The 3 things that make or break a franchise

Hey there,

Let’s look at a simple but critical framework I use for evaluating a franchise: 

The three-legged stool.

You may have heard some version of this before, but I want to walk you through how I actually use it in practice, and what to look for in each leg before you buy.

The gist is: every franchise lives or dies by three key elements.

• The franchisee (you)

• The franchisor (the brand)

• The market (where you’re operating)

If any one of those is weak, the stool wobbles. 

And if one totally collapses? The whole thing goes down.

Let’s walk through each.

Leg 1: The Franchisee

This is you. Your strength as a franchisee depends on three elements:

• Skill set

You don’t need to be an expert in the specific service you’re offering. In fact, you shouldn’t even be the one out doing the service (don’t buy a franchise you’re passionate about). 

But you do need to be able to drive sales. If you’re in B2B, you better be good with relationships. B2C franchisees need to understand marketing… or be ready to dive in the deep end and learn.

(By the way: I wrote about who does well in B2B vs B2C here.)

• Mindset

Don’t think of your first franchise as a passive investment. Pay attention to your business. It’s like trying to treat a startup like a stock. Doesn’t work.

• Capitalization

This one’s huge. If you’re undercapitalized, you’ll make panic decisions.

You need enough upfront to invest in growth — especially in the early days, when it might not be cashflow positive yet.

Leg 2: The Franchisor

A good franchisor sets the tone for everything. Here’s what I look for:

• Strong business model. Do the unit economics make sense? Can franchisees actually make money?

• Systems and processes. Are you confident in the playbook? Can this thing run efficiently?

• Industry trends. Is this a growing, durable industry, or are you chasing a fad?

• Leadership and culture. Do you align with the leadership team? Do they have a clear vision?

• Franchisee validation. Are the other owners legit? Are they growing real businesses, or are you about to be the only person rowing the boat?

One of the best signs: you’re surrounded by 100+ ambitious franchisees pushing each other to win. 

That’s the system you want to be in.

Leg 3: The Market

This is where a lot of people get sloppy. Don’t be one of them. Because even the best brand in the wrong territory can flop.

Here’s what I look for: 

• Ideal customer density

Not just “is there demand?” but “how concentrated is that demand?”

If it’s a rural market and you’re driving 40 minutes between jobs, that’s gonna hurt.

• Climate and seasonality

Some people freak out about seasonality. But when it’s predictable, you can plan around it. Just make sure you understand how it impacts your business model.

• Industry distribution (for B2B)

B2B businesses can be market-sensitive. You need to know if the industries you serve are even present in the market.

• Competition

Don’t think anecdotally. Just because your kid’s soccer coach’s uncle does roofing doesn’t mean the market’s saturated.

Instead, forecast what your cost per lead is going to be. That tells you way more.

Bottom line

If you’re evaluating a franchise, make sure all three legs are solid.

One weak leg? You might have a rough time.

Two? You’re in danger.

All three? Sayonara.

If you want a second set of eyes while you’re vetting your next opportunity, let’s talk.

—

Unrelated: I’m still working on my YouTube shorts game. Give my latest one a watch and tell me what you think!

Thanks,

Connor

P.S. A lot of folks I work with are surprised by how much a market can impact a great franchise. Don’t let the right brand in the wrong place ruin your experience. 

Book a consult here if you want help sorting through the noise.

Ready for the next step? Here are 3 ways I can help you: