What factors should a franchisee consider before choosing a franchise?
A potential franchisee should consider a number of factors when choosing a franchise because buying and operating a franchise involves a large investment and considerable risk. A few of the many factors to consider include: Demand: • The franchisee should consider whether there is a demand for the franchisor’s products or services in the target market area; whether the demand is seasonal; and, whether the product or service will generate repeat business. Competition: • The franchisee should consider what competition the franchised business will face; how many franchised and company-owned outlets the franchisor has in same area; how many competing companies sell the same or similar products or services; and, whether the competing companies offer the same goods and services at the same or lower price. Franchisee’s Ability to Operate the Business: • The franchisee should consider whether he or she would be able to operate the franchised business even if the franchisor goes out of business
