Should I Buy An Established Or Emerging Franchise Brand?
Investing in a franchise presents a really exciting opportunity.
The idea of running your own business, but doing so with a team of experts behind you, is one of the many reasons entrepreneurs look to franchise ownership.
The difficult part is deciding where you should invest your money.
There are many established brands offering franchise opportunities. Burger King, Subway, and 7-Eleven are just a few examples.
The thought of owning a business that offers almost guaranteed success- or at least a much higher rate of success than that which comes with a typical independently-owned business– is attractive.
A new world of franchise opportunities is available with emerging brands, and each one offers its own benefits.
Lower investment amounts, a closer relationship with the brand’s Founders, and the opportunity to scale: these are just a few of the reasons why some investors are choosing to spend their money on emerging brands like Footprints Floors, Dog Training Elite, and Hounds Town USA instead of going with one of the bigger names.
The rewards, while not always guaranteed, may in fact be a whole lot greater with an emerging brand.
How do you know which one is the right choice for you? Let’s take a look at the advantages and drawbacks of each scenario.
Pros & Cons Of Buying An Established Brand
If you choose to invest in a popular franchise, you already know before you invest that customers want what you’re selling.
As a result, you take away the risk of setting up a business and it failing because the market simply isn’t there.
Customers know what the business is, what it does, and whether they like it or not.
There’s very little effort that needs to go into promoting the brand itself.
Fewer Risks for Investors
For those looking to make an investment that does not come with too many risks, going with an established brand often feels like the sensible thing to do.
Larger franchises can evidence a proven business model.
Combine this with consumer awareness of the brand as mentioned above and potential investors have a pretty sure bet.
In fact, it’s all relatively predictable.
Franchise Owners can calculate with reasonable accuracy what their profit and loss might look like. There is also plenty of expert support available to you as you need it, not to mention a model that’s proven successful in markets across the country- or even the world- for you to follow.
Business Models Can Become Outdated
While having a set business model is attractive and often works really well, sometimes larger brands do not revisit this enough.
As a result, it can become stale and no longer effective.
With larger franchises, it is often more difficult and expensive to change this business model.
There is also an idea that if something is working, why change it?
While that might be true in the short term, businesses need to stay agile enough to adapt to change when necessary.
Established brands don’t always do this which can lead to their downfall.
All you’ve got to do is look at Blockbuster Video, which has become a cautionary tale for companies across multiple industries, as it shows how even a giant corporation can fail spectacularly if it is unwilling or unable to gauge changing consumer behaviors and needs.
Customer Fatigue and Market Saturation
“Oh look, they’re building another Starbucks. How many more do we need?”
That’s probably something you’ve either said or have heard other people say.
There’s a risk when investing in a franchise of an established brand that there is simply too much competition around you for you to be able to make enough money.
Customers are also looking to support smaller, more independent brands where they can.
Many have chosen to shop locally where they can since the outbreak of the pandemic back in March 2020.
With larger brands, therefore, you run the risk of customer fatigue.
Higher Investment Costs
If you’re buying into an established brand like McDonald’s or Starbucks, there’s almost a guarantee of success.
The thing is that this guarantee is not going to come cheap.
It is going to cost you a huge upfront investment. This means that opportunities with these businesses are often only available to experienced multi-unit Franchise Owners.
Pros & Cons Of Buying An Emerging Franchise Brand
Exciting Opportunities For Growth
Established brands are often the most attractive to Franchise Owners.
They can jump straight in and it isn’t long before the businesses are making good money.
The business model established brands present to entrepreneurs is also usually tried and tested, with proof that it works.
The exciting thing about emerging brands is that there is so much more potential to make the business your own.
And this excitement goes both ways.
Both the Franchise Owner and the brand itself are looking for opportunities for growth. This means more chances to have a say in the steering of the business itself.
Without a hard and fast way of doing things, there is room for innovation.
Entrepreneurs buying Franchises from smaller brands are often just as eager and capable as larger investors, they simply have a smaller amount of capital available.
Investing in emerging brands is not just for the new Franchise Owner, however,
Those will experience and perhaps a bit of spare capital will enjoy the new challenge of working with a smaller brand. Their experience will serve them well in knowing how to make the business succeed.
Adaptable To Modern Consumer Trends
As an emerging brand, there is so much more room for adaptability when it comes to moving with consumer trends.
What consumers want from businesses changes all the time in line with what’s popular at the moment.
Having a more fluid business model and being newer to the market can be beneficial as there is more opportunity to try out new things with fewer repercussions.
Emerging Brands May Already Have A Strong Business Model
There are some businesses that have been around for a long time but are only just moving into the world of franchising.
It shouldn’t be assumed, therefore, that just because a company is only just emerging onto the franchise market that they don’t know what they are doing!
These types of brands are a fantastic investment opportunity.
The investment capital needed with usually be lower than with established brands, but the risks are also reasonably low.
This is because you’re getting all the support that would ordinarily only be available in larger brands, and you already have strong consumer awareness.
Difficulty In Extending Brand Awareness
As with any new business, there is always going to be a need for marketing.
Unlike established brands that often already have their own large, ready-built marketing teams, emerging brands might not have that available.
It might be the job of only one or two people to carry out all the marking work.
As a result, you’re probably going to have to work harder to promote the business and build up brand awareness amongst consumers. That is, of course, unless you are fortunate enough to find a franchise opportunity with a brand that already has an outstanding Franchise Owner training and support system in place, regardless of their status as an emerging franchise.
So, Which One Should You Buy?
As you can see, there are benefits to potential investors of buying both established and emerging franchises.
The decision will generally be down to the investor and just what they are looking for.
Emerging brands offering franchise opportunities are a brilliant way for entrepreneurs to get into the business.
The lower amount of investment capital needed makes it the perfect entry route.
Having said that, even seasoned investors should be excited by the opportunity to work with an emerging brand.
It’s the chance to really get involved with the business and steer it in the direction you want it to go.
There’s a chance to be part of growing a business where the earning potential is limited only by your entrepreneurial skills.
No matter where you are in your search for the perfect franchise opportunity, please get in touch with us via our website for more information.