Test Yourself

by Administrator - Faredge

Arlette Dumont du Voitel
Client Project Manager
How to use SWOT analysis
to determine whether
a franchise business
opportunity is right
for you

Arlette Dumont du Voitel

Arlette Dumont du Voitel | Client Project Manager | 10 THOUSAND FEET

The key to being successful as a franchisee is not only choosing a franchise business opportunity that has great systems and support in place, as well as the potential to be financially rewarding, but also to consider what you, as a franchisee, have got to bring to the table. The better you understand in what kind of franchise business opportunity you can utilise your skills, experience, knowledge, interests and personality and make this part of your decision process, the happier you are going to be in the system of your choice.

Buying into a franchise business opportunity is a big decision in life. When companies face big decisions, they often get a team together and conduct a SWOT analysis. This type of analysis identifies the strengths, weaknesses, opportunities and threats not only of the company internally, but also particularly in relation to a decision that has to be made, whether it is the launch of a new product, a merger with another company or the decision to expand overseas. So, when making your own big decisions, it is certainly a good idea to take a leaf out of the big companies' books, and carry out a SWOT analysis on yourself.

In a SWOT analysis, strengths and weaknesses are internal factors whereas opportunities and threats describe external factors. In the context of looking at becoming a franchisee, the first step is to brainstorm on the four elements (strengths, weaknesses, opportunities, threats) in consideration of your skills, experience, knowledge, interests and personality and in regards to the venture of taking on a franchise business opportunity. The analysis will work best with a particular franchise business opportunity in mind or alternatively a category, such as coffee franchise or mortgage franchise.


For a prospective franchisee, strengths can encompass aspects of the following:

Advantages of becoming a franchisee of a particular franchise business
If a particular franchise business opportunity attracted your attention, it surely was for its potential benefits to you, whether this is working hours, location, flexibility, financial rewards, its products or services or the support system behind it. Identifying why a particular franchise business opportunity appeals to you will help you not only to understand what you are looking for in a business and but also to apply this to other franchise business opportunities you may be considering.

Personal traits that are advantageous for the venture
There are personality traits that are a strength no matter what franchise business opportunity is considered, such as being a "people person" or being a fast learner. Others may be more advantageous for a particular system and less so for another. It is important to identify the personality traits that will be particularly helpful to be successful in your franchising endeavours.

Personal support network such as family, friends, mentors
Humans are social creatures; we need the people that surround us. In its very basic form, their support can be as simple as listening to problems even without being able to give qualified advice and being positive and encouraging about the business. In a best case scenario, they may even be family members or friends who run their own business or are engaged in a similar industry and who can, therefore, be more of a hands-on support and assistance.

Professional and personal experience, knowledge and skills
Skills and experiences gained are most likely to be a strength regardless of whether they directly or only indirectly relate to the franchise business opportunity in question. Similar to your personal traits, some of your experiences and skills will be more suitable for the nature of the franchise business you are looking into than others. In regards to the skills and experience that do not directly relate to the franchise business opportunity in question, the art of this exercise is to identify aspects within those experiences and skills that can be converted and applied to the business and be beneficial to it.

Financial reserves and a good credit history
If you are looking at buying a franchise business opportunity, you are most likely faced with a considerable investment. There are multiple ways of financing a franchise ranging from using your own money, borrowing money from wealthy friends or relatives to taking out a bank loan. In some cases, it will be a combination of multiple sources. Not only personal wealth or access to funds through family members or friends but also good credit histories are definitely strengths that should be thought about in your evaluation.

Personal values and goals
Last but not least, values and goals are the fuel in our engines. If they aren't in line with what we are doing, we are not going to be happy, efficient or successful in it.


Identifying weaknesses serves two purposes. The first one is to be aware of aspects that may obstruct your business endeavours and to see whether it is worth pursuing. The second purpose is to find ways to overcome the objections and ideally turn them into strengths.

Disadvantages of becoming a franchisee of a particular franchise business
There are always two sides to a coin. The importance of this exercise lies in the comparison to the advantages identified in the strength section above. It is a question of weighing up which side of the coin, the advantages or disadvantages, would have a greater impact on you, your life and your professional career than the other. If the disadvantages are of greater significance than the advantages, you may want to look for a different franchise business opportunity.

Gaps in skills, knowledge or experience
Skills and knowledge, more so than experience, are areas that have the potential to be relatively easily fixed. There may be courses that you can undertake to gain new skills or brush up your knowledge in a certain area. Also, one of the advantages of becoming a franchisee over starting a business from scratch is that skills are mostly covered in the training component of the franchise business opportunity. Experience only comes from experience but until it is gained, it can often be made up for by other skills or qualities.

Lack of personal support
If the key people in your life can't offer, at the very least, emotional support for your venture, an undertaking such as taking on a franchise business is going to be challenging. Part of the evaluation should be why the support is being withheld and if there is a way of overcoming the issues.

No personal funds and bad credit histories are definitely going to be obstacles in the process of becoming a franchisee. If this is the case, financial advisors may be able to help or even the franchise system in question through their agreements with banks and lenders.

Lack of commitment or discipline
If you doubt your commitment to your prospective business, this should be taken as a warning signal. As the owner of the business, your commitment is paramount. Lacking discipline is less serious than lacking commitment. Discipline can be learned. The less disciplined and structured you are, the better the systems and structures put in place by the support team of the franchise business opportunity of your choice need to be.

Personality clashes with business requirements
This comes down to the nature of the clash. Leading on from the last point, if you happen to be lacking discipline in a business environment that requires a high degree of it, there is the potential that the attitude required by the business can be learned if the commitment is there.

If the clash is based on values, ethics or goals, the potential to turn it into a success is minimal.

Opportunities and threats:

As mentioned earlier, opportunities and threats take into account externalities. These are largely based on economic factors and activities. The opportunities of one business can be a threat to another.

The economy overall
The economy goes through cycles of booms and recessions and their transitions. Some industries and businesses rise and fall with the economy, others are countercyclical and make profits from recessions and others again manage to adapt their offering quickly enough to be able to maintain a relatively steady level of growth throughout ups and downs.

Annual reports of the franchise company, in comparison to historical information on the state of the economy at any given time, can give you an indication of the opportunities created and taken by the company, as well as the threats that were avoided and the ones that had to be faced and dealt with.

Market developments, industry or lifestyle trends
The franchise business opportunity you are interested in should be constantly engaging in research into past, current and future market movements and trends for their strategy as a company. But trends can be different on a local level, so franchisees may have to adapt their own business strategy to market shifts in their local area. It definitely won't harm to knowledge up on the industry, products and/or services you would be offering as a franchisee and to run your own evaluation on whether, on a local basis, the offering is future proof, if a rise in demand or a shift in the target audience can be predicted for the future, if it is likely that more competitors will enter or exit the market or if there is a market niche to conquer and own. Market developments and trends, more often than not, entail both, opportunities and threats. Similar to assessing advantages and disadvantages of becoming a franchisee in a particular system, it is important to recognise whether there are more opportunities than threats to the future of the business.

Technology development and innovation
While the purpose of technology is to make work easier and more efficient, it has eradicated not only individual positions within a company but whole industries. But on the other hand, new technologies also create new positions, new businesses and new opportunities. The question is how changes in technology have affected your potential franchise business opportunity in the past and present as well as what impacts there could be in the future, positively and negatively.

Depending on the nature of the franchise business opportunity, opportunities and threats can also be created by environmental factors, the employment market, changes in legislation, political changes, influences from overseas, and seasonality or weather.

Once the information on strengths, weaknesses, opportunities and threats is compiled, it is time to highlight the areas and aspects that will be the most important or have the greatest - positive or negative - impact on your business venture. The outcome should ideally show your greatest strengths, most hindering weaknesses, the opportunities that have the greatest prospect of making your franchise business opportunity a success and the worst threats that have the potential to tear it all apart. Based on this list, you will have a solid indication whether you can lead a business of that kind to success while enjoying being the owner of it.

You can look for franchise business opportunities to conduct your SWOT analysis on right here on this website. Click on the franchise category that is of interest to you or look under the A-Z Franchise Listing.

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