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EVALUATE THE MARKET FOR THE PRODUCT/SERVICE

If you are buying a franchise, you are going to be working, selling and promoting the product or service for a long period of time. You can’t change or develop the product or service, so make sure that the franchise has long term appeal and its market is not threatened in any way.

It is important that the franchisor can demonstrate a clear understanding of the future market for the product or service and that you both clearly understand the following

Question
Is the market for this product / service expanding rapidly, growing slowly, static or declining?
Notes to consider
The more advertisements you see for the product or service now than a couple of years ago can give you an indication of the state of the market
Question
Does the product / service have special features which help it to sell? Does it warrant a premium price?
Notes to consider
In order to make money for the franchisee and franchisor, the product has to have real advantages over competitors. It may be difficult to maintain premium prices if the product or service could be easily copied by others.
Question
Who would your competitors be and how competitive would your product or service be in relation to them?
Notes to consider
Do competitors have any technical or price advantages? Could you improve on the service offered? What is their level of advertising? If there are no competitors ask yourself why there are none.
Question
You have looked at the general market for your product, what do you know of the local market in which you will be operating?
Notes to consider
Does the local market have the same characteristics as the market in general? Is the product particularly suitable for your area? How dependent is success of the business on particular lifestyles or levels of income?


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