Your list of popular franchise brands may include Crumbl Cookies, Jersey Mikes, Sonic, Mcdonald's, UPS Store, Subway, Popeyes, In-N-Out, Starbucks, Chick-fil-a, and many others. But, first, let's quickly eliminate Starbucks and In-and-Out, which do not sell franchise units, so don't even try to go down that path.
For the others, most are notoriously difficult for just anyone off the streets to get one of their franchise locations. But why is that?
Problem #1: Many Franchise Brands Have Limited Territory or are Sold Out
Why do you think they became famous? They are already in high demand. There may be no territory available near where you want to operate the franchise business. Crumbl, one of the fastest growing franchise brands, is almost completely sold out in the US and is already sold out in most states west of the Mississippi.
Problem #2: But I Have the Perfect Location, and There Isn't Another One for Miles
You might think your community is a perfect location for a particular franchise, and you do a Google search and see there isn't a location within miles where you'd want to locate a unit. The problem is that many popular franchise brands encourage franchisees to buy more than one unit or location and haven't yet built out their second, third or fourth location. Franchisors often give them 3-5 years to do that build-out.
Problem #3: It's a Clique
Current owners of franchise units have it great. Not only did these franchise owners get in early enough to get their franchise units, but they are often the ones first in line to get new ones where the territory opens up. So, let's say a new territory location becomes available. But, of course, the franchisor would prefer an existing franchisee to own the next new location since that owner has already demonstrated success.
Problem #4: Get in Line for a Franchise
You aren't the only one that wants to buy the franchise. Hundreds, if not thousands, of other individuals also want to franchise these brands. Unfortunately, these brands get overwhelmed with applications. They may take weeks to respond if they even get back to you at all.
Problem #5: They are Picky in Who They Choose
Popular brands have the upper hand, and they can be choosy. Most franchisors have particular profiles of the types of candidates they seek. Their sites may show example “mom & pop” pictures running one of their units, but don't be suckered by a few nice images. What are these brands looking for? Often, ten years of experience in similar markets as they operate. High net worth individuals who can ride through the ups and downs of the economy. Backgrounds in leadership, management, finance, marketing, and operations. Some are looking for specific personality types that match their brand image. They want to increase their chance each new franchise location will be wildly successful.
Problem #6: You May Need a Lot More Money
Popular brands are generally the most expensive to build out and operate. This is because they place a lot of costly conditions on their franchise owners. Also, as a new owner, you may be required to buy multiple units upfront. As mentioned above, you may not have to build them all at once, but you will have to pay more upfront franchise fees.
Problem #7: Profitability
Are you thinking that owning one of these popular franchises is going to make you wealthy, think again? While some popular franchise brands or if you are a top performer, you will significantly increase your wealth, but that is not always the case. For example, if you own only one unit of a UPS Store or a Subway shop, you may earn less than $100,000 in annual income.
Hugely popular franchise brands will likely be squeezing franchises for higher royalty rates. Or, they may be shrinking the size of your territory. Why not, they are in demand and have hundreds of other prospects waiting in line to get a unit.
Problem #8: Past Their Prime
Many of these highly visible brands are well-past their growth peak. They may be well recognized as a brand but these brands often have so many restrictions in the award process, it ends up wasting most people's time and quickly discourages people from franchising. Think about it this way, your goal should be the income potential and the return on your investment (ROI). Also, its harder to scale larger with these tired brands. Proven brands that are entering their growth zone addresses each of these issues. With younger growth phase brands, you get first dibs on the hottest new markets; you can more easily acquire multiple locations of the brand to scale up growth; the restrictions are minimal; you have a greater say (and sway) with the franchisor; and the return on your investment can be as much as two times that of old, tired, yet popular brands.
What are Your Alternatives
Hundreds of fantastic and financially lucrative brands haven't yet grown to the size of some of the brands mentioned earlier. But, what's even wilder, your investment costs may be a lot lower, and the return on your investment dollars may be much higher.
If you are open-minded and open to alternative franchise brand options, contact us or schedule a call with our franchise expert Jay Friedman.