Owning a franchise has many advantages, including a tried-and-true business model, ready-made brand recognition, and national advertising that franchise owners get to benefit from.
For business owners who already reap the benefits of franchise ownership, owning multiple franchises is a logical next step in growing their business. But herein lies the question: do you open a second location of your current franchise, or go with a different franchise altogether? Consider these pros and cons of each option before you make a decision to own multiple franchises.
What Are the Pros and Cons of Owning Multiple Franchises of the Same Company?
In addition to the many advantages of opening a single franchise, there are many benefits of owning multiple locations of one franchise. For one, you already know everything you need to know to open a second location; it’s the same process you went through when you opened the first one. Once you’ve trained your employees, they can work at both stores using the same skill set.
If you have a seasonal franchise, such as Liberty Tax®, you can increase the amount of money you bring in during tax season while still having plenty of time to work at a slower pace during the rest of the year.
Depending on the size of your city or the population of your town, you may have to open your second location a significant distance away from the first location so you don’t cannibalize your own clientele. If you find that business starts booming at the second location as it drops off at the first location, it may be a sign that your clients have just chosen to use your second location instead because it’s closer to home. Ultimately, this won’t help you grow.
Although it can be a good thing to have lots of work during a short season and plenty of down time the rest of the year, it can backfire. You may find it difficult to find reliable temporary employees. You could also burn yourself out by having too much work to do in a short period of time.
What Are the Pros and Cons of Owning Single Units of Different Franchises?
There are many types of franchises that complement each other really well. For instance, owning two different fast food franchises can ensure you capture more of the market. Many franchisees combine tax preparation and insurance franchises, as these two industries overlap in a number of ways, and it’s easy to refer your clients from one franchise to another.
If you own different franchises, you may be able to rent locations near each other, cutting down on commute time and making it easier to pool resources, such as storage and office space.
A negative aspect of owning different types of franchises is the learning curve. Although you will already be familiar with the franchise industry, you will need to learn an entirely new process, especially if your franchises are in vastly different industries.
In addition, it may be harder to share employees between your franchises if the skills sets are different. Not only will you spend more money training and hiring staff, your accountant will have additional work to do as far as keeping track of bills, vendors, and payroll.
Ultimately, whether you choose owning multiple franchises of the same company or single units of several different franchises is up to you. Choose what works best for your location and lifestyle. By weighing all the options, you’ll be able to make an informed decision that will lead to the best way to move forward for your specific situation.