How to Find a Good Franchise

on September 4, 2014 Blog with 0 comments
How To Find a Good Franchise


People dream about coming out on their own and running their own business. Many of them hold well paying jobs, and have been too comfortable too long to start “small time” bootlegging businesses. They need more assurance of success and need the income stream. Instead of starting up from scratch or buying a profitable business for a high premium, you can also learn how to find a good franchise.

Franchises are a good way to enter a new market, with a proven product or service. The founder had already ironed out all the clinks in the business and will teach you how to start the new location. There are costs associated with franchises and some can be debilitating, but most franchises are a better way to get into business and eliminate the very high risk associated with a startup.

Here’s some tips on how to find a good franchise that is suitable for you.

Do a Self Assessment:

  • What are my work experiences?
  • What am I good at?
  • What do I enjoy doing?
  • What skills do I have?
  • How much risk am I willing to take?
  • How much capital is available to me? (Cash + Loan)


Narrow Down the Industry:

  • What industry interests me?
  • Is that a sunrise or sunset industry? Sunrise means growing industry, sunset means slowing industry. e.g. Public telephones are a sunset industry.
  • What is the average profit margin of the industry? Does the profit margin make sense? ie Don’t go into a ultra high volume business with 10% profit margin like plastic bag wholesale. You will just lock up capital in inventory. Besides, unless its biodegradable, it’s a sunset industry…
  • Does my desired work hours match the business hours? Don’t open a restaurant if you are not willing to work on weekends.


Determine the Costings and Profitability:

  • Find out the setup fees including franchise fee, premise setup costs, equipment, renovation, and administrative costs.
  • Go on site before you lease a premise and count foot traffic (number of people going by). Do multiple counts of 3 timings for weekdays and weekends. Off peak, lunch hour, rush hour, and average times for weekends.
  • Use this footfall to estimate your estimated sales. Many franchises will have a formula for you. These are only estimates not a definite figure.
  • Determine the shifts needed and total labor costs.
  • Estimate your overheads. Rent, utilities, communications/transaction fees.
  • Use your estimated revenue and subtract all monthly costs including the franchise recurring fees or percentage of profit share.


Assess the Risk and Reward:

  • Make sure the profits make sense to you. With profitability estimates, it is always better to go with a lower better “guesstimate” and an optimistic one.
  • Compare the profits with your current salary. Ask yourself is it worth the risk?


After going through all these steps and you still feel that a franchise is the way to go, then make arrangements to have a more detailed discussion with the franchiser.

Hope this helps!

Dan Tan

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Up to 8 Methodologies Used:

1. Income approach: 3 methodologies.

2. Market approach: 3 methodologies.

3. Asset approach: 2 methodologies.