Franchisees: Assess competitors

When you purchase a franchise opportunity, you will be working, selling and promoting the product or service for a long period of time. You cannot change or develop the product or service, so make sure that the franchise has long-term appeal and its market is not threatened in any way. Most importantly, make sure that there is a market for the product or service your franchise provides and that it will last. Understand the future of your market.

Ask yourself:

• Is the market for this product / service expanding rapidly, growing slowly, static or declining?

If the services or products your franchise provides do not really have a future, market or growth potential, you are bound for failure. Choose a franchise that produces and markets goods or services for which there is a demand and established market. You do not want to buy a franchise only to realise that there is no actual demand and established market for the product or service. Select a franchisor with a well accepted trademark. The more advertisements you see for the product or service now than a couple of years ago can give you an indication of the state of the market.

• Does the product/service have special features which help it to sell? Does it warrant a premium price?

In order to make money for the franchisee and franchisor, the product has to have real advantages over competitors. It may be tricky to maintain the best prices if the product or service could be easily copied by others.

• Who would your competitors be and how competitive would your product or service be in relation to them?

Do competitors have any technical or price advantages? Could you improve on the service offered? Make sure your products/services cannot be beaten by competitors and that you offer something more and better. Ensure the best prices that other competitors cannot offer. What is their level of advertising? If there are no competitors ask yourself and find out why.

• When looking at the general market for your product, what do you know of the local market in which you will be operating?

Does the local market have the same characteristics as the market in general? Make sure that the product/services you provide are suitable for your area and that there is a demand. Ascertain how dependent the success of the business is on the particular lifestyles or levels of income in the general/local market.

Assessing and evaluating your competitors is of utmost importance before even setting up your franchise and selecting a site location.

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