EXPERT ADVICE: George Knauf | Senior Franchise Business Advisor | FranChoice
Legacy Brands Still Have Opportunities
You may be wondering if brands established years or even decades ago have growth opportunities for you to take advantage of. Let me answer that clearly: Yes! While I am often a big fan of emerging franchise brands with great leadership teams, much of that is about control and empire building. Those newer brands have a lot of low hanging fruit, territory, open and available for buyers that want to build multi-unit empires. That said, if you are not looking for a geographically dense multi-unit package, then those more established brands can be outstanding places to look for gems. As a franchisor sells most of their territory, the remaining bits of open territory are often not heavily marketed and they may have scaled down their Franchise Development efforts to focus on supporting the existing franchisees. I do appreciate franchisors that focus first on their existing franchisees whether it is 3 or 1,000. When they have scaled down their development efforts, those open bits of territory are in inventory for their own franchisees that want to grow as well as for new candidates that inquire or get introduced by someone like me. These open territories with established brands may require patience and flexibility. Let’s say you wanted three territories or units. Maybe one is in your preferred geographic area, but the other two are a moderate drive away. The scenario still gets you to your desired territory 44 Franchising MAGAZINE USA
George Knauf is a highly sought after, trusted advisor to many of the top franchise ownership groups in the world. With over 25 years of experience in both start-up and mature business franchise operations he is uniquely qualified to advise individuals that have dreamed of Building their own empires. Whether you have an existing portfolio or searching for your first franchise, he can help you to pursue your dreams. www.MyPerfectFranchise.com
or unit count, it will just take a little more investigation and planning. The development process is often a little longer, but you have the benefit of a larger pool of franchisees to find relevant validation calls with. At this point in their lifespan, the franchisor is often very clear on who their best candidate would be and they are not shy about turning down a candidate that doesn’t fit that mold. You may also find that legacy franchisors have resales in their systems. These come in three categories as I see them: “Smart long term portfolio additions” successful units or territory for an empire builder that is probably already operating in the space, “fixer uppers with potential” for a capable operator that rolls up their sleeves then works the business and ”Nope”. A lot of buyers want the peace of mind of category one, with an immediate return. That won’t be common, if at all. Successful business sell for enough money that if you buy them it will be a while before any proceeds of that business pay for the purchase. There are other pitfalls and strategies for resales, but that is another column. Here is your big consideration for resales within an established system. If the resale is so good,
I do appreciate franchisors “ that focus first on their existing franchisees whether it is 3 or 1,000.
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why haven’t existing franchisees bought it? Whatever the answer is to that, will tell you a lot. So, what legacy segments are showing recent growth? Hair care, seemingly long dormant and recently being highlighted by the salon suite segment, this category has some interesting activity. The largest brand in the space took thousands of corporate units and put them in the hands of franchise operators in recent years, I suspect they have a growth plan for new units that will start in the near future. Another top 5 hair industry operator has a new CEO and investor backing. They will be launching a new development program. There are still younger brands growing in the space and the salon suite folks have only taken a small bite out of the hair care industry. Hair grows daily, regardless of what the stock market is doing.
