What if your next business decision could change your life?
That’s what happens to many people who invest in a franchise, it is life-changing. Of course, how this investment changes their lives depends greatly on the franchise. Some franchises help investors become respected business leaders within their communities. Other franchises end up being a major waste of both time and money.
How, then, can you know if you’re investing in the right franchise or not? Keep reading to discover 8 things to look for in a franchise company before you take out your wallet!
1. Solid Sales Record in Franchise Company
Part of what makes investing in a franchise so great is that you don’t have to start a business from scratch. Instead, you can step in and take advantage of a proven sales model.
Is the model really proven, though? It’s important to investigate whether the franchise you want to invest in has a solid sales record or not. A reputable company should be able to produce records demonstrating strong and consistent sales each year.
Of course, you shouldn’t simply focus on past sales. You should also focus on market opportunities for the future.
2. Are There Market Opportunities For This Franchise?
Before you invest in a franchise, you need to know more than whether it has had strong sales in the last five years. You also need to know whether it is going to have strong sales for the next five years or more.
To discover this, you need to conduct your own research into the market for this product. Is the franchise selling products and services that are currently in demand? Are there any major changes in technology, economics, or other fields that may soon disrupt this market?
It’s obviously impossible to fully forecast the future. Doing a little homework on the market opportunities of a franchise can go a long way toward letting you know if the market will continue to be viable and help your franchise generate passive income.
3. Status of the Competition around the Franchise Model
The market stability of a franchise opportunity depends on more than the status of its sales. It also depends on the status of the competition!
In your area, are there many competitors to the franchise? If the answer is “no,” then investing in the franchise is a reasonably safe bet.
It’s not the end of the world if there is a bit of competition. You’ll also want to research what the competition has been doing lately and how this is likely to influence the success of the franchise in the next few years.
4. Is There Adequate Franchise Support?
For many franchise investors, this is their first time trying to run a business. Whether it’s your first time or you have some experience, it’s important to understand what level of support you will have from the franchise.
Does the franchise offer numerous points of contact? Can you get support after hours? Do the management and staff you have spoken to so far seem generally helpful and friendly?
If the answer to all of these questions is “yes,” that means the franchise is offering solid support to investors. This means you’ll have someone you can turn to in case anything unexpected suddenly happens.
5. Does the Franchise Model Encourage Repeat Business?
No matter the franchise, your ultimate goal is to boost your bottom line every year. One of the best ways to do that is to look into whether the franchise generally gets a lot of repeat business.
Repeat customers are very important because they form the core of any successful business. It does no good to bring in many new customers via marketing if you are constantly losing the customers you had before.
This is why investing in things like insurance franchises is usually a safe bet. Everyone needs insurance and most people prefer to stick with the same company, so you can count on plenty of repeat business.
6. Is There a Value Proposition With the Franchise Choice?
While it would be helpful to have no competition at all, every business eventually gets a rival or two. This is why it’s important to invest in a franchise with a good value proposition.
Your company’s value proposition is what helps set it apart from the competition. To best understand this, think about your favorite restaurant. You have plenty of places to eat in your town, so what keeps you coming back to this one?
Things like top-notch customer service and unique products can help any business stand out. Before investing, make sure your franchise will stand out within the local community.
7. An Understandable Franchise Model
Remember when we said that many franchise owners are running a business for the first time? If that sounds like you, then it’s very important that the company you invest with has an understandable franchise model.
Basically, the company should be able to walk you through how the franchise works, what your role will be, what their role will be, and so on. By the time you open the doors to your business, you should feel confident that it will be a success because you fully understood the franchise model that was presented to you.
8. A Passion That Mirrors Your Own
It’s an open secret that entrepreneurs are passionate people. Often, running a business is about more than just making a profit. It’s also about improving your community and leaving your mark on the world.
That’s why it’s important to find a franchise company whose passion mirrors your own. When you speak to management and staff, do they seem excited to help you get started? Do they seem motivated to make a difference every day?
Such passion becomes more important when you consider that you’ll likely be working with this franchise company for many years. When you have matching passions, it makes your business relationship that much smoother!
Invest in a Great Franchise Today!
Now you know what to look for in a franchise company. But do you know where to find a great franchise investment today?
Here at Confie, we are always looking for entrepreneurs who are willing to join our team or start their own exciting franchise. If you’re ready to see what Confie can do, all you have to do is contact us today or call us at 714-252-2500.