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Should Emerging Brands Work With A Franchise Development Company?

Frandata’s recent research on franchisors revealed that the top three challenges emerging brands face today are raising capital, finding qualified franchisees and promoting and selling their franchise offering.

If you can relate to those struggles, you’re not alone. Few emerging franchises are fortunate enough to have the resources, both human and digital, to build out a dedicated development team. Oftentimes, it’s only one or two people doing the heavy frandev lifting.

And even if a given company has a compelling franchise offering, without having a robust development engine behind it, it’s difficult to thrive long term. They’ll always be at a severe disadvantage to those that are.

One solution that’s becoming more and more popular in the space is working with a franchise development company. Franchising.com published a helpful piece about this trend, and how for emerging brands, frandev firms can offer more advanced services to help them accelerate their system growth. 

Whether it’s generating leads, qualifying prospects, or training and coaching the franchise on marketing or infrastructure, franchises with less than one hundred units are critical to the industry, and franchise development organizations can help them thrive.

Oakscale, FranchiseHelp’s sister company, has been doing some amazing work in the past several years on this front. They’re experts in using tech enabled strategies to plug in highly skilled, well capitalized, and sophisticated development teams to launch and sustain growth for emerging franchise brands.

And in light of the sheer number of inquiries and applications they’ve been receiving for franchise information on two of their brands (PetWellClinic and Surveillance Secure), this franchise development is on par to have the best year ever.

Ultimately, should emerging brands work with a franchise development company? If you’re struggling to raise capital and find qualified franchisees, then it might be the right path for you.

If you’re looking to gain access to franchise investors that most companies could only dream of, while leaving your brand’s executive team to focus on training, support, and franchisee success, it could be the game changing move of the year.

Considering how challenging it can be to franchise a business, going the route of a franchise development firm can help an emerging brand without taking as big of a financial risk.

Franchise Disclosure Document for Dummies – Part 2

If a franchisor does not offer refunds or installment terms (which is not unusual), it should include a “negative disclosure” to this effect in Item 5 (i.e. “We do not offer full or partial refunds under any circumstances.”).

Why I Have an Issue with the Forbes Franchise Rankings

The 5-Year Growth Rate and 5-Year Franchise Continuity are both great independent metrics of how a franchise is doing on average. As a potential franchisee both of these statistics are vital for selecting a franchise - you want to select a franchise that will provide you with a high return on investment and which will survive in the long run. I think these are, as FRANdata and Forbes suggested, two of the biggest (if not the two biggest) and most obvious metrics for whether or not a franchise is a “good” opportunity for a franchisee. But how do you use these to determine which franchise is BEST? This is the fundamental difficulty in coming up with a ranking system - it isn’t the difficulty in separating the good from the meh from the bad - it’s separating the great from the good and the best from the great. In the case of these rankings I found it to be pretty difficult to comprehend how they differentiated between the top ranked franchises. For instance, if you look at the difference between Discover Map (Forbes #4), Just Between Friends (Forbes #5), & Seniors Helping Seniors (Forbes #6) they all have extremely close continuity ratings and substantially different growth rates. In fact, in the case of these three, the overall rankings are opposite the growth rate rankings. Seniors Helping Seniors is ranked at the bottom of these three franchises despite having a growth rate that is 31 percentage points higher than Discovery Map and a continuity that is only 2 percentage points lower. This suggested to me that continuity was viewed as the dominant factor. But that logic didn’t hold for the rest on the “Economy Class” Top 10, as BrightStar Care (Forbes #7) had the same growth rate as Pop-a-Lock (Forbes #8) but a continuity rate that was 12 percentage points lower. These comparisons show that these were not the only two factors that went into the rankings, which is understandable, but no other factors that are explicitly listed in their results seem to be major factors.