Factors By Which You Should Judge A Franchise Opportunity

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Factors By Which You Should Judge A Franchise
Opportunity
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Trying to figure out if a franchise opportunity
is a grime or gold? In this article, I would
explain which what factors will help you judge
a franchise. In particular, I will show you which
aspects to consider

• Growth  Is a franchise growing or shrinking?
• Average Sales per Unit and its history.
• Success Rates of units in general.
• Continual Support provided by the franchisor.

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Growth

• According to a recent KPMG and Franchise
  Association of India (FAI) report, the India
  franchise economy has a potential to grow to 51
  billion in 2017 from the present 13.4 billion.
  The franchise industry is expected to contribute
  almost 4 percent of Indias GDP in 2017.
  Increasing consumption, willingness to spend,
  growing preference for branded products, global
  exposure and use of international brands is
  driving the demand side of franchising. This
  growth has increased the set of
  opportunity-driven competent entrepreneurs and
  has grown the awareness of franchising as a
  business opportunity and its relatively low-risk
  profile.
• One of the easiest ways to measure how well a
  franchise is doing is to look at their growth
  How many units have they added or lost in recent
  years?
• From my experience, the best place to find this
  information is Entrepreneur.com. There you can
  search for any franchise opportunity provider and
  view a profile that details their growth over the
  last 5 years, as well as franchise agreement
  terms and other facts.

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Average Sales

• is this going to be a profitable franchise? What
  kind of profits can I expect?
• This is probably one of the first questions
  youll be asking when you start your research
  after a franchise opportunity comes before you,
  although, unfortunately, the answer can be tough
  to find. Franchisors/company are not required to
  tell you the average sales per unit, and many
  choose not to since inaccurate earnings claims
  can be grounds for litigation. If they do release
  this data, however, it will be in Franchise
  Disclosure Document (FDD).
• Lets say the information is not available, or
  youre just not at the stage of flipping through
  FDDs. Where can you go to find sales information?
  A simple Google search can do wonders. In
  particular, blogs by Indian franchise association
  will give out important facts and figures.
• If youre looking for a franchise opportunity in
  the food industry, QSR Magazine has financial
  profiles of the top 50 restaurant chains. You can
  break it down by category (Burger, Sandwich,
  Chicken, etc.) and compare their average sales
  per unit, number of units, system-wide sales and
  other variables (pictured above). You can also
  look at previous years to figure out if stores
  have been improving or doing worse. This
  analyzation is an important aspect while
  consideration of franchise opportunity/opportuniti
  es.

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Rate of Success

• What percentage of new franchisees succeeds?
• Again, this is not something franchisors are
  required to disclose, but its certainly good to
  know before you get too far into a relationship.
  According to statistics from the Franchising
  Association of India, franchises currently
  account for only two percent of retail revenues
  in India compared to almost 50 percent in the US.
  However, that two percent is growing at a fast
  pace, and the implications point to astounding
  market potential. The success rate for individual
  franchise business owners in the US is 92
  percent, and since franchise businesses are based
  on proven systems, the success rate for Indian
  franchises should be comparable.

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Continual Support

• Once you go ahead with the franchise
  opportunity in front of you get associated with
  the company, it is necessary to see whats the
  level of support you will receive from the
  franchisor? In other words, how much training and
  ongoing support do you get for things like
  marketing, client acquisition, advertising,
  recruiting and litigation? Unlike the other
  questions, this one is not all about the numbers.
  Nonetheless, it cant have much of a huge impact
  on the profitability of your business, especially
  as youre first starting out.
• Fortunately, this is all detailed in the
  Franchise Disclosure Document lists franchisor
  obligations, from training to advertising and
  more. This is key because youre only entitled to
  support thats actually outlined in the
  agreement. Unless present in the document, any
  promises made verbally during meetings are
  unofficial. Also, you need to look out for
  qualifying words like at our discretion or as
  required. This means its up to the discretion
  of the franchisor when to give you help, and
  their definition may be a lot different from
  yours.

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Pivot Point Is This a Profitable Franchise
Opportunity?

• Taken all together, you can get a pretty good
  idea of whether or not a franchise opportunity is
  good or a bust. Once youve identified a
  great franchise opportunity, its time to
  consider financing options, human resource
  management location selection. Remember your
  analysis and understanding of the factors is
  critical.

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• Source http//multilinkworldfranchising.blogspot
  .com/2018/01/Judge-A-Franchise-Opportunity.html

Website www.multilinkworld.com
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