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Choosing a Winning Emerging Brand How do you get rich in franchising. Here’s how to spot one.

Opinions expressed Entrepreneur Contributors are their own.

Anyone who invests in a franchise business thinks that it leads to wealth. And it certainly is, that you choose the right franchise brand for the partnership. Whatever concept you choose to franchise, the way you make money in franchising is to match up with an emerging brand.

Every big brand like Burger King or Taco Bell started with just one store. The earlier you enter the successful chain, the greater the benefits to the franchise. If you buy an established brand, multiples can be very high, it usually takes six to 10 years to get your money back. Emerging brands return an initial investment in one to three years. Clever franchisees combine that revenue by reinvesting that free money in more places and building a much larger, more valuable business with the same investment.

Although the emerging brand comes with a certain amount of risk, the rewards outweigh it. Emerging brands are cheaper to join, prime areas are available, lower initial costs, and better real estate can be secured. But most importantly, the new franchise concepts offer a long runway for franchisees to make money.

For more than two decades, my company has helped brands like Five Guys and The Halal Guys develop emerging concepts into a powerhouse international brand. While you may never be 100 percent sure that a new brand runaway will succeed, here are five things you can look for to prevent your bets from supporting the winner.

A passionate founder

Many entrepreneurs are just in it for the money and it shows. When you are evaluating an emerging franchise concept, look at the owner as tough. Is he or she really passionate about the things they create and are they committed to being the best in their department? If not, run – don’t walk – away. It’s hard to make a business a big success, and it won’t happen if the owner doesn’t have it all.

Related: 4 Strategies to Diversify Your Franchise Portfolio

Authentication

Dovetailing enthusiastically, the emerging brand must have the credibility to go the distance. Consumers can steal brands that lack soul and they stay away. For example, when I evaluated plant-based burger concepts, I eliminated non-vegetarian brands, and their owners created their own brand because they couldn’t find a decent plant-based burger anywhere in Los Angeles.

Trending section

To make money with an emerging brand, the segment also needs to emerge. You need a section that is not just fashionable, because you want to have a long runway of at least 10 years to see the brand grow to over 500 locations while the segment is still hot. I look at it and the data backs it up for plant-based concepts.

Strong Unit Economics

For a franchise to be rich through a franchise, the concept must have strong unit economics to back it up. The numbers don’t lie. If the franchisor can’t offer impressive numbers, look for another emerging brand to invest in.

Related: Why Your Franchise Relies On Strong Unit Economics And 5 Ways To Strengthen Them

Strong ROI

Franchisees want to get their money back quickly. When evaluating the concept, look for one where you can see faster ROI. This means that the franchisee will be able to use the power of compounding revenue to reinvest in the concept and open additional units. When you are a multi-unit operator the real ticket to wealth through franchising is punch.

Related: The billionaire who manages more than 2,400 franchises knows that these types of franchises make more money

By following these guidelines, prospective franchisees can evaluate if a new brand has the foundation to become the next five individuals.

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