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Nov
4
2021
INDUSTRY

How to Evaluate Franchise Opportunities

How to Evaluate Franchise Opportunities

Here are a few things to consider when evaluating a franchise opportunity.

When it comes to franchise business opportunities, there is no one size fits all. There are many different types of franchise businesses. Finding the right one for you takes time and careful consideration. You may be set on a certain industry or franchisor early on, but there are other factors to consider before you leap into the onboarding process and open a franchise business.

There is much more to a franchise business opportunity than what you see on the franchisor’s website or even in the materials they provide for your review. It’s imperative to dig deeper for a more complete picture of the opportunity to determine if it’s a good fit for you and your business goals. Knowing where to look for that information is key. Read on for what you should consider when evaluating a franchise business opportunity. 

Assess the Potential

You may already be passionate about the industry you’ve chosen, but before you start researching specific franchise business opportunities, it’s a good idea to learn all you can about the market potential. Review industry publications. Look at current trends and what the biggest and most successful companies in the industry are doing. Search for ways to connect with successful figures in the industry via social media or at networking events to learn more about the hallmarks of success and where the industry is headed. 

Assessing the viability of the product or service will help you make an informed decision when selecting a franchise partner. You will learn how this franchise business opportunity measures up against others, and whether it’s a good choice for you.  

Research Company History 

All franchisors must file a Franchise Disclosure Document (FDD) that includes complete business details, making it the perfect place to take a deep dive into the details of the company’s history. In this file, franchisors are legally obligated to disclose information such as a list of the management team, a breakdown of costs, franchisor obligations, franchisee obligations, litigation history and bankruptcy information. You’ll only receive this document when you are in the discovery phase, after the franchisor has determined you are qualified and serious about opening a franchise business.  It’s wise to seek assistance from an accountant or lawyer to properly understand the documents and the data provided as some things may be less obvious than others. Get the clearest financial and legal profile possible as you get closer to signing on the dotted line. 

Also, ask to speak to other franchisees to get an inside take on what it’s like to be in the franchise network. A good franchisor won’t hesitate to connect you with other owners in the system. If they do, it’s worth asking why and rethinking whether you should continue down the path of opening a franchise business in that network. 

Understand Franchise Support

Many potential business owners choose to open a franchise business rather than a sole proprietorship because of the backing they expect to receive from the franchisor. Support can vary from franchise to franchise, and it’s important to know exactly what you will receive during your partnership. While many franchisors offer training and mentorship, comprehensiveness varies.

Make sure you understand and are comfortable with the level of involvement from your franchisor as well. Some may have more input on their franchisees’ day-to-day than others, resulting in reduced autonomy. The level of restrictions and franchise guidelines designed to provide consistency across the network are also different for every franchisor. You must be willing to adhere to these standards to protect brand identity. 

Identify Expenses 

There are many costs to consider when opening a franchise business. In addition to initial setup and franchise fees there may be several fees for things like training and grand opening assistance, or ongoing fees for marketing, software usage, licensing and royalties. Find out if any minimum or maximum amounts apply. Be sure to factor all expenses into your budget and crunch the numbers carefully. Most franchisors still expect royalty payments even if your new business is struggling so it’s important to ensure you will have enough money to afford the operation until you start turning a profit.

An adequate budget is important but protecting yourself during the launch process is crucial. Before putting any money down, make sure the plan to open your business is solid on both sides. If the deal falls through before completion, you could lose any money invested up front.

Due Diligence is Crucial 

A successful franchise is based on more than brand equity. Do your homework and fully investigate any franchise business opportunity you’re considering before making any commitments. Assess the market potential and competition, explore the franchisor’s history, the level of support provided and ensure you can not only afford their partnership but flourish. Tap into as many resources as possible and do your due diligence to make the best decision for your business and your future.

Entrepreneur's Franchise Top Rated for Veterans in 2022 badge

We Proudly Support Our Veterans

Participating partners with the VetFran program, The UPS Store offers qualifying veterans $10,000 off their franchise fee to start their new business. To learn more, contact The UPS Store Franchise Development Team.

Entrepreneur's Franchise 500 Ranked #4 in 2023 badge

Ranked for over 30 Consecutive Years

The UPS Store has been ranked #1 in the postal and business services category for over 30 years and remains in the top 5 overall for the seventh consecutive year according to the Franchise 500 list.

Kristin Howard

Franchisee, Michigan

The reason my husband and I decided to go into franchising and specifically with The UPS Store, is the different opportunities we're given with the business. The UPS Store has name recognition as well as opportunities to expand.

Debbie Adams

Franchisee, Kentucky

What I enjoy most about being a The UPS Store owner is working with my customers. We are the solution specialists for our customers.

Jim George

Franchisee, Illinios

My favorite part about The UPS Store network is the camaraderie with other franchisees. Everybody loves to help everybody else. You’re really part of a family.

Greg Murray

Franchisee, Florida

The interesting thing about The UPS Store is that when a customer walks through the door there's an extremely high probability that they're coming there to do something that is important to them. So at the end of the day, what we do for customers is very important and they are trusting that we are going to do it well.

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Mariana Huberman

Franchisee, Washington, D.C.

One of the things that I love about The UPS Store franchise system is that you're not ever in this by yourself. The franchisees of The UPS Store network are great.

Heidi Morris

Franchisee, Colorado

The thing I enjoy most about being a The UPS Store franchisee is I get to get up, go to work and know that I'm helping other business owners succeed in what they're doing.

Bob Brown

Franchisee, Tennessee

Owning a The UPS Store franchise has changed my life because it's finally given me the opportunity to engage my customers and my staff and be able to take real pride in what I do. As a franchisee, we get faced with solving peoples' problems every day and we do everything we possibly can to try to help.

Marie Jensen

Franchisee, Oregon

My favorite thing about The UPS Store is the variety. I love the variety of customers, I love the variety of services; getting to know the customers, meeting their needs, finding out how we can help them accomplish what they need to accomplish and seeing how happy they are. That makes me ecstatic.

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Tad Mollnhauer

Franchisee, Florida

With the products and services that The UPS Store provides we can make a difference in people's lives and that is the best reason for being a The UPS Store owner.

Joy Batchelor

Franchisee, Idaho

What makes being a The UPS Store franchisee worthwhile at the end of the day is the customers. The customers treat us like we're family.

Paul Erchinger

Franchisee, Texas

One nice benefit of owning a The UPS Store franchise for me has been that it gives me the opportunity to be more involved in the community. As I make relationships with others it seems like no matter what the environment is, in one way or another business comes out of that and that's not my objective—it's been a secondary benefit to being involved in the community.

Chris Reminder

Franchisee, Ohio

There are several things that I really enjoy about being a The UPS Store franchisee. First and foremost it allows me to get to know the people in the local community and that is a lot of fun. We get to see people on a regular basis. We get to know their life stories. That's a lot of fun.

Bruce Jones

Franchisee, Kentucky

Since we have joined The UPS Store, our life has changed by just having more time to spend together as a family. We've been very fortunate with the stores that we have and we have a great staff that looks out for our best interest and we look out for theirs.

Lonnie Williams

Franchisee, Oklahoma

What makes The UPS Store so successful is it gives each individual an opportunity to grow with the network and just meet the challenges that are brought to them on a daily basis. Every day gives us a new opportunity to help another person, to help another small business, to answer a question and to solve a problem.

Jeff Graham

Franchisee, Alabama

I love my customers. I love my employees. I love every person, every face that comes into my store. I enjoy every day going into work and I can't see doing anything else for the rest of my life.

Stacie Stigar

Franchisee, Alaska

I think that this franchise is so successful because of all of the resources that are available to us as center owners—we have marketing materials, we have so many different opportunities for help from the home office, and it just really makes for a great franchise.

Don Pollard

Franchisee, New Jersey

I think the thing that makes this franchise successful is a number of things. First of all we have an outstanding system, we have a great product, a great brand, and we're able to attract dynamic people to run these centers and run the business. So I think when you put all that together it really provides for a winning combination.

Mary Ellen Nichols

Franchisee, Tennessee

The thing I love about the franchise is that you have the UPS name backing you but yet you also have the autonomy to make your own decisions to promote.

Laura Griffin

Franchisee, Florida

In the eight short months I've owned my The UPS Store it has really changed my life. I've gone from being an employee of someone else to being an employer of my associates. It's a big responsibility but it's exciting every day.

Sandy Scandrett

Franchisee, Wisconsin

Being a The UPS Store franchisee has improved every aspect of my life. It's very rewarding financially, professionally, and emotionally. I have a large number of regular customers who are really, really appreciative of everything we do.

Kristie Robison

Franchisee, Alabama

I would say owning a The UPS Store location has changed my life to where I have more time and flexibility. In owning your own business you get your store up and running and you get employees that you can trust that are going to help keep your store running. This allows me to attend my two boys' ball games and also travel and do things with them so it has really changed my life for the better.