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.