MULTI-UNIT
NEED TO
KNOW
Buyer’s Guide
Brand
DIVERSITY
The growing allure of operating several concepts
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ranchising continues to grow—not
only in size, but in complexity—
and in recent years, a huge part of
that growth is attributable to multi-brand
franchising.
Makes sense. If following the system
works for one successful brand, it will most
likely work in another, then another—if you
choose wisely. And if your unit economics
are strong, more profit will flow your way
with each passing year and additional brand.
Diversification, a recommended
strategy in designing an investment portfolio, is a big part of the thinking behind
the growth in multi-brand franchising. As
savvy investors know, no matter how good
your ROI may be from a single holding, it’s
not wise to put all your eggs in one basket.
And as multi-unit franchisees seek new
avenues for growth, an increasing number
are adding second, third, and fourth brands
to their portfolios.
“There is a definite interest in growth
through multi-concept operations,” says
Darrell Johnson, president of FRANdata.
“It’s continuing to expand and grow, and
we see the trend continuing upward.”
Franchise attorney Lane Fisher observes: “From a franchisor’s perspective,
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MULTI-UNIT BUYER’S GUIDE 2012
multi-unit franchising provides opportunities for accelerated growth; a vehicle
to penetrate new markets; capitalize on
certain market efficiencies; reduce the
training, opening, and operational assistance typically provided to single-unit
franchisees; and is a means to attract and
reward productive franchisees.”
One dynamic propelling multi-brand
growth is the combination of 1) expansionminded franchisors seeking multi-unit
operators successful with other brands
with 2) successful multi-unit franchisees
evaluating new concepts to diversify their
organization. This alignment of interests has
been accompanied by a rise in the number
of franchisors offering several concepts from
under one corporate umbrella—usually
limited to a single industry segment (fast
food or home repair services, for example).
For franchisors offering multiple
brands, it means working with franchisee
organizations they already know, saving
countless hours of relationship-building,
recruiting, investigation of finances, etc.
For franchisees, adding a new brand from
their current franchisor does the same.
It means working with a known, trusted
management team, saves time, helps them