When you think about franchising, the prospect of being a franchisor’s first franchisee doesn’t always spring to mind. But business networks have to start somewhere and someone has to be brave enough to take the leap. You never know - it could provide huge benefits…
While you might consider one of the biggest advantages of franchising to be access to an established and widely recognised brand, the model comes with a range of different opportunities. Some of the most lucrative and fulfilling roles can be found in new and emerging franchise businesses - just read our dedicated guide on the subject to find out more.
To succeed as a franchisor’s first franchisee, you need to be a risk taker, able to adapt to unfamiliar and unexpected events and committed to driving rapid business growth.
Pros and cons of being a franchisor's first franchisee
Here are some of the factors you’ll need to consider when deciding whether to become a franchisee in a brand-new franchise.
- You get to shape the franchise - Although the franchisor will have spent years or even decades developing their business, they won’t yet have perfected their franchise model. As the first franchisee, you’ll play a key role in helping them drive growth.
- You may access low fee structures - Most franchisors charge higher fees as they expand their training and support systems. So, as the first franchisee, you could expect the franchise and ongoing fees to be fairly affordable.
- You may get more personalised support - Although the franchisor may not have refined their support structure, they’ll probably be able to spend a good deal of time helping you develop your unit. You may get more one-to-one meetings and tailored guidance in the early days.
- It’s exciting! - Most business owners want more than a good paycheque, and being a franchisor’s first franchisee can provide a good dose of excitement and personal fulfilment too. You won’t know where the journey will take you or the heights you’ll eventually reach.
- You can’t refer to existing franchisees - One of the best ways to get a true picture of life in a franchise before you invest is to talk to existing franchisees. But you’ll have to rely on the franchisor’s claims and other research tools to inform your decision.
- There’s no franchisee network for support - Many franchisees enjoy discussing their business with the brand’s other unit owners, but you won’t have access to a wider network if you’re the first investor. You’ll have to wait until more people come on board.
- The training and support system may not be fully developed - First franchisees will need to be comfortable receiving an unrefined version of the franchisor’s training scheme.
- You can’t be sure of the franchise’s future - Many entrepreneurs invest in a concept because it’s already seen success as a franchise. As the first franchisee, you may not know where the business is heading.
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- Franchising 101: Are You Ready to Become a Franchisee?
- Franchising 101: 6 Things to Know Before Becoming a Franchisee
How to succeed as a franchisor's first franchisee
If you’re thinking about becoming a brand’s first franchise representative, take a look at these tips for success:
1. Understand the potential problems and opportunities
Being a franchisor’s first franchisee is a thrilling concept. You’ll be part of a franchise from the very beginning and, if the formula is right, you could build a successful and lucrative investment model for others to follow.
However, life can be tough as a first franchisee. You have a unique opportunity and the role you play will be different to the ones of franchisees who join at a later date. You're essentially the franchise tester, and both you and the franchisor will learn along the way.
You must have a positive attitude, as well as commitment to the brand you’ve joined. Being a franchisor’s first franchisee comes with some risks, but, ultimately, you’ll be a figurehead for future franchisees, who will follow in your footsteps.
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2. Understand the limitations of the pilot scheme
The franchisor probably ran a pilot scheme before appointing their first franchisee; it’s their opportunity to prove the model works when they’ve been removed from the equation.
However, it’s almost impossible to iron out all the wrinkles in a franchise model during the pilot phase. It’s a chance to identify any gaps in operational processes and training programmes, but there will still be a lot of aspects to test and develop as the concept is rolled out.
Plus, no matter how thorough the franchise pilot was, you will probably have a unique experience within the business. The franchisor could have chosen the pilot franchisee because they understood the business or the industry well, or had experience of being a franchisee before, for example. As a new franchisee to the company, your experience is likely to be different.
3. Develop a strong relationship with the franchisor
As the franchisor won’t have had time to perfect their training and support schemes, you’ll need to rely on their personal guidance as you launch and grow your unit. Without a large network of franchisees to monitor, they may have more availability to provide one-to-one support. Plus, it’s in their interests to make sure their first franchisee gets off to a flying start and lays the groundwork for further expansion.
Aim to develop a relationship built on trust and transparency. Having open and honest discussions with the franchisor and their team is vital to the ongoing success of the franchise network. And, if something doesn’t work, you must feel comfortable giving constructive feedback and working out a solution together.
4. Be ready to negotiate fees for a fair deal
The franchisor might tell you you’ll receive more one-to-one support than franchisees who join the network in the future. Although this fact may be true, you’ll probably have to wait for them to develop elements such as the training and operations manuals further down the line. So, it’s worth negotiating when it comes to the fees you pay.
Your help in establishing the franchise fees will boost the chances of future franchisees developing successful businesses. If the fees are too high, recruiting new franchisees may be difficult. But set them too low, and the franchisor won’t be able to generate enough revenue to invest in brand development and franchisee support.
More guidance on how to succeed as a franchisee
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Alice Tuffery, Point Franchise ©