During current times, franchisors operate in a very competitive environment as they seek to attract and add qualified franchise candidates to their franchise network. As candidates look to obtain a favorable return on their franchise investment the most attractive franchise opportunities should be represented by the healthiest franchises. However, in the real world there are a number of franchise systems that don’t represent a healthy franchise system. Many of these unhealthy systems aggressively seek franchise candidates and compete for investment dollars. In order to grow their system franchisors need to offer the best opportunity and investment value to prospective franchisees. For these reasons, it’s important for franchisors to perform a competitive analysis of franchise systems that are direct and indirect competitors.
It’s a given, that businesses should do a competitive review on a regular basis and this includes franchisors. Just as franchisors expect their franchisees to be aware of their competitors and new programs or promotions, franchisors should do the same.
The types of competitors that franchisors should review include direct competitors; who represent franchises in their own business segment and indirect competitors; which represent franchises in a related segment. For example, in the Children’s franchise sector, children’s fitness and enrichment programs could be direct and indirect competitors.
Given the number of potential franchises that could be considered direct and indirect competitors, it’s best to begin with those that most closely match up to your particular franchise opportunity based upon investment, size and maturity. Once you’ve identified the franchises, set up a spread sheet and rate and compare the following items to your franchise opportunity:
Individuals looking to invest in a franchise expect to receive the best ROI from the money that they are investing. Since franchisors compete with other franchisors for the same investment dollars it’s important to be aware of their strengths and weaknesses versus other similar franchise opportunities.
60% of franchisors provide a financial performance representation (“FPR”) under Item 19 in their Franchise Disclosure Document.
As part of a franchise candidate’s due diligence process, it should be expected that certain questions will be directed to franchisor staff.
It was quickly apparent that some employees struggled working from home. They had never experienced the challenges associated with time management.
Detailed studies on emerging franchise success rates, errors in Item 20 disclosure and sector performance, Franchise Grade’s reports help you.
There have been various changes in average franchise investments during this time, some changes were more dramatic than others.