Franchise Question: Is there a Viable Market for this Business in my area?
While you may be at the very beginning of your research, you should know what you ultimately need to consider after you’ve done all your research and are ready to sign and move forward. Question: Does the franchise offer a product or service for which there is a viable, long-term market in your area?
Viable market can mean many things to many people.
I’m often asked, “Has the Franchisor has done the market research in my area to see if this is gonna work?” Are you kidding me? Most franchisors have barely done it for their own market let alone your neighborhood. I believe some good old-fashioned leg work (some online research is OK too) – BY YOU- is in order before moving forward with a concept if you don’t believe in your heart of hearts that there is a market for the product or service in your area.
I also hear “Well, my area is different than Corporate’s.” Really?
Well, depending on the business, that may well be true. One thing to look at is the competition. How many real vs. perceived competitors are there? NO COMPETITORS in your area? Either that is a good sign or a very bad sign depending on how you look at it. Let me share a story with you…
Two shoe salesmen go to Tahiti. They both get off the boat and immediately notice something – NO ONE IS WEARING ANY SHOES! The first one calls back to his office dejectedly saying, “Cancel the orders, I’m coming home tomorrow, NO ONE HERE IS WEARING ANY SHOES!” The other salesman calls to his office excitedly, “DOUBLE THE ORDERS, TELL MY FAMILY I’LL BE HERE FOR A MONTH, NO ONE HERE IS WEARING ANY SHOES!” THAT, my friend, is who the franchisor is typically looking for.
Is it a B2B product or service? Do you feel comfortable calling on other businesses or would you rather just deal with consumers as customers. If it’s a retail type of operation, is there opportunity to expand the reach of the products / services outside of the walls of the location? What is the differentiator that the franchise offers? Pricing? Service Hours? Access to proprietary products or methodologies? What is the barrier to entry for both franchised and non-franchised competitors? IS THIS SOMETHING YOU ARE READY TO BE INVOLVED WITH FOR THE NEXT 10 YEARS or more?
Often a viable market is more based on attitude and desire, than demographics – unless the franchise offers roof repairs or landscaping services and you live in downtown Manhattan. Perhaps it’s more about recurring revenue vs. one-time sales… but that’s topic for another time.
