The Differences between Large and Small Franchises

As you conduct your franchise search, one of the factors you will want to consider is the size of the franchise organization that you wish to get involved in. Take into account the pros and cons of each as you make your decision.

Pros of Larger Franchises:
  • Lower risk: The risk involved with larger franchises is probably a bit less since the business model is likely to be better established. If the franchise is in business longer the bugs are more liable to have been cleared up earlier in the game.
  • Better support: The support received from the organization is usually more structured. Also there are typically more experienced managers within the team to assist franchisees.
  • Increased profit potential: As you receive more direction from an experienced organization, you have a better chance of decreasing errors, therefore increasing profits.
Cons of Larger Franchises:
  • Less flexibility: In order to keep uniformity in place, larger franchises typically have more rigid rules and regulations in place, leaving less room for flexibility.
  • More difficult to obtain: Many times it is more difficult to obtain a unit within a larger franchise because the organization may have more demand for units than availability. In addition, these franchises may sell any vacant units to franchisees who are already part of the organization who have demonstrated their ability to be successful.
Pros of Smaller Franchises:
  • Less complicated systems: Smaller franchises tend to have simpler, less complex business models in place. Franchisees are typically able to receive assistance that they need directly from the franchisor rather than through middle persons.
  • Flexibility: Smaller franchises may be less rigid and more open to new ideas and changes.
Cons of Smaller Franchises:
  • Limited resources: Smaller franchises typically have more limited funds. This may reduce access to current technology as well as training programs and promotional materials.
  • Newer business system: Since the smaller franchise is likely to be newer, the business model may not be as polished as a more established one. Therefore the possibility of success may be decreased.
Basically it is best for you to investigate your options as thoroughly as possible so that you have a full understanding of what a particular franchise involves. Talking with other franchisees within a franchise organization before investing is a good way to obtain information regarding how the franchise system is working.

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