When it comes to investigating franchise opportunities, you have lots of choices these days.
You can explore:
- Food franchises
- Retail franchises
- B2B franchises
- Maintenance/Cleaning franchises
- Automotive franchises
The list goes on and on.
In addition, you’ll have to decide whether you want to invest in a franchise opportunity with a long track record, or something newer.
In this article, I’m going to focus on new franchise opportunities.
New Franchise Opportunity Pros
Here are a few pros to buying a new franchise opportunity:
First off, if you like the idea of getting in on the ground floor, a new franchise concept is the way to go.
One thing that really stands out when buying a new franchise is the fact that most new franchise opportunities have wide-open geographical areas. That means you can get first dibs when it comes to things like territory and real estate.
Secondly, if you played your cards right at the beginning-in other words, if your attorney was able to negotiate a first right of refusal*, you’ll have even more opportunities for growth, as you’ll be the first franchisee who’s offered additional locations in your area. That means if the franchise opportunity takes off, you’ll be in a wonderful position to leverage the company’s success.
Finally, it’s possible that the person who came up with the idea for the new franchise opportunity will be very open to input from franchisees.
That’s because a new franchisor doesn’t know what she doesn’t know. For instance, while the franchisor’s marketing techniques may have worked exceptionally well for her flagship store, it’s entirely possible that things may have changed (because of rapid-growing technology or the like), and new marketing initiatives are warranted, according to the input she received from her new franchisees.
New Franchise Opportunity Cons
When it comes to buying into a new franchise concept, it’s not always a bed of roses.
For example, the franchise business system may need work.
Sometimes, a few tweaks here and there are all that are needed to make the franchise business hum along. Just know that this tends to come with the territory when you’re buying a new franchise opportunity.
Occasionally, the franchisors’ system needs more than a tweak. If that happens, your business can take a nosedive as it can take quite a bit of time to get things right.
The next thing that comes to mind when I think of some of the negatives involved in buying a new franchise opportunity; rapid growth.
At first, the idea of investing in a fast-growing franchise system sounds good. It must mean that it’s a good thing, right?
But when a new franchise opportunity explodes out of the gate, it can be quite difficult for the team at franchise headquarters to keep up.
That’s because it’s one thing to sell new franchise units. It’s quite another to quickly find real estate for anxious new franchisees, as well as train and support them in rapid fashion. It can be done, but there needs to be enough staff and infrastructure in place to do it-from the beginning.
Finally, while the thought of buying into a brand-new franchise opportunity can be exciting, it’s important to research the concept thoroughly. You don’t want to end up with a short-term business…a fad.
One way to find out if the franchise opportunity you’re considering has the potential to work, is to enlist the help of your local Small Business Development Center. (SBDC)
SBDC’s can be found at local universities and state economic development agencies, and are funded in part through a partnership with United States Small Business Administration. (SBA) You can receive free business consulting and more at a Small Business Development Center, and there may be one near you.
For more information contact me through our contact page!