“ 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 .”
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 homecourt 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 office staff . With a strong infrastructure in place , a multibrand 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
“ 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 .”
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 .
MULTI-UNIT BUYER ’ S GUIDE 2016 13