Most prospective franchisees have the perception that in order for franchising to work, they have to take up a big name franchise where everyone under the sun recognizes the brand. And this is rightly so because acquiring the rights to a business that is associated to a well-known brand name is one of the fundamental attractive qualities of the franchising business model. Besides, taking up an investment always requires a practical approach. So looking at it from just this aspect, it seems almost impossible that a new franchise will ever out-maneuver established ones when competing for the same pool of prospective franchisees. But that’s just one side of the story.
Franchises which are already established and well-known, compared to a young franchise, will typically command higher franchise fees with more capital requirements. What this means is that it this pretty much limits the investor profile, based on financial ability, to a select group. For those who are interested in investing in a franchise but don’t have the required finances in place for a more established brand, giving a young franchise some consideration instead might throw up some competitive advantages that aren’t apparent at first glance.
In a larger organization, approval of decisions normally includes an evaluation process that involves several department levels or personnel before being given the green light (if given the green light). In a nutshell, larger franchise organizations could be tied down by the very formalities and rules they implement that brings everything to a crawl with bureaucratic hurdles that probably didn’t need to be there in the first place.
On the other hand, while young franchises will also have their own set of rules and formalities, they usually have significantly smaller teams which should result in a more efficient workflow through faster decision-making processes. Futhermore, young franchises being relatively new, should have more operational flexibility. Even with having already formulated a business plan and strategy, there is nothing to confine them to those original directions. This allows young franchises to be more agile when negotiating through obstacles or reacting to market changes.