When you plan to invest in a franchise opportunity, you’ll look at varying criteria. One thing that should be on your list — but isn’t about the specific franchise businesses you’re considering — is the business friendliness of the town or neighborhood where you’re planning to locate the business.
What’s a business friendly town? Look at these criteria:
- Licensing fees and regulations. How easy is it to start a business in your town? Here, you will have to consider the type of franchise you plan to start, but your location will make a big difference. Depending where you live and the type of business you plan to start, you might have to deal with licensing at multiple levels: city, county, state, and federal. You might have some specific regulations that apply to your district of a large city, too. A recent survey found that one quarter of small businesses are subject to more than one level of licensing and regulation.
- Business costs. These include the costs of licensing fees, but there may be other factors influencing the cost of doing business in your town, including the local minimum wage and the cost of utilities, rent, and fuel in your area. Bear in mind that rent can vary a lot in a single town; downtown locations with lots of foot traffic may be much more costly than a space at a strip mall on the edge of town. On the other hand, there can be good reasons for that.
- Labor force. Will you be able to find workers with the skills you need? If there are more workers than jobs, you can expect people to compete for your openings. If there are more jobs for people with the skills you want than there are workers, however, you’ll have to compete with other employers. If you need skilled workers, look for colleges and training programs in your area. If you don’t need special skills, check the unemployment rates. Remember that 3% is considered full employment, since there will normally be some people who are raising children, going to school, or who are not able to work because of disabilities. The U.S. currently has about 5.5% unemployment on average, so there are many areas where workers are in short supply.
- Economic climate. All things being equal, a town that’s growing may be a better choice that a town that’s stagnant, economically speaking. However, this depends on your business. A luxury business won’t do well in a town that’s facing hard times, but a bargain business may thrive.
- Infrastructure. Is it easy to get from one part of town to another? Is it easy to get shipments to your chosen location? Do you have reliable utilities, a convenient local airport, and easy access to the kinds of goods and services your chosen franchise will rely on?
As you explore these factors, you may see that one kind of franchise would be a better choice for your location than another — or that you’d be better off with a site in neighboring town. Use that information in making your choice of a suitable franchise.
