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Franchise Decision: Big or Small?

By: Bill Bradley

 

Franchise Decision Big or Small

There are franchises with thousands of locations, and there are franchises with just a few dozen… or a mere handful.

Jan-Pro cleaning service, for example, has 11,000 units. Domino’s Pizza has 11,285. 7-11 has 51,000.

Parking lot painters We Do lines, on the other hand, have 11.

Which is right for you?

Related Article: 3 Steps for Choosing a Franchise

Here are the points to consider as you make your decision:

  • Small franchises may be newer. Do you want to get in on the ground floor? You could have opportunities for growth and influence that later franchisees won’t have, and you might have more flexibility. On the other hand, you could also be buying into a system that hasn’t yet matured.
  • Big franchises have more turnover. While it makes sense that a large system would be less risky, the biggest franchise corporations actually have a lot of turnover. This is logical, since they have more units to turn over, but it might make it harder to develop connections.
  • Small franchises might be more personally connected. The corporate office probably can’t really think about 2,034 franchisees as individuals, but a franchisor with 36 franchisees probably can. On the other hand, very large franchises are likely to have a team looking after the franchisees, so it may be the middle-sized franchisors who provide the least personal touch.
  • Big franchises are usually more streamlined and professional in their operations than small franchises. They have to be, just to keep track of everything going on at the corporate level. If you decided to go into franchising because you got tired of corporate life, you may be dismayed to find that your new small business has quite a bit of the feel of corporate life.
  • Small franchises are easier to get into. The largest franchises often have many, many applicants to choose from, so they don’t offer as many opportunities for new franchisees. Big franchises also are usually much more expensive to join. You may need a large investment and an aggressive approach to find a place in the bigger franchises.
  • Bigger franchises are more likely to have strong franchisee organizations and communities. A small franchise with a few locations in the same region doesn’t have enough players to get conferences and meetings going—and the franchisees may feel more like direct competitors. Large franchises often have exciting events for franchisees, and strong leadership within their organizations.
  • Smaller franchises may offer more freedom to franchisees, whether they’re new or have been around for decades. Flexibility is easier for smaller, more agile companies. The bigger a company becomes, the more uniform it has to be in order to keep things on track.
  • Bigger companies have more name recognition and more momentum for marketing. Being the new kid on the block has some benefits—novelty can be exciting for consumers—but at the end of the day, fame certainly has its perks. Especially when you first open, having a well-known brand it a huge advantage.
  • Small companies are often simpler, with straightforward business models that have very small learning curves.
  • Bigger companies probably know the answers to all your questions, and their training will probably be more intense

There are pluses and minuses to both—and what’s a minus to you might be a plus to someone else.

Published: December 1, 2015
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Source: America's Best Franchises

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Bill Bradley

Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

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