Franchises are often referred to as a “business in a box” or a “turn-key business.” However, that doesn’t tell you which franchise is best to invest in. Today, we’ll share five signs of a hot franchise opportunity to help you figure out which ones make smart investments and which to stay far away from.
As you begin to think about investing in a franchise, you should first consider what you want from your business. It helps to answer a few questions:
Once you have your responses, use them to help you spot a hot franchise opportunity by looking for these signs.
One of the most obvious signs of a hot franchise opportunity is the level of success over the lifetime of the business.
Invest in a franchise that has a lengthy history of success and profit.
Avoid new franchises that don’t have an established history or that try to hide their history from you
The past is the best indicator of future success. Proven business models come with success built into their processes.
When you invest in a franchise with historical success, your chances of launching your own successful business increase dramatically.
So keep an eye out for proven franchises that have plenty of success metrics to share with you. These could be profit and loss statements, future projections based on past results, or even case studies of other successful franchisees.
A business that only offers a single revenue stream probably isn’t a hot franchise opportunity.
As an investor, you want to know that your franchise can stand the test of time. So you have to think about what happens if your primary revenue stream wavers.
Do you have a backup source of revenue? What about a backup for your backup?
Many businesses have closed their doors permanently because they couldn’t produce enough income month over month when their primary revenue source dried up.
Invest in a franchise that offers multiple revenue streams. The more revenue streams, the stronger the opportunity.
If there is only one revenue stream, RUN for the hills!
Having multiple revenue streams ensures you’re never solely reliant on one way to bring in your revenue. For instance, the iCode Franchise offers nine full revenue streams with opportunities for even more revenue streams coming in the future.
How much cash do you have available to invest? If you’ve got millions, you might be a fit for a top brand with an established reputation (think McDonalds, Starbucks, Pizza Hut, etc.).
Since the cash outlay for franchises with the biggest brands can be between $2,000,000 and $5,000,000 (or more) they usually aren’t considered hot franchise opportunities for many people.
A truly hot franchise opportunity is one that you can afford AND that meets the other criteria in this article.
Invest in a franchise with affordable startup costs between $100,000 to $400,000.
Unless you’re a multi-millionaire or have access to multi-millions, avoid franchises with initial investments in the millions. Also be wary of franchises under $100k because they likely don’t have the history, branding, or proven processes to support you as a business owner.
On a similar note, franchises that are too affordable are often money pits.
It makes sense when you think about it. They don’t have proven processes, training, or resources to help you grow.
When a franchise investment is only in the tens of thousands, you can expect that success will mostly rest on your own entrepreneurial abilities.
That’s great if you like to take risks, but if you’re going to do that, you might as well start up a business from scratch, right?
Not every industry is a good match for every personality. Some people don’t like preparing food or making coffee. Others don’t want to sell clothes or real estate.
If your franchise industry doesn’t fit your interests, you’ll put yourself at much greater risk for burnout.
Part of the success equation is persistence. It’s much easier to persist in a business that suits your individual interests and goals.
Choose a franchise in an industry that not only matches your interests but is deeply fulfilling for you and offers a sense of purpose.
Avoid franchises that don’t align with your passions. If you can’t wake up excited about what you do, you’ll risk burnout and failure.
Another factor for persistence is how fulfilling your business is.
Will you wake up in the morning with a sense of purpose or will you dread your day?
It makes a difference.
Look for franchises tied to a mission that you can stand behind.
If a franchise exists for the sake of existence and doesn’t offer a greater sense of purpose, ask yourself if it’s really the right fit for you.
The last big sign of a hot franchise opportunity is whether or not that franchise is positioned to take advantage of the future.
Is the franchise positioned to grow with the market, or will market forces work against it over time?
For example, Kodak was a dominant force in the photography industry for many years.
Unfortunately, Kodak wasn’t positioned well for the 21st century. When phones replaced traditional cameras, Kodak’s fate was sealed.
If you invested in a Kodak franchise just before this major shift, it might have looked like a great choice.
Kodak offered an established brand and strong history, but it couldn’t compete with modern technology. Ultimately, it failed.
Invest in a franchise that is set to take advantage of future opportunities and markets.
Avoid franchises that offer hot prospects in the immediate present at the expense of future markets and changes in technology.
Starting a franchise is always an investment in your future.
Keep an eye out for opportunities that are designed to capitalize on tomorrow while succeeding today.
Looking for a franchise that checks all the boxes?
iCode Franchise offers a proven business model with nine sources of revenue that can expand with you into the future.
To make it even better, iCode Franchise is grounded in the growing education and technology industries.
We teach science, technology, engineering, and mathematics (STEM) to help prepare children for the world and jobs of tomorrow.
Parents love our schools, and kids love learning with us.
That’s a mission many entrepreneurs can stand behind, and that’s why we’ve grown so fast and have so many successful case studies for you to follow.
If you’re ready to check out this hot franchise opportunity, click here to learn what we can do for you.