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With a total turnover of 76 billion euros in 2022, franchising is an economic model sustainable and reliable. Therefore, embarking on this adventure ensures a good return on investment. However, you must be sure to invest in a profitable franchise. In other words, it must allow you to generate net income after paying off expenses and debts. Here are some tips for finding a profitable franchise.
Examine the potential of the field of activity
To find a profitable franchise, you must first choose a field of activity. Do not bet on a market randomly: instead, base yourself on current data. A profitable franchise is always accompanied by a promising market. However, niche markets can also be profitable. We advise you to consult the most profitable franchise sectors in 2024 to get an idea of the latest trends.
Without giving in to the fad, you should take advantage of trends that are considered sustainable, especially if you are planning a large investment. Geographic location can also have an impact, which is why it is important to conduct local research.
Check the official accounts of the brands
Also consider taking a look at the official accounts to find a profitable franchise. Many sites offer the possibility of consulting the balance sheets and income statements of companies. For a few euros, you will be able to know whether the targeted franchise concept generates a good turnover or not.
We recommend that you analyze franchises that have been in business for at least three years. Despite positive forecasts, it is often difficult for a store to stand out from the moment it opens.
Find out about the reputation of the franchise network
Generally, the reputation of the franchise network is an indicator of the reliability of the brand. A well-established network that is recognized nationally or even internationally inevitably presents fewer risks.
In your business plan, you will need to find out about the brand image, by examining consumer feedback, customer satisfaction levels, traffic, etc. Also consider certifications or quality labels associated with the business.
Confront openings and closings
A franchise network that closes as many points of sale as it opens is not trustworthy. So, if you notice that more than 10% leave the network instead of joining it, be wary!
Before signing the franchise agreement, the franchisor must provide the contact information of the franchisees in activity (Doubin law). Thanks to the documents provided to existing franchisees, you will be able to find those who have left. Take care to find out the reasons for leaving in order to ensure that you join a profitable franchise.
Don't neglect turnover
In addition to customer loyalty and traffic, you should also explore the situation internally. Indeed, it is the franchisees who contribute to the growth and distinction of the franchise network.
The idea here is to evaluate their working conditions, staff training and equal treatment in the various points of sale. The staff turnover rate is a significant indicator of the profitability of the network. If it is excessive compared to the industry average, it could indicate a poor return on investment or support for franchisees.
Profitable Franchise: Other Criteria to Consider
The franchise fees, royalties or entry fees often vary from one franchise to another. Comparing franchise models based solely on cost is a mistake. It is better to invest a substantial amount of money to make a “real profit”. Let’s not forget that in exchange for an entry fee, franchisors must provide quality support.
In summary, to find a profitable franchise, you must look at the potential of the sector, the reputation of the network, customer satisfaction… Added to this are turnover, costs and openings/closings. Do not hesitate to further your research to increase your chances.
Partner article, the editorial staff did not participate in its writing
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