Are there risks in going with a first-time franchise?

All potential franchisees need to check out the franchisor of a franchise system very carefully. However, this can be more difficult with a new system, as there is no trading history for the franchise and no existing franchisees you can talk to about their experiences.  You will need to carefully question a first-time franchisor on its pilot operation. You need to know the amount of pilot testing that has been carried out and details of the financial performance of pilot operations. You will want to establish the franchisor has shown the system works and that it can be successfully replicated by franchisees.  For a young franchisor, it is important to consider if it has sufficient capital to finance its operations. If there is a shortage of capital, the franchisor may seek to remedy this by rapidly recruiting franchisees. The franchisor may not have the infrastructure in place to support these franchisees.  However, a new or young franchise system can have the advantage of bringing a novel idea to the marketplace. It may be that the only way you can establish a business in a certain area is to buy a franchise from a new franchisor. If this is the case, you need to consider if the area of activity is going to be a flash in the pan, or if it will have staying power.