Factors to Consider When Choosing a Franchise

With Thousands of Franchises to Choose from, Picking the Right One Can Be a Seemingly Impossible Task. Here's What You Should Know.

With thousands of franchises to choose from, picking the right one can be a seemingly impossible task. It is crucial to consider your interests, skills, and financial situation when deciding on a franchise, as all franchises require different skills and financial investments.

Other Factors to Consider When Choosing a Franchise include:

  • The franchise should have a good sales record. The primary benefit of franchising is investing in a working system that has already seen success. The operating system should be replicable and proven.
  • The marketability of your product or service is key. Doing market research is a critical part of the due diligence process and will help you determine if the franchise is located in a prime market that will lend itself to business success. Also, invest in an industry that is expanding and gaining market share.
  • Look into the competition in your area. If the competition is low, it will benefit you, but be aware of market saturation. For example, if there is a fast-food restaurant around every corner in your market, consider investing in a non-food-related franchise.
  • Invest in a franchise that has a lot of repeat business. This will allow you to expand the business and become an essential part of the daily lives of those in your community.
  • You should be interested and invested in the franchise. Be sure that you are excited to endorse the product or service you are providing. If you don’t buy into what you are selling, nobody else will.

Another important factor to consider when choosing a franchise is the type of ownership model that you want.


With this kind of ownership, you are front and center doing the daily operations of the business. If you want to make a full commitment to the business and be in control of all its decisions, then this ownership type is for you. This type of ownership is also good for those looking to make a career change.

Absentee Ownership

This type of ownership will give you an arm's-length control. It allows you to treat it as an investment and not a lifestyle change. While you own the business, you hire managers to deal with the daily operations. While this leads to higher labor costs, you can have more freedom and scalability. Many former professional athletes choose this form of ownership after they retire.

Semi-Absentee Ownership

This is the best of both the owner/operator and absentee ownership models. With this ownership type, you have help with the daily operations while also having the time to have a day job and support the business financially.

You also need to consider how many units you’d like to buy. You can choose:

Single-Unit Ownership

This is the classic franchise model and is great for newbies trying to make it in the business world. With single-unit ownership, you can focus on one location.

Multi-Unit Ownership

You may decide to own multiple units of a franchise in a specific area. Usually, a franchisor will give you a discounted rate per unit if you decide to buy several. With this type of ownership, it is common for the franchise owner to be the owner/operator of their main unit while taking a semi-absentee ownership role of the secondary units.

Area Developer

Area developers are similar to multi-unit owners but on a larger scale with more units encompassing a territory. The area developer is granted the right to open a certain amount of units by the franchisor.

A misconception about franchising is that fast-food restaurants are the only kind of franchise to choose from, but this is not true. The great thing about franchising is that there are franchise opportunities in any industry that you can think of:

Choosing a Franchise

Deciding to invest in a franchise really is exciting and life-changing. There are many factors to consider when choosing a franchise, including your skills and financial situation. Additionally, you have to think about how many units you want to buy and the model of ownership you want to have over them.

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