What Makes the Most Profitable Franchise in Today’s Franchise Market?

The Franchise market in the U.S. alone boasts over 3,500 franchises and in many states, the true number of franchise opportunities is unknown.  For a buyer working through the decision-making process as to what the best franchise investment might be, this can be a daunting task.

It starts with determining your own skill set and abilities, what have you done in the past that could be leveraged in a new franchise business, what skill sets are you strong in and could be a benefit in the new business, and what would you like to get out of a franchised business investment? 

In most cases, it makes sense to ask someone else to provide an assessment of your abilities, it can be difficult in most cases, to be honest, and without bias.  There are great tools out there which can provide a personality test or professional skills review for you.

Once you have your personal assessment together, you can begin to research which business models fit your profile best.  Some franchise businesses require salesmanship and the ability to be comfortable prospecting for customers while others need an owner operator who has been in retail and managed staff effectively in the past. 

If your evaluation is accurate, you will be able to narrow down your selections of franchise industries and be able to determine which categories might make the most sense for you.  When looking for the most profitable franchise, it is important to recognize that the franchise itself does not inherently produce profitability, regardless of how great of a business model it might be.

It is the combination of a good market, good business model and a good operator that makes franchise systems profitable at the unit level.

Now that we have narrowed down our industries, it’s time to review the market segment.  There are several ways to look at “market”, one is the area where you would be operating the business and what customers you would be providing the goods or services to.  You should do extensive research on your area and determine whether that market has the right demographics, income levels and population density to support the franchise businesses you are considering.

Use online data to start your research, sites like www.Score.org are a good start, then get specific with direct research by interviewing business owners and professionals who would have relevant experience related to the business in that market.  The second “market” is the overall industry you are considering entering with the franchised business, food service, cleaning or accounting would be considered in this category. 

You now need to research the potential growth for your industry, competition, and market trends….how will technology affect this industry?  All of these elements could make your franchise more or less profitable and if you don’t do the planning prior to your franchise purchase, you could unknowingly be making the wrong move.

Now it’s time to research the franchises themselves.  You should have a list of at least three concepts that interest you and warrant additional research.  Start by researching any available data on the franchise brand, what has worked, what hasn’t, why have there been failures in the market, and why have some franchises succeeded. 

Review the FDD in detail, and read all 23 Items and the exhibits to the document including the Franchise Agreement and Financial Statements.  Ask the franchisor about every question that comes to mind and take good notes. 

Towards the end of the FDD are other franchisees who are either in the system or have left the system, take the time to call and interview them about their experience with the franchise brand. 

Compile your data and compare the brands to one another, then do the gut check as to which franchisor you feel the most comfortable working with and who you could envision yourself “married” to.

At that point, you have most likely discovered the Most Profitable Franchise.  I’m sorry it isn’t a one-word answer, but if you take the time and invest in the process of researching the right franchise, you certainly have the best opportunity to realize a good return on your franchise investment.

For more information on how to buy a franchise, Contact Us.

 Entrepreneurship With a Safety Net: Owning a Franchise

Owning a franchise can be a great way to start a business with less risk or to invest in businesses with proven scalability.  Owning a franchise requires an understanding of what a franchise offers and the benefits vs the negative components that come with franchise ownership versus entrepreneurship.

First, a large percentage of franchisees are made up of new business owners, people who are starting a business for the first time.  This is one of the driving forces behind franchising is that the franchisee is provided with the tools, systems, support and training to increase their odds of success as they start a new business. 

What I have found in my time in the franchise market is that many franchisees do not understand that this still means a lot of hard work, dedication, hours and time to make the franchise business work.  The franchisor's role is not to run the business for the franchisee, but to support and provide guidance.  My advice to a franchisee is to look to your franchisor as you would a business coach or advisor, not an employee.

Second, franchising is not a sure bet, there is still considerable risk in starting a new business.  Although owning a franchise drastically increases your success rate, you still can fail as a business owner.  Knowing this going into the relationship should help you plan, research and get to know the market prior to making a franchise investment.

There is an extremely large percentage of franchise owners who own multiple units of one or more brands and focus on finding franchise systems which have the systems and market opportunity to scale.  These franchisees are looking for unit economics, system validation and management team resumes. 

Multi-unit and master franchisees invest in franchise brands because they see long-term value in where the business is headed and value in the franchise structure they pay for.

Regardless of what is driving you to consider owning a franchise, you should understand the inherent risks associated with starting a business first, then get to know the franchises you might consider.  Review the franchisor's track record, speak with franchisees, take time to understand the FDD and go into the business relationship with appropriate expectations.

For more information on how to franchise your business, contact:
Christopher Conner
Cell:  770-519-3910
Fax:  800-625-8530