The Pros and Cons of Buying a Newer Franchise Concept

By Kelly MangumOctober 29, 2018
Should I buy a new franchise concept or should I invest in one that has been established for many years? Are my chances for success better with a large branded franchise or a company that has only recently franchised and/or hasn't yet become a nationally recognized brand? There are pros and cons to this decision and of course much of it comes down to you and your preferences.

New Franchise Concepts:

  • New Franchisors are extremely committed to your success. If you do not succeed, it will become exceedingly difficult for them to expand. They will devote time and attention to you.
  • You may be able to obtain territories that will yield more revenue. Often in an established franchise, prime territories are sold within the first few years.
  • New franchise owners can more easily contribute ideas to help develop the new system.
  • If you are a true entrepreneur, you may want to stick to a new concept as risk is a part of the process and your personality may be better suited to that environment.
  • More risk is involved as the concept may appeal to you but not succeed in the area you develop.
  • There will be growing pains for the franchise system, and you will be among the first to deal with them.
  • It may be more difficult to obtain capital as lenders are often risk-adverse with less proven businesses.

Well Established Franchise Concepts:

  • History of revenues, litigation and failed franchisees are available for you to investigate.
  • Established brands have tried and true marketing that has been tested and successful.
  • Your transition to ownership will be quicker and simpler...the kinks of an established system will already be worked out.
  • Getting financing will be easier.
  • You may experience some difficulty in having a voice as one of hundreds or thousands of franchisees.
  • Prime territories may be sold out.
  • You may not agree with or like regional and national advertising campaigns that you're required to subsidize through your ad fund contributions.
Whatever you decide, buying a franchise for most people is much easier than starting a business from scratch. Most franchises help you secure a location, provide software, establish recognized vendors and give day to day support. Committed to your growth, Franchisors want you to be successful. After all, your growth equals their growth!

About the Author - Kelly Mangum

Director of Marketing at & Franchise Solutions. Experienced at lead generation & project management. Mama of 2, wife, runner, gardener, living just outside of Portsmouth, NH.
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