Nancy WilliamsÂ earned a degree in sociology from UCLA with a specialization in urban studies and business. Her first business was a partnership in aÂ small record label right out of college. After working with a few tech startups, she concluded her career in the corporate world with 14 years at Sprint,Â a majority of that tenure as a director of customer and sales operations. Nancy started NValuable Franchise Consulting, in order to provideÂ free consultation, relevant insight, pertinent and candid feedback toÂ her clients, so they are able to confidently purchase the rightÂ franchise. As a result, her clients achieve financial independence andÂ a positive, enduring impact on their families and local communities. Follow her on Twitter, and check out her website for more information.
January 19, 2017
What You Need To Know Before Buying a Franchise
“What’s the hottest franchise?” is the question I get the most. When someone asks me that, I often wonder if it’s just out of curiosity, or perhaps, they somehow think I have access to big secrets in the franchise world, and like a stock tip, I’ll tell them, they’ll buy one and become uber rich. That sounds like a great movie plot, but since we’re not in a movie, I answer their question with a question. “What’s your definition of hot?” I’m not trying to be difficult, or combative, but the truth is, franchises can and should be judged on many different criteria, and what is “hot” to one person is stone cold to another.
When you’re deciding what franchise will be HOT for you, you really need to consider what your goals are, how much money you have to comfortably invest, what kind of support system it has, how it will fit in with the lifestyle you want, etc., etc. Even the most successful franchises by financial standards, have unsuccessful franchisees.
I recently read a magazine article that the top three franchises with the biggest growth in the U.S. in 2016 were the following: Popbar, Velofix, and Spavia (Entrepreneur). That’s great news for these brands, as growing an emerging brand can be challenging. But does this mean they’re hot? Could be. But like most metrics, growth is relative.Â Popbar went from one unit in 2015 to eight in 2016–a growth of 700%; Velofix went from 10 to 37 units –a growth of 270%; and Spavia went from four to 14 units–a growth of 250%. Whether they will continue to grow at these rates is something we’ll have to wait and see.
But knowing what the hot franchises are, can be helpful. Oftentimes it tells us what’s trending, and perhaps where things are headed. What I like about the above list is that only one of the three is in the food category. I have nothing against food, it can be a great opportunity for some, but because it’s the most visible and flashy, people become consumed by it, and don’t consider the hundreds of other non-food franchises that are highly profitable and require less capital and time. So for me, I share the 2016 results with clients to emphasize the fact that there is so much more out there for them than hamburgers, pizza, and sandwiches. The 2016 growth of Velofix and Spavia continues to support the health and wellness trend we’ve seen cultivate over the past several years. Â I believe that trend will continue through 2017, which could mean, the right owner has the potential to have high revenues and growth. The good news is that there are several health and wellness franchise brands out there that span the spectrum of investment requirement and have various business models, so finding the right one for you is certainly possible.
Bottom line, do your homework! Don’t just look for what’s hot, what’s trendy, or what make the most money. Buying a business is about so much more than that. If you take the time to determine what a good fit for you will be, even if the trend fades or the competition heats up, you’ll do much better in the long run.