Would you believe that during the coronavirus pandemic, franchises added over new 1200 locations? It is incredible to think that during the most significant economic downturn in decades, franchises were still expanding, and people still wanted to own a franchise. Many of the concepts that saw the largest growth were newcomers.
Investing in a new concept can be seen as risky because the franchisor has less experience, but at HIRE YOURSELF, we see many powerful reasons to become an early adopter. Of course, your personality is a substantial factor in deciding if a new concept is for you.
We wanted to lay out a few pros and cons to owning a franchise that is a new concept. Please read our article on choosing the best franchise for you for more ideas to consider when evaluating a franchise.
Early Adopter Franchisee Pros
Better Incentives
Franchisors need franchisees, and early in the existence of a concept, they need to draw talent, which means the deals they offer you may be better than if you invest a few months or years later. Imagine if you had invested heavily in Subway or Orangetheory when they started and offered new franchisees great initial packages! You have that opportunity with other new concepts.
Larger territories
The older the concept, the fewer and smaller territories will be available. The reverse is true of a new concept; they will likely be wide open. Not only will you get the territory of your choosing, but it will sometimes be larger. That means your customer base will be bigger than if you wait or invest in a franchise that has more locations.
Many franchisors even offer a deal for early adopters like buy three territories and get one free.
Lower costs
If you like to haggle or save money, a new franchise concept might be right up your alley. Before the franchisor has ironed everything out, they will focus on their relationships with new franchisees. You can use this to your advantage because costs will be lower, and they are often open to working with a candidate to make sure the investment is affordable.
Scalable Territories
Do you want to own a franchise in the town you live in? Then a new concept is for you. As a franchise grows, its available territories become fewer. Most people want to be a business owner in their community, but popular brands like Chick-fil-A and Home Instead could be taken.
With an emerging concept, you have more territory available for purchase. A savvy investor can carve out a fiefdom in their area and focus on building the brand and controlling the market. You will also have growth insurance because you can open new locations as needed, and no other franchisor will have a close territory you need to work around.
Vertical Scaling
Many concepts are part of a family of brands. You can capitalize on this relationship by owning multiple brands within a family in one area. This will lower your customer acquisition cost through cross-referrals.
For example, you may invest in a painting franchise with roofing, lawn care, and insulation concepts as part of the family. When one of the representatives visits a customer, they can leave information for all the other brands in your franchise portfolio.
Closer relationship
When you get in on the ground floor, you get incredible access. The franchisor has very few franchisees to interact with. You may go to discovery day and receive your training directly from the founder. This starts a special relationship with the franchisor. The organization is very flat at the beginning. When you call, you will receive much attention. They will know you, and that positive connection will only get better over time.
Looser requirements
Some franchisors provide freedom for franchisees to explore during the initial development of a franchise concept. Some investors, especially those who want a little bit of entrepreneurship, love this idea. The franchisee gets a set of processes and procedures to use, but they can also explore opportunities and report back to the franchisor to build a stronger brand.
Early Adopter Franchisee Cons
"Less" Proven
As a franchisee, you are paying for a proven system from the franchisor. The processes and procedures will be 95% there for a new concept but won't be as fleshed out as an older brand. But the franchisor will value your input a lot.
More Risk
With anything new, you never know how it will turn out. With a new franchise brand, you could be investing in the next big thing, a brand that fails after a few years or does well for many years. You never know!
Emerging brands will be a little less structured and insecure when a concept has 30 30 locations or less. From 30 to 100 sites, it will start dialing in, become more focused and successful. When a franchise crosses above the 100 location threshold, things are generally rolling.
Whether you choose to invest in a new concept or an old standard, going down the path of business ownership is a great choice. You will find freedom and financial security through franchise ownership. Think owning a franchise is for you? Reach out for a free consultation.
