This lesson is part of our free Franchise 101 course.
Before you dive into running a franchise, you need to understand how good it is. One of the best ways to do that is to look at the metrics.
Why Metrics Matter
Metrics tell you about the aspects of a franchise that can be quantified. Anything that’s counted comes under this heading, and in business terms, that mostly means finances.
Metrics are important because they give you objective information about how big a franchise is and how well it’s likely to do. Different people might have different opinions on whether a specific burger chain is popular or successful, but the metrics will give you an objective assessment of how profitable it is compared with the competition.
This is why it’s so important to look at the metrics provided by a site like Franchise Chatter. They help cut through the opinions and give you hard facts.
Performance Metrics Are Averages
When you’re looking at a metric on a franchise, whether it’s for revenue, profits, or even something non-financial, it’s vital to remember that it will usually be an average. This means that you’re seeing what a mid-level branch of this franchise will achieve.
That tells you whether a franchise can provide what you’re after, and whether the rate of return is likely to match your initial outlay. But it can’t tell you what will happen with your individual franchise. For any average, some locations will do far better and others far worse. Just because you’ve seen an average income doesn’t mean that you’ve seen a promise on what you will earn – or a limit on it!
Results Vary with You
Individual results can vary hugely between different outlets, and the key variable is you. Your thought, your effort, your planning will help decide where your branch ends up compared to those averages. That planning starts with looking at the metrics.
To get started on this, check out Franchise Chatter and our rankings of franchises by average revenues and average profits.