Multi-Unit Franchisee Magazine Special Edition | Page 14
GEOGRAPHY.
Adding a new brand can be the perfect
path to continued growth in their region
for a single-brand multi-unit operator or
area developer who has built out their ter-
ritory, or for a franchisee of a brand with no
local opportunities to build more units—
without having to travel to new or distant
locales. Familiarity with the territory and
the dynamics of their market, combined
with local connections and a solid grasp
of local real estate, developers, and zoning
requirements is a real
home-court advantage.
FINANCING.
A successful track record with one fran-
chise concept demonstrates your ability
to lenders who can help you launch that
next concept. Thriving multi-unit franchise
operators typically have high net worth,
extensive contacts, and access to financing
to open successful units quickly. These
are powerful assets to have. Your existing
operation and the value of your real estate
can help you acquire a second or third
concept, without putting a stranglehold
on your cash flow.
INFRASTRUCTURE.
Multi-unit franchisees with their own
accounting, human resources, and other
internal departments often have excess
capacity. Adding brands can take advan-
tage of that capacity, growing profits
without expanding the home office staff.
With a strong infrastructure in place,
a multi-brand franchisee has a built-in
advantage in building brand awareness in
their territory and more easily, rapidly, and
successfully penetrating their market with
a new brand.
12
TRAINING AND RETENTION.
With two or more brands, a franchisee can
offer employees cross-training, flexibil-
ity, promotions, and a clear growth path
as their skill sets improve. This helps in
attracting and retaining top talent as you
build your organization, always a challenge
in any business. And with better-trained
employees, unit economics improve.
“FRANCHISORS SEEKING
NEW MULTI-UNIT
PARTNERS ARE LOOKING
FOR A PROVEN TRACK
RECORD MANAGING
MULTIPLE UNITS,
RELEVANT INDUSTRY
EXPERIENCE, POSITIVE
CASH FLOW, STRONG
UNIT ECONOMICS,
AND A SOLID MANA-
GEMENT TEAM AND
INFRASTRUCTURE.”
ECONOMIES OF SCALE.
Once an organization attains a certain size,
several things get easier and, often, less
expensive since you’re “buying in bulk”:
marketing and advertising, supplier costs
and services, administrative and back-of-
fice functions, and more. For example,
one vendor may be able to service all your
equipment and, as a result, offer you a
more economical rate.
2017 Annual Edition
CO-BRANDING.
Locating two or more brands in a single
location also allows behind-the-scenes effi-
ciencies that can boost profits. Be careful
to maintain compliance with each franchise
agreement, as some concepts may not be
combined legally or functionally. If it does
work, co-branding and co-marketing can
make more efficient use of your
advertising dollar.
SYNERGY.
Each franchise brand has its own pro-
prietary operating system perfected
over many years and many thousands of
customer transactions. While the operating
systems differ and must remain separate,
sometimes elements of one can be applied
to another, or to internal operations at the
franchisee’s home office. The same holds
true for marketing programs, recruiting
methods, training, HR, and every other
ingredient of franchising success. Keep
them separate to maintain compliance,
but look for areas to adapt good ideas
across your organization.
Multi-brand franchising is a complex busi-
ness. Done right, it offers great potential
to the multi-unit franchisee seeking to
diversify their investment, increase their
profitability, and build a larger, stronger
organization. One caveat: New brands
should not (and in many franchise agree-
ments, cannot) be in competition with your
existing brands. Check with your franchisor,
franchise agreement, and franchise attor-
ney before you start shopping for
a new brand.