Emerging Franchise or Established Franchise Brand?

Is joining a large, well-known franchise brand, like Subway’s or Domino’s Pizza, better than joining an emerging franchise concept? Does it make a difference to your ultimate success as a franchisee? While there are no hard and fast rules, there are certainly benefits to both.

Established Franchise Brands

With an established brand like McDonalds, your chances of success are all but guaranteed. They have superb support teams, bullet-proof systems and a global network of franchisees who can validate the concept.

On the other hand, the barriers to joining these franchise networks are high, markets are saturated, and to be accepted as a franchisee you almost certainly must have access to substantial amounts of capital and bring real world operating experience to the table.

Below are a list of pros and cons for joining an established franchise network:

Pros

  • Well-known brands
  • Bullet-proof systems
  • Superior support teams
  • National and/or global franchise network
  • Superior marketing and sales systems
  • Highly predictable cash flow
  • Well documented track history
  • Strong chance of success
  • Clear exit/succession plans

Cons

  • High barriers to entry
  • Saturated markets
  • Access to large amounts of capital required.
  • Real world operating experience desirable
  • Little autonomy or flexibility
  • Strange mix of employment/self-employment
  • New territories awarded to existing franchisees.

Emerging Franchise Brands

With an emerging franchise concept, you can snap up prime locations, you tend to have a better relationship and more flexibility with the franchisor, the room to grow with the brand is unlimited and, in many cases, you are able to access much greater levels of opportunity, such as multi-unit and area developer rights.

Pros

  • Lower barriers to entry
  • Opportunity to snap up prime real estate.
  • Grow with the brand.
  • Ability to create close relationships with the leadership team.
  • Increased flexibility
  • Greater opportunity for growth
  • More autonomy
  • Ability to shape the direction of the business.
  • Opportunities to get involved with Head Office.

Cons

  • Most probably a lesser-known brand
  • Systems are less bullet-proof.
  • Support may be one or two key people.
  • A smaller franchise network.
  • Sales and marketing systems still being tested.
  • Lighter track history
  • Potentially harder to access capital.
  • Less certainty of success
  • Fewer options for exit/succession

What Type of Opportunity Are You Looking For?

The truth is, both established franchise brands and emerging franchisors have their benefits. What it really comes down to is the type of person that you are and the type of opportunity that you are looking for.

The truth is, both established franchise brands and emerging franchisors have their benefits. What it really comes down to is the type of person that you are and the type of opportunity that you are looking for.

If you are looking for something that will allow you to follow a proven methodology yet provide ample room for growth, where you can grow with the franchisor, then an emerging franchise brand could be your place to start. However, if you are looking for as much certainty as possible and have access to capital, then an established franchise brand may be more for you.

The Best Time to Join A Franchise

Often, the best time to get into a franchise system is typically when the franchise has between fifteen and forty franchisees. This shows that the franchise has a level of validation; if fifteen existing franchises are performing well then, the franchisor has done something right, but provides enough room for you to grow as the franchisor continues to grow. When you get the timing right, it usually opens you to opportunity that you may not get with older, more established franchisors.

When you get the timing right, it usually opens you to opportunity that you may not get with older, more established franchisors.

An example of this is if you joined a franchise brand when it had twenty franchisees. As the franchisor continues to grow, they may give you the opportunity to open more locations, spearhead new initiatives and represent the franchisor on a paid basis.

Opening multi-locations can be particularly lucrative – imagine if you were one of the early McDonalds franchisees? You would probably be selling your business for seven to eight figures now.

Ultimately, it does come down to your personal preferences and circumstances. Both established franchise brands and emerging franchisors have many benefits – the key question is, which one is best suited to you?

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