Franchise Basics 2019-07-29

Never Ignore These Factors before Investing In a Franchise

There’s more to a franchise opportunity than upfront costs and prior successes. Consider these factors while purchasing a franchise

By Content Writer
Never Ignore These Factors before Investing In a Franchise

Franchise Industry is continuing to flourish and is considered a successful path for aspiring entrepreneurs to venture into the business world. Given the numerous benefits that a franchise business offers like the proven business model, brand recognition, support & training etc, are adding to the popularity of taking a franchise.

However, buying a franchise does not open the door of success & profits. Even if a franchise is well recognised, it is crucial for buyers to do their diligence when exploring franchise opportunities. One should take consideration of all the factors including local & external factors which might affect the present & future of your business. Below are some of the local factors you should consider while purchasing a franchise.

Financial Aspect

While some expenses such as franchise fee & royalty etc are fixed, there are other financial aspects of a franchise which will affect your business to a great extent. A prime example of this is the cost of real estate or rent in a particular location and also the cost of labour. For instance, if you want to start a franchise in Delhi, the cost of doing business in a posh area such as Saket or Defence Colony is much higher than doing business in Rohini. Since many franchises demand to have their outlet in these high street areas only,    evaluate these factors before investing in a franchise and whether or not you can afford it. 

Demand & Competition

Before purchasing a franchise, make sure there is demand for that product in your selected location. If your prospective franchise is doing well in one region, it doesn’t mean that it will do well in your city too. The product/ service may not be well received there. Therefore, don’t jump on opportunities without thorough research.

Also, find out more about your competitors. If your selected region has many businesses offering a similar product, then you may need to reconsider your choices of investing in that particular franchise. This is because you may not be able to capitalise on the consumer base to its fullest.

Future Market Potential & Expansion

There are thousands of different kinds of franchises available in nearly every industry. Just because a brand is offering a franchise, doesn’t mean it has great market potential. Before you decide on a brand, consider your local market and demographics. Research what competition is already in the area and if anyone brand has multiple franchises.

Franchise Model

For a franchise novice, it can be gruesome to understand the nitty-gritty of a franchise business. But people often overlook the type of franchise model the business is offering, which is crucial for the success of the business. There are various types of franchise models offered by businesses, research about them beforehand and finalize the one which will work the best for you.

If the brand is doing well currently, doesn’t guarantee if it will be steady in future. Take note of the growth graph and research whether the business has scope for success in future and whether you can or cannot expand the business.

Franchise Rules & Regulations

One of the important factors which one should consider is the franchise rules & regulations in your state/city. Franchise rules vary from state to state, thus before taking up a franchise, research about the laws regarding a franchise in your city and what documents & licenses are required to establish your business.  It is important that a franchise prospect knows the local business climate and regulations before purchasing a franchise.


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