The Best Way for Buying a Franchise

Is Buying a Franchise a recipe for success?

It can be!

Before you rush off to get your check book you have a bit of research to do, but you'll find most of the hard work done on these pages.

case with money

Buying into a franchise has been a life-changing experience for me, so make full use of all the information supplied here.

The Franchise Territory

When buying a franchise, the nature of the business will largely determine the extent of the territory required to ensure its viability.

For example: if the small business franchise relies on the community to supply its stock such as a craft market, having another identical business in close proximity will seriously affect the business. You can not protect yourself against competition from another source, but you should not have to compete against "your own".

Alternatively, buying a franchise such as an office cleaning franchise within a very dense business area may very well thrive even with another franchisee close by.

The territory for which the franchise is granted is one of the points in the franchise agreement which may be negotiated. The franchiser may feel that he can best build the brand by an increased footprint in the market whilst the franchisee will want exclusivity for his own business (within the brand) in as large an area as possible.

Before Buying a Franchise You Must Know Your Customers!

If you want to franchise your business you will know the demographic requirements of your business very well and should take care to allot territories to ensure viable businesses. (Unfortunately some franchisers may have obtained a license for an area from a principal - perhaps even based in another country - and may only care about the number of franchises they can sell.)

The franchiser should have identified his typical customer (not to the exclusion of others obviously), for example: male between 25 and 45 years old, small independent business, housewives etc. Coupled with the demographics of the area, that should determine the territory granted to the franchisee.

What Makes a Franchise Business Territory Viable?

The territory granted when buying a franchise is typically described as a mile or kilometer radius, once a suitable site for the business has been secured.

island territory

I do not agree with the radius principle entirely!

A perfect site might be in a shopping center which is situated say next to a lake, which effectively only gives half a pie.

The better solution would be for the franchiser and franchisee to look at a detailed map, compensate for "lost space" and use major roads to demarcate the area. (This clearly marked / shaded map will then be attached to the franchise agreement to specify the territory).

Before buying a franchise the franchisee should make it his business to investigate planned development within and in close proximity to the proposed territory (a service which might be included in franchise consulting) and the franchiser should supply his short to medium strategic growth plan in number of franchises.

The Ideal Franchise Location

When buying a franchise the biggest challenge will be finding the perfect site for the business. For any franchise its all about LOCATION, LOCATION, LOCATION!

Consider the following:

  • What is the type of business? Is it a destination type such as windscreen repairs where you do not rely on passing feet or is it a retail business where feet are crucial. In the fast food business the site may well be next to a busy road but if it does not have an easy access road it will lose a lot of business.
  • Does it have adequate parking for customers?
  • shopping center

  • Who is the anchor tenant in the complex?
  • How many businesses have previously failed in that site and why?
  • Does the landlord grant you exclusivity for your type of business?
  • For how long can you sign the lease and will you have the option to extend it for a further period?
  • Is the center well established or is it a new center that still has to go through growing pains?
  • Can you afford the rent (even in the lean months)! The franchiser should provide an accurate assessment of a realistic maximum rental for your size of business.

Joining a reputable franchise can only help in your lease negotiations with the landlord, even where lease negotiation part of your franchise consulting process. You will have the advantage and experience of the franchiser to draw on and a landlord who will view your application favorably because of the strength of the brand, which will add value to his premises.

Follow the links below to get still some more information on buying a franchise:

Advantage-Disadvantage of a Franchise

Small Business Franchise - What to look out for

Franchise Royalties

Financing a Franchise

Franchise your Business

Most Profitable Franchise

Termination of a Franchise and Restraint of Trade

Buying a franchise can be the best decision you ever make! Use the extensive franchise information supplied here to help you reach the right decision for your business.

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