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:

Advantages:

  • 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.

Disadvantages:

  • 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:

Advantages:

  • 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.

Disadvantages:

  • 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!

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About the Author - Kelly Mangum

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