To assess if a franchise represents a profitable business opportunity, you'll need to consider:
- what the business is and how it operates
- the location of the franchise
- the success of the franchise concept - the number of franchises in the UK, the length of time in business and how financially successful they are
- the amount and strength of competition from other businesses in the same market sector - at both a local and national level
- any market research that has analysed the public perception of the franchisor's (the business offering the franchise) brand
- levels of initial and ongoing costs of a franchise
- how much training and support you'll get in setting up and running the business
- conditions and restrictions in the franchise agreement, including how long it will run and whether you'll have the option to renew
The franchisor will probably give you an information pack but you shouldn't just rely on this. Ask questions and look for evidence of their claims.
Visit other franchisees
One of the most helpful things you can do before deciding on a franchise is to visit other franchisees and talk to them. Ask the franchisor for a full list of past and present franchisees, not just the two most successful ones. It is important to visit new and established franchises - of differing levels of success - in as many different locations as possible. This should give you a good idea of the challenges you yourself will face should you decide to go ahead with a specific franchise.
How a business plan can help assess a franchise
Just as you would for any other business, you need to draw up a business plan when buying a franchise. This will help you assess the prospects for the business and identify potential weaknesses. A business plan is also essential for raising finance. You should be able to get assistance with your plan from the franchisor - and banks with specialist franchise units can check how realistic your projections are.