Franchise Opportunity - Questions to Ask the Franchisor

How Big is the Market? Who are the Competitors?

by Dennis Schooley

Whether it's hamburgers, pizza, telecom, coffee, Internet, muffler parts, or seniors' services, there are Franchise opportunities available to evaluate. There are great Franchise systems, good Franchise systems, and bad Franchise systems. The challenge is to ask the right questions to find the right system that will fit your goals and dreams. The key is to ask the questions -- and listen closely to the responses. Only then can you determine if the Franchise opportunity is the right fit for you. So, whether it's food services like burgers or coffee, professional services like telecom or IT, or manual services like cleaning or oil changes, ask the questions and record the answers.

How Big is the Market?

The Franchisor should have a good handle on the available market for the product or service that you will be offering as a Franchisee. Presumably the Franchisor has done extensive research on the current market size, as well as the potential market size for the future.

The Franchisor should be willing to share that information with you so you can assess the data to make sure that the opportunity is going to be of sufficient size to satisfy your own goals. You may have to sign a non-disclosure agreement first, but the information is important to you, so it must be assessed. The whole idea of Franchising is to ensure that market availability will allow for strategies to be implemented by you, which are consistent with your goals, and those penetration goals are congruent with the Franchisor's goals, then all is good.

If it's a long-standing and stable market, then there should be plenty of statistics to back up that conclusion. If it's a new and burgeoning market, there should be analysis that you can assess to give you a comfort level that you, together with the Franchisor, can go get a significant share. If it's a fad market, or limited-life market, then the strategies should reflect that, as should the agreements.

The caution is that if the Franchisor is wishy-washy about the market, or is unwilling to discuss the issue in depth with you, that should be a significant warning sign.

Who are the Competitors?

The Franchisor should have a good understanding about the competition, and how much market share they command. It doesn't matter how big a market is if it's completely saturated, unless the Franchisor has specific strategies to eat someone else's lunch.

The Franchisor should be able to talk to you about specific competitors, what their strategies have been, what they will likely be in the future, and how the Franchise system intends to penetrate that market.

The Franchisor should also be willing to discuss the future competitor that may appear on the horizon. They may not be willing to disclose their specific strategies about dealing with that eventuality -- at least not without erasing your memory after the discussion. However, a general discussion about the issue should give you some solace that they have thought about their approach, and that you feel comfortable with their preparedness.

Again, if the Franchisor is not sufficiently prepared to discuss current competition, as well as future competition, then warning bells should go off.

To receive a free copy of an E-Book titled "Franchise Opportunity -- Making the Right Decision" by Dennis Schooley, email that request to corp@schooleymitchell.com.

Dennis Schooley is the Founder of Schooley Mitchell Telecom Consultants, a Professional Services Franchise Company. He writes for publication, as well as for schooleymitchell.blogging.com and franchises.blogging.com, on the subject areas of Franchising, and Technology for the Layman.

http://www.schooleymitchell.com, 888-311-6477, dschooley@schooleymitchell.com