Can Multi-Franchise Ownership Work for the Smaller Franchisee?

by Ed Teixeira

Is it possible and practical for a unit franchisee to own and operate different franchise brands?

There are a number of multi-unit franchise operators that operate more than one franchise concept.  For example, the August issue of Franchise Times identified the top 200 restaurant franchisees. Companies like New Jersey based Doherty Enterprises, which operates 61 Applebee’s and 29 Panera Bread locations and Sun Holdings, LLC of Irving, Texas which operates 72 Popeye’s and 71 Burger King’s are examples of these diverse multi-unit franchise companies.

Individual franchisees can take a lesson from these multi-unit franchisees and if qualified should consider franchising several complementary brands. There are obstacles to this strategy which can come from the franchisor. Franchisors that market unit franchises often prefer that the franchisee devote all of their time and resources to developing that single franchise unit. While other franchisors allow qualified franchisees to own and operate multiple locations, they may prefer to have a single unit operator. This was my approach when I operated various franchise companies. Yet, in retrospect given the right circumstances, I can make a strong case for a franchisee operating multiple franchises. If certain conditions are met than a franchisor might wish to consider this strategy.

Franchisor benefits from franchisee multi brand ownership:

• Attract more qualified and competent franchisees
• Collaborate with complementary franchisors on franchise recruitment and marketing activities
• Franchisees could generate additional revenues from other franchise brands
• Increase market share
• Franchisees could be operationally and financially stronger

Following are requirements for this concept to be successful:

• Franchisee must have the financial resources and business skills necessary to launch and operate multi franchises.
• The franchise brands must be conflict free. For example, a home care and massage therapy franchise shouldn’t conflict with one another
• Identify economies of scale for the franchisee
• Franchises must be compatible from a territory standpoint

Franchisors could consider franchise brands that could complement one another and enable franchisees to own and operate multi brands. This could enable smaller franchisees to duplicate what large multi brand franchisees accomplish but on a smaller scale.

© 2012 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com