4 Steps to Diversify Your Multi-Unit Franchise Portfolio
At its core, franchising is a system that lends itself to multi-unit ownership. You buy into a brand you believe has staying power. You follow the brand’s systems and you take advantage of the support it offers. You scale and repeat the process over and over again with each new location until you feel that you’ve grown enough.
But what if the franchise brand’s growth plans don’t align with your own? Or what if the market you want to enter is too saturated?
Well, you start the process all over again – with a different brand.
For those looking to diversify their multi-unit franchise portfolio, growing across multiple brands may initially seem daunting. They are overwhelmed by the idea of working with new people, learning new systems, and facing new challenges.
In truth, the process is similar no matter what brand you’re a part of. Growing your portfolio with multiple brands is oftentimes the best way to reach your growth goals in a reasonable amount of time. You just need to know what to look for and have the right resources in place.
1. Find Your Sweet Spot
When you’re looking to add another brand into the fold, you should first examine yourself. Know exactly what you’re good at and stay within those parameters. If you look at my LSGF Management portfolio, you’ll notice that almost all our businesses, which include Smoothie King, Great Clips and T-Mobile, are with brands that have simple operations and require a small store format of about 1,200 square feet. That is no coincidence.
In my experience, I found that these concepts are where I have been proven to shine. I’ve ventured out beyond that and opened large full-service restaurants and bars, but I quickly realized that’s not where I feel most comfortable. And in business, I find it’s best to stick to what you’re good at. Simple franchise concepts with a small footprint are not only far easier to manage, but with dedication and effort they also have the potential to grow at a quicker rate. Remember to find your comfort zone and begin to grow from there.
2. Work With the Right Brand
After you’ve finished examining yourself, it’s time to evaluate the brand. With so many franchise concepts to choose from, knowing what to look for is key. My advice is to keep an eye out for established franchises that have good leadership and solid store count growth.
Why? Because the experience and the track record is there, along with a desire to improve. Take Smoothie King, for example. The brand has been around since the 1970s. But unlike many franchises of this age, instead of growing stale or complacent, Smoothie King has strong leadership that’s coming up with new products, better systems and a fresh new store design. As a result, Smoothie King’s sales and store count growth rate is actually accelerating.
When a brand is already successful like Smoothie King, yet continues to make positive changes to streamline processes and remain relevant, its commitment to growth is crystal clear. Brands like Smoothie King have a knack for providing the best opportunities for serious, scalable growth while focusing on creating a better experience for their franchisees.
3. Think With Your Calculator, Not Your Heart
When considering what brand to grow with, your decision should always boil down to the numbers. I’m a firm believer that business decisions should not be emotional, but rather analytical.
One of the biggest mistakes first-time franchisees make is they buy a franchise simply because they love the product. That’s not a wise way to invest. Before you join any new brand, take the time to read the Franchise Disclosure Document (FDD), study the numbers and make sure it can support a solid return on your investment.
If you’re at a place financially where the numbers make sense and the risk is worth the reward, then you may have nothing stopping you.
4. Hire the Right People
For multi-unit owners, delegating is the key to success – you cannot do all the work yourself. You have to hire good people and then teach, train and develop them. With each brand you add on, your primary role becomes more focused on developing exceptional managers that can act in your place. As a general rule of thumb, good employees do not work for bad managers. Personally, I recommend growing talent from within. Bring people up in your stores, develop them from part-time employee to manager and build that loyalty and trust.
The store managers that work in my Smoothie King locations are all go-getters who are passionate about nutrition and wellness. I trust them and find them incredibly easy to work with. They show a true commitment to their roles and are always eager to learn and constantly improve. Having people like that in place makes your job as multi-unit operator very easy – well, I should say easier.
So, what’s next?
There are a ton of places to begin looking for the next brand to put into your portfolio. Attend a multi-unit conference, read franchise magazines, and most importantly talk to other multi-unit operators and see what their experiences are like. Once you do your research, find a brand you want to expand with. Start putting in the work and you’ll have the chance to see your portfolio become stronger more quickly.