Will This Franchise Work In My Area?

Franchise Consultant Jeff Elgin writes in Entrepreneur Magazine about points to consider in knowing if your dream franchise will succeed in your local market. A concept that succeeds in Oakland, California may not transplant so well in Boise, Idaho and vice-a-versa.

"Can the product or service be transplanted to where we live and still be successful? Will the brand draw sufficient customers? Will other people see the appeal that seems so obvious to us? Is there anything necessary for success in this business that's missing from our area?"

He offers several benchmarks that potential franchise owners often don't hear but development leaders typically ask. (Some franchisors have developed formulas germaine to their particular industry on how many franchises an area can hold.) Here's Mr. Elgin's suggestions on what to consider in knowing if your locality will support a franchise.

• Total Population in Trade Area. Many businesses need a certain absolute number of people in the trade area in order to ensure enough potential customers to support the business at a successful level.

• Population Density. Ask the franchisor about the effective draw area (in other words, how far will a potential customer drive to get to a business like this?). Then compare the population density within that radius in both the existing unit and your area.

• Population Racial or Ethnic Characteristics. This can be an especially important factor if you're considering a franchise business idea that appears to provide initial consumer appeal based on one of these factors. This might be a Polynesian restaurant that appeals strongly to certain racial demographics.

• Income Levels. It's also very important to compare the average household income levels of the existing business area to your area. There are a number of businesses that succeed in a fairly tight income demographic, and you need to determine if the business you're considering is one of these.