For many individuals, the prototypical franchise is a big name company with units located across the country and even internationally. Its products or services often can be recognized solely by its logo.

Consider Starbucks, for example. The coffee chain recently updated its logo in celebration of its 40th anniversary. With the redo, Starbucks decided to only keep the graphic of its iconic siren, removing the "Starbucks" name. Why? Because the company realized that it was so easily recognized just by an image that including the name of the franchise on the cups seemed superfluous.

Investing in a big name franchise opportunity magnifies the instantly recognizable aspect that most franchisors tout as a top benefit of belonging to a system. But beyond this element, what are the benefits and downsides of being part of a nationally, or even internationally, recognized brand? Does its sheer name appeal make it a better investment?

According to the website, one of the pros of instant recognition is that franchisees will not be responsible for educating their customers about the product or service they provide. But it aids in less obvious ways as well, especially in financing the unit.

Big names equate to an increased amount of bargaining power, Joel Libava, a franchise advisor, told the source. Consider real estate, for example. "Commercial real estate representatives pretty much jump for joy with the prospect of having a big-name tenant. It helps them attract other tenants, and sometimes they even feel that it's a lower risk proposition for them," he explained.

Furthermore, when franchisees head to the bank to apply for a loan, having the power of a big name behind them can offer reassurance to financial institutions, especially in today's tight credit market. Since banks tend to be more familiar with the concept and have seen a track record of success, they will be more likely to lend, Libava explained.

However, with a big-name franchisor comes certain restrictions. Since the name is known by millions of people, franchisees will be expected to stick to the rules much more closely than with a franchise that is just starting out.

"Well known brands are older and have less tolerance for renegades in the company," Tom Scarda, a franchise consultant, told the website. "All rules in the FDD (Franchise Disclosure Document) must be strictly followed. With years of experience, no market testing is needed. They will handle that at the corporate level."

For prospective franchisees, it is important to understand what type of system they will work best under. Are they an entrepreneur at heart, looking for a system that will give them more creative freedom, or do they value financial security more highly?

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