The fact that every franchise is different makes meaningful comparisons difficult. For example, David Lindsay, chief executive officer at BDC Partners cautions against using the franchise fee as a deciding factor.
“What matters is whether the franchise itself is right for you,” he says. “Basing your decision on a lower price could mean you end up in a job you hate because you’re not aligned with the culture, values, workstyle and stage of growth.”
The same is true of support.
“You need a system that plays to your strengths,” Lindsay continues. “The fact that one brand provides less support in, say, marketing isn’t important if you have skills in that area you’re keen to apply.”
New or established brand
Should you opt for a newer concept or a well-established brand?
“Franchise networks with a strong brand presence, robust business systems and a proven track record will tend to be a lower risk than brands that are still establishing themselves,” Greg Nathan, founder of the Franchise Relationships Institute says. “However, they also tend to generate lower financial returns.”
It’s important to take your risk appetite into account. Would you feel more comfortable with the security of a well-established brand? Or would you prefer to accept the risks that come with getting in on the ground floor of a newer concept that brings the chance of a better return on their investment?
“The level of risk can also affect how easily you secure finance,” Lindsay says. “When the brand is established, lenders have a better understanding of how it operates and may well have financed other franchisees.”
However, when the brand is very successful there could be pressure on territories.
“At best, you might not get the territory you’re looking for,” Lindsay says. “At worst, there’s the risk that territories established purely for growth will result in cannibalisation.”
He sees personality playing a major role in the decision-making process.
“A young, emerging brand will have less established systems,” he says. “A franchisee might have the opportunity to collaborate with the franchisor to build them out, which would suit someone with an entrepreneurial frame of mind. Someone looking for more of a ‘plug and play’ approach to franchising could feel challenged by the uncertainty. They would do better working within a complete and proven set of guidelines.”