How To Identify A Good Franchise Opportunity In Nigeria: Things You Need To Know

How To Identify A Good Franchise Opportunity In Nigeria: Things You Need To Know

You can always see a franchise to join as easy as you see hawkers on the street, but the trick is in identifying a good franchise opportunity. Before you join a franchise, there are lots of things to consider aside from the annual revenue. This article will help you with the necessary things to do in order to identify a good franchise to invest your money in Nigeria. There are certain factors to consider before buying a franchise in Nigeria.

Good franchise opportunity

You should know that there are many franchise opportunities which often mask their true nature, so before you join a franchise, ensure you have done due diligence. There are ways you can know a good franchise opportunity, especially in Nigeria. You don’t jump into buying a franchise simply because your friend or colleague said it is a great buy. If you don’t take out time to determine whether such a franchise is a good franchise opportunity, you may risk losing your investment.

Also Read: Business opportunities in Nigeria

5 Important Ways To Identify A Good Franchise Opportunity

Here are some very important factors you need to consider if a good franchise opportunity is what you seek.

  • The Unit Growth Of The Business

In your quest to identify a good franchise opportunity, a very way to start is by looking into the business’ unit growth. You should look into the number of units or locations added and lost in recent years. If a franchise has had more added units that lost ones, it is a good sign you are in the right place. When the unit growth of a franchise is on the negative, that is to say, that there are more lost units than new ones, then you really need to watch it.

You can request to know about the franchisor’s unit growth directly or you privately source for it on your own. The problem with getting telling your potential franchisor to give the documents containing his unit growth is that you may end up getting an incomplete report; especially the franchise unit growth is on the negative.

While trying to identify a good franchise opportunity in Nigeria, it is often good you start with the unit growth.

  • You Need To Know The Average Sales Per Unit

Another quality of a good franchise opportunity is the profit potential of the business. So, when trying to find that good and wonderful franchise opportunity, you have to look into the average sales per unit of the franchise you want to join. As a franchise buyer, you would want to make sure that the franchise you are considering is profitable. The challenge here is always in working the numbers that are involved.

No franchisor will disclose their average sales per unit easily because inaccurate earnings claim can be a basis for litigation. Another reason is the fact that proprietary business is jealously guarded. However, this information is often disclosed howbeit vaguely in your Franchise Disclosure Document (FDD). There, you will see a table or chart that provides you with some figures for the average franchise sales.

Read: How to scale your startup in Nigeria

Perhaps you haven’t gotten to the stage where you can gain access to the FDD, there is still a chance you can get your hands on the average sales per unit of the franchise you are considering. You try to go through online sources like the FranchiseChater blog which specializes in the profit potential of different franchises. Here, you will get to find a lot of information in their “FDD Talk” posts, etc. although you will have to subscribe before you can access certain article on this blog.

In a case where you cannot find any information regarding your franchisor’s average sales per unit, you can ask them directly.

  • The Success Rates Of New Franchisees

Another thing you might find hard to come by is the report on the success rate of franchisees as franchisors are not required to disclose such information. The percentage of new franchisees that succeed will tell you how good that franchise is. A good franchise should have a high success rate for new franchises. In item 20 of the franchise disclosure document (FDD), you will always find tables that inform you of every failed unit, those that have been terminated or transferred in the past three years.

In a case where you don’t have an FDD, another way to know the success rates of new franchisees is to look at Small Business Administration (SBA) loan failure rates. This will give you a clear picture of how small businesses have fared in recent years.

  • Take A Critical Look Into Franchisee Reviews

In your quest to identify good franchise opportunities in Nigeria, you will need to see what the existing franchisees are saying about the franchisor. The already existing franchisees already have firsthand experience in the business and you need to pay attention to what they have to say. No matter how meticulous you are in finding answers on your own, you should not neglect the reviews of the existing franchisees. They are the ones that will tell you where the “shoes” hurt the most.

  • What Is The Level Of Support From The Franchisor

A good franchise opportunity cannot exist without quality support from the franchisor. You need to know that the level of support the franchisor is willing to give in order to help you succeed is very critical. What is the franchisor’s offer when the going gets tough? You must demand to know the kind of support the franchisor will provide in terms of ongoing client acquisition, litigation, advertising, marketing, and recruitment.

You can find such information detailing the franchisor’s support on item 11 of the Franchise Disclosure Document (FDD). Note that you are entitled exclusively to the support outlined in the FDD.  Every verbal promise that doesn’t appear in the FDD is considered unofficial and is not binding on your franchisor. While going through the support document, ensure you look for terms like “as required” or “at our discretion.” Such terms entail that it is entirely up to your franchisor to determine when to provide support. In this case, you will have to assume that they won’t provide you with the needed support when the time comes.


Although it is not an easy feat to identify a good franchise opportunity in Nigeria, you can follow the aforementioned tips to make it simpler. Note that the success of your business is not exclusively dependent on the theoretical data at your disposal; you will have to put in the work to get the job done. Once you have identified a good franchise opportunity to invest in, you go ahead and do the needful. You will never win until you have started, so go succeed in that business.





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