This lesson is part of our free Franchise 101 course.
Not all the best franchises are ones you’ve heard of. Sometimes, the best option for you to work with might be one you’ve never heard of before.
That might seem counterintuitive. After all, if a franchise is successful then it will become famous, right?
Yes, but…
Rising Franchises
Even the biggest franchises start out small. McDonald’s was once a single California restaurant run by two brothers and now it’s one of the biggest businesses in the world.
Profitable franchises tend to grow quickly. By being good at what they do, they rapidly attract customers and accumulate repeat business, becoming a fixture of the areas where they first set up. At the start, they might just be famous locally, or among certain well-informed circles, even though their business is growing fast.
If the franchise is well designed and profitable, early on can be the best time to join. Because it’s not so famous, the cost of entry may be lower, and more of the best spots to start a new franchise will still be available. Fast rising attention will lead to fast rising revenues.
A franchise you’ve not heard of before can sometimes be a good bet.
Falling Franchises
The flip side of this is that big, famous franchises aren’t always the right choice. They tend to have a lot of prestige and marketing power behind them, and well-established products and procedures. Fame itself attracts attention, and with it customers. Even as a well-informed businessperson researching potential franchises, it’s easy to be blinded by the glamor of fame.
But that fame means that a franchise can sometimes keep going even when profits per outlet are becoming slim. It also creates more competition to become a franchisee, which raises franchise fees and fills up the best spots for a branch of that franchise. This doesn’t mean that you shouldn’t work with those big franchises, which have a lot of advantages and a proven business model. It does mean that they’re not always the optimal choice.
That’s why it’s important to learn about the franchises you’re interested in. A rising startup may hold more potential than an established player, especially if you’re willing to take a little more risk to see bigger profits. Just because you’ve never heard of a franchise doesn’t mean it’s not the brand for you.
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