Evaluating Franchise Opportunities
Franchising statistics show that the success rate for franchise-owned businesses is very high, but not all franchises are created equal. So, how do you evaluate franchise opportunities? What criteria should be used to compare franchise opportunities? How do you know if a particular franchise is right for you? This article has all the answers to your franchising questions.
The process of narrowing down a list of possible franchise opportunities to the one that is right for you can be a harrowing experience because so much is riding on your decision.
The right franchise can offer you years of enjoyment and profitability. On the other hand, the wrong franchise can quickly become a never-ending nightmare for you and your family. That's why it's important to know how to evaluate franchise opportunities when they arise.
Ultimately, only you can determine the questions you need to ask prospective franchisors. However, there are some questions that simply cannot be ignored. Those questions include the following:
What is included in the franchise fee?
It is absolutely critical to have a thorough understanding about what is - and isn't - included in the fees you will pay to the franchisor. This includes information about training programs, site development, advertising, and ongoing operational assistance. You should also understand whether there will be additional royalties or fees moving forward and the services you can expect from the franchisor along the way.
How much profit can you expect to earn from the franchise?
Prospective franchisors should be expected to provide you with a preliminary or pro forma estimate of net earnings. But more than that, they should also be able to provide you with average net earning data from their other franchisees. If your pro forma figures are significantly lower than the average franchisee, then you need to understand the reason why.
What are the territorial restrictions? How many other franchisees are in your vicinity?
Territory is a major concern in franchising. Chances are your franchisor will limit the number of franchisees in a given geographical vicinity. Ask the franchisor to provide you with a franchise density map and if exclusivity is a concern, make sure to receive written guarantees that you will be given exclusive rights in your territory.
Are there any financing options?
Many franchisors provide financing for their franchisees. Ask for details about your franchisor's financing program and compare it with other lenders in your area. The franchisor's financing terms may be better or worse than other lenders. It's up to you to find out.
How will you receive inventory and supplies?
In many cases, franchisors supply franchisees with the inventory and products they need to do business. It's important to inquire about how you can expect to receive those supplies as well as how much they will cost. Order lead time and a current price list are a couple of important issues you'll need to address.
What is the franchisor's current financial and legal status?
When you buy a franchise you are entering into a long-term partnership with a franchisor. It is incumbent upon you to determine the long-term viability of that relationship by researching the franchisor's current condition and future potential, including its legal and financial status. To do that, ask if the franchisor has any lawsuits pending against it and review the company's financials.
Want to Learn about Franchise Opportunities?
Browse tons of franchise opportunities in the Gaebler Ventures franchise directory:
Gaebler Ventures Franchise Directory Categories - Alphabetical Listings
- # - How to Find a Good Franchising Opportunity
- A - Franchises for Sale
- B - Directory of Franchises
- C - How to Find Franchise Business Opportunities
- D - Franchising Information
- E - Finding a Franchise
- F - Franchise Directory
- G - How to Buy a Franchise
- H - Owning a Franchise
- I - How to Own a Franchise
- J - How to Choose a Franchise
- K - What's the Best Franchise for You?
- L - Franchise Businesses
- M - Learn About Franchises
- N - Franchise Companies
- O - Want to Start a Franchise Business?
- P - Franchise Info at Your Fingertips
- Q - How Do I Buy a Franchise?
- R - How Much Do Franchises Cost?
- S - Start a New Franchise Business
- T - Franchising Process
- U - Franchise Lists
- V - Franchising Lists
- W - Franchise for Sale
- X - Purchasing a Franchise
- Y - Need to Find Franchising Info?
- Z - Learn about Franchising
Gaebler Ventures Franchise Directory Categories - By Franchise Type
- Accounting Franchises
- Apparel Franchises
- Asian Restaurant Franchises
- ATM Franchises
- Auto Parts and Tools Franchises
- Auto Rental Franchises
- Auto Repair Franchises
- Auto Sales Franchises
- Automotive Services Franchises
- B2B Franchises
- Baby Franchises
- Bagel Franchises
- Bakery Franchises
- Bath Remodeling Franchises
- Blind Repair and Sales Franchises
- Bookstore Franchises
- Business Services Franchises
- Candy and Chocolate Franchises
- Car Wash Franchises
- Carpet Care Franchises
- Carpet Retail Franchises
- Cartridge Recycling Franchises
- Cell Phone Franchises
- Child Care Franchises
- Child Education and Tutoring Franchises
- Child Entertainment Franchises
- Child Photos and Portraits Franchises
- Child Safety Franchises
- Children Arts Programs Franchises
- Children's Fitness Franchises
- Children's Franchises
- Cleaning and Maintenance Franchises
- Closet Design and Construction Franchises
- Coffee Shop Franchises
- Construction Franchises
- Consulting Franchises
- Convenience Store Franchises
- Dating Service Franchises
- Deli Restaurant Franchises
- Dollar Store Franchises
- Donut Shop Franchises
- Dry Cleaning & Laundry Franchises
- eBay Franchises
- Embroidery Franchises
- Employment and Staffing Franchises
- Environmental Testing Franchises
- Family Restaurant Franchises
- Fast Food Franchises
- Financial Services Franchises
- Fitness Franchises
- Flooring Franchises
- Florist Franchises
- Food and Drink Franchises
- Framing Store Franchises
- Franchises that Serve Liquor
- Frozen Yogurt Franchises
- Gift Items Franchises
- Golf Franchises
- Hair Styling Franchises
- Handyman Services Franchises
- Hardware Store Franchises
- Health and Beauty Franchises
- Health and Diet Franchises
- Health Franchises
- Healthcare Franchises
- Healthcare Services Franchises
- Healthy Alternative Foods Franchises
- Home Décor Franchises
- Home Furnishings Franchises
- Home Inspection Franchises
- Home Repair Franchises
- Home Services Franchises
- Hotel and Motel Franchises
- Ice Cream Franchises
- Insurance Franchises
- Interior Environment Franchises
- IT Franchises
- IT Training Franchises
- Juice Bar Franchises / Smoothie Franchises
- Kid Friendly Franchises
- Kitchen Design Franchises
- Landscaping Franchises
- Leisure and Entertainment Franchises
- Mail and Shipping Services Franchises
- Marketing, Sales and Advertising Franchises
- Meal Preparation Franchises
- Mexican Restaurant Franchises
- Miscellaneous Franchises
- Modeling Franchises
- Moving Franchises
- Party Supply Franchises
- Payday Loan Franchises
- Payroll Service Franchises
- Personal Services Franchises
- Pest Control Franchises
- Pet Franchises
- Pizza Franchises
- Print and Sign Franchises
- Real Estate Franchises
- Rental Franchises
- Restaurant Franchises
- Restaurant Services Franchises
- Retail Franchises
- Seafood Restaurant Franchises
- Security Franchises
- Senior Care Franchises
- Soccer Franchises
- Specialty Foods Franchises
- Sports Franchises
- Sports Restaurant Franchises
- Tanning Franchises
- Tax Preparation Franchises
- Telecommunications Franchises
- Textile Repair Franchises
- Training and Education Franchises
- Travel and Leisure Franchises
- Vending Franchises
- Video and DVD Rental Franchises
- Video and Photography Franchises
- Wedding Franchises
- Wine Franchises
Our Directory of Franchise Opportunities now includes over 1,400 franchise opportunities. If we're missing a franchise, please let us know.
Share this article
Additional Resources for Entrepreneurs