A recent article in the Franchise Times discusses the “gold rush” to get in on the pickleball craze. It cites figures from FranData that show an 85.7 percent year-over-year increase in pickleball players and notes that while “[t]he race to the top in the rapidly growing pickleball space heated up in 2024 for franchisors looking to capitalize on the country’s fastest-growing participation sport. . . . [p]ickelball franchisors and their financial backers agree there is plenty of space in the industry for everyone to grow and prosper even as they compete for prime real estate locations and franchisees work to draw players to their courts.”
As a prospective franchisee, should you join the pickleball “gold rush”—or any other franchise “gold rush,” for that matter?
This isn’t the first time we’ve seen franchisors flock to an emerging industry. From trampoline park franchises to weight loss franchises, we’ve seen several trends over the years—some with more staying power than others. As national franchise attorney Jeffrey M. Goldstein explains, as with all other aspects of buying a franchise, the key is to make an informed decision based on your long-term chances of success.
Making a Long-Term Investment Based on Short-Term Success
When you are thinking about buying a franchise, historical data can be extremely valuable. While past results do not guarantee future success, if franchisees have historically been successful—and if the franchise system is still growing—this is at least some indication that success is a possibility.
If you don’t have these insights, how can you make an informed buying decision? Here are some important considerations:
Is the Trend Here to Stay (at Least as Long as it Takes for Your Franchise to Become Profitable)?
Before you buy into a trendy franchise concept, you will want to conduct your own assessment of whether the trend is here to stay. While it doesn’t necessarily need to be here to stay permanently, you should at least have a reasonable degree of confidence that you will be able to operate sustainably throughout the term of your franchise agreement.
Does the Franchisor Have Experience in the Industry? Does it Have Experience in Franchising?
When considering competing franchise opportunities (which you absolutely should do), you should consider each franchisor’s experience both within the specific industry and within franchising generally. While new and established franchisors both have their benefits and drawbacks, you will want to be wary of choosing a franchisor without any significant track record.
How Competitive is Your Local Market?
Another important factor to consider is the level of competition in your local market. Is the local market saturated already, or are there still opportunities to attract customers who are interested in the concept and who aren’t yet loyal to a particular brand (or a particular location)? Carefully choosing your location and territory can be extremely important—as can the scope (or lack thereof) of your exclusive rights.
Are You Passionate About the Movement Behind the Business?
Owning a franchise requires a substantial investment of both time and money. Even if you won’t be managing your business on-site on a day-to-day basis, you will still be heavily involved.
With this in mind, it is important to choose a business that means something to you. If you choose a franchise because you think it has potential but you aren’t interested in the concept itself, you may find it difficult to invest the time it takes to make your franchise a success.
How Are Current Franchisees Faring (Both Within and Outside of the Brand)?
Even if a concept (like pickleball) is popular, this doesn’t necessarily mean that franchisees in the industry are succeeding. From market oversaturation to pricing issues and lack of franchisor support, numerous issues can cause franchisees to struggle when it seems like they should be turning a decent profit. As a result, as you do your due diligence, you will want to assess how current franchisees are faring. This is true not only within the brand that you are considering but within competing franchise systems as well.
The First Steps Toward Investing in a Franchise Opportunity
Let’s say you’ve thought carefully about these considerations (along with all of the other considerations that go into making an informed buying decision), and you have decided that you are ready to move forward. What are your first steps?
- Review the Franchise Disclosure Document (FDD) and Franchise Agreement – Once you get serious about pursuing a franchise opportunity, one of the first formal steps in the process is to obtain a copy of the franchisor’s FDD and franchise agreement—and then review each of these documents in detail.
- Do Your Due Diligence – Along with reviewing the FDD and franchise agreement, you will also need to conduct your due diligence. You should schedule a discovery day with the franchisor, and you should work to gather as much information from as many sources as possible.
- Talk to Plenty of Franchisees – The best way to assess how current franchisees are faring is to speak with them one-on-one. The more franchisees you can talk to during your due diligence, the better.
- Evaluate Your Financing Options and Prepare Your Pro Forma – You will need to carefully evaluate your financing options and then choose the option that makes the most sense for your specific circumstances. Now is a good time to prepare your pro forma and business plan as well.
- Consult with an Experienced Franchise Attorney – To ensure that you are not agreeing to anything that you shouldn’t, you will need to have the franchise agreement reviewed by an experienced franchise attorney. If necessary, your attorney can work to negotiate key provisions of the franchise agreement on your behalf as well.
Schedule a Free Consultation with National Franchise Attorney Jeffrey M. Goldstein
If you are in the process of buying a franchise, we invite you to get in touch. We assist prospective franchisees nationwide with all aspects of the buying process, including reviewing and negotiating their franchise agreements. To schedule a free consultation with national franchise attorney Jeffrey M. Goldstein, please call 202-293-3947 or request an appointment online today.
