Hey everybody,

Here's a phrase I hear constantly from people exploring franchises:

"In a franchise, I’m paying for brand recognition."

My advice? Get that idea out of your head.

This is for two reasons:

I always encourage franchise entrepreneurs to think about the royalty (the fees you pay to the franchisor) as an investment. 

As with any investment, you have to realize a return on that investment for it to be considered a good one.

There are probably less than 10 franchises in the world with enough brand recognition for that alone to produce a strong return on your royalty investment. 

Even with a national footprint, brand recognition usually doesn’t run that deep. 

For example: CertaPro Painters is the largest painting brand in North America. They’ve got over 300 locations in 43 states.

I know them because I’ve been in the home services industry AND franchising. You maybe know them because, well, you’re reading this newsletter.

But the random homeowner walking down the street? It’s statistically unlikely. 

So if you’re buying a CertaPro franchise, don’t wait for “brand recognition” to start driving you a ton of leads.

When it comes to franchise fees, you want the bulk of your ROI to be in other areas, like vendor relationships, national accounts, marketing, training, support, etc.

"Brand recognition" isn't inherently good for your business. 

Subway has terrific brand recognition. I "recognize" it as the place that sells terrible sandwiches where all the meat tastes the same (which is concerning).

So sure, what you’re actually looking for is positive associations with the brand.

But even if a franchise is massive, successful, and generally well-liked, there are risks that come just from the size. 

More on that in my next issue: the hidden downsides of “big name” franchises.

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In short: “brand recognition” is far from the most important ROI you want for your franchise royalty. So if that’s the headline, proceed with caution. I’d suggest checking out my article here: Are franchises worth the fees you pay?

Thanks for reading!

Connor 

P.S. Keen to buy a franchise? I can help with sourcing, diligence, and guidance, as someone who’s done this multiple times. My services never cost you a dime. Book a free consult today.