Picking Winners: The Power in Multi-Brand Organizations
Picking winners is sometimes easier than you might imagine, especially when they have proven themselves to be winners before.
As we watch the industry and work with our franchise candidates to find their perfect franchise we see a mix of emerging and mature brands. In the process of evaluating these brands as possible matches for our candidates we look at where they are in their lifecycle. An old friend of mine was fond of saying this about franchises: “it is as important to know when to get out as it is when to get in”.
An interesting trend has been the growth of multi-brand franchise organizations that are sometimes created through acquisitions but most often grow out of a single successful brand as the parent company looks to expand on their success and grow a family of franchise brands.
Looking at smaller emerging brands can sometimes seem somewhat more risky to the uninitiated. We can get comfortable with some and not with others, it is not uncommon for our candidates to lean on an evaluation of the executive team, the market that the franchise operates in and the infrastructure that has been built to support the franchisees. Through careful analysis we have seen our candidates able to select an emerging brand and find their success.
Where multi-brand organizations assist in the evaluation process is that the track record of the organization behind the emerging brand provides a much clearer picture of what the onboarding process, training and support will look like. In looking at multi-brand organizations we have even done investigations where we evaluate both their new emerging brand as well as their mature brand that may be sold out where our candidate is just so that we can develop a better picture of how the organization works, franchisee happiness with the franchisor and their success in the established brand. Often their emerging brand will have enough crossover in key areas that this dual investigation can be very valuable.
In this multi-brand investigation process the key aspects of the existing brand that you may want to look into are the unit opening/closing rate, a full FDD evaluation and talk to some of the franchisees in that more mature brand who have had experience working with the franchisor.
Some of these multi-brand organizations go so far as to encourage these dual investigations or even do discovery days that involve candidates for all of their brands at one event. The multi-brand discovery days have been very powerful when we have seen them used because it is clear evidence that the franchisor has a set of proven systems and resources that all of their brands take advantage of.
Multi-brand organizations tend to have much larger support teams that they can dedicate to new brands they are bringing online because the cost of those teams is supported by the more mature brands in their portfolio. This gives their emerging brand a substantial advantage in the early growth phases.
Young single brand companies sometimes try to control costs by keeping their infrastructure small as they are bringing on their initial franchise owners then growing the support team somewhat in proportion to their revenue stream. While this has clearly worked for many franchise concepts over the years we prefer to see our candidates getting the best possible advantages in their startup phase, more support and resources tends to lead to successful franchisee outcomes.
Multi-brand organizations have the added benefit of providing growth opportunities to their existing franchisees where they will get their training and support from the same team that they have already worked with. Time and time again we have seen an established franchisor roll out a new brand and the first people in line to get approved for the new brand are existing franchisees in their system. We take it as a great testimonial about the company and their systems when franchisees add units or a new brand.
One thing to watch for with multi-brand organizations is that there should be continuity in their portfolio of brands. For example, a restaurant portfolio of brands would probably be best only adding new restaurants, an automotive portfolio would likely be best adding new automotive concepts and a home services company is probably best staying in that space. The continuity you are looking for is more about the application of training, support, buying power, etc. than it is about the specific product or service. The product or service is sometimes just an early indicator of how they are applying their systems over multiple brands.
A restaurant company that adds an automotive brand would have to develop a host of new talent, systems and relationships to be successful the new space and this may make them no different in many ways than a completely new franchise company.
Sticking to similar themes can often provide a lot of overlap in training, support, marketing and sometimes purchasing power. It is a strategic advantage that anyone seeking a franchise should consider.
Take the time to fully evaluate your franchise options and go pick a winner. If you have questions, we are always here to help.
Mr. Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution.
Contact the Franchising USA Expert George’s Hotline 703-424-2980.