Whether you wish to add more units to your mix or expand your franchising portfolio, these useful tips will help franchisees eager to grow
After time spent operating a successful, profitable franchise business, you may start entertaining the idea of opening more units. Or maybe you want to diversify your portfolio and begin multi-brand franchising. For many franchisees, a business keeps them on the lookout for new ways to take their entrepreneurial endeavors to the next level.
Over the years, the popularity of multi-unit and multi-brand franchising has increased due to the fact that both options enhance individual opportunities for increased profit. But without taking the necessary steps to ensure expansion is the right move for both you and your business, adding more franchise locations to your roster could be counterproductive. If you’re a franchisee who is looking to expand from a single unit to a multiunit agreement, or if you want to add to your portfolio of businesses by becoming a multibrand franchisee, be sure to take into consideration the following four steps:
1. Research all of your options
In any business endeavor, a thoughtful review of all of your options is a crucial first step before any decision is made. Determining whether or not you have the investment capabilities and business acumen to handle expansion as a franchisee is just the first step in the research process; the next is looking into whether or not the franchisor you want to grow with is the right fit for your expansion goals.
Even with an existing relationship with a franchisor you are looking to expand with, you still need to do some basic research to make sure growing with that specific brand aligns with your professional goals. For instance, you will need to find out the minimum number of franchise units your brand will expect you to develop through expansion, the time frame that will be allotted for multi-unit development, and whether or not the territory you’re looking to develop is in need of the brand’s presence.
However, if multi-brand expansion is your goal, then research will be similar to what you conducted for your very first franchising opportunity. Learn everything you can about the brand you’re interested in adding to your portfolio, beginning with looking to resources such as the International Franchise Association or the brand’s franchising website.
2. Reach out to other franchisees
Once you have decided which franchisor would be a good fit for you to expand your portfolio with, whether through multi-unit or multi-brand franchising, you should then connect with others who are currently in the franchisee position you’re seeking.
If you’re considering expansion of your current franchise deal, reach out to other franchisees in your system who are already multi-unit owners. By connecting with others who have insight into expanding your specific franchise brand, you will gain even more information to ensure multi-unit franchising is the best business decision for both you and the franchise.
“For many franchisees, a business keeps them on the lookout for new ways to take their entrepreneurial endeavors to the next level”
The same is true for those looking into multi-brand franchising. Once you have identified both an industry and a company, contact the franchisor and its current franchisees. As I’m sure you’re aware from having other franchise businesses, getting in contact with the franchisor is vital in order to receive the brand’s franchise disclosure documents (FDD). Additionally, speaking directly with a brand’s current franchisees is ultimately the best way to learn about its franchise network.
3. Reflect on everything you’ve learned
Franchise expansion is no small undertaking, so after collecting all of the background information you can about your franchise expansion options, take the time to carefully consider it all. Make a pros and cons list to compare alternatives. Discuss with your business partners, family, and friends everything you have learned throughout the process thus far. Sharing with others your thoughts and feelings on the matter can help you determine if you’re truly comfortable with growth at the time being.
Regardless of the path to expansion that you are pursuing – either multi-unit or multi-brand expansion – this third step in the process is crucial so you can proceed with a clear outlook.
4. React on carefully
Now, armed with all of the information you have gathered, and having thoughtfully reflected on that information, it is time for you to commit to a decision. The final stages before signing on the dotted line entail circling back to the franchisor to ensure that your agreement outlines everything you expect based on the knowledge you gained. If expanding a current franchise deal, talk extensively with your franchisor about implementation plans for how to execute your deal to ensure that you are on the same page about the path to successful growth. If you reach this final stage in the process as an aspiring multi-brand franchisee, then finally seeing the franchisor in action is the best way to confirm your expectations about a new franchise opportunity. Request a personal visit to the franchisor’s headquarters and a current franchise location, or participate in the company’s discovery day to meet company executives and learn more about the franchisor’s level of support. Having gone through this process before with your original franchise brand, you should have a pretty good idea of what you are looking for in both a brand and franchisor.
By following these “four Rs” – research, reach out, reflect, and react – eager franchisees looking to expand will know if they are fully ready to take this next step in their franchising journey.
Craig Sherwood is chief development officer for Gold’s Gym Franchising LLC.