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As you look for a franchise to own, one of the things you need to think about is when. As in when should you buy it?
But before I offer tips on when you should enter franchising, it’s important for you to know what the franchising cycles are.
Let’s begin.
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The 3 Franchise Life Cycles
All franchise concepts have cycles.
The first is the mature cycle.
For example, The UPS Store®, a mail and shipping franchise, is in a mature cycle.
Why? Because they’ve been around for years, their brand is super-recognizable, and they’ve opened thousands of stores. Lots of other franchise brands have done the same.
But just because they’re in the mature stage of franchising, it doesn’t mean there isn’t room for more franchises to open. Can you think of any possible locations that could work near you?
The second cycle in franchising is the middle cycle.
Franchise businesses in the middle stage of their development normally have some brand recognition along with a growing number of franchise locations.
Franchises like these offer a plethora of opportunities, as there’s generally a good amount of unsold territories. And that increases your chances of securing a great location for your business.
A note about location: There’s no guarantee you’ll be able to get your first choice for a location. Why is that? There are three main reasons:
A. The cost may be too high.
B. Other brands may be looking at the same location you’re looking to secure.
C. Your franchisor may not agree that the location you want is the best location.
If you’d like an example of middle-cycle franchise opportunities, there’s actually several of them to investigate in the senior care category.
The Third Franchising Cycle
Last but not least is the cycle in franchising that gets a lot of press, and because of that, a lot of interest from potential franchise buyers.
These are franchises in the early cycle, the third of the franchise life cycles.
I’m speaking of newer franchise opportunities. Early cycle franchises are quite popular, as illustrated by one of the most popular questions I get asked when I tell people I’m involved in franchising:
“What’s new and hot in franchising these days?”
Another example of the popularity of franchises that are in the early cycle would be the fact that there’s an entire page on the Franchise Direct website specifically focused on new franchise business opportunities!
But just because franchises in the early cycle of franchising are popular, it doesn’t mean they’re right for you.
On the other hand...maybe one of them is.
In Which of These Cycles Should You Enter Franchising?
The best time for you to become a franchisee comes down to three things: Opportunity, availability, and your risk tolerance.
As to opportunity, you need to ask yourself if the business concept makes sense to you and the market (especially your local area).
In addition, will you be able to make money as a franchisee?
Can you eventually have the lifestyle you desire?
Do you feel the business concept is sustainable?
Finally, what about availability?
Before you get too excited about a franchise (no matter what part of the cycle it’s in), it’s crucial for you to find out early in your research process if the franchise is available to open in your area. If so, great. If not, you need to quickly move on.
Moreover, not only do you need to make sure the franchise you’re interested in buying is available in your specific area, but you also need to determine if you can add other locations in the future. For that to happen, there needs to be enough of a population to support more than one franchise.
So keep that in mind as you search for a franchise to buy.
Where Do You Stand On The Risk Scale?
If you lean towards the risk-adverse side of the equation, you should focus on franchises that are in the middle or mature cycle of their business.
Why? Because you’ll have better options when it comes to doing the research. Why?
Because there’s already a footprint, you’ll be able to talk to a good number of franchisees about their experiences. That’s not something you can easily do with younger franchise concepts.
Conversely, if you’re not opposed to taking more risk, a newer franchise concept may be the way to go. There are a couple of reasons for that.
The first one goes right back to the opportunity itself. In other words, how big is the opportunity?
For instance, would getting in early allow you to dominate a large geographical area because there may not be anyone else there, or near you yet?
The second reason is the very real opportunity to get some extra attention from the franchisor.
That’s because the team at franchise headquarters will have more time to spend with you, as there aren’t as many franchisees vying for attention yet.
In the final analysis, not only do you have a lot of excellent choices in franchises to invest in these days, but you also have several choices as to when to enter franchise ownership.
The Franchise King®, Joel Libava, is a top franchise expert. He’s written over 2,000 different articles on franchise ownership and personally consults with people who are looking to buy a profitable franchise. Go here to find out how The Franchise King® can help you become your own boss.