Choosing Between a Start-up and an Established Brand

Posted on May 26, 2011 by Farrah Kennedy

There is a lot to consider when evaluating franchise concepts to potentially purchase. With thousands of opportunities to choose from, a buyer will generally find themselves searching within a certain industry/sector that is of interest to them and/or working on a price point that is workable. Either search typically winds up bringing a decision between 3-4 opportunities, with a few being seasoned and a few being newer to the marketplace.

When evaluating the potential between a newer brand and one that is well-established, there are many things to consider before making a final decision. Below are a few strengths of each that should be taken into account:

Why Buy A Start-up?

1. Territory Size - Early in the life of a franchise concept, a franchisee can often garner a territory size that is larger than the territory sizes that will be awarded in the future.
2. Potential for Multi-Unit Territory - If there is consideration and/or desire to own multiple locations within a city, there is much more potential to get the areas of interest locked in.
3. Lower Fees - Sometimes the royalty fees of a start-up are lower than they will be later in the life of the franchise concept.
4. More of a Name Less of a Number - In a smaller franchise operation, the new franchisee is much more integral to the overall performance and success of the company as a whole and there is sometimes more attention afforded to new franchisees.

Why Buy An Established Brand?

1. Easier Lending - It is easier to find financing for a new location of an established franchise brand than for a brand without much history
2. More Brand Awareness - With an established concept, there is more brand awareness in the marketplace and less need for the franchisee to be a pioneer of the brand in their area
3. More Security - There is safety in numbers and there can be more security in an established brand with location density than with a relative start-up
4. Proven Systems - Established brands have worked on their systems over time and have a firm lines of protocol that are proven effective.

Each "pro" for one type of system can be a "con" for the next. It is vital to your decision that you weigh the items most important to you as a business-person and then see which type of operation will give you what you are seeking. The start-ups will provide a bit more of an entrepreneurial opportunity, whereas the more established brands should be looked at more as a small business operation.

About David Gollahon
David Gollahon brings 20 years of sales, marketing, and project management experience from a myriad of industries, including 10 years in the franchise advertising space. David created Franchise Insites as a means to bring individual clients an efficient and effective means to create, manage, and analyze their franchise advertising campaigns. Through his efforts, he sees the performance of the top 25 franchise advertising portals across multiple industry verticals as he manages over $1 million in annual media spend for the expansions of Maid Brigade, Kona Ice, Grout Doctor, FranchisESource Brands International, American Business Systems, The Franchise Authority, Maxx Merchants, Woodhouse Day Spa and a host of others. Franchise Insites also provides integrated marketing and sales functions for fully outsourced projects including IKOR and Conspire2Hire.

Contact David at david@franchiseinsites.com or call 770-617-5968