How to Overcome Competitors that were First to Franchise Their Concept

Being first does not necessarily mean you’re the best, and being best is what matters most in the competitive franchise industry.

Still, as an emerging franchisor going up against competitors that were first to market with a similar concept, you will need to develop a better business model and one that is different than the rest. It’s not impossible, though.

Know Who You’re Up Against

Before you begin franchising and developing your competitive advantage, you need to know who your direct competitors are, and you need to know them well.

Take note of their value proposition and their key differentiators. You also need to understand how long they have been in the market, how large the market is, and what percent of the market they currently own. Knowing this will help you compare differentiators and whether you need to improve or change yours.

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Knowing your differentiators and exploiting them to show the end consumer why your product or service is superior or better value will be key. Research the best aspects of each competitor and improve on those areas as you develop your concept. Many of your competitors will have aspects of their business that guests will find appealing. Focus on improving those aspects. Remember, this is about being best.

Conduct a competitive analysis to help you see how your yet-to-launch franchise concept compares to similar concepts already operating in the market. These studies will provide you with a plethora of valuable information to utilize, especially before you begin recruiting franchisees. Competitive analysis reports should cover:

  • Amount of initial franchise fee
  • Quality and size of franchise territories
  • Recent growth, which should include the number of franchisee terminations and sold but not opened units
  • Royalty fee
  • Amount of brand or marketing fee (if any)
  • Initial and renewal terms of the franchise
  • A look at their training and support programs
  • Whether they’re involved in any litigation
  • What their marketing programs consist of
  • A view of their operational efficiencies

By knowing these aspects of your competition, you may be able to better position your brand to attract franchisee candidates away from them.

Dare to Differentiate

Now that you know more about the franchise brands you’ll be going up against, you can better differentiate your own brand for both consumers and potential franchisees.

Consumers want to know if you provide a better value and if your product or service is superior. They’ll also want to know in what ways it’s better than other similar concepts. However, there are several other ways to differentiate your brand beyond the value and quality of the product.

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Once you have established and shown why your franchise is second to none, demonstrate these advantages through your brand advertising, messaging and sales pitch by playing up these distinctions.

Depending on your concept, and how well you set it apart from the competition, your customer and potential franchisee could be the same person. It’s not unheard of for customers who are impressed by a concept’s uniqueness to fall in love with the brand and become franchisees. Your differentiators should also attract entrepreneurs who view your franchise through a financial investment lens and are enticed to become franchisees. Both kinds of franchise owners should share the same passion and vision for the brand as the founder and corporate staff.

To grow, you need to make sure your marketing message is tailored to your ideal customers and franchisee candidates.

Get the Word Out

Kicking off a franchising campaign that attempts to make up the distance between your brand and competitors is a costly endeavor.

You should expect to spend more on advertising out of the gate since your franchise is an unknown commodity trying to knock down the brand names that already have significant market share in the industry. But, it can be done. It will take time and frequency of message, though. You should be flush with capital to spend a significant amount to build brand awareness for the next two to three years after launching.

You may also spend more capital on research and development at the beginning as you build a better product or service that has true differentiation.

Where to Begin

Building the brand and establishing yourself in markets where your competition doesn’t exist is a great way to penetrate a new market and not have to spend a significant amount to capture market share. As far as those consumers know, you are first to market. If you do it right, you will have brand loyalty from day one.

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The market development strategy that is recommended to emerging franchise concepts is the hub and spoke model. Start with your base of operations and develop regionally around that area. This will provide faster and greater brand awareness.

When you expand beyond your home market, keep in mind that your biggest competitor has been a franchise longer and it will take some time to overcome them. Take the time to be better first, not bigger.

To learn more about competing against brands that have franchised first, turn to a trusted franchise advisor, Winmark Franchise Partners. With 30 years of franchising experience and more than 800 franchise owners representing over 1,250 locations for five brands, Winmark Franchise Partners can you help grow your brand through sound strategy and expert franchising advice. Contact us here or at (844) 452-4600.

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