Video: How to Identify a Successful Franchise

In this video, Minnesota franchise attorney Aaron Hall explains the factors that can indicate a successful franchise; one which you may want to buy into. When looking into buying a franchise, it is important to identify:

  1. What are the initial fees to buy into the franchise?
  2. What are the ongoing fees?
  3. What kind of support is offered to franchisees?


If you are looking at starting a business, you can be overwhelmed by how many different franchises are out there and which ones you can buy into. T Hey have so many different prices, they have different styles, and approaches. Everyone says that theirs is a unique approach.

But, I would look to a couple things:

  1. What are the fees required to buy in
  2. what are the ongoing fees
  3. what kind of support do they provide to you as a franchisee as you are running your business.

Do you have people to call on if you are having challenges, do they have marketing materials already prepared that you can utilize, or are you going to have to develop this on your own. Is the franchiser going to do marketing for you?

Here is another question, can you do marketing on your own?A lot of franchisers control so closely their brand, that everything you do has to be run through them, or maybe they prohibit it outright, which means if you want to have your own website, too bad you’re prohibited from doing that, if you want to have your own Facebook page, too bad. Well that can be frustrating because you want to be able to build your own brand in your own area. You want people to be coming to you and not having all your time and advertising dollars going to build the national brand. And it is fine, sometimes that is how it’s going to be. McDonald’s for example, if you do any advertising, it’s going to be promoting the national McDonald’s brand. But, McDonald’s also provides a lot of support in exchange for what you are paying. So the key is identifying what you are getting out of the deal? What are you giving up as far as money and time? And then is that a fair relationship?

With some franchisers it’s going to be a great deal for you. With others, I have seen some terrible deals. I have recommended to many people that have come to me, don’t get into this franchise, you are giving them everything and the franchiser is giving you very little. So it really takes analyzing it closely and with a professional who is experienced in franchises, to identify whether this is actually a good deal for you.

It probably makes a lot of sense to spend a lot of time analyzing the particular industry you are looking to get into. What are the characteristics of that industry that lend itself towards success or failure? So if it is a personal services firm, it is going to be a lot of networking and you are going to have to ask yourself, do I enjoy networking? Am I seen as a thought leader among my friends and family? Do I have a network upon which I can connect myself and connect this new franchise opportunity. Is it going to require a lot of sales? Do you like sales? Or is it going to be a couple strategic partners and if so, can you establish those relationships early on? Maybe even before establishing a franchise.

One thing that might be helpful, depending on the type of franchise, is go to some of your target market. In other words, the market you would be targeting when you’re working that franchise, and get to understand them, their concerns, their interests, their needs, and whether they would be receptive to a franchise like this. For example if you are looking at selling or having a McDonald’s, you have a pretty large market, but you could start going to people in a certain geographic area where you are looking at being located and asking them, do you think it would make sense to have a McDonald’s here? If you are going to be selling components to a particular industry, you can go to those company owners and say, would you consider buying these components? Why or why not? Maybe they are overpriced, maybe the brand doesn’t have a good reputation, maybe there are other issues in the industry that would prevent them from buying from you. It would be nice to know that in advance and you can often identify problems or opportunities by talking with your target market before you have invested that large amount in buying into a franchise.