Experiential franchises have seen a surge in popularity in recent years. With many brands benefiting from a post-pandemic rebound and a growing desire to find ways to engage “IRL” that do not involve screen time, several franchises in this sector have reported strong sales and are actively recruiting new franchisees. Does this mean that now is a good time to buy? Here are some key considerations from national franchise lawyer Jeffrey M. Goldstein.
There is a Broad Range of Options Available
From arcades to indoor golf simulators and from pottery painting franchises to cooking schools, there is currently a broad range of options available in the experiential franchise segment. Concepts based on pickleball and e-sports have also grown in popularity in recent years. The breadth of options in this segment suggests significant potential, though it may also raise questions about market saturation and consumer fatigue in some areas.
For prospective franchisees, the volume of options offers an opportunity to conduct extensive comparative research. This includes not only comparing franchise concepts that are direct competitors, but also comparing those that offer different kinds of experiences. As a prospective franchisee, doing your due diligence is essential to the buying process, and comparing multiple franchise opportunities can provide invaluable insights to guide your decision-making.
Buying a Franchise is a Long-Term Investment
Doing your due diligence as a prospective franchisee is essential, as buying a franchise is a long-term investment. Most franchises have an initial term of two or three years, and, in many cases, franchisees will need to secure renewal terms in order to recoup their initial investment and begin turning a profit. If you rush into buying a franchise without giving due consideration to all of the various financial and legal risks involved, you could find that you have made a very costly mistake.
While buying a franchise offers instant brand recognition and the ability to benefit from the franchisor’s business methods and system standards, running a franchise incurs costs not present in a fully independent business. Along with the franchisor’s initial franchise fee, franchisees must also typically pay royalties and advertising fund contributions—and these contributions may or may not fund advertising in any individual franchisee’s geographic location.
Not All Trends Have Staying Power
Likewise, trends that are popular now may not be in the future. In today’s world, cultural shifts can happen quickly, and something that is popular in 2026 could be completely out of fashion in 2027. While this is important to consider with any prospective franchise opportunity, it is particularly relevant to experiential franchises, which often seek to capitalize on current trends.
While it is impossible to predict the future, prospective franchisees need to do their best to forecast demand for the experiences different franchise opportunities offer. If a franchise offers an experience that has been in demand for years (or decades), this might suggest a relatively stable business opportunity. On the other hand, if a franchise concept seeks to profit on a more recent trend, this might suggest that demand could be fleeting.
At the same time, investing in a novel concept could provide an opportunity to get in on the ground floor and build a loyal following before competitors enter the market. Again, conducting thorough due diligence is essential, and prospective franchisees must ultimately make informed decisions based on their own analyses and the level of risk they are willing to accept.
It Is (Generally) Important to Have an Interest in the Business if Your Franchise
Unless you are someone who is purely passionate about building and selling businesses, most franchise consultants will tell you that you should be interested in the business of the franchise you are buying. For example, if you are thinking about buying an indoor golf franchise, you should be passionate about golf. Or, if you are thinking about buying a painting franchise, you should be someone who loves to paint.
This is because owning and managing a franchise is a full-time job. For many franchise owners, their daily life becomes consumed by their franchise’s operations. If you aren’t interested in the experience your franchise offers, you may find it much more difficult to devote the time and energy that are required to build a successful business. Of course, this is not universal, and here too, all prospective franchisees need to make their own decisions based on their own individual circumstances.
It Is Always Important to Make an Informed Buying Decision
As we have already emphasized, when buying any type of franchise, it is critical to make an informed buying decision. While conducting thorough due diligence is key, it is also just one part of the decision-making process. Once you have narrowed down your options, making an informed buying decision also involves the following steps:
- Assessing the availability of viable locations and territories
- Evaluating your financing options
- Attending a “discovery day” at the franchisor’s headquarters
- Reviewing the Franchise Disclosure Document (FDD) and franchise agreement
- Hiring a franchise lawyer to conduct a comprehensive franchise business review
Even these are just examples. If you are thinking about buying an experiential franchise, you should make sure you have a plan for moving forward and avoid becoming emotionally invested in any individual concept before you have evaluated its merits as a viable business opportunity. By making informed, rational decisions, you can help maximize the chances that your franchise venture will succeed if you ultimately decide to move forward.
Schedule a Free Consultation with National Franchise Lawyer Jeffrey M. Goldstein
Are you considering an experiential franchise opportunity? If so, we invite you to contact us to learn about our franchise business review services for prospective franchisees. To schedule a free consultation with national franchise lawyer Jeffrey M. Goldstein, please call 202-293-3947 or contact us online today.
