When evaluating a franchise opportunity, you can learn a great
deal as to whether the opportunity is excellent, good, or bad
simply by asking the franchisor some targeted questions. Whether
you are looking into running a manual service, food service, or
professional service franchise, the answers that your franchisor
provides for the following questions will help in determining if
the business is a good fit for you.
Are You Informed About Your Competitors?
The more information that a franchisor knows about the
competition, the more effective the franchise can be in
commanding its share of the market. When you question your
franchisor about competitors within the same industry, you should
focus on several key topics. A savvy franchisor will have a firm
understanding of who the competitors are, how much of a
stronghold each competitor has on the market, which strategies
the competitors have used and will use to maintain their market
share and which strategies your franchise will need to use in
order to improve your own consumer base and profit margin.
You should also feel free to ask your franchisor about
strategies for handling any future competitors who may start up a
rival franchise. The explanation of potential strategies does not
need to be overly specific, however, your franchisor should be
comfortable with discussing future competition in general terms.
If your franchisor is willing and able to provide insight on
current and eventual competitor strategies, then this should
provide you with a sense of trust, comfort and confidence in the
direction of your franchise. If your franchisor is not
approachable or knowledgeable in these issues, then you should
take this as a sign to pursue other franchise opportunities.
Is The Market Size Stable?
Because market size is a major factor in the success of a
franchise, you should make it a priority to ask your franchisor
for detailed information on both the existing stability and the
future growth potential of your product's or service's market. A
capable and qualified franchisor will not only have gathered
research data on the current size of the market, but will also be
able to confidently discuss and analyze the data with you. Keep
in mind that a non-disclosure agreement may be necessary for you
to sign in advance. Before taking on your franchise, you will
need to know that the market is sizable and stable enough for you
to successfully implement your strategies for targeting
consumers. The goal of your franchise is to penetrate the
existing market in a manner that allows for future business
Upon receiving statistics on the market size from your
franchisor, you should then be able to discuss your approach in
regard to opening your franchise. Your franchisor should be
forthright in informing you as to whether the market is new,
limited in size or limited in growth capability so that you can
develop the appropriate business strategies needed for success.
By the same token, you and your franchisor will also need to
brainstorm about entering a stable and long-established market.
Be suspicious of any franchisor who does not place importance on
market size or stability when discussing the franchise