Buying a franchise can be a great alternative to starting a business from scratch. However, there are a number of questions that you need to ask yourself before buying a location. These questions generally apply whether you’re buying an existing franchise or if you’re going to be a new store for customers to check out.
1- Are There Other Franchises Nearby?
In a smaller town or city, you probably want to make sure that you’re not competing against other franchises from the same brand. This is because that other location is necessarily going to take customers away from yours, which will make it less profitable overall.
2- What Are the Demographics?
You want to make sure that you know who your customers are before you start a business. Ideally, you’ll have some idea as to how closely the demographics of an area match your target customer. Ultimately, you don’t want to be in a location where people can’t afford your products or are too old or young to buy them.
3- Is the Location Accessible?
You don’t want to start a business in a location that isn’t easy to get to. Whether that’s because you are too close to a busy street, there is a high rate of crime, or some other issue, it’s going to be hard to do well if people are hesitant to come to find you.
4- Do People Know Where You Are?
Perhaps the only thing worse than people avoiding your chosen location is people not knowing where you are at all. Although it’s easier to locate and get directions to even obscure places, it’s generally harder to do well when no one knows that you exist. At a minimum, you’ll need to do a lot of extra marketing to get the word out.
5- How Much Traffic Can You Expect?
Even if you’re the only location in town, foot traffic is still capped at some level. You’ll need to know how much traffic to expect before you can decide if a given location is fit for a franchise.
6- Will the Franchise Be Easy to Sell?
You might feel as if you’ll only be a franchise owner for a limited time. In that scenario, you want to make sure that you’re located in an area that will be attractive to future owners if you want to step aside someday. Check to see if you the parent company will find a buyer for your franchise or if you’ll be responsible for that yourself.
7- What’s the Regulatory Structure Like?
You may pay higher taxes to start a business in one county or state versus another. Alternatively, you may be entitled to tax breaks or other incentives to locate in specific areas. You should consult with your lawyer or others on your business team to determine if there are regulatory reasons to avoid or target one area over another.
Opening a franchise can be a lucrative way to build and gain more control over your career. Of course, it’s critical that you know as much about your preferred location as possible to ensure that you’re making a decision that is in your best interest now and in the future.
