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The Benefits of Purchasing a Unit in a New Franchise Business
Posted on November 16, 2010 by My Franchise Law

When determining the options available to you as a potential franchise owner, you may feel hesitant to invest in a new franchise before it has proven itself to be a lucrative opportunity. However, in many cases, there are advantages to getting in on the ground floor and becoming one of the founding franchisees in a growing chain. Here are several “pros” to considering a new franchise.

New ideas can mean big money: Opening one of the first franchises in a chain that will become popular in the marketplace means increased business, and better profits, before the market becomes saturated.  If you believe you have discovered a new product that will appeal to a large sector of the mainstream market, you could become one of the founding members of the next McDonald’s or Starbucks (and may be able to manage your own franchisees down the road).

Smaller franchises can mean more support: Generally, when a new franchise is just starting up, they will invest a large amount of time and attention to ensure that their franchisees get off to a successful start.  This extra care can mean the difference between a bumpy first year (and damage control) and a smooth path to financial stability.

Your choice of territory: With a new franchise business, you will often be able to choose your territory and negotiate exclusive rights to the area so that you will have a larger customer base on which to draw.  With established franchises, it can be difficult to open a branch in a market that is already saturated, and your choice of locations may be limited by franchise agreement terms with earlier investors.

Negotiable contracts: With new franchisors, it may be easier to negotiate favorable contractual terms that will help you get off to a strong start. With an established franchise, contracts can often be stringent and lacking in flexibility.

External Resources

Small Business Administration

A government resource for finding information on planning, mentoring, and strategies for franchises and small businesses.
SBA Small Business Planner

USA.gov Business Gateway

Resources for every step in planning your business or non-profit, from getting your EIN to handling wages.  
USA.gov Business Gateway

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