Diversification and Balance
Multi-brand franchising allows multi-unit
operators to balance risk and ride out the
uncertainties of the marketplace in many ways:
• Economic cycles
Operating brands in different industries can help
minimize the ups and downs of an uncertain
economy. casual dining as a segment took a huge
hit in the recession, while bargain-priced fast
food continued to do fairly well; new car dealers
suffered while automotive maintenance and repair
businesses held their own and expanded.
• Seasonal cycles
a lawn care franchise in a four-season climate
slows to a crawl in the winter. ice cream, lemonade,
and frozen desserts peak in the warm weather, so
why not add soup and sandwiches as the weather
cools? adding a second business to balance out
the seasons will keep employees engaged and the
cash flowing in. new brands can be in related
sectors (maid service, electrical, plumbing, home
insulation), or in completely different areas (food,
• Cash flow
a franchisee with several units of a casual
restaurant brand ventured into rental stores.
stocking a new rental store with merchandise is
expensive, and monthly rental fees don’t cover the
purchase price for 6, 12, or 18 months, tying up
valuable cash in inventory. the daily cash flow
from the restaurants was the perfect complement
to keep the organization healthy until the rental
stores started showing a profit—which they did
handsomely in time.
• Day parts
Breakfast, lunch, dinner, late night, and in-between.
Whether it’s food or services, consumers and
businesses have needs 24 hours a day. if your
business makes the majority of its sales at breakfast
and lunch, adding a brand that peaks in the
afternoon and evening will make for a longer day,
but also a stronger bottom line.
Fast food operators have been hit hard over the
years by news of salmonella, e. coli, employee
misbehavior, and other developments beyond their
control. having other brands in your portfolio can
help you stay afloat until a negative situation is
remedied and trust in the brand restored.