How is a Franchise Business Growing?

How is a Franchise Business Growing?

There are a variety of ways to evaluate a franchise businesses growth. So if you're looking for a franchise business and are interested in how that franchise business is growing, the following information may assist you in your evaluation.

A good measuring stick of growth is the number of new franchisees added each year. This information may not be readily available, so it may have to come directly from the franchisor. Also ask about the number of operational support people devoted to new franchisees. The ratio of support personnel to franchisee is important. This can be a good gauge of the growth of the franchise corporation, because the more franchises sold, the more support people you need. As problems or issues arise, you want to make sure that you will be supported.

One obvious fact regarding the number of franchisees added each year, if a franchisor has been in business for a number of years but has added very few franchisees, there may be issues or problems within their system. It's possible that current franchisees don't validate well due to those problems within the system, so it's possible that potential franchisees are rejecting them.

If that's not the case, the problem may be that the franchisor has insufficient staff to handle all the elements associated with getting a new franchisee up and running. This would cause them to reject a number of qualified applicants. Either way, a lack of new franchisees could mean that this isn't a solid or healthy franchise company.

With that said, what would be an acceptable number of new franchisees to be added each year? To keep things simple, the percentage of new franchisees to the number of total franchisees will give you a number that you can use for comparison. For example, if there are currently 30 franchisees, and they add 20 new franchisees in a year, they may be growing at a rate that is too rapid. This rapid growth could cause their undersized staff too be overwhelmed and not have time for new franchisees. This seems to be the most common problem with rapid growing companies.

Somewhere between 10 and 35 percent growth is a good number. This number is based on the current total number of franchisees. In other words, a franchise business company that has 100 franchisees should have the capabilities to add up to 35 new franchisees in the coming year. If a medium sized franchise company is working within this percentage, you can bet that they are a pretty solid company.

The formula listed above is typically for a medium sized franchise business company, and will probably not work for very large or very small companies. If that is the case, there is another number to take into consideration. That number would be the ratio of support personnel compared to new franchisees. On average, there should be one support person for every 10-20 new franchisees. If this is the case, the new franchisees should be getting adequate preparation and support to develop their businesses.

Finding a solid franchise company is just one step towards making your decision easier. After determining that this is a solid company, one you feel you are interested in, your next step would be to do research. This would entail calling and interviewing existing franchisees, or maybe even visiting some of the franchisees. You should also meet with and talk to the support staff. Another good place to gather information on a franchise is by searching Google. Goolge has links to all kinds of informational franchise business web sites and online forums. Plenty of information is available, all you have to do is search for it.

During your research, did you find any areas of concern? Did the support staff impress you? Were they helpful and knowledgeable? More than likely you will be spending a lot of time with the support staff, so it's important that you feel comfortable interacting with them. Get to know them and ask questions. Take note of anything that stands out, whether positively or negatively.

If you've done your research and you are happy with all of the results of the interaction you've had with the franchisor, you can be confident that you are investigating a growing, healthy franchise business system, one which will provide you an opportunity to make your personal and professional dreams come true.

Looking for more information about the growth of a franchise business, go to http://afranchisesolution.com.

Jeffrey Sloe, Internet Marketing Advisor to The Ultimate Team
440-725-3729
jeff@internetmarketingadvisors.net
http://ultimate.org