The lifecycle of a franchisee: Stage Three - expansion into a new brand

Over the past four years, the franchise model has been tested and has shown that it can be flexible and resilient even in challenging times. Operators’ focus has moved from stabilising their business to driving growth, and where that can be achieved. In the previous articles in our ‘lifecycle of a franchisee series’, we focused on investing and growing in a single brand, but as many know franchising can be addictive and many are drawn to the attractions of a second or even a third brand.

There are a number of reasons behind the growth in multi brand operators, firstly more brands are seeking multi-unit “management franchises”, and equally an increased consolidation in franchise networks has limited the ability to grow within a single brand. However, investing in a new brand can be a giant step into the unknown and there are pros and cons to be considered before making the leap.

Positive factors include:

Investing in several brands, even in slightly different sectors can mitigate an entrepreneur’s risk – think coffee and pizza!

Many traditional franchise brands are already at scale with limited growth opportunities in their existing territories and neighbouring territories are often operated by other franchisees. If it’s geographical growth that’s desired, then this can often only be achieved by investing in additional brands.

Successful franchisees are excellent operators, and their knowledge and skills are highly transferable across franchise models. In many cases, franchisees typically outperform franchisor operated units / territories.

Talented and skilled resources are always in demand, adding additional brands can provide new, exciting opportunities for employees and provide additional scale and complexity to current roles.

More brands adopting a franchise model, when your favourite sandwich brand, coffee brand or convenience store announces a new franchise model, the opportunity to become a pioneer franchisee is very tempting, especially if you already feel culturally aligned to the brand.

Selecting the right brand is critically important, the UK is a highly sought after franchise market for global brands seeking to make their mark, alongside a phenomenal number of new and developing home grown brands. There’s so much choice, that it can be difficult to select the right opportunities for your business.

Many of the established global franchise brands already have their desired number of partners, so the choice is often limited to homegrown brands or new global brands to the UK market. Homegrown brands will have a smaller existing footprint and reduced brand awareness whilst new global brands may have increased brand awareness but may seek larger development agreements. The direction you select is very much a personal choice and often that choice will be dependent on the business’ connection to the values and culture within the brand.

A franchisee’s existing business is likely to be a well-oiled machine with effective management and systems in place. This often means that a franchisor and their senior management need to spend less time “in the business”, but a new brand is likely to need a lot more time and attention during the recruitment and selection phase and during the early stages of development. If a brand is new to franchising, then you must be willing to accept some of the test and learn challenges that that will present.

It can be easy to underestimate the capital required to develop a new brand, so careful planning will be critical to ensure that the resources to grow and succeed are available.

Decisions, decisions! So, when considering how to grow your business, it’s worth considering a multi brand route and whether that would be a good ‘fit’ for you?