Established vs. Fad Franchises – Making the Right Choice for You



According to data gathering firm Statista, there are approximately 791,000 franchise concepts in the U.S. and Canada, across a variety of industries, providing a wide range of products and services to both the consumer and business marketplaces.

Some of these models are based on decades of experience, with well-developed systems, processes and support infrastructures – and products and services that continue to stand the test of time. Others are built more on temporary trends and patterns.

While both can initially attract attention and generate revenue, their long-term trajectories often diverge significantly. Understanding the differences between these two models – let’s call them Solid franchises and Fad franchises for the sake of simplicity – is crucial to individuals exploring the viability of the franchise models they are exploring.

Solid Franchises: The Foundation of Long-Term Success

Solid franchises are built on sturdy foundations of proven business models, sustainable practices, and established brand reputations. These franchises prioritize longevity over quick gains and focus on cultivating strong relationships with clients/customers and franchisees alike. Here are some defining characteristics of solid franchises:

Established Track Record

Solid franchises have a track record of success, often spanning several years or even decades. They have weathered economic fluctuations and industry changes, proving their resilience and adaptability. Their products or services continue to meet the needs and priorities of their buyer base – and they often focus on continuous Research and Development to meet needs of the ever-changing world.

Strong Brand Identity

These franchises invest in building a recognizable brand identity with a clear value proposition. Their customers and clients trust their products or services, leading to repeat business and positive word-of-mouth referrals. They’ve also established significant relationships with their vendors and other key stakeholders, passing that clout, leverage, buying power and respect along to their franchisees.

Comprehensive Support Systems

Franchisors of solid franchises offer robust support systems to their franchisees, including initial training, ongoing assistance, marketing support, and access to resources. This ensures consistency across locations and fosters a sense of partnership between the franchisor and franchisee. For many individuals, it is important to feel like they are in business for themselves, but not by themselves – in a solid franchise model that has a feeling of corporate support, ongoing learning and education, and streamlined communication with franchisees.

Commitment to Quality

Quality control is paramount for solid franchises. They maintain high standards for products, services, and customer experiences, earning them a reputation for reliability and excellence. They have consistency across their system and continue to train their franchisees to provide them with the resources needed to provide the maximum value to their clients and customers.

Strategic Growth Strategies

Solid franchises prioritize sustainable growth strategies, carefully selecting franchisees who align with their values and vision. They expand strategically, avoiding rapid overexpansion that could dilute brand integrity. And they engage in two-way due diligence with potential new franchisees – both parties learn about one another, vet one another, and decide on moving forward together in a business relationship only if there is unified thinking and shared values on both sides.

Fad Franchises: Riding the Wave of Temporary Trends

 

On the other hand, fad franchises capitalize on short-lived trends, gimmicks, or novelty concepts to attract attention and generate rapid revenue. While they may experience initial success, their longevity is often limited, and they face greater risks in the future. Here are some characteristics of fad franchises:

Trend-Driven Concepts

Fad franchises often leverage popular trends, such as unique food crazes, fitness fads, or viral sensations. While these concepts may generate buzz initially, their appeal tends to fade as trends evolve or new fads emerge.

Lack of Longevity

Fad franchises prioritize quick returns and may overlook long-term sustainability. As a result, they are more susceptible to market fluctuations and consumer fatigue, leading to rapid declines in revenue and relevance. Many fad franchises are completely dependent on the right demographics, traffic patterns and real estate – variables that can always change and negatively impact the viability of the franchisees’ success.

Limited Brand Loyalty

Fad franchises rely heavily on the novelty factor to attract customers, but they often struggle to build lasting brand loyalty. Without a strong foundation of quality and consistency, customers may quickly move on to the next trend.

Risk of Oversaturation

Fad franchises face the risk of oversaturation, especially if competitors rush to replicate their concept. This can lead to market saturation, diminishing returns, and ultimately, the collapse of the franchise.

Lack of Support Infrastructure

Unlike solid, long-term franchises, fad franchises may lack comprehensive support systems for franchisees. Without proper guidance and resources, franchisees may struggle to adapt to changing market conditions or sustain their businesses beyond the initial hype.

For candidates considering franchise opportunities, distinguishing between solid franchises and fad franchises is essential for making informed decisions and mitigating risks. While some may like the idea of innovating along with a new franchise concept, it’s still important to ensure that the “secret sauce” – that is, the ‘unique’ product or service that the business is creating and providing – will continue to be valuable to clients and customers, and will continue to meet their needs as the world changes, as the economy fluctuates, and as buying patterns and behaviors shift.

It’s important to conduct thorough due diligence, assess the model’s history and resilience, evaluate support systems and consider industry and economic trends to ensure the franchise model they are interested in is viable and sustainable in the long-term.

In conclusion, while both solid franchises and fad franchises can attract attention and generate revenue, their long-term trajectories diverge significantly. Solid franchises prioritize longevity, consistency, and customer satisfaction, while fad franchises often rely on short-lived trends and novelty concepts. By understanding the distinctions between these two models and conducting thorough due diligence, franchise candidates can position themselves for sustainable success by making the right choice.