The 2022 International Franchise Expo (IFE) recently took place in New York City. In an article recapping the event, the Franchise Times notes that several “hot” concepts debuted at the show. While “hot” concepts make for good headlines, are they sound investments for prospective franchisees? National franchisee lawyer Jeffrey M. Goldstein shares his thoughts.
While “Hot” Franchises Cool, Buying a Franchise is a Long-Term Investment
We discussed the topic of buying a “hot” franchise recently. At the end of 2021, Entrepreneur Magazine released its list of “The Hottest Franchise Categories of 2022,” and we took a look at the list while also discussing some overarching considerations for buying a “hot,” or trending, franchise.
It is worth noting that four of the five franchise concepts highlighted in the Franchise Times article fall into the categories on Entrepreneur Magazine’s list—Hot ChiknKitchn in the chicken category, The Vitamin Shoppe in the health and wellness category, Imagine Arts Academy in the children’s education and enrichment category, and Southpaw Gym in the health and wellness category. So for validation purposes, there is some overlap. But, this still begs the question: Is buying a “hot” franchise in a “hot” category a good idea?
One of the most important factors to consider is that “hot” franchises cool down. There will be a new list at the end of 2022, and there will be new standout concepts at the next IFE. So, while certain concepts might have buzz now, before long they will just be additions to the long list of franchised brands competing for franchisees and retail market share.
When buying a franchise, one of the most important factors to consider is staying power. Buying a franchise is a long-term investment, and you need to be confident (or as confident as possible) that your franchisor will still be going strong, two, five or ten years down the line. Franchising is a completely separate business from running a retail outlet, and some new franchisors simply aren’t equipped to manage franchise systems or provide the support their franchisees need. With this in mind, buying into a well-established brand might be the smarter investment.
On the other hand, franchised brands need to stay fresh, and new brands can offer new innovations that appeal to today’s customers. But, experienced franchisors can innovate, too, and they may have more resources and more insights than newly-minted franchisors.
In short, there are lots of factors to consider when evaluating franchise opportunities, and franchisees should not make their decision based on a franchisor’s tenure alone. Prospective franchisees need to conduct thorough due diligence and make informed decisions based on a comprehensive assessment of their chances of success.
Discuss Your Franchise Opportunity with National Franchisee Lawyer Jeffrey M. Goldstein
Our firm helps prospective franchisees nationwide evaluate franchise opportunities and negotiate their franchise agreements with their franchisors. If you would like to discuss your franchise opportunity with franchisee lawyer Jeffrey M. Goldstein, please call 202-293-3947 or contact us online to arrange a free initial consultation.
This article is provided for informational purposes. Goldstein Law Firm does not recommend or endorse any individual franchise opportunities.
