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Things to Consider When Picking Between Franchises
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Things to Consider When Picking Between Franchises to Acquire

By: Viraj Shah

If you’re ready to start your business, consider opening a franchise. There are many different options, each with its road map to success. While you’re going through your options to find the perfect one for you, there are three main things that you want to consider.

Investment Cost

One of the biggest factors you want to consider is the investment cost of the franchise. There are tons of different franchises out there, all with their own unique investment cost. You want to choose a business that fits within your desired budget, which will be different for every person.

Keep in mind that franchises will recommend who to use to get the financing you need to open your new franchise business. Franchisors commonly work with particular lenders who understand their business model and are more likely to finance their franchisees than the traditional banking route.

It’s a good idea to set your budget ahead so you can narrow your search down to franchises that fit your budget. Looking at franchises before deciding on your budget can lead to overextending your finances, which is not a good start for any business.

Competition

While competition is healthy to ensure that everyone’s operating, it can also be extremely detrimental when it’s too competitive for a new business to enter the market. When researching potential franchise ideas, be sure to think about other businesses in that competitive field of view that are located within your area.

For example, let’s say you’re considering getting into a nail salon franchise. If there are a couple of other nail salons in your area, then it’s an indication there’s an active marketplace for that service. However, if there are 10 or more nail salons in your local area, there may be a very high amount of competition. You want to be able to find a franchise that has signs of a great market in your area, but that is relatively competitive to enter.

Available Territory

Pretty much all franchises have some sort of territory restriction for each franchise location. For some businesses, this may mean only having one franchise location per zip code. For other franchises, they may allow multiple locations for bigger towns and cities.

When you’re looking at potential franchises, you’ll want to take a look at what their territory requirements are. You want to avoid getting excited about opening a certain franchise only to discover the territory you wish to have already been taken. Unless you’re willing to uproot your life and move to another town that is available for a new franchise business, you’ll want to be particular about checking for availability in your area before getting too committed.

When you make the decision that you’re going to open a franchise as your first business, the idea of growing your business and expanding to multiple locations can be overwhelming. By taking the three factors above into consideration when deciding on the perfect franchise, you’ll help ensure your optimal success.

 

Published By: Aize Perez

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