Expanding Your Franchise Portfolio

Are you a franchisee that has multiple locations of a franchise brand and there's really no more territory to grow in your market and with the franchisor? Do you find yourself in a predicament, because you're cash flowing, you have a strong, healthy business, and you want to utilize the infrastructure that you've created to generate more capital and wealth for your business. What can you do? 

Leveraging Your Infrastructure for New Brand Expansion

This may be the time for you to look at acquiring another brand and ushering it into your existing franchise portfolio. Why? Because you already have the infrastructure, you have the people in place, and if you have multiple locations, you have an above unit or above store level operational support structure that's sophisticated enough to help bring in and champion a new brand. You're able to not only leverage the labor of your infrastructure, but when it comes to build outs, you'll be able to negotiate perhaps better rents and better cost of construction because you have economies of scale. And in some cases, you can build one brand next to the other and get efficiency that way.

Acquiring Existing Franchise Locations

If there's no territory available with your franchisor, sometimes the right answer is to acquire a new brand, but that's not always the case. Another thing that you can look at, if it's not in your direct territory, are any existing businesses up for resale. We call these secondary market assets, meaning there's an existing franchisee that wants to exit the system, and so you purchase the existing business to add unit count to your existing franchise portfolio. 

Strategic Considerations for Geographic Expansion

Even if there are resales up for purchase, it does not mean that they are geographically located in the optimal place. Ideally you should be looking for resales in adjacent territories or locations that have a drive time of 2 hours or less from your existing franchise operations. Just because the business is for sale doesn't mean it's the right operational strategy for you to take on. If your operations are in Dallas,TX and there's an opportunity all the way west in Sacramento,CA, does it really make sense to stretch out your team and your resources? Or would your time, people and capital be best spent looking for a resale that's going to be closer to home? Maybe it's a resale in Oklahoma and you're able to get to it easier by car from Dallas. Perhaps you start there. 

Diversifying into new brands when there is no longer any available new territory for your existing brand, acquiring a new brand in the same market is a great way to continue to build your portfolio in franchising, as well as exploring available resales in or close to your existing market. How have you seen franchisees grow when they have geographical limitations? Drop a comment below.