The world of franchising offers opportunities for franchisees to manage a broad portfolio of options while benefiting from a connection to brands that are widely known and have established strong customer appeal.
Most franchisees start with a single brand. Some buy in with a multi-pack of that br.....
Most franchisees start with a single brand. Some buy in with a multi-pack of that brand. The more ambitious franchisees, those who are not only multi-unit operators but also multi-brand operators, elevate the investment to a different level.
From fresh-never-frozen tacos to in-home health care, multi-branding can be an ambitious endeavor that knows no boundaries. Multi-concept franchising offers entrepreneurs, investors and super-achievers great potential for investment diversity, creating a stronger business portfolio and increasing profitability.
“Since our success relies on a combination of our competence, our fellow franchisees’ competence and the competence of the franchisor, we don't completely control our own destiny,” said Bill Bass, Chairman of Black Wolf Group, the enterprise behind eight TWO MEN AND A TRUCK® locations in Arizona, Florida and Minnesota and one BrightStar Care franchise in Charlotte, N.C. “By operating multiple concepts, we increase the ratio that our own aptitude and skill influence our success.”
By choosing the multi-brand path, franchisees can potentially lower the risk associated with investing in a single concept, cultivate alliances between units and receive higher returns on investment. To maximize the potential of the investment, the brands that are eventually chosen should be based on carefully thought-out, personal criteria and goals.
When choosing her next concept, seasoned Subway franchise veteran Roya Moshiri, who owns six locations in St. Louis, pursued a brand that would supplement her sandwich shops. The entrepreneur opened her first Wing Zone location in St. Louis in December 2013, and has plans to open 10 more units.
“We wanted to do something that would complement our existing Subway locations and we wanted a brand that had strong management in place, and with goals and a long-term vision that we could help achieve,” Moshiri said. The multi-unit franchisee also noted that to be successful, corporate support and long-term sustainability is vital.
Sean Falk currently owns and operates eight franchised business units – including three Great American Cookies in Michigan, two Mrs. Fields Cookies, three Pretzel Makers and one Salsarita’s Fresh Cantina in Maumee, Ohio. His criteria for pursuing a new brand? The details of the business model.
“Look for infrastructures that work for you, and either have a plan to stay small and work hard or have a plan to get big really fast,” the multi-state, multi-unit, multi-brand operator said. “Middle ground, about five to 20 units, is risky to maintain because, depending on the brand, the infrastructure you need to uphold such a size ends up costing a lot of your percentage of sales.”
Additionally, Falk advised that franchisees be aware of their surroundings.
“I was in small-town Midwest, so it wasn’t possible for me to open up five Great American Cookies in one Ohio town. I wanted to stay local and be an influence, but didn’t have the population base to put in multiple locations. I got savvier; I branched out.”
Atlanta-based multi-national, multi-state and multi-unit franchisee, Aziz Hashim president and CEO of NRD Holdings LLC, agrees, and had additional advice.
“Diversification does not imply taking more risk, it means spreading your risk,” he said. “I diversified mostly by staying in the food business, but in different markets with brands that appeal to slightly different demographics.”
Hashim also noted that, when researching your next concept, always read the agreement. Not just once. Read it twice.
“The franchise agreement has to be balanced,” he said. “If it contains clauses that aren’t keeping up with risks taken by the franchisee, then I won’t choose it. Examples include continuing guarantees upon transfer, liquidating damages if a unit fails, unclear image enhancement commitments and unclear territorial boundaries and protections.”
Choosing to diversify is a big undertaking, so before considering new concepts, be sure to reflect on the reasons why you want to differentiate, and only then divvy up your eggs and your baskets based on professional goals.
With thousands of brands on site in New Orleans for the annual International Franchising Association (IFA) convention, it would be difficult to find a better industry-sponsored opportunity to connect with a new brand or explore opportunities.
When choosing an industry, narrow down the list to options that will give you the greatest strategic advantage based on your parameters and proficiencies. The IFA has several resources for franchise owners looking to expand, especially sessions to take advantage of during the IFA convention. Diversifying is a great undertaking, but an enterprise that can reap lucrative benefits, if completed with thought.
“The grass is not always greener with a new brand, and you run a real risk of defocusing your current business,” Bass said. "Make sure you can continue growing your current business before tackling on a new concept."