Some of the people that have met with me for franchise selection advice have insisted on investing in an opportunity that has a recognizable name. Why is that?….
The discussion that I always make sure I have with prospective franchise owners includes a discussion of brands, and how it relates to their risk level.
I have found that most of my candidates feel that if they invest in a franchise of their own that has a great brand, like an AAMCO, a Dairy Queen, or even something like Subway, that they are entering the world of franchising in a way that really lowers their risk. That is not necessarily the case.
Just because one invests in an extremely well branded franchise like Subway, does not mean that their investment equals what will amount to guaranteed financial success. What if:
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- They have no food service experience
- They have never managed a group of hourly workers
- They did not do their research, correctly
- They didn’t have enough capital
Do any of those possible errors in franchise selection negate any positive impact of a recognized brand?
Another thing to think about as it relates to brand, is how does a franchise’s brand impact the availability of a great location for a prospective franchise owner?
If you are just starting your franchise selection process, you are probably thinking about where you would like to put your franchise? {If the franchise you are looking at requires a leased space} It is only natural to start thinking about where you would want to put your new business. it helps you visualize things better.
If you are looking into investing in a franchise that has a great brand, be prepared to be very flexible about your location choices. After all, if the franchise concept is branded, the choice locations may already be spoken for.
I have outlined a few things you may want to think about, when choosing a suitable franchise. Yes, the brand is important, and if you happen to have a strong brand, it will help you set yourself apart from the mom and pop operators in your geographic location.
In the future, I will discuss investing in franchise opportunities that may not be well branded. But, maybe it doesn’t have to be, for you to be successful….
This month’s Poll Question has to do with this article.
You’ll find it just to the right. Please vote on this important question…
“Is a franchise concept’s brand an important part of your franchise buying decision?”
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What about your own brand?
Branding is undoubtedly important for any franchise – the only thing that is perhaps more important than branding is brand consistency. In order for a national brand or franchise to fully maximize demand generation it must be committed, both on the corporate and the local levels, to upholding a certain brand image. I would argue that if a potential franchisor isn�t willing to fully embrace a franchise�s carefully crafted branding and advertising materials that the potential franchisor should keep looking until they find a brand that they can embrace. More and more franchises and national brands are employing tools, such as Balihoo Marketer Edition, that allow local franchise owners direct access to corporate-approved creative. That creative material is then taken by the local franchisor and customized so that their final advertisement resonates with the franchisor�s local (and most profitable) audience. In our hyper-local marketplace, it is more important than ever that corporate and local franchisors advertise their joint brand in concert. Read more about online software tools, like Balihoo Marketer Edition on franchise-update.com: http://www.franchise-update.com/suppliers/balihoo/
As a former Subway multi-unit franchisee, I can corroborate your post. I followed all the rules, and the strong advice of the Development Agent, and ended up building a beautiful, money-losing store. The big mistake? Not doing my research carefully enough. In this case, I blindly trusted the training and the reputation and the advice of this mighty franchise, and that was a costly mistake. Overall, I think Subway is a good franchise, but not nearly so safe as the franchisor would want new franchisees to believe. I encourage all prospective franchisees to budget a significant amount of money ($5,000 – $10,000 minimum) to pay experts (like Joel) to help them, and them exclusively, to evaluate a franchise opportunity. The business risks in the franchise world are grossly understated.
Mark Leonard (www.YourFranchiseMentor.com)
Thanks for the information…I bookmarked your site, and I appreciate your time and effort to make your blog a success!
I like the idea of investing in some less popular franchises that have the potential to be big. Thanks for the tips!