The markets can change rapidly. Therefore, prospective franchisees must think carefully before committing to a franchise that may be worthless in a few years
>In a fast-changing world like ours, it’s prudent for aspiring franchisees to question whether the business they’re thinking of investing in will be around for the foreseeable future.
While it’s impossible to be 100% accurate in any prediction, the most rational answer provides an excellent method of evaluating the hundreds of franchise opportunities that exist in the UK at the moment. If your chosen business venture passes the following tests you'll have a better than 90% chance of being successful, which is an excellent percentage for any new business.
Firstly, look at the business sector and consider the likelihood of it being changed by technology. Those who invested in a printer ink cartridge shop or a DVD video store franchise know only too well that things can shift very quickly. The same could apply to a trendy new technology, such as aerial photography with drones. As these become cheaper and easier to use, their values will drop and a business that looks profitable today could soon be unable to cover its overheads. An e-cigarettes and vaping shop is currently an interesting proposition. However, as this market matures the shopping habits for these products are likely to change and it’s worth pointing out that many a small local shop has gone bust trying to compete with the big supermarkets.
It’s also possible that an industry could be disrupted by a new way of doing things, particularly where the internet is involved. For example, the short-lettings sector has been changed forever by Airbnb.
Similarly, the elderly domiciliary care industry could transform dramatically if an Uber-style titan began to match carers with those who need their services. The middleman, and there are some very successful homecare franchises in this market, could see their customer base evaporate before they can adapt. Also take into account changes in the way we live. In the 1970s there was a laundrette on every street corner. Some were franchised. They aren’t there anymore. Conversely, the gardens of new homes are now far smaller than they used to be, so it's more convenient to use a grass-cutting service than buy a lawnmower that will only be used for a few minutes at a time. This trend is definitely set to continue. If the franchise you’re considering clears these hurdles it'll probably be successful for the foreseeable future as a business.
You should also assess how well the franchise you're considering is managed. You need to feel confident the management team is competent and feel comfortable dealing with them. Are they overly expansionist or lacking desire to grow? Either could prove problematic for the longevity of the business.
If you get all of this right you'll find franchising to be an excellent and very secure way of establishing a new business. You'll make money, have a more enjoyable lifestyle and eventually possess a valuable asset to sell.