Bradley Sugars

Brad Sugars believes that franchising is a great business model which combines a proven system for running a business and producing a profit with great people who have an equity interest in seeing it succeed.  He does not however want to see everybody go out tomorrow and try to open a coffee shop, just because they think this is a great business idea.  There are many things which should be considered before making the decision to either franchise your own business model or to buy into an existing franchise.

Brad Sugars provides the following 8 item checklist to evaluate before making a decision about franchising options:

1. How many of the same type franchises are available? As a general rule, the more competitors, the more difficult it will be to land premium site locations. Also, any prospective franchisees will always evaluate your business model against that of your competitors.
2. How many people want to buy a business in the area you are trading? You should research the total number of franchises that were bought and sold, as well as the number of transactions of your key competitors in the area. If the market is not already a thriving franchise location, it could be more difficult to find people willing to invest in your business.
3. How many customers a day does the business need to be profitable? You should evaluate the minimum number of transactions needed each day to hit your financial targets.  Compare this minimum target against the size of the market while factoring things like the market share of your competitors to decide if your projections are realistic.
4. Is your target market growing or shrinking? You should review demographic trends to determine the direction of your market over the foreseeable future.
5. How many competitors for the franchisee? As a general rule, the more competition you have the more pressure you will have on pricing, profit margins, and therefore success.
6. What will be the profit margin for your franchisee? You need to have a solid understanding of the profit picture from the lowest level up. There should be enough buying discounts to offset the royalty fees, but make sure your franchisees will be making an adequate return.
7. Can you build long term customers? A business model built around a one and done buying relationship with your customers is lot less likely to be profitable than a model built around repeat customer traffic.
8. Are you going to love it? If you do not enjoy the day to day activities of the business, you will find it a lot harder to put in the level of workload necessary to make it successful. A labor of love is always an easier burden to carry.

Brad Sugars has proven in his own business the power of the franchising model. If after doing your due diligence up front you still see the potential for growth, then franchising is an excellent growth vehicle. It is also a great way for a novice business owner to get into a business by joining a franchise in a growing market with a proven track record for success.