Competing Established Markets

Every new potential franchise investor must have done their due diligence possible before committing to a business, not only to weed out opportunities that are not profitable, but also to get a sense of confidence that is needed in order to proceed. There are a number of ways to tackle due diligence and here are some you might have missed.

One of the best ways to test your business idea is to see if anyone else is doing the type of business that you are seeking to open. While everyone likes to think that they have found the perfect unique business idea, chances are that if there is no competition in your area, there is no market for what your new business either. It’s like opening a dry cleaning business on a college campus. You’ll be the only dry cleaner in the market, but how many college students need to dry clean their t-shirts? In the same college town, there may be 50 pizza restaurants. That simply means that there is a demand for pizza and all that you’ll need to do to be successful is to compete more effectively. That’s where franchising comes in.

You can take any business where the demand for the product is being supplied by privately owned businesses and see if you cannot produce a better product more cheaply and efficiently. Franchises are the perfect way to compete in a seemingly saturated market. Think about the pizza/college example. A franchise system may enable you to make pizza faster and deliver it more quickly as well. They may provide scooters for delivery people. You may be able to buy purchase materials more cheaply and offer a less-expensive product. You may also benefit from national television advertising and you may well be the only pizza restaurant in town with a television advertising campaign.

Now we are not necessarily recommending that you go out and buy a pizza franchise located in a college town, but as you can see, it is a very good idea to see what businesses there are in town that are established and “are not” franchise owned and see if you can find a franchise system that enables you to compete more effectively.