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Will This Franchise Work In My Area?

Our expert helps you determine whether your dream franchise will succeed in your market.
December 5, 2005
URL: http://www.entrepreneur.com/article/81814

It's happened to all of us. We go on vacation or take a work-related trip, and while we're on the road we discover a wonderful business. It might be a great restaurant, a wonderful new type of fast-food sandwich, a unique retail shop or even a service business offering a different twist on something we feel many people will want. Even better, we learn the business we've discovered is a franchise with opportunities available for new franchisees.

Invariably, we wonder how well that business would do in our hometown--raising a number of questions for us to ponder. Can the product or service be transplanted to where we live and still be successful? Will the brand draw sufficient customers? Will other people see the appeal that seems so obvious to us? Is there anything necessary for success in this business that's missing from our area?

These questions form the basis for the rapid expansion of the American Dream we've seen in the past 15 to 20 years. The discovery of a "better mousetrap" is often the spark that lights the entrepreneurial fire in people. Though this is a wonderful way to spot potential opportunity, there are some important questions that a careful investor needs to answer before moving forward.

One of the surest ways to begin developing an answer to the question of whether the franchise will work in your area is to compare the demographics of the population supporting the existing successful business to the population in your area. It's fairly easy today to find demographic data for any targeted trade area, so you should start your comparison there. Some of the key factors in this demographic comparison include:

Another consideration relates to any international business opportunity you may come across and consider putting into your area. Let's assume, for example, that you were on a trip to Australia and saw a franchise business you thought would be wonderful in America. Though most people think of international franchising as starting in America and then being exported to other countries, the reverse is often true as well.

This can be a wonderful potential opportunity, but you need to keep an old saying in mind: "When in doubt, send a scout." There are so many uncertainties in international franchising that you want to make sure any concept can be successfully transplanted (by seeing someone else do it) before you invest. It may require more patience to do it this way, but history shows you don't want to be the pioneer on this type of journey.

The franchise industry has long been criticized for its role in the purported "homogenization" of America--chains of units, all the same, operating in every corner of our vast country. But it's important to understand that this dynamic is the absolute intent of a successful franchise concept--to be able to conduct business successfully, using proven systems and brands, in virtually any area of the country.

This is a key point in relation to the topic of this article. You want a franchise business that's going to work in your area, and the less doubt you have about that fact, the less risk is associated with the franchise investment.

Often, the unique and exciting idea you see somewhere and then wonder about putting into your area is a concept that's untested in terms of its general acceptance in the marketplace. That puts you, if you decide to invest, into the position of a true entrepreneur in terms of introducing a new concept to your market.

However, that also puts you in a much riskier position than you would normally expect when you get a franchise for a business startup. Make sure to research very carefully to find out whether the concept will work in your area. If it can, then you can go forward and make your American Dream come true.