Pros and Cons of Joining an Established Franchise System

08/08/2018 08:00 | Start a business

Established franchise systems

When most people think about franchising, they conjure up images of famous franchises such as McDonald’s, Subway and Starbucks. But with over 900 franchise brands available to invest in, how do you know which are the best franchise opportunities for you?

The good news is that the best franchise opportunities don’t always have to be the biggest and the most well-known. However, you may feel more comfortable investing in a mature franchise system, rather than an emerging brand.

This is because your chances of success as a franchisee are linked to the support and know-how that the franchisor can share as well as how well other franchisees in the network are performing. Newer franchisors may have fantastic ideas but will be inexperienced. This could mean that they don’t have as much capital or knowledge to give you the support you need.

Advantages

Of course, there are benefits to investing in a less-established franchise system, but there are overwhelming advantages in joining a mature franchise too:

Increased brand recognition

With famous franchises, customers expect a certain level of quality and consistency that makes them keep coming back for more. When they’re faced with a brand they’re aware of and one they haven’t used before, they’ll turn to the comfort of familiarity.

It doesn’t matter whether the familiar brand’s products and services are better than any of the competition, there will still be customers who choose consistency over anything else. This is why uniformity is so vital to franchises as customers expect the same level of products and service regardless of the location they visit.

Ready-made customer base

With increased brand recognition comes access to a ready-made customer base. Customers who have visited other franchise outlets within the system will become your customers too. This level of awareness would take an independent business owner a significant amount of time and investment to achieve.

As well as leveraging the success of other franchisees from your network, you also benefit from the national advertising campaigns that the franchisor is in charge of. This exposure ensures that customers know about your brand before you've even performed any local marketing.

Robust support systems

When you invest in a well-structured franchise system, you’ll get so much more than a tried and tested business model with a proven track record of success. You should also receive help with site selection, store designs, equipment costs, training, operations manuals, marketing activity, and whatever additional support you need to launch your business successfully.

As well as the support you’ll get from the franchisor, an established system offers access to a network of franchisees who will also be on hand to provide advice and guidance. The advantages of being able to share problems, ideas and success stories with your peers should not be underestimated. There will always be another franchisee within the network who will have experienced the challenges that you’re facing. After all, with franchising, ‘you’re in business for yourself, not by yourself’.

Disadvantages

As with any business decision, there will be both pros and cons. Even the most famous franchises can have disadvantages if it’s not one of the best franchise opportunities for you. Here are some of the difficulties that could be associated with investing in an established franchise:

More restrictions

Any franchise requires you to give up a certain amount of freedom. To benefit from the proven business model, training and support, you must agree to adhere to the franchisor's rules. This means that you won't have full control over your business as you would if you chose to start an independent company from scratch.

And the rules, responsibilities and obligations that will be expected of you as a franchisee are likely to increase the bigger and more established the franchise is. This is necessary for the franchisor to protect the brand they have spent significant time and money developing.

Before you invest in an established franchise, you need to be sure that you'll be able to cope with the lack of independence. If you've got a strong entrepreneurial spirit and would prefer to run your business your way, then becoming a franchisee may not be the best route to business ownership for you. It doesn’t matter how profitable your franchise may become, you’ll never be truly satisfied if you have to follow someone else’s business model to be a success.

Becoming reliant on the system

At the other end of the scale, some franchisees may become so dependent on the franchise system that they lose the ability to operate their business effectively. You need to understand that while the franchisor sets the brand standards, it’s your responsibility to manage and run your business day in, day out. No one is going to do it for you.

It’s a common misconception that buying a franchise is a shortcut to success. Although much of the groundwork will have been done for you, you’ll still need to work hard and have the drive and ambition to make your business thrive.

If you fall into the trap of becoming totally reliant on the system for your success, you won’t achieve the profits that could otherwise be realised. For example, the franchisor may have marketing plans in place at a brand level, but unless these are complemented by local promotional activity, potential customers in your area won't know you exist. As a franchisee, you're responsible for making your business a success – or not.

Whether you decide to invest in a new or an established franchise, it's crucial that you do your homework before you sign the franchise agreement. You must be confident that the opportunity is right for you and that the franchisor can provide you with the support you need. Not all franchise opportunities are equal so spend time performing thorough due diligence so that you don't end up making the wrong choice which could be a costly mistake; both financially and emotionally.

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