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Your Franchisor Might Not Bring A Flood Of Customers To Your Door

Posted on Date: Apr 28, 2015

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One of the reasons potential franchisees love the idea of owning a franchise is that they often believe the franchisor will work hard to generate customers for their franchisees. Turn on the television or take a tour of your local billboards, and you’ll see tons of ads for Subway and McDonalds urging viewers to stop on by the local franchise.

One of the big myths of franchising is that every franchisor can offer strong brand awareness. Sure, you have the pervasive McDonalds and Subways, but for every major brand, there are scores of franchised brands that fail to deliver any significant market demand. Many of these franchises are small and only have a handful of franchisees. They don’t enjoy the multi-million dollar marketing budgets like the big guys.

Smaller and newer franchises may have little or no brand recognition, which means you cannot count on the franchise to bring customers through your door.

Before you invest in a franchise, do your due diligence. Look around your community to see what kind of presence they have. Ask your friends and family if they have ever heard of the franchise, know what the franchise does, and have ever felt compelled to shop at a franchise location. Most importantly, ask current and former franchise owners if they had trouble getting customers through the door.

If your franchisor is small or new and doesn’t have a strong marketing presence, that isn’t necessarily be a deal breaker as long as you accurately understand the situation before you start. Smaller, less well known franchises can be a great deal if you believe that they have a strong product or service and have the potential to grow over time. This could be your opportunity to get in on the ground floor, but it will also mean you will have to work a lot harder to create brand awareness. You may have to focus more heavily on the location of your business, distribute the marketing materials your franchisor provides, and do some hustling to bring in customers.

Again, do your homework and make sure you have a strong understanding of how well your potential franchise is branded in your community or what your franchisor intends to do to help support your franchise location. The AAFD Franchise Self Evaluation Tool is a great asset that can help you rate the quality of your franchise opportunity.

One comment

  1. avatar
    Jeff Lefler /

    Jessica, great points. Specifically studying an emerging brand’s development or grow can tell a lot about the type of marketing support you will receive. Are new franchised outlets radiating from a market with brand awareness, or are new outlets opening in disparate markets throughout the U.S. If a franchise has 50 locations in Texas and one location in Oregon, that lone location will be unlikely to get the support or value that comes with investing into a franchise.

    As always, prospective franchisees need to spend the time and money on proper due diligence.

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