Before you decide which franchise opportunity to invest in, you’ll want to get a clear sense of your competition.
Once you determine the exclusive territory you may have access to, you’ll want to assess the competition for your particular product or service. Think first about all the competition you might be facing, both direct and less obvious. With that mental list, take these steps:
- Go for a drive and a walk. If the franchise you’re considering will benefit from walk-by or drive-by traffic, you’ll want to know who else your customers would be passing as they drive or walk by your location. Cruise the main thoroughfares and see which other options are visible.
- Google your primary keywords. If you’re selling sandwiches, type “sandwiches” and the name of your community into the search engine and see who they think is your top competitor. Anyone showing up on the map or the front page should be on your radar, too.
- Crowdsource the question. Post at Twitter, Facebook, or LinkedIn, asking, “Where’s the best place to get a tune-up?” in your neighborhood – of course, replace “tune-up” with the goods or services you’re considering offering.
These three methods will give you more current and up to date information about your major competitors than checking the phone book, but you can also ask the Chamber of Commerce and Better Business Bureau.
Armed with your list of potential competitors, you can research them online. Check out their website, but also see how they show up in the news, look into their workers’ social media, and explore sites like Manta.com and Spoke.com to find out more about the companies. If they’re franchises, go ahead and research the corporate parent companies as well.
What do you want to find out?
- Can you win? The first question is simply whether the market can support another competitor. If there are already 12 pizza parlors in the neighborhood, do you really want to be the 13th? Are there several well-established companies… plus a series of others who have opened and closed their doors quickly? You might be able to outshine the competition, but get a realistic idea of what you’re up against first.
- How are you different? If you can’t find clear points of differentiation between the businesses that are already open in your area and the one you plan to open, you probably can’t compete. What’s unique and progressive about the franchise you’re considering? Can you set yourself apart from the competition? If so, you may be looking at a great opportunity.
- What problems are they having? If the competition is visibly having problems like customer complaints, high employee turnover, or slow business, you can expect to have these problems, too. All businesses face problems, so this doesn’t have to discourage you, but you should think ahead about how you’ll respond to the challenges you see.
If you see no competitors at all, you should think about why goods and services like the ones you plan to offer haven’t gotten established in your neighborhood before. Do you have something very new, or something that doesn’t sell well where you plan to sell it?
Your answers to these questions will help you make the best decision about your franchise investment.