Offbeat sites provide newfound opportunities for franchisees and franchisors
One of the best ways for a new franchisee to get in on the action in franchising is by choosing a nontraditional location. Why? For starters, try reduced franchise fees, lower overall startup costs, smaller real estate fees (none for kiosks), fewer employees, and for some, the option of beginning part-time.
"Nontraditional" locations include airports, college campuses, sporting events, concerts, stadiums, hospitals, military bases, government offices, convention centers, highway rest stops and turnpike plazas, even large companies - anywhere large numbers of people congregate, pass through, or live.
Food is the primary industry found in nontraditional sites. From kiosks selling smoothies at concerts, to quick-serve youth-oriented meals on college campuses, to sit-down casual dining at an airport, franchising has moved beyond shopping malls, strip malls, and standalone locations to explore new horizons. And when done well, it's paying dividends, to individual franchisees and franchise systems alike.
Each nontraditional location has its pros and cons. At a college campus, for example, business is built-in and booming from September through May, but the summer months often are dead, as are holidays and the weeks in between semesters, when many or most students are gone.
Airports are gold mines - if you can navigate the land mines. First is the paperwork involved in getting approved by the airport authority and federal regulations. Then there's the high price of precious real estate inside the terminal, and the need to compress a concept's essence into a smaller space than in a mall or free-standing location. With those two hurdles behind you, all employees and food and supplies must pass through airport security every day. And while customers passing by from early morning until late at night is a definite plus, airports usually are remote, which can complicate hiring and retention.
Nevertheless, nontraditional locations can be a good place to start for an aspiring franchisee. A kiosk at a mall or a cart at a sporting event or concert can be the ideal entrée for new franchisees seeking to try out a brand, or the idea of franchising part-time to supplement their full-time income. If all goes well, they can "grow up" and go full-time and full-size later.
Franchisors with several brands like the idea of leveraging their "stable" by offering co-branding opportunities with discounted fees for franchisees who agree to sell two or more brands at a nontraditional location. This presents franchisees with an opportunity not only for a bargain, but also to improve their prospects for success by offering two different products. It also provides the franchisor with a chance to spread their brand name, as well as to deliver efficiencies in training, distribution, and other operational and financial functions.
Nontraditional locations also offer franchisees lower rent, whether because it's in an offbeat location, or because of reduced square footage requirements. When it comes to monthly bills for startup businesses, smaller is definitely better.
Reduced entry costs also mean reduced risk. With less on the line, and if a new franchisee finds out that franchising, the concept, or both just aren't for them, it's easier to cut their losses and move on - especially if the commitment was only part-time and they have a day job they can return to.
And if it does work out, they can take their cash and move up to a more traditional, leased location, make a full-time commitment, and start building their franchising empire.
13.2: Complementary Brands
13.4: Franchise Leadership