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 open units sooner, and also can mean
discounts on franchise fees, sometimes even
royalties for a limited time.
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 management team
and infrastructure. And, of course, signing
multi-unit or area development deals also
means dealing with fewer franchisees to
sell more units. Franchisees seeking a new
franchisor partner look for pretty much
the same: a solid management team, strong
unit economics, a well-known and respected
brand name, and an opportunity to develop
a territory over the long term.
Taken alone or together, there are many reasons that inspire
successful multi-unit franchisees to seek out additional brands:
• 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
territory, 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 franchise
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 advantage
of that capacity, growing profits without expanding the home
are looking for
a proven track
and a solid
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.
• Training and retention. With two or
more brands, a franchisee can offer employees
cross-training, flexibility, 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.
• 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-office 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.
• Co-branding. Locating two or more
brands in a single location also allows behind-the-scenes efficiencies 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 proprietary
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 business. 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 agreements, cannot) be
in competition with your existing brands. Check with your
franchisor, franchise agreement, and franchise attorney before you start shopping for a new brand.