When considering your choice of Franchise to invest in it’s also important to look beyond the initial agreement period. It can be easy to focus just on the shorter term of launching the business and the growth and profits that can be achieved over the first few years.
Most Franchise agreements are for a commitment of 5 years and these are usually renewed providing all is still well with both parties. What you must look deeper at is the longer term opportunities of the Franchise.
When examining the finer details of the business with the Franchisor, discuss with them the earning potential beyond the first 5 years. What you really want to know is if your earnings or potential to expand further will be limited either by reaching a certain point in the business or because Franchisees have been positioned very close to your territory border.
For example, some home and van based Franchises which are initially launched as a one person operation may have the potential to expand into a management based business. This would allow the building of a more substantial business putting the Franchisee in a more managerial role and employing others to increase the amount of areas that can be covered.
However, this can only work if…
The Franchisor has experience of how to expand the operation to provide everything you need for employing others, training them, etc
The surrounding area of your territory is sufficient enough to provide you with greater opportunities for you to be able to expand your operations.
Of course Franchise expansion is not for every Franchisee and it may not be for you. Perhaps you’re only looking for a business to provide you with enough to meet your needs and are quite happy with a certain territory to manage.
However, if you are more ambitious and have plans to build a much more sizeable business