yours, this can be a great indicator that your business is more likely to thrive. If the existing franchises operate in markets that are much different than the one you’re interested in operating it, it is important to initially perform market research prior to making a commitment to opening the franchise. This will in turn offer you generous insight on whether there is an audience interested in the products and services you will offer and how you will need to capture their attention and interest.
At the end of the day there are a lot of factors to take into consideration when searching for a franchise to start. Our rankings can serve as a great tool for identifying reputable franchises with a solid history of opening new locations and growing their existing businesses. It is important to use our resource as a guide for your own research and to determine which of these franchises will be in your best interest. Take into consideration your life goals and expectations over the next few years and select a franchise that is most likely to be able to meet those goals and give you the lifestyle you’re searching for. Take into consideration the time investment required to both start and operate the business based on the information you receive from those offering you the franchise opportunity and those actually operating the franchises.