What is an Emerging Franchise?
If you’ve ever spoken to someone at Oakscale you can tell we live and breathe emerging franchise development. Last year I had the opportunity to attend Springboard which is a purpose filled event in which Franchisors and Suppliers (Businesses that offer Franchisee / Franchisor specific products/services) meet at a conference to discuss best practices, learn from each other, and network to build relationships that strengthen their respective brands in the industry.
This event caters to emerging franchisors. In case you don’t know what an emerging franchise brand is, think of it as a startup in the Franchise space. Currently there are over 4000 franchise brands that exist and over 75% of them have less than 100 franchise locations; which I would classify as “Emerging.
These brands comprise the largest total number of franchise concepts that exist and frankly, as a development company, we segment these brands into the following categories as we come across them:
- Those who probably shouldn’t be franchising
- Those that are growing quickly and just aren't at 100 units just yet.
- Those that don’t have the right strategy / team in place to sell franchises.
Many brands in the emerging stage are great concepts that just need to figure out how to partner with great franchisees. An event like Springboard is an opportunity to meet with others who have grown to 100+ locations as well as meet suppliers that help emerging brands with a great model get the support they need to grow.
At Oakscale, we partner with emerging brands in a long term growth strategy and are constantly on the lookout for the next big thing. So naturally we show up at events like Springboard to meet with brands who have just started or are looking to franchise.
In addition, we are always combing over tons of data (our parent is Metric Collective, after all),checking Yelp, Google, Facebook, Instagram, as well as running ad hoc searches, and TBH, the vast majority of the time we don’t find anything that catches our attention.
The reason we constantly search is that every so often we find an absolute diamond in the rough like our emerging brand Xpresso Delight.
You may wonder what a company like ours looks for to figure out how to categorize concepts we evaluate and decide if they are a brand that we can take to 100+ franchise units.
To give you an idea of how thorough our search is -> here are a few things we look for in brands.
Unit Economics -
The leverage of franchising lies in franchisees’ ability to faithfully execute a concept’s business model and receive just revenue/ returns.
Repeatable Operations -
A brand’s service or product must be straightforward for franchisees to learn and deliver consistently.
Scalable Supply Chain -
Franchisees must be able to economically and reliably source material for a brand’s service or product throughout any market in which the brand intends to franchise.
Passionate Consumer Base -
Strong customer advocates and positive word of mouth are leading indicators of a concept’s breakout potential. Proxies for this kind of early brand equity include online reviews/testimonials, social media activity, and an engaged following.
Strong Executive Team -
An executive team with a deep understanding of their industry, the ability to articulate a compelling vision, and the capacity to manage rapid growth are key.
To give an example, the Xpresso Delight brand scored 5/5 for us.
Xpresso Delight is the largest coffee service franchise in the world with over 200 Franchises sold In Australia and New Zealand and just a handful in the United States. The brand made the jump to the United States and realized that although their model was great, targeting the right franchisees was key to growing the right way in the United States (something that is difficult for an Australian based franchisor to do).
We knew the only thing holding them back was a great development company and so we partnered with them to develop the brand in the United States and take it to over 100 franchise units in the next few years. Currently we are already 10% of the way to our goal with a robust pipeline and are glad to have partnered with a concept that is disrupting a huge industry here in the United States.
Even with our early success, we know there’s a long way to go to reach our goals and we’ll continue to leverage learning opportunities like Springboard to help further the emergence of brands like Xpresso Delight.