Franchising is all about expanding business and uncovering new opportunities, and more companies are seeing those opportunities in a multi-brand approach. Could multi-brand franchising open new doors, or does it run the risk of creating unnecessary internal competition?
MULTI-BRAND FRANCHISING AND DIVERSIFICATION
Multi-brand franchising can be a smart move for entrepreneurs, especially those looking for the excitement or economic opportunities of diversification. For those with business in industries that have seasonal ebbs and flows, multi-brand franchising can help fill the gaps. It’s all about diversifying your income in a strategic way, perhaps by owning different franchises that each have different “peak” seasons so that the off-season for one is peak for another.
For entrepreneurs looking for something new and exciting, multi-brand franchising may be the way to go. It’s an opportunity that allows savvy business owners to apply their existing knowledge so they’re
not starting entirely from scratch, but it’s still different enough to have the rewards and challenges of launching a new brand.
COMPLEMENTARY, NOT COMPETITIVE
When choosing which brands to pair within a single portfolio, many entrepreneurs choose the “complementary” route by launching brands that do not directly compete with one another. This arrangement can take on a couple of different forms. On the one hand, there’s the option of owning multiple businesses within a broad industry, but with each brand staking out a different small niche. For instance, there are a handful of multi— branded home services/repairs/maintenance franchise companies that have several flags for each of their franchisees to fly, and all have similar operating and marketing models. This offers an attractive benefit for the franchisee of continuing to work with a familiar organization. From the franchisor’s point of view, they have a known entity with whom they are entrusting a second brand.
Another strategy for entrepreneurs is to own franchises that “go together” in a logical way. Pairings, like clothing stores and dry cleaners or gyms and spas, allow customers to meet multiple needs or wants while staying within the same family of brands. When this is the case, owners can use their varied brands to cross-promote and support each other. This allows for the creation of promotional partnerships, special deals, and other opportunities to send customers of one company over to the other for a related need.
At the same time, pre-existing knowledge of the broader industry or customer base can be an advantage when working on second franchises or brands. There are also the financial rewards to consider: in some cases, complementary brands may be able to share expenses for items like local advertising, networking, or IT support.
WHAT HAPPENS IF YOUR FRANCHISES ARE ACTUAL COMPETITORS?
Is there ever a circumstance where one owner might oversee multiple brands that are in direct competition with one another? Yes – and it happens more than you might think. There are ways to approach this situation that can be successful, but they require serious planning to ensure that “sibling” brands don’t siphon each other’s business away.
Entrepreneurs can strategize to minimize the “competition.” For instance, two locations of two different but competing brands might be placed to achieve expansion goals and reach new clientele, rather than being too geographically close and absorbing each other’s customers.
However, this competitive approach may require a little extra work to maintain true separation and avoid conflicts of interest. As one forum from the American Bar Association explains, some resources (like supplier relationships) can easily be coordinated and leveraged for better deals across the board, while others (like operational support and brand marketing) are best kept separate. It’s important to develop a nuanced strategy to reap the benefits of multi-brand operations while still maintaining the independence of each individual brand.
THE ROLE OF THE FRANCHISE DEVELOPMENT OFFICER
The job of a franchise development officer is to pursue the best possible franchise opportunities for the company as a whole. This would make them one of the key leaders when determining whether multi-brand strategy is appropriate, where and how to diversify, and how to approach these plans.
Franchises often face three overarching categories of challenges: diverse customer needs, dealing with new competitors, and maintaining culture. With a capable, creative franchise development officer, organizations can tackle multi-brand opportunities in a variety of ways, such as:
- Diverse customer needs: Diversifying into multiple brands, when done strategically and marketed well, can meet increasingly diverse customer needs while keeping existing customers in the overall “family.”
- Dealing with new competitors: A savvy multi-brand strategy can reduce the “risk” of competition, since would-be competitors become “sibling” brands instead. This way, they can complement each other instead of taking business away.
- Maintaining company culture: A successful franchise development officer can maintain the company culture and values even in various locations and
Multi-brand franchising can be part of a robust strategy to expand a business footprint and bring new customers and franchisees into the organization. Like any strategy, however, it requires creative thinking, planning, and flexibility to ensure that each unique brand can succeed, both on its own and as part of a larger franchise family.
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