When you are starting a franchise, a big part of your due diligence process should be devoted to conducting extensive market research. A thorough market research is mandatory, if you want to become successful as a franchisee. But, many novices fail in spite of starting a franchise of a top franchise opportunity, just because they don’t do proper market research. You may find the product/service great, but if there are not enough people to buy it, then it is of no use.

The next question that naturally comes is what are the facts that we will have to gather from the market and how. Before you go ahead and start looking at various franchise business for sale ads, try to find the answers to these questions:

• Who will buy my products regularly?
• Who may buy my products occasionally?
• Where do they live?
• How often will they buy/need my products?
• Are they willing to go far to get my products/services?
• When do they shop?
• What is the franchisor’s brand-value to them vis-à-vis that of the competitors?

Now, the next question that comes to mind is how you will solve these queries. Some sources that can help you to solve your queries are:
• The franchisor: Your first-hand knowledge of the market will come from the franchisor. Every franchisor has a profile of its customers. Ask them about it. You can also get a clear picture from the FDD where there will be specific guidelines stating the consumers of the product/service.
• The present franchisees: After the franchisor, the present franchisees are the best source of information. They can tell you in details what sells and what extra features people want. You can ask franchisees from different franchise opportunities to know more about the market.
• Reports & surveys: The government regularly publishes trends and statistics on the demography and spending habit of the people living in the market. You can get most of them free of cost. Then there are also publications from respected journals and local Chamber of Commerce, which will also provide you with necessary information.

The next step is how you study the market with these reports and statistics. Let’s take an example. Suppose you have come to know from the franchisor that your product/service is generally for women of various ethnicities and between the age of 18 and 38 years. The income level of the group is generally high and they like shopping in malls during afternoon. Now use the demography report and check out which area of your market has the highest concentration of such customers and find a shopping mall in that area to open a franchise.

This is how you can find out whether your market can support the franchise business for sale you intend to buy.

Written on August 19th, 2009 by Joseph in Franchise Industry.
Source: brandEXPANSION Hot Press