When developing a strategy for developing a franchise system, franchisors often follow different paths. In some case’s the path a franchisor selects will depend upon a number of factors, the type of franchise, its size, required investment and system maturity. Based upon these attributes franchisors will usually migrate to one of the following approaches:
Although there are some successful franchisors that follow numbers 1 and 2, I would submit that the most effective way to develop a successful franchise system is number 3. Recognizing how difficult it is to turn down a qualified candidate, the fact remains, that without a clear understanding of how viable a market is can lead to isolated franchisee locations, low brand recognition and a miss-allocation of franchisor and franchisee resources. In terms of site location; the best site in the wrong market will accomplish little in terms of overall system development and brand recognition.
Although a strong viable market and good site locations are both important, the fact remains that focusing on the right market is the critical step in the process.
Evaluating a market for a franchise requires answering the following questions:
These are the types of questions that should be answered before committing to a franchise development plan in a particular market. Although proper site location is a key part of the franchise development process, being in the right market is paramount.
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.