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Know Your Market. If You Don’t Know, Ask!
Know Your Market. If you don’t know, ask! After you’ve done your franchise opportunity research, and before you sign and move forward, consider this important question: Does the franchise business you are considering offer a product or service for which there is a viable, long-term market in your area? Viable market can mean many things to many people. I’m often asked, “Has the Franchisor done the market research in my area to see if this is going to work?” The truth is, most franchisors have barely done it for their own market let alone your neighborhood. Some good old-fashioned leg work (online research is ok too) – BY YOU – is in order before you move forward with a concept if you don’t believe in your heart of hearts that there is a market for the product or service in your area. Some great places to start are your local library, chamber of commerce and state economic development office. Also, be sure to talk with other franchisees and people in similar or related businesses (i.e., suppliers to or end uses of your product/service). I also hear “My area is different from Corporate’s.” Depending on the franchise for sale, that may be true. Look at the competition. How many real vs. perceived competitors are there? No competitors in your area? That is either a good sign or a very bad sign depending on how you look at it. Let me elaborate… Two shoe salesmen go to Tahiti. They both get off the boat and immediately notice something – NO ONE IS WEARING ANY SHOES! The first one calls back to his office dejectedly saying, “Cancel the orders, I’m coming home tomorrow, NO ONE HERE IS WEARING ANY SHOES!” The other salesman calls to his office excitedly, “Double the orders; tell my family I’ll be here for a month. NO ONE HERE IS WEARING ANY SHOES!” THAT, my friend, is who the franchisor wants. Consider also whether the franchise offers a B2B (business to business) product or service. Do you feel comfortable calling on other businesses or would you rather just deal with the general public as customers? If it’s a retail operation, is there opportunity to expand the reach of the products or services beyond the walls of the fixed location? For example, a fast casual restaurant may offer catering services. Some other questions you should ask include: • What is the differentiator that the franchise offers? Pricing? Service Hours? Access to proprietary products or methodologies? • What is the barrier to entry for both franchised and non-franchised competitors? • Is this something you are ready to commit to FOR THE NEXT 10 YEARS or more? Often a viable market is based more on attitude and desire than demographics – unless the franchise for sale offers roof repairs or landscaping services and you live in downtown Manhattan. Like I said, the more you know about your market before you sign a Franchise Agreement, the better prepared you will be for franchise success. Dan Durney, CFE, PowerHouse Franchising To read more about Dan’s brands, see Front Office Staff Regional Development, Global Prevention Services – No Mold, and LabXpress Area Development at www.FranchiseSforSale.com. Article Directory: http://www.articledashboard.com Gail Parker is the President of FranchiseSforSale.com, a website providing free information regarding franchising. The website draws from Gail's professional background in franchising; including 16 years of experience in franchising and small business operations. Using her knowledge and experience Gail hopes to help inform and aid entrepreneurs in their search for business ownership and success. |
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