First-Mover Advantage

Why it pays big to be an early adopter in franchising.


First-Mover Advantage

As far as people go, most love being first. And why? Most people can name the first person to walk on the moon but draw a blank on the second. Being the first to try something has cachet, whether it’s in sports, science or any other enterprise.

Except, maybe, in the franchise world. For every investor who lucked into an early hit franchise, there have been hundreds who bet their life savings on untested concepts and ended up losing everything.

Most franchise advisors tell prospective franchisees to stick to proven concepts – ones with a track record, have perfected their model and have veteran franchisees.

This is good advice – but in some cases, ignoring it can also be a good thing. Being an early adopter of a promising new franchise concept has its rewards.

A franchisee who gets in the door first may develop a deeper relationship with the franchisor, receive stronger support, gain access to new territories and sometimes even have the opportunity to shape the direction of the franchise system.

Hands on the steering wheel

By being first, the new kid on the block, it gives you an advantage going forward. A franchisor will often do everything they can to make you successful as you’re their ticket to expansion.

And, if you’re able to demonstrate that you’re an excellent franchisee, they’re likely to call you first when more opportunities become available.

You get to be the test pilot

When you’re the first test pilot there’s usually a lot more leeway than with an established franchise – you’re effectively the guinea pig which can feel a lot more entrepreneurial and pioneering than a franchisee later down the line, when everything down to the door knobs is worked out for you.

But not having all the details worked out gives you the opportunity to be more involved in refining the concept, from wall finishes to operations. By consulting with head office, you’re in a position to look at something on paper and say that it might not work well.

You can be proactive in making positive changes that other franchisees will benefit from – the downside is that it will be your store where small changes happen most frequently.

The franchisor’s experience counts

When becoming an early adopter with a franchise, experience counts. Not yours, but the franchisor’s. Do they have experience and a track-record of success with other brands they’ve launched, and are their franchisees satisfied?

This isn’t just about how much the franchisor can help you, but whether they know what they want and how to get there. Direction is key.

Expanded horizons

If the franchisor has proved its mettle and you’re prepared to be a test pilot of the brand you’re interested in, there are four things to look into:

  1. Is the concept truly original in its sector, or just another brand in an ever-saturated market?
  2. Is it iconic enough to draw a good customer following?
  3. Has the corporate store performed well and is it thoroughly water tight in its operations?
  4. Is the brand a natural fit to your business goals, character strengths and values?

Red flags in new brands

If a brand new franchise system has 800 stores under development in their first year, that’s a red flag. They simply won’t have the staff and infrastructure to service that many franchisees properly.

Potential franchisees need to make sure the person leading the charge has the experience and attitude to lead the company. If the CEO doesn’t realise franchisees are the most important core ingredient, it’s highly recommended you look elsewhere.

Caution

Signing on with an untested concept started by a franchisor with no experience takes extraordinary due diligence to mitigate risk.

Tracy Lee Nicol
About the Author
Tracy-Lee Nicol is the managing editor of Franchise Zone Magazine and deputy editor of Entrepreneur Magazine. She studied her Masters degree in Art History and Visual Culture at Rhodes University and spent the next two years working and travelling in Asia. Her love of people, business and teaching is reflected in telling the stories of entrepreneurs, franchisees and franchisors, inspiring others to take the leap to being their own boss and bringing about positive change in South Africa.

Related Articles

©Franchise Zone / Entrepreneur Media SA (Pty) Ltd. All rights reserved.

Disclaimer: Reliance on the information this site contains is at your own risk. Readers are advised to consult their attorney and/or financial advisor prior to pursuing any investment. Please read our Editorial Disclaimer and Terms & Conditions of Use.

Is this information out of date or incorrect? Report it to our webmaster.