Demand for a Franchise in Your City: Check Before You Buy

A well-known brand does not guarantee a queue of customers in a particular city. Joining a franchise network gives an entrepreneur rights and tools, but local demand still needs to be assessed independently. This helps distinguish an appealing concept from an offer people are genuinely willing to pay for. It is best done before signing an agreement or making commitments you cannot reverse.

1. Identify the need the franchise meets

Start not by asking whether people like the brand, but by considering a specific buying situation. Who is the customer, why do they need the product, how often does that need arise, and what do they use now? For a bakery, this might be breakfast on the way to work; for an education centre, after-school classes; for a home services business, an urgent household repair.

Draw up a brief profile of the demand you expect:

• who makes the decision and who pays;
• what prompts the customer to act now;
• which alternative they currently choose;
• how much time they are willing to spend travelling or waiting;
• which factors matter more than the brand: price, speed, opening hours or delivery.

Do not treat everyone in the city as a single audience. The same product may appeal to office workers yet be inconvenient for families with children. Choose the main buying scenario and focus your research on it.

Speak to potential customers outside your circle of acquaintances. Ask about their most recent actual purchase: where they bought it, how much they paid, what they liked and why they did not choose an alternative. An answer such as ‘I would give it a try’ is much weaker evidence than a description of a recurring need they already spend money on.

2. Compare the brand’s claims with local conditions

Ask the franchisor to show which existing outlets underpin its demand estimates. Population size is not the only factor: compare buying habits, where customers are located, competition, seasonality and product availability.

A successful outlet in a tourist centre does not necessarily demonstrate that the same format will work in a residential neighbourhood. Equally, a lack of direct competitors may indicate either a gap in the market or weak demand. Each explanation needs to be tested separately.

In Russia, commercial concession arrangements are specifically regulated by Chapter 54 of the Civil Code of the Russian Federation. Where a package of exclusive rights is granted, including the right to use a trade mark, the rules of this chapter apply; the grant of the right to use those rights must be registered with Rospatent, Russia’s intellectual property authority. Registration does not, however, confirm the commercial viability of the offer. The law does not require a franchisor to test the model at its own pilot outlet beforehand.

Nor is there a specific mandatory pre-contractual franchise disclosure document equivalent to those required in some other countries. You should therefore request the information needed to assess local demand yourself, rather than treating a sales presentation as a comprehensive market study.

It is useful to obtain separate figures for comparable outlets: transaction numbers, average transaction value, repeat purchases and the periods covered. Check whether the figures reflect normal trading or an opening period supported by heavy discounts. Total revenue across the network tells you little about customer behaviour in your city.

3. Study competitors and customers’ actual journeys

Map out not only similar brands, but also substitutes. A coffee shop customer might buy a drink from a convenience store, a student at a learning centre might take online classes, and someone considering a fitness studio might choose a municipal sports facility instead.

Record the same set of details for each significant competitor or alternative: product or service range, actual prices, opening hours, waiting times, delivery, promotions and the substance of customer reviews. Separate standard terms from temporary discounts. The comparison will only be useful if you are looking at similar products and buying situations.

Observe the area on different days and at different times. Look beyond passing footfall: note whether people match your target audience and whether they actually visit competitors. Do not assume a queue proves high profitability; it may result from slow service or a one-off promotion.

Use reviews as a source of hypotheses. Repeated complaints about inconvenient opening hours or slow delivery may point to an unmet need. First, however, establish whether the franchise format allows you to meet it. If the brand’s standards rule out the service customers want, that demand does not make this particular franchise suitable.

4. Run a small test and set decision criteria

Before testing, put in writing what you need to establish. For example: the target customer understands the offer, accepts the proposed price and is willing to take a specific action. Decide in advance which results would justify further investigation, a rethink of the format or a decision not to buy.

You could conduct interviews using a presentation of the concept, organise a presentation for potential corporate customers or collect initial enquiries. If you use the franchisor’s trade mark, photographs or other materials, obtain permission for that use in advance. Negotiating a purchase does not itself give you those rights.

Do not present the test as an operating business. Clearly explain that you are assessing interest in a possible launch, do not promise an unconfirmed opening date, and do not accept payment for a service you are not yet ready to provide. When collecting contact details, comply with applicable personal data legislation, and separately check whether consent is required for marketing messages.

Assess not just the number of responses, but also their quality: do respondents fit your chosen audience, are they comfortable with the price, and are they willing to wait or travel? An enquiry is not a purchase, so test results cannot automatically be treated as a forecast of future sales.

Practical takeaway: before buying, prepare a short summary setting out whose demand has been substantiated, the observations supporting it, the uncertainties that remain and what needs to be checked next. If the only convincing evidence relates to another city or a different audience, postpone the deal rather than replacing due diligence with trust in a recognisable brand.