If you’ve decided the best way to begin your journey to entrepreneurship is to first become a franchisee, one of your first decisions will be what kind of franchise you want to buy into.
Some new franchisees look for a tried-and-true brand that’s been around for many years. Others would prefer to get in on the ground floor of one of the hot new trends in franchising. Of course, these change from year to year and sometimes more often than that.
The advantages (and disadvantages) of a new franchise concept
There are certainly advantages of buying into a new franchise concept instead of a more established one. These include:
- Lower up-front franchise, marketing, royalties and other fees and entry costs (which can eventually mean a larger return on investment)
- More potential for growth
- More collaboration with the franchisor (and a better chance that your ideas will be listened to and incorporated into the business)
Of course, the flip side of these advantages is that buying into a new franchise concept comes with more risk. Further, rules and processes are likely still being developed, so things may be more disorganized than in an older franchise.
Making the right choice for you
A new franchise can also mean a lot more work by those who get in on the ground floor. Often, that’s one of the trade-offs for not having to invest as much money as you might in a more established franchise.
The choice of whether or not to go with a new franchise depends largely on what you’re more comfortable with. Do you like higher-risk (and potentially higher-reward) situations? Do you prefer flexibility or stability? These are just a couple of things to consider.
As a new franchisee, it’s crucial to understand the legal ramifications of the franchise agreement you sign. This is the document that will define your relationship with the franchisor. It’s crucial to have sound legal guidance as you review and negotiate this agreement.