5 THINGS YOU MUST CONSIDER WHEN BUYING A CHILDREN’S FRANCHISE
Commonly when people begin researching franchise concepts to buy, the idea of a children-oriented business comes to mind. It makes sense when the average American family spends over $233,000 to raise a child. However, there are more things to consider than the size of the market when making such a significant personal investment. Here are our top 5 considerations.
1. The “Value-Add”
Many concepts offer a service geared to children – tutoring, athletics, amusements. As you look at the business model, consider if the concept does more than simply provide the base service. Talking with Kenny Crump, CEO of Gym Skills, he shared this thought, “When we developed the Gym Skills model, we wanted to give kids something more than simply athletic training. We wanted every child to leave with this underlying learning – that hard work and perseverance are fundamental to achieving greatness.”
2. The stickiness of the Concept
For those financially inclined,
Stickiness = Lifetime Value of a Customer
Many children’s concepts target a particular life stage- be it, infants or toddlers. When investing in a concept, be sure its services bridge multiple life stages so you can retain families longer.
3. Territory
When evaluating a franchise, no matter the segment, the territory is a critical consideration. As you are looking at concepts, consider not only your territory today but what is available for you to purchase as you grow and scale your operations. This is where emerging franchise concepts can have a tremendous advantage. While you may need to introduce the brand to a new market, you can own a larger territory and the revenue it creates.
4. Scalability of Investment
All FDDs share the range of investment in the first year of operation. However, very few franchise concepts offer the ability to start with a mobile business and build into a brick-and-mortar business as your revenue grows. Brands that offer this business model can be a more reasonable investment allowing you to continue to invest as your business grows, rather than making a larger investment in year one. Face it, deciding to leave a current job, invest in a franchise, and fuel the startup costs is a huge barrier for many people to realize the dream of owning their own business. Scalable businesses that limit fixed costs in the first year can be a wise investment.
5. The Company’s Core Values
As part of the mutual discovery process, many brands have a “meet the team day,” a chance to meet the leadership and training teams that you will be working with if you invest. Take note of the company’s culture and core values. Be sure they align with your own. A company’s core values determine how they make decisions and the importance of the role franchisees have in their business and operations. If the group doesn’t share your vision of doing business and what really matters, it isn’t the concept for you.