Is branching out with different brands the best move for multi-unit franchisees?

The benefits of multi-unit franchising are clear, but the best way to go about it remains an open question. Should multi-unit franchisors stick with a single brand or branch out across companies?

A case could be made for either strategy, but there’s no denying the potential advantages of becoming a multi-brand franchisee.

Diversification
Just like in the stock market, spreading your money among varied investments in the franchise world can be a great way to reduce risk. For instance, if one of your franchises sees more business during the summer, investing in a franchise that tends to perform better in winter could be the ideal way to offset profit dips.

Expansion
Adding more units may be easier with multiple brands, as well. For instance, say you invest in only one company. You want to build up multiple units in your region, but the area can’t sustain too many of the same businesses. Six of the same burger joints in a small town won’t do your bottom line any favors.

However, by focusing on different types of businesses, you may be able to grow your portfolio faster and wider. A burger joint, frozen yogurt shop, cleaning service and mosquito treatment business won’t eat into each other’s profits.

Correlation
In addition to easier expansion, multiple brands can also be used to complement each other. Take the burger restaurant and froyo shop, for example. If you own both and place them next to each other, you could encourage consumers to visit both while they’re out. A young couple visits your burger place for dinner and then walks next door for some soft-serve.

Depending on the types of brands you invest in, your franchise locations could augment and support each other.