A SWOT analysis is an effective way to assess a franchise opportunity, Paul Hansen, head of sales and marketing at Hitachi Capital Franchise Finance, says
There are literally hundreds of franchise brands to chose from. So how do you select the one that’s right for you?
Whenever I look at a new opportunity, I like to use a SWOT analysis to help me evaluate it. Below I will give you some hints and tips on how to complete a simple SWOT analysis to help you evaluate the brands you’re considering.
What is a swot analysis?
SWOT is an acronym that stands for strengths, weaknesses, opportunities and threats.
A SWOT analysis is a useful tool to assess, evaluate and compare these aspects of different franchise brands.
Why would you need to use a SWOT analysis?
In almost any situation, your likelihood of success can be improved by getting a handle on known strengths, weaknesses, opportunities and threats.
A good SWOT analysis is like a car MOT - it points out things you should take notice of and highlights key areas for immediate action and consideration. Because it relies on four neutral factors, a SWOT analysis is an effective tool for getting an unbiased evaluation of a franchise opportunity.
Is it difficult to complete a SWOT analysis?
No. You can carry out a simple SWOT analysis on the back of an envelope. However, the most useful SWOT analysis is best conducted as a considered exercise with input from family and friends. Different people could have different perspectives on things that you consider the strengths or weaknesses of a brand.
Working through each quadrant in turn, ask yourself the questions appropriate to the brand. When you have captured thoughts on all four areas, it’s useful to rank the views. Some may be less pertinent; others may be of vital importance.
Remember, the best SWOT analysis relies on complete honesty. Put everything down as you think of it. If it turns out to be less important, it will become evident when you rank it.
The four quadrants of a SWOT analysis
A good SWOT analysis will help you evaluate the risks and rewards associated with the franchise brands you’re considering. These can be assessed using the four quadrants:
- What does the brand do well or what sets it apart from the competition?
- How long has the brand traded in the UK?
- How successful are the franchisees?
- What’s the speed of return on your investment?
You could consider:
- The brand’s reputation.
- The people involved and their experience.
- Processes and procedures.
- Financial strength.
- Quality of training provided.
- Is the sector growing?
- Are there additional territories available for future expansion?
- Does the demographics of your territory match the typical clients of the brand?
- The competition.
- The brand’s resilience in the current economic environment. • Negative reviews from customers.
- Unhappy franchisees.
Franchising and, more importantly, selecting a brand is a very personal journey. It’s an exciting time and in many instances, it’s easy to focus on the positives and overlook the negatives - we all own a pair of rose-tinted glasses somewhere at home.
A SWOT analysis is only valuable if you use it - merely conducting the exercise is futile if you don’t use the output effectively.
Selecting the right brand is critical to your future success, so use the tools you have at your disposal to make the right decisions for you and your family.