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The Truth About Evaluating Franchise Opportunities

The Truth About Evaluating Franchise Opportunities

The Truth About Evaluating Franchise Opportunities

When an entrepreneur buys into a brand, that franchisee purchases the right to use the business model, logo, name, marketing and reach of the umbrella company. With the fates of both the franchisor and franchisee connected, both parties have an unbreakable incentive to work symbiotically and toward the success of the other. But franchising means owning, and that means buying. Before you invest in a franchise, it is critical to purchase a profitable, reputable brand that you can grow with for years to come.

Avoid the Bandwagon

“Herd” industries are prominent and popular, which leads many potential franchise owners to jump in and attempt to ride the wave without looking at the calculations behind the concept. The more popular the industry, the stiffer the competition. If it’s a fad, a litany of failed franchises will be left behind when the trend ebbs.

The article “Think Unique: Stay Away from the Herd Mentality When Choosing your Franchise,” uses the junk-removal industry as an example. The industry essentially didn’t exist a decade ago, and now there are more copycat services than there is junk to haul away.

Be Aware of Industry Trends

The article points out that we are living in difficult times – if you’re a carpet cleaner, that is. As homeowners and apartment managers opt for inexpensive, low-maintenance laminate floors (which mimic the look of hardwood and tile), carpet cleaning franchises find themselves competing in a crowded market for a dwindling customer base. Don’t research the trending data of the franchise you’re considering before you’ve studied the data surrounding the trajectory of the industry in which it operates.

Picking a Franchise

The Wall Street Journal suggests choosing a franchise that has a well-known brand name, and a record of strong performance. Just as a potential owner should avoid industries that are too crowded, they should also steer clear of sparsely populated markets. Most importantly, operators should buy into a chain that they like and an industry that stirs their passions. Operating a franchise store is a lot of work – it serves the buyer to spend those hours doing something they enjoy and consider important.

See Also
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Franchise owners must look beyond what’s popular and instead look at what’s popular.

There is a fine line between industries that are too crowded and industries that aren’t well-populated. Avoid fads, trends and bandwagon industries. Don’t dive into “stable” industries with the assumption that growth will continue uncontested. Instead, conduct thorough research on the trajectory not just of the brand, but of the entire industry. Most importantly, love the trade, love the product, love the business and love the brand.

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