Choosing the Right Franchise

Big Franchisors vs. Small Franchisors

big and small franchisesFranchisors range from giant companies like McDonald’s to small companies you may never have heard of till you learn about them here at America’s Best Franchises. Does size really matter when it comes to franchise opportunities?

FRANData released a new study on the health sector of franchising where more than 400 brands operate over 33,000 franchised businesses. You may not be surprised to learn that Jazzercise is still leading the health-related franchise industry after sweeping the nation years ago.In the food section of the franchised health industry, GNC leads the way followed by smoothie franchises.

GNC, some would argue, isn’t really a food provider, since they’re more about supplements than they are about providing meals for customers. Smoothie franchises, however, don’t have much competition in the franchise sector — they meld a health-focused image with the convenience of fast food. Early adopters Smoothie King and Jamba Juice lead the pack as the second and third largest food companies among health-related franchises and the first and second largest smoothie franchises. Coffee franchise Maui Wowi (they also make smoothies) comes in at fourth in size for health-oriented food franchises — the first newcomer on the list.

How can these companies lead the pack when there are so many newer, fresher options? Easy. Franchises that hop on a new trend early off are able to get in on the ground floor and gain an advantage which can help them grow to be the largest franchise systems in their category. But does being at the top for size really matter in terms of your franchise’s success?

On the one hand, size doesn’t prove that a franchise is going to be a good investment for you.  Larger franchisors may put less time into individual franchisees because they have many more franchisees to manage than smaller franchise systems. They may or may not be better than their competitors… as we’ve seen, there’s an advantage to getting into the game early.

Franchisors that are large enough to dominate a category may have accomplished this because they are driven to succeed. They might be more apt to create programs to help you succeed as a franchise — or they might be focused on their corporate success regardless of franchisee success.

On the other hand, the larger franchisor may have a winning system. They certainly will have greater brand recognition. They have more experience and more data to pull from in determining what works — and that can mean less trial and error for you.

If you’re part of a franchise that dominates a sector and have a protected territory with them, you might have less competition overall. If there are countless franchisees in your franchise system, it might be harder for franchisees of another system or independents to break into the market your franchisor dominates, especially if your franchisor has a clear national brand with a trusted and recognized name.

Large franchisors have more power than newer franchises in terms of getting you the best deal as a franchisee for supplies and equipment.The overall risk is generally lower with a large brand than with a smaller one.

All those advantages can also mean higher prices to get started with a mega brand.

The bottom line? Size is rarely going to be the only factor you should look at, but it can certainly make a difference. Check out the industry leaders in the area you’re considering: if they’re not on your short list, they certainly will be your competition.

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