Success Franchise Advisors

Emerging Franchise Brands

One of those most common reasons we invest in a franchise is the fact that they are a proven business model. In other words they are not only a strong franchise model but have dozens or even hundreds of franchisees achieving success with their brand. That being said, all successful franchisors start with their first franchisee and while sometimes it can require a leap of faith, there are many emerging franchise brands that show great potential. Like most any investment there are always pros and cons when choosing to invest in an emerging franchise, ie: a franchise that has fewer than 5 franchisees but with the right model can offer significant advantages and still achieve great success. Below are some angles to consider when exploring an emerging franchise brand.

One of the key advantages to being an early pioneer with an emerging franchise brand is you may have greater control and flexibility with your business. The larger a franchise becomes the more rigid they can often tend to be. As a franchisee with a newer brand the owners tend to have a larger say so in the direction of the franchise and are extended greater flexibility with trying and tweaking various products, services, marketing methods, etc. with their business. Commonly the early adopters of a new franchise can serve as somewhat of an advisory board along with the franchisor to help determine best practices and the best path forward. All businesses must evolve and the first franchisees tend to carry more weight through the evolution. Classic example… McDonald’s didn’t invent the Big Mac or the Egg McMuffin, their franchisees did.

Another advantage to being with an emerging brand is the owners tend to have direct access to everyone in the company including the CEO, founders and such. The larger a franchise grows the more layers there tends to be in terms of top level access. Early franchisees also tend to get first dibs on additional territories and re-sales within the system if and when those arise. Franchisees of brands like Great Clips and Super Cuts that own 20, 30 or ever 50+ locations often acquire these by leveraging their position and getting first rights to other franchisees in the system who are looking to exit and are sometimes bought for pennies on the dollar.

When looking at an emerging brand clearly you don’t have the advantage of seeing nationwide ad campaigns and witnessing lots of other franchisees enjoying success. So what do you look for? Systems! Even an emerging brand should always be striving to develop well oiled systems to reduce risk and make the business as easy to run as possible. With today’s technology it is easier than ever for a younger brand to bring key systems to the table without having to be a franchise giant. The same goes for marketing. While it would not be cost effective for a young brand to invest in expensive nationwide marketing, they should have excellent marketing systems and methods in place and easy to execute on a local or regional basis.

How do you validate an emerging brand? Validation is where you spend time speaking with other franchisees and gaining insight and feedback on their experience being a franchisee with that system. Unfortunately an emerging brand won’t have much to offer in terms of validating because they don’t have many, if any, franchisees yet. Yes this will take a bit of faith in the brand but study the corporate model closely. Experience the business however you can… Try the product or service, spend a day in the life with the franchisor, study online reviews, heck sit in the parking lot and watch!  We are currently working with a restaurant that is looking to franchise. Before I even agreed to meet with them to dig into financials, growth plans, expenses, etc. I spent hours combing through online reviews and sitting in their parking lot during lunch and dinner hours to see how many people came in and how quickly they came out. I learned from online reviews that people were driving an hour just to eat there and observed what appeared to be smiling faces of customers after enjoying a meal. These were good signs that this particular business had strong potential as a franchisor and would do well in other similar markets.

Lastly, sometimes an emerging franchise may own multiple corporate locations but just does not have any franchisees yet. If the location is right for you and the numbers look good sometimes offering to buy one of their corporate locations and becoming their first franchisee can reduce the risk. While these situations are not always available, this can reduce risk and allow you to buy an existing revenue stream.

At Success Franchise Advisors we are fairly meticulous when it comes to working with an emerging brand as frankly, some are not going to survive. That being said, with decades of experience in working with hundreds of brands we are pretty good at spotting those with strong potential. If you are looking for “that next big thing in franchising” feel free to contact us and we will gladly help explore some options and assist you through the process.