On average, being a franchise owner in the United States allows you to earn anywhere from $50,000 to $200,000 annually. Aside from the potential revenue, people globally franchise because it requires lesser costs, warrants faster expansion, and is easier to manage.
But with the number of franchises available today, do you know which to choose? Are you aware of the factors to consider when choosing? Your answers to these questions are vital to ensure that your resources, such as time, money, and energy, will not go down the drain.
Take note of the following criteria when selecting a franchise.
Costs and Liabilities
Money is one of the most critical resources you’ll need when you decide to franchise, which is why you should first consider the costs involved. Do your homework by researching the franchise fees of a specific business and what it covers.
For example, if you’re planning to invest in an art franchise, check if the fees already include equipment, training, and licensing rights. If not, calculate how much these would cost. You should also assess how long you can earn your upfront costs when you invest in a franchise.
Proven Track Record
Regardless of how affordable, avoid franchising a business without a proven track record. This will cost you more in the long run because you’ll have to spend more resources on marketing. In worse cases, this kind of franchise might not even deliver the revenues you’re expecting.
Only franchise a business with a proven track record in the industry. If you have your eyes set on an art franchise, research if the group painting classes and other services offered by the business actually make revenue. If it’s a restaurant, check if the business has a positive brand in the eyes of the public.
The track record of the franchise you’ll choose will serve as the image of your business. Choose a franchise that gained negative reviews from customers, and you’ll surely have a hard time running and making money from the business.
Market Demand
Is there a growing demand for the franchise you want to invest in? Or is its market or industry starting to fade? The demand is an important consideration when choosing a franchise. You should only invest in a franchise that offers in-demand products and services.
If you’re planning to buy an overseas franchise license, research if the business is saleable in your country. Keep in mind that the demand for a specific business varies per area — the products and services in demand in China might not gain the same response from customers when sold in your area.
Market Competition
The business industry is fast-paced, so expect to have several competitors when you become a franchisee. In general, competition is great for businesses because it forces entrepreneurs to be resourceful and highlight the value of their customers in the business.
However, as you choose a franchise, you need to pay attention to the gravity of the competition in your niche or industry. Investing in a franchise with thousands of rival companies operating in your area will make it difficult for you to establish a brand. This is especially true if the franchise you’ll choose is small or new.
As much as possible, pick a franchise from a well-known brand or one that offers unique products and services. Sure, this might require you to spend more, but the investment is worth it as you’ll have better chances of standing out from the competition.
Training and Soft Skill Development
Diving into the business industry without the necessary skills is a recipe for disaster. You need to learn a lot of things before you can become a successful franchisee.
One of the most important criteria in selecting a franchise is training. If you don’t have any background in business or entrepreneurial experience, make sure to choose a franchise that includes training. Some franchisors even offer ongoing support once your franchise starts its operations.
The training provided by the franchisors is important because it helps you learn the ropes of the business. Training also helps you get through any roadblocks along the way and ensure that your franchise eventually succeeds.
Final Remarks
The franchise you’ll choose can affect the quality of your life, so you should never be hasty when picking. For one, your decision can either build your wealth or cause lifelong debts.
If you don’t know how to pick the best franchise, use the information in this article as your guide. When you know the criteria to consider, you won’t have any problems narrowing down your search and choosing the best franchise that suits your goals.
