6 Factors That Determine the Success of a Franchise

First off, are you right for franchising? Yes, you’ll get to be your own boss. You’ll be able to work hard and provide a service to people. Not to mention the adrenaline rush of being a business owner. The success of a franchise isn’t guaranteed, though. It’s more than a matter of writing a check and gaining capitol. Here are 6 factors for figuring out if a franchise will sink or swim.

1. Demand

Is there a demand for the product/service? Find out. Think about what the franchise has to offer people, and if that offer will still be popular five, ten or fifty years from now. Shopper’s Drug Mart, for example, will still be standing decades from now – because it fills a demand people have. Healthcare products. Pharmaceutical services.

2. Investment

When you purchase a franchise, a large chunk of your capitol goes towards the franchisor for fees. Fees for training, equipment fees and usage, as well as rights for licensing. You’re looking at anywhere between a thousand dollars to half a million (or more, depending). This is a part of business you have to come to grips with, fast. That’s why it is crucial for you to ask yourself what the franchise company brings to the table. Analyse how long it will take you to earn back your upfront investment costs. Ask yourself how much you are willing to risk. Seek the counsel of an attorney and accountant.

3. Customers

Without loyal customers who keep returning on a monthly—even yearly—basis, a company is dead in the waters. Whether it’s McDonald’s, Subway or Home Depot. Before you make a decision, go over the numbers with a fine-tooth comb. If the brand name isn’t one everybody knows, you’ll have a harder time keeping the doors open. Investing in a custom t-shirt franchise is one opportunity for people to recognize your brand, since the business literally makes t-shirts for companies. But be wary of franchises that have dwindling numbers, like McDonald’s. Everybody knows McDonald’s, but the fast food giant is taking a beating as people become more conscious about their health. Their customer numbers are dwindling by the year and their revenue is plummeting.

4. Market Position

What needs do people have? The companies that fill those needs remain in business. Do this and your market position is stable. One of the mistakes many entrepreneurs make is to create a business model that proves profitable – and change it. Preserve the brand by following the market position that’s already in place.

5. Training

Some franchises offer substantial training support for hopeful franchisees. The importance of this training cannot be understated. Your franchise will be successful right out of the gate – as opposed to learning everything during operation. You will also be responsible for training employees and ensuring that turnover rates are minimal. Some of your duties include:

  • Rotating routines to prevent employee boredom
  • Developing staff schedules (with their help)
  • Updated about new marketing opportunities

6. Expertise

Franchisees everywhere have a lot to benefit from the leadership and guidance of franchisors. This includes using—and improving, if necessary—the business model they’ve set up. Staying in constant communication with the franchisor is advantageous for you. It can be as simple as a call or email.


Running a franchise will be easier for you if you’re the kind of person who handles conflicts amiably. People with a professional background in marketing will also have an easier time. That said, learn the rules of the business first to understand the procedures of operations.