It’s quick and easy to look at any number of published ‘top franchise’ rankings to get an idea about which franchise concepts have the least risk and highest possible return. But if your investment budget is $300K, why look at the top franchises that require $1M in investments?
These ranking lists can seem like a nice shortcut to getting information fast, but in reality, they can actually be misleading if they have no direct correlation to you and your requirements.
Here are three helpful tips to keep in mind before scrolling through the ranking lists.
1 How much you have and how much you are willing to invest
Remember that franchises have startup and ongoing costs, so it’s important to be confident about what you’re willing to invest. Rule out opportunities that are above your investment limit.
2 How the franchise generates revenue
Franchises can develop revenue in a few different ways. Some rely on personal sales and marketing efforts, while others generate revenue through brand awareness and retail foot traffic. And others depend on national contracts and relationships. Acknowledging how a brand drives revenue will help you as a franchisee become more versed in exactly how to bring that revenue in.
3 What is required of you, the franchisee, to operate and generate revenue
Know your strengths and weaknesses. If a franchise concept requires major sales and marketing efforts on the franchisee’s part, and that’s not your strong suit, it likely will not be the best choice for you. Understanding your strengths will make your search for the perfect franchise concept easier and inform which revenue-generation models to target.
There’s more than meets the eye when it comes to franchise ranking lists. Consider these points before jumping on a franchise concept. The Franchise Evaluator further explores this idea. First concept evaluation FREE! Schedule one here.