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 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!