Adding a new brand to an already existing portfolio a franchisee refers to Multi brand franchising. One may utilise the same retail space for clubbing two brands together or may open up stores at multiple locations. Multi brand franchising does not necessarily mean that you have to choose your list of brands from under the same corporate umbrella; they can be from different brand roofs as well. However, this is possible if a franchisee has rationalised infrastructure, rock-solid resource base, and sturdy financials and integrated back end. Before jumping onto this bandwagon, one must analyse the market conditions like the customer base, sales in the area, demand for the product, average spending power of the clients they wish to cater to. Multi unit franchising has proved that adding new units is a great growth tool. Multi-brand franchising is working on the same lines to add to the growth and profit figures.
The benefiter
Multi brand franchising is a win-win situation for both the franchisor and the franchisee. At the end of the spectrum, both gain some or the other benefits which helps initiating a multi brand franchise relationship.
Franchisor
For franchisors, signing a multi brand franchise deal with a single franchisee means dealing with lesser franchisees in number with the added advantage of selling for franchise units. In case a franchisor has more than one brand, he can sign a franchise deal for more than one brand with a single franchisee. Also it makes the process easier as they would already have a well established relationship with the franchisee saving all start-up hassles or for going through the process of signing up new franchisees. Samit Lakhotia, Co-Founder & Director Strategy & Business Development, Re-feel says, “Working with the same franchisee for an addition of brands means cashing in on the same customers, same infrastructure and saving up on the marketing efforts as well.”
Franchisee
On the other hand for the franchisees, it means lesser amount of risk involvement as he is already aware of the franchisors capability and working style. The relationship with the franchisor is also strengthened as the level of trust builds on. Also signing another deal with the same franchisor can mean a discount on the franchisee fee and other financials involved. By adding a new brand, the franchisee is able to bring a new vibe to the store and also helps increase the brand value for both the brands.
Can you get one?
If you’re wondering you are a potential buyer of more franchises but confused, here are some pointers you should go over that will help you decide if you should take the plunge or not.
Stability
What franchisors are looking for are stable and unwavering franchisees that have a good track record of carrying out business with them or some other franchisor.
Related brand genre
You can think of choosing a brand from the same genre because then you have the possibility of utilizing the same vendors to reduce cost.
Undivided attention
Also each franchisor would want undivided attention to their brand so be sure you can do that or have an efficient team in place to do that for you. Unless you are convinced you can handle multiple brands and locations you will not be able to convince the franchisor.
Thorough ground work
Do your ground work well and do an in depth scrutiny of all aspects for actual realization of the viability of the business plan. Jason Bajwa, Franchisee, Subway and Baskin- Robbins tells, “I first started with the Subway franchise and after running it successfully we thought of adding a new brand to the store as we had big retail space. That’s when we decided to rope in Baskin- Robbins to compliment a meal at Subway. People can now enjoy a wholesome meal starting with a Sub and ending with scrumptious scoop of ice cream.”
Making the shift
Deciding to upgrade from one brand to adding another to your basket is a decision that needs to be taken with a lot of precision. Firstly the brand combination to be chosen wisely as to what brand will go well with which brand because you do not want dipping sales in one brand because of the other. The brands you choose must complement each other. An in depth discussion on the financials and legalities involved must be done thoroughly with the accountants and lawyers. Single brands are the focus of all your investments and if for any reason the business fails, you lose out on all your money! So investing in multi brands helps divide the risk factor and reduce it. But taking up multi brand franchises also spells out higher investment. However, your bank can come to your rescue if you wish to expand and cannot shell out money from your own pocket. Complete all your business papers and develop a strong team to be sure of getting the required funding. As and when you start expanding make sure you set up a strong back end team which is capable of handling excess capacity.
Economies of scale can be achieved by carrying out bulk advertising, combined marketing, maintaining the same fleet of suppliers and integrated back end operations. While taking up a multi brand franchise you do not step over the franchise agreement of either of the franchisor and do everything in compliance with the agreements.
So if you do have expansion on your mind and do not want to follow the multi unit franchising path, then multi brand franchising is what is right for you!
