There are over 3000 franchise concepts in today’s marketplace, and although most people still think first of “fast food” when they think “franchise”, franchising extends to almost every industry. Franchise business opportunities abound all around you.
Think about a typical day in the life of an American adult. If you wake up in the morning and head to the gym, you’ve likely had your first franchise encounter there. If you stop for a coffee on the way to work, odds are you’ve visited your second. If you go out for lunch, go to the dry cleaner, take your kids to karate lessons or a tutoring center, get a massage, have your car’s oil changed, or pick up takeout for dinner—you’ve been patronizing franchises all day. While investigating and evaluating a franchise you should think about all of this before deciding on a concept.
Franchises Are Everywhere
Franchise businesses have become ubiquitous in our day to day lives, and people are creating new ways to successfully use the franchise model all the time. Why the steady expansion of the concept to new industries and working systems?
First, because business creators seem increasingly aware of the franchising option when they work out the bugs of their big ideas. They know they can reach more markets and more people if they can find a way to successfully franchise.
Second, because investors like you, and like me, want to work for ourselves, want to have ownership of our careers, but we seek the security of opportunities that have already been proven profitable. After all, why would we take on any more risk than is necessary?
As a franchise consultant, there’s one question I hear more than any other. Potential candidates, colleagues, friends, and casual acquaintances ask, “What’s the next big thing?” Here’s the thing about the next big thing: Franchising is, by definition, about success based on proven business models—and the proof that makes them solid investments can only come with the test of time.
Franchising Concepts
Not every business concept—even if it’s genius—lends itself to franchising. Some successes just can’t be duplicated.
Yes, there are flourishing areas in franchising. Among them at this writing are businesses that help parents to entertain and educate their kids; businesses that cater to thriving, retiring baby boomers; and green businesses.
And yes, seeing a new trend coming can offer a great opportunity to invest and do well. But with franchises available in nearly every industry, I advise the candidates I work with to consider what’s important to them, what their skills are, and how they want to spend their working days—all before they get to the inevitable question of, “What’s hot?”
Finding the Best Franchise
The question of which franchise is the best for an investor should always involve a discussion about whether you’re interested in getting in on the ground floor of something that’s just beginning to grow or if you want a business that’s paid its dues and earned widespread brand recognition. These questions are about much more than just what feels right to you—they’re also directly tied to your level of investment and your tolerance for risk.
Do you want a concept that’s been around for 30 years and is proven? You’ll be making the safest possible bet if you do. And even if a concept has a thousand franchisees, it can still be growing and thriving.
That said, there are potential drawbacks. First and foremost, you’ll pay a premium for an established track record. Second, when a great concept gains a solid foothold, competitors sometimes spring up with a new spin on the same good idea, potentially changing the market. Third, the best territories may already be taken.
Be an Early Adopter in a Franchise?
On the other hand, do you want to be an early adopter—one of the first to invest in a great concept? You’ll be able to get a great deal and have your pick of territories—but you’ll also have to live with the uncertainty of not knowing if the franchisor will grow gracefully or burn itself out by trying to fly too fast and too high.
This is one of the trickiest decisions a franchisee candidate has to consider. It’s also an area where a good franchise consultant can offer some unique and valuable insight. A fairly new concept that’s doing well and growing smart is likely to be a known quantity to a franchise investment insider long before it’s making the business news or expanding across the country.
In addition, consultant groups like Franchoice and some individual franchise consultants meet with the leadership teams of up-and-coming franchises, review their financials, and check their backgrounds to vet them before considering them for the candidates they work with. This vetting process can mercifully take some of the mystery out of your assessment of an unknown franchisor.
I advise my candidates to stick with vetted concepts that are well-capitalized and responsibly run. Within those parameters, though, there’s a vast range of risk between the up-and-coming concepts and the old guard, blue chip options. The bottom line is this: There’s a lot of merit in going with a proven concept, but there’s great potential in being an early adopter of an idea that’s just starting to take off. Only you can decide where your risk tolerance lies.
Ready to consider taking the first step to HIRE YOURSELF? We are here to help you find the best franchise match for you.
