Pioneering the Franchise Frontier: Is Being First in a Franchise System Right for You?
Prior to the beginning of the civil war, the American economy had just experienced one of the most significant economic growth periods in its history.
From 1820-1840, westward expansion, the building of canals, roadways and train tracks as well as tremendous agricultural growth fueled a time of innovation, both in goods and services as well as in the way America did business.
It was in this environment that Albert Singer, son of Issac Singer, the inventor of the Singer Sewing Machine, was trying to grow his business. With the westward expansion, Americans were increasingly spread out across the country. Singer wanted a way to get his sewing machines into the hands of more people, quickly and efficiently, so he developed what is now seen by some as one of the earliest models of the franchise system. Essentially, it worked similar to how a resale model would work today.
Since then, franchising has gone through a number of changes. In the 1960s and 70s, the model was plagued by a number of shady players who were eventually regulated out by the government. Today’s franchise system is both more heavily regulated and transparent, and is now a mainstream track to entrepreneurship for thousands of business owners who don’t want to go it alone. In recent decades, some of the nation’s strongest brands, as well as many popular niche concepts, rely on the model to allow entrepreneurs a proven system and strong profit potential.
Today’s potential franchise owner has more options than ever, yet just as with stocks or real estate ventures, a smart franchise investment depends on timing, demand, and understanding your risk profile. For the investor who doesn’t mind investing more upfront to buy into a proven, sustainable model, an established brand may make more sense. New models, on the other hand, can offer the first-to-market advantage with a new concept or product. If you’re willing to accept more risk and put in a little more sweat equity, the potential rewards are great.
IS ACCESS TO LEADERSHIP IMPORTANT TO YOU?
One strong upside of being first is the likelihood of regular access to the franchisor’s most senior management. This often provides greater exposure to first-hand training and more opportunity to become an expert in every aspect of the business. This in turn allows you to mentor others as the franchise grows. Other franchisees will look to you for help and guidance, and this can be quite rewarding.
Bruges Waffles & Frites, a popular Utah-based chain with four locations (brugesfranchising.com), is bringing their proprietary Belgian specialties to surrounding states as a young franchise brand. Belgian native and Bruges Franchising Co-CEO Philippe Wyffels has decades of experience in franchising across the globe, and has witnessed how investing in a franchise at an early stage of growth offers a unique opportunity to directly train and work with new franchise owners.
“Bruges has built a strong system to support hundreds of locations, but there is simply no doubt the first franchise owners will have access to a deeper level of training, mentoring, and collaboration than what will be possible once we’ve expanded—that’s just one of the natural benefits of coming into a system early. The best part of being a first-adopter is feeling part of a team and making a difference as you build something bigger. Your voice is heard much easier, and you can have an integral part in helping further develop the system.”
ARE YOU MORE COMFORTABLE AS A LEADER OR A FOLLOWER?
The good news is, that by being first, you can often invest at a much lower cost and receive a greater potential return down the road. However, the tradeoff will often require more effort on your part. As a first adopter, you are essentially a testing ground for growing the business, and this will likely require more trial-and-error than later franchisees will experience. If you’re comfortable with that leadership role, then being the first in a franchise system will likely be preferable.
Clint Rowley, a serial franchise owner operating multiple service brands, and a master developer for ASP Franchising in Arizona (ASPPoolFranchiseAZ.com), has invested in both young and more established franchises. “A very different kind of person is drawn to a new system over a larger one—both types are looking for profitability, yet the first-adopter is more of a true entrepreneur, looking to help grow and develop a brand and take a leadership role. The person looking at more established systems with hundreds of locations is often looking for a more predictable investment. In many cases, they are buying a job.” Understanding whether you enjoy leadership is a critical factor in being first in a franchise.
DO YOU PREFER COLLABORATION OR FIXED SYSTEMS?
First adopters in a system have opportunities for greater collaboration in how the franchise model develops. Coming in early allows you to provide feedback and enjoy a level of cooperation with the franchisor that is difficult to replicate in larger systems. You may discover improvements that will be more welcomed in a young franchise, whereas larger brands will often have more rigid and established processes across hundreds of locations.
After being an early adopter in one franchise system, Rowley bought a franchise with the nation’s largest swimming pool service provider, America’s Swimming Pool Company (aspfranchising.com), which had over a hundred locations when he came on board. This time around, he was impressed with the comprehensive support system in place. “Having been first with my previous franchise brand, I sometimes felt I was developing the system I bought into. While I liked collaborating and playing that leadership role, it can require a lot of time and effort.”
Rowley warns, “Just be sure when you are evaluating a new or established franchise system that you do your due diligence to ensure a basic support system is in place. You don’t want to feel like you are developing the system that you bought into.”
Regardless of size, many franchises emphasize collaboration as a core value even as they grow. “At Bruges Franchising, we are building a community-focus into our system from the beginning to allow for regular collaboration, even after we’ve expanded,” explains Wyffels.
HOW PATIENT AM I WHEN MISTAKES HAPPEN?
By virtue of being one of the first franchisees in a system, there will inevitably be mistakes made—both by you and the franchisor. From billing to the supply chain, something is bound to hit a rough spot or a particular situation may arise that hasn’t yet been encountered. This can happen even with more established brands. The key is selecting a franchisor that values transparency and feedback. Without that candid communication, the road to success will be much bumpier.
The antidote to these early-model frustrations is the franchise owner’s commitment to the brand itself. For those who are simply looking for an investment and a return, most any established brand will do. But, for many of those who come in first, they chose the brand because they are passionate about the company, its values, culture, or products—whether they be addictive waffles and frites or a more professional swimming pool service.
WILL I HAVE THE COMPETITIVE ADVANTAGE?
One important benefit of being first to market with a new concept is the opportunity to bring an entirely new offering to your area—a completely unique cuisine, an unheard of novelty or trend, or a professional brand in what has been a historically fragmented, mom-and-pop industry. In many cases, being the first franchise means you are the first to market with something completely new, which means you have the challenge of introducing it along with the benefit of being the only game in town.
Also, if you’re one of the first to franchise, you’ll often get your pick of location, which allows you better strategic placement in relation to any competition in the area.
WHAT IS MY END GOAL WITH THIS INVESTMENT?
Being first to invest in a new franchise model comes with a wide range of benefits in addition to a typically lower upfront cost. However, that doesn’t mean there aren’t challenges. Determining your end goal along with your personal style will help you make a wise decision.
Rowley sums it up like this, “If you find a new brand that you like and can be passionate about, you can set yourself in a very favorable position by being first— being first to market with the product, contributing to the organization, growing a new national brand, and enjoying a strong relationship with the franchisor.”
As one of the first entrepreneurs to adopt a franchise model, it’s likely Albert Singer would have agreed—there are benefits to being first.
Andrew Parker currently serves as the Chief Marketing Officer for the Leonardo Museum in Salt Lake City, UT.
Valerie Christensen is the founder and CEO of RISE Strategic Marketing and brings over 20 years of experience developing world-class marketing and PR strategies for global brands, national franchises, regional enterprises, and start-up ventures.