Finding a top franchise opportunity can offer a quicker and more profitable way to go into business than starting a new company from scratch. It cuts out a lot of work associated with starting a business, such as market research and product development. The company selling franchises is called the franchisor, while the person or company buying the franchise is known as the franchisee. A profitable franchise opportunity will have all the resources a new business needs, for the right price.
These resources include training, name recognition, advertising, financing, and strength in numbers when it comes to negotiating with vendors. A top franchise opportunity will offer these benefits in exchange for reasonable royalty and franchise fees. Larger, more established brands can command high royalties and fees.
A successful track record and commitment to advertising can help ensure that newer franchisees will be successful. Name recognition is a key factor when figuring out if a franchise is a top opportunity. Larger, established franchises can have the resources to run regional or national advertising campaigns that build name recognition.
Newer franchises may have cheaper fees, but could involve more risk if the company is relatively unknown. At the same time, there may be less competition in a given market when a franchise is new. This can help make the franchise more profitable.
Another sign a business is a top franchise opportunity is the degree of training the franchisor will give to the entrepreneur. A leading company will offer a more detailed and rigorous training program. It is often imperative for both the franchisor and franchisee, because both have invested money into the business. Quality, proven training programs will help ensure that the new franchise is run efficiently and help ensure profits.
Strength in numbers is also an important quality in a top franchise opportunity. When franchisees buy from the same vendors, they have more bargaining power to negotiate better prices. The money saved on supplies and expenses increases profitability, which can make a franchise a top franchise opportunity.
Attending a franchise trade show is one way to help evaluate different business opportunities. With many franchisors in one place, an entrepreneur can evaluate several options quickly. The prospective franchisee should determine the total investment needed, available financing options, and expectations of the franchisor. This information is included in the Franchise Disclosure Document (FDD) that all franchisors must provide to prospective franchisees.
In addition to reviewing the FDD, prospective franchisees should learn as much as possible about the franchisor before investing. Prospective buyers can research the franchise to determine if the franchisor has any pending legal litigation or public relations problems. A franchise may not be a top contender if it has a poor reputation that can affect sales at a new location.