The dream of franchise ownership is popular. The established processes, the plug-and-play business model, and the bulk of the research and risky development done for you—all of these features are attractive in their own right, but one of the major reasons investors put their hard-earned money toward franchising is the established branding that works as wind in their sales.
Because the allure of an established brand is so high among potential franchisees, many often turn their head away from emerging franchises. That might be a mistake. Many hidden opportunities in these new markets can help new franchisees turn a profit faster while influencing the future of the franchise’s growth. Let’s look at the benefits of starting an emerging franchise.
Potentially Lower Your Investment Costs
It’s extremely rare for a brand to lower its investment costs as it grows. Instead, because franchisors know that new franchisees are tapping into the longevity of their brand name, they can raise investment rates such as royalty payments.
More commonly, emerging franchises haven’t increased their investment rate from the beginning stages because they’re still building up brand recognition — an enormous selling point to investors. That means, for budget-conscious franchisees, there’s a prime opportunity to tap into a growing opportunity at a fraction of the cost.
Likewise, depending on how recently the franchisor opened its doors to franchising, new investors may have some negotiation room to lower those investment costs even more.
These lower costs pay off quickly, giving the franchisee a faster time to see the return on their investment. That lower barrier to entry paired with the potential for quicker returns makes emerging franchises more attractive alone, but there are other reasons many investors look at these opportunities, too.
Have Your Voice Heard Easier
When investing in an established franchise, franchisees often enter the room where the playbook has been nearly set in stone. More voices are around the table, so speaking up and offering fresh ideas is more challenging.
Emerging franchises are still finding their sea legs in these business models, so they are often more receptive to suggestions and ideas from their early investors. This means franchisees have a better chance of influencing the shape of the brand, growth trajectory, and more. Likewise, they can receive faster and more in-depth feedback, assistance, and guidance, allowing for faster and more streamlined growth.
Access to More Territories
Have you ever heard someone say, “It seems there’s an XYZ Store at every corner!” That’s because as franchises gain traction, territories get scooped up, making it harder for them to stand out in a region. More prominent franchises have more limitations on territory availability. Emerging franchises want to expand their reach through the franchising model, which means new investors can cherry-pick their locations based on growth potential.
While emerging franchises might lack household name status, the promise of faster return on investment, faster profitability, and more significant influence in trajectory and territories can help investors thrive by getting in at just the right time.
~~
Kimberly Crossland is the founder of Roadpreneur and Cruisin' + Campfires, two companies designed to keep families together and living in freedom through travel and entrepreneurship. The goal of both businesses is to inspire meaningful change through the power of a strategic, thoughtful approach to life and business. In her free time, you can find her looking for a new adventure together with her two boys.