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Often, when people think about opening a franchise in a crowded industry, the knee-jerk reaction tends to be “no.” Why enter into a place where the competition is fierce already?
While on the surface, it may seem like a no-brainer to shy away from starting a business where there are already so many competitors on the scene, there are benefits to this approach. Here are a few reasons why you might want to consider opening a franchise in a crowded market.
Opportunities to Stand Out in the Crowd
In a crowded market, differentiation is key. You can instantly set yourself apart from the competition by carefully selecting a franchise that offers a unique product or service. For example, if you’re wanting to open a quick service restaurant or a QSR franchise in a market that already has other restaurant areas, choose a franchise that isn’t represented yet.
Assuming your area has all the food choices they want is like assuming your area only likes to eat one type of food. Bringing in a new restaurant can offer new opportunities for your customer base, and that is something they’ll respond well to.
Identify your target audience's untapped needs and desires and cater to them in a way that nobody else does. When you offer something distinctive, you have a higher chance of your customers flocking to your franchise, eager for an alternative that meets their specific requirements.
Proof-of-Concept Has Been Established
A crowded market often signifies high demand for a particular product or service. Having that pre-established proof-of-concept means you’ll have a chance of growing faster because the demand is already there.
By opening a franchise in such a market, you can tap into an existing customer base actively seeking your offerings. Having competition isn’t a sign of oversaturation. It’s a sign of demand. Crowded markets can indicate a viable market for your franchise, and with the right strategy, you can carve out your own share of the customer base eager for what you have to offer.
Franchises Carry Brand Recognition
Established franchises tend to have greater brand recognition and customer trust in a crowded market. That’s because these brands have often been seen in other geographic areas, so your customers know that the brand is reputable and trustworthy.
By leveraging the brand reputation of the franchise you’re considering, you can use that presence to your advantage to grow faster in your community. Customers are more likely to choose a familiar and trusted franchise over unknown or newer options, giving you a head start in building customer loyalty and attracting business no matter how many competitors are around.
A Sign of Stability
While a crowded market may seem daunting, it can also indicate stability. Established competitors in your space have already come before you to demonstrate that businesses can thrive in the market, withstand challenges, and maintain profitability. This stability provides a foundation for your franchise to grow and flourish, knowing that the market has already proven its viability. In other words, it’s a good sign that you’ll have room to expand and settle in for the long haul because demand is there.
Potential Collaboration Opportunities
Instead of viewing fellow businesses as rivals, consider them potential collaboration partners. In a crowded market, forming strategic alliances can be mutually beneficial. Identify non-competing businesses that share a similar target audience and explore opportunities for joint promotions, cross-referrals, or bundled offerings. By combining forces, you expand your reach and tap into new customer segments, leveraging your collaborators' existing customer base.
The bottom line is this — opening a franchise in a crowded market offers unique advantages such as established demand, brand recognition, innovation opportunities, collaboration prospects, market stability, and potential for expansion. You can thrive and succeed — even in a competitive environment — by leveraging these benefits and employing effective strategies.
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.