Franchise Research Must Include Questions About Direct Competitors

Wonderful West Wittering - June 2011 - Happy Couple 1

Unless the franchise business concept you’re currently having a love affair with is the 1st of it’s kind, you’re going to have direct competitors. Having competitors can be good or bad, depending on how you look at it. If you’re competitors are rock-solid, you’re going to have to work harder and smarter than them. On the other hand, if they’re weak, you can quickly dominate your local area.

There’s only one way to find out if your competitors are good or not; you’re going to have to ask the people on the firing line-the franchisees of the concept you’re interested in. It’s not really that hard to do; you just need to have the right mindset going in. Here’s the mindset I want you to have;

I’m only focusing on getting the facts needed  in order to make an intelligent, fact-based decision on becoming the owner of a franchise.”

I want you to say that over and over again as you investigate opportunities that you’re interested in. The reason; you’re going to get distracted at times. Sometimes, well-meaning friends and relatives throw ideas…and even suggestions your way. These ideas and/or suggestions may be excellent. Or, they may be stupid, and in that case, they can end up turning into distractions. Distractions eat into your research time. So, plan on getting distracted a bit, but don’t let Aunt Penelope stop you from reaching your goal.

I’m actually teaching how to reach your goal of becoming a franchise owner right now, with my continuing series of blog posts titled;  The Top 40 Questions To Ask Current And Former Franchisees.

You’re in the middle of one of them right now. From page 185 of my book on franchise ownership, here’s question 13;

How much and what type of competition is there?”


Are The Direct Competitors Rock Stars?

If I was about to plunk down $150,000 or more on a franchise start-up, I’d sure want to know how strong the competition was. I’m sure you do, too.

You’re going to want to find out if there are a lot of  competitors-both nationally, and locally. The best way to do that is to ask 10-15 current franchisees of the franchise you’re interested in. You should also ask your franchise development representative, but the answer you get won’t be exactly spin-proof. On the extreme end of possible answers you’ll get when you ask your franchise rep that question, is this one; “We don’t have any competition.”  I find that answer to be a bit old-school, but you never know; it could be true. A more common answer will include your rep naming off a couple of direct competitors, stating a couple of negatives and positives about them, and moving on.

The answers that matter will come from franchisees. So ask them!


I Like Open And Honest

You should too.

If I’m looking at a specific franchise opportunity, like something in the retail sector, and I ask my franchise development person about the competition, if he told me the following, I’d feel like a rock star;

“There are actually 3 other franchise concepts that compete with us, Joel. 1-800-Picture Frames And Such does a nice job with internet orders. Their website is really good, and the franchisees share in all the earnings from the net, and they seem pretty happy. Picture Frame Heaven is a pretty small franchisor..they are really more regional. They are in about 5 states, and haven’t really grown that much. But, they have really nice stores. Then there’s Name Your Frame; they are our strongest competitor. They have almost twice as many stores up and running as we do, and they have been on quite a roll. They’ve also gotten some nice press; they’ve been featured on OWN…Oprah’s network, and Entrepreneur magazine did a nice feature on them. They’re good. But we’re better. Allow me to tell you why…..”

How would you react to an answer like that?

(FYI: the 3 franchises named above are fictitious. I made the names up. OWN is a real network, and Entrepreneur magazine is…Entrepreneur magazine.)

Here’s the bottom line;

Your franchise business will have competitors. Knowing who they are…and how good they are is great knowledge to have.

Are there more competitors in your own market than you originally thought? Or are there less.

Because you crushed them.


Remember, before you sign your franchise agreement, go to this website.


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  • Caitlin Laura

    Great post. I think a lot of people overlook who their competition is or underestimates how strong they are. Sometimes it takes more than just hard work to beat your competition, and in certain industries, strong established competitors may not make it worth even getting in the business no matter how good it may be.

    • The Franchise King

      So true, Caitlin.

      They say that we shouldn’t really watch out competitors that much.

      Not sure if I agree.

      Thanks for the comment.