Ask the Expert: Evan Hackel

Dear Evan,

"I’m looking to grow. Do I buy another franchise in the same brand, or do I buy a different franchise in the same market?”

- Carla, Richmond, VA

Dear Carla,

Like most things, it depends.

But let’s not overcomplicate the question, because the answer is simple. You want to expand in the same brand and franchise if the following conditions exist:

  • You are happy with the brand that you have
  • You can make money with the brand that you have
  • A new location is available that is reasonably close to where you are already operating

If those factors in place, it is clear that acquiring a new location in the same brand is the right decision. Because you are already operating one location, you’ll be even more efficient running both locations. The more locations, the more efficient you can be, in fact. Why? Because you’ll be able to share employees between locations, which will make it easier to hire despite labor shortages or other issues. You can continue to apply the knowledge you have already learned, and it will be easier for you not to have to know two different systems.

It’s also an easy decision not to expand in the same brand if the following conditions exist:

  • You have not gotten the ROI that you were expecting
  • You’re not happy with the brand
  • You don’t like management
  • You foresee difficulties coming your way - maybe the product you are selling is becoming obsolete
  • You think it is unlikely that you will be able to grow the brand in a new location, so you’ll be “putting all your eggs in the wrong basket”

If those conditions are in place, then I would say finding another brand that you can open in the same market would give you diversity and would reduce risk. It might offer you the opportunity to find a better fit and another brand to grow with. 

What About Managing from a Distance?

I have already noted that the best new location is one that is near your current location. But what if you love your brand, your current location is thriving, you “know the ropes,” and the only available location is some distance away?

Then you have a difficult decision to make. When you’re spread apart geographically and it’s difficult to go between the two locations, that’s inefficient. In that case, you’re going to have to decide whether it’s better for you to open a different brand in your same market, or whether you really want to own your current brand in a remote market.

To me, this decision is helped by evaluating yourself as a manager. If you’re a really strong manager, it will be easier for you to manage from a distance. But if you’re a hands-on manager or a micromanager, the distance is going to be a real issue and you should seriously  consider opening a different brand in your current market.

Another consideration is the available talent. Is there a person you can hire to manage your distant locale who is highly qualified in that market, and someone you trust? If so, you might want to consider an earned partnership agreement. If that manager does very well, he or she can earn equity and an owner’s stake in the business.

Let me close by saying that I’m happy to hear that you’re thinking about expanding. That tells me you are doing well. No matter which of the paths we’ve discussed today you choose, you will get diversity. And diversity can lead to success.

Best wishes for every success,

Evan Hackel

Have a question for Evan? Send your question to editor@cgbpublishing.com and it could be answered in an upcoming issue.

Evan Hackel is a 35-year franchising veteran as both a franchisor and franchisee. He is CEO of Tortal Training, a leading training development company, and principal of Ingage Consulting. He is a speaker, hosts "Training Unleashed," a podcast covering training for business, and author of Ingaging LeadershipTo hire Evan as a speaker, visit evanspeaksfranchising.comFollow @ehackel or call 704-452-7368. Why not have Evan Hackel address your group about franchising success?