Buying into a big franchise system: pros and cons

Most people equate franchising with well-known names: McDonald’s, 7-Eleven, Dunkin’ Donuts, Supercuts, the list goes on. These big franchise systems have advantages and disadvantages when it comes to the franchisee role. When exploring franchise opportunities, be sure to ponder these pros and cons.

Benefits of a big franchise system

When evaluating franchise opportunities, you’re looking for at least two things: a valuable brand and a proven operating system. The primary advantage of big franchise companies is that many are good on both of these fronts. And they are easier to research. You can check consumer awareness and attitudes about these brands just by asking around. And it’s relatively easy to visit a few locations and look at how well (or not) they operate.

These large franchise systems can offer another advantage to new franchisees: safety and dependability. The risk of getting into a big franchise system is relatively lower, because they worked all the bugs out of their systems long ago. This doesn’t mean they can guarantee your success. But because there’s a wealth of information available about the current system and its operators, you’ll have less uncertainty.

With big systems you’ll usually find a greater degree of professionalism and expertise among the support staff, the supply chain, and virtually every other system component, compared with what you can reasonably expect for a smaller or newer franchise. This can help you avoid mistakes and potentially realize lower operating costs compared to a less sophisticated system.

Drawbacks of a big franchise system

Mega franchise systems have disadvantages too. One potential disadvantage is that the larger a franchise system becomes, the more they may regulate the conduct of existing franchisees. A large franchise system usually documents exactly how the business should be run in every respect—from layout to operations to marketing. They’re not looking for innovators or someone who will reinvent the wheel. They’re looking for operators who will faithfully execute their proven systems.

Many very large systems already have so many units that it can be difficult to get approved to open a new unit as a new franchisee. These systems tend to favor successful current operators for expansion opportunities rather than take on new, unproven operators.

Buying an existing unit

New franchisees typically enter a large system by purchasing one or more existing units. This can be an advantage, as it enables you to review the performance of the unit(s) before you decide whether to pursue it. Buying an existing business with profitable operations enables you to avoid the losses typically associated with the initial startup process. As long as you make sure you’re getting a successful unit (rather than taking on someone else’s troubles), this can be a great opportunity.

It’s up to you

The really big franchise systems receive thousands of inquiries from prospective franchisees every month. You may need to communicate your qualifications more aggressively to get a big franchisor’s attention and consideration. Whatever the challenges are in this area, the prize may be well worth going through the process.

Every franchise is seeking franchisees with the talent and capital to make their business a success. Big or small, most franchise companies care deeply about the success of all their franchisees. You can find just as much heart in a big company as in a smaller one. Take the time to look into a number of alternatives when you’re contemplating franchise opportunities–big company or small–and you’ll find the right one to maximize your chance for success.