Franchising — An Opportune Business Model
When you think of a franchise investment, chances are you think of well-established, highly visible brands (e.g., McDonald’s, Dunkin’, 7-Eleven, etc.). While there are many benefits to these popular mega-brands – presumed lower risk and an established reputation – it may come with a costly price tag.
Some people might believe that an established franchise with brand recognition is a less risky investment and better suited for success. However, this doesn’t always hold. Consider the U.S. electronics company, RadioShack, which had 4,000 company-owned and franchise units in 2014 and now has only 400. RadioShack failed to maintain relevance as technology changes and companies like Amazon.com continue to be more popular.
Conversely, emerging franchises are catching business owners’ attention for their growth potential, investment value, and franchisee satisfaction. These growing franchise brands may not be a household name (yet), but they have many advantages and business opportunities for entrepreneurs to carve a path of success.
Why is Franchisee Satisfaction Important?
According to a survey conducted by independent market research firm, Franchise Business Review, franchise owners of emerging brands that have been in business for at least two years have higher positive sentiment across the board vs. all franchise owners. Franchisee satisfaction directly impacts profitability and has a ripple effect on growth other economic benefits, including cost reduction, operational efficiencies, and attracting other franchisees.
Are You an Emerging Franchise Business?
Although there is no hard and fast definition for what constitutes an “emerging franchise” brand, an emerging franchise is typically a newer venture with five or fewer years of experience and has few or no existing franchisees. Despite being small or new, they are the franchising opportunities recognized as having strategic status due to their potential to become future strong brands. The most successful franchises today began as “emerging franchise businesses.”
Today in the U.S., there are over 3,000 franchise brands, and over 785,000 franchise locations, across 72 industry segments. Many franchises in the emerging stage are great concepts that need to learn how to scale effectively.
Every year, several hundred new companies do their due diligence and set out to franchise their brand. Many franchisors probably have similar visions of McDonald’s partner, Ray Kroc, hoping to build the next franchise empire.
But the reality is, you don’t have to invest in a big franchise company to be successful as a franchise owner. In fact, the majority of franchises available in the United States. today are companies with under 100 locations (in many cases, as few as 10, 15, or 20 sites). Over 300 new concepts hit the market each year, and 82% of franchise brands within the market have less than 100 units.
Emerging franchisors must establish a growth strategy, generate and recruit new franchisees, assemble a great support system, implement training, and build a support infrastructure, all while launching new locations. They are working hard to enhance their systems, processes, and business model – and they know they can’t do it alone. Franchise owners who opt for an emerging franchise often feel more passionate and connected to the brand, provide constructive feedback, and contribute to its growth and success.
Franchising Fuels the Entrepreneurial Spirit
After losing her dream job as an exercise physiologist at a high-end spa in Miami in 1996, Orangetheory founder and franchisor, Ellen Latham taught Pilates to gym members in a spare room in her Florida home to support her nine-year-old son. The small-scale enterprise became immensely popular.
Over the next 14 years, Latham expanded her endeavor and incorporated science-backed intensity training into her workout routines. She branded the comprehensive workout as Orangetheory in 2010. Orangetheory is now a $1 billion global franchise with over 900 studios and 700,000 members in 16 countries. In 2016, Latham was named Entrepreneur Of The Year® for service-based business in Florida.
5 Benefits of Emerging Franchise Opportunities
1) Profitable business opportunity as the brand grows
As brands expand and break into new markets, the franchisees who were there from the beginning become experts across their franchise systems. When getting in on the ground floor, if your franchise becomes the next big hit (e.g., Taco Bell, KFC), you’ll be a veteran. Investing early may mean you own multiple franchises of a now-famous brand and enjoy a tremendous ROI.
2) Having the franchisor’s ear
An emerging franchisor is more likely to listen to your input. You will be more appreciated and more likely to influence any required operating changes. When early franchise brands listen to their franchisees’ opinions, they are more likely to succeed.
3) More territory availability
Most larger brands have limited territory available. With emerging franchises, there are more expansion opportunities (e.g., multi-unit deals, area development deals, master franchise opportunities).
4) Ease of market adaptability
With technology and ever-evolving markets, consumer demands can change in an instant. Blockbuster to Netflix, taxis to Uber, and more being part of a larger brand can make adapting to change difficult or even impossible and being left in the dust.
Conversely, emerging brands are more agile and able to pivot quickly to take advantage of changes in the marketplace. Also, they often are innovative concepts that have great appeal to younger generations looking for a business concept that is new and different.
5) Strong support for franchise owners
Smaller, lesser-known franchisors will strive to give you more franchise training and personal attention as a new business owner. They will be more invested in your success — and it’s in their interest to help you.
Bridge the Gap, Fill the Void
At EmmerScale, our team of franchise experts helps franchise brands get past emerging to the next level. We understand the inner workings of a successful franchise and how to get you there. From Sales and Legal to Marketing, Finance, IT, and HR, EmmerScale ensures that you have all your bases covered to protect your investment and create a thriving franchise system.
We work with start-up and emerging franchise brands to position them properly to scale and maintain rapid and sustainable growth by helping franchises:
- Map a clear path to help you identify and prioritize the key components that will accelerate the growth of your business
- Fill in the voids and bridge the gaps by identifying areas for people, systems, and process improvement
- Scale in the most cost-effective way and generate tangible ROI for our clients
For a free consultation or more information about how our consulting services can help your emerging franchise model, contact us here or call us at (336) 365-8005.