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
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
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.
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.
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.
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.
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.