By Charles J. Bonfiglio
America is the land of opportunity, and many hardworking entrepreneurs look for success by opening their own franchise business.
That’s easy to see looking at the latest Department of Labor statistics, which reveals the franchise industry contributes a significant part of the U.S. economy, accounting for more than 10% of all businesses with paid employees. In fact, over the last year, there were more than 806,000 franchise establishments in the country.
One of the ways to ensure that a franchise to stand out is by becoming a diversified franchise. In simplest terms, this is a savvy business model that offers a wide range of products or services, catering to various customer needs and preferences. After all, relying solely on one franchise service can leave you vulnerable to economic shifts and industry-specific downturns.
For instance, at Tint World®, our offerings include automotive services like window tinting as well as residential solutions such as security film. This gives our team an opportunity to reach different customer segments and increase overall profitability.
An approach like this allows a franchise to tap into multiple revenue streams rather than relying on a single offering, so if one area starts to lose steam, revenue from other services helps sustain the business.
That’s why if you’re an entrepreneur looking to join a franchise system, investing in a diversifies franchise can offer multiple benefits for your success.
Pros of Diversification
New entrepreneurs often look to start a franchise with an established range of offerings based on market demand and industry trends, but the shrewd ones—and those most likely to succeed—are those that diversify and go that one step further.
Some franchisors will even assist franchisees in diversifying their offerings, including providing training, marketing strategies or operational support.
It’s not difficult to understand why diversified offerings lead to increased revenue streams, which are crucial for survival—especially in the early years. An ability to maximize profits with multiple streams of revenue increases the overall value of the business model for a franchisee.
For example, some franchises provide revenue sources that are especially beneficial during specific seasons. This seasonal income, combined with other service offerings, helps maintain a balanced business and may reduce the fluctuations in revenue throughout the year.
With multiple incomes, a franchise owner can invest in necessary tools, equipment and labor. This will help your franchise stand out in a crowded landscape.
Having more than one type of service is also a great way to establish customer loyalty, as it creates a deeper connection through more business interactions. Consumers prefer working with businesses they know and trust, so they are likely to return and utilize all aspects of the franchise.
A growing customer base typically indicates a rising demand for additional services, so it’s important to stay open to expansion. To identify emerging trends and opportunities, make it a priority to monitor customer feedback and inquiries. As demand increases, think about diversifying your offerings to meet a wider array of needs and preferences.
By utilizing multiple revenue streams, entrepreneurs can shift their focus to more profitable segments of the business in response to evolving market trends and demands. This adaptability enhances financial stability, allowing income from one stream to compensate for any downturns in another.
Potential Cons
Still, there are some challenges to running a diversified franchise. A common mistake new franchisees make is overextending themselves by offering a wide range of services beyond their capabilities, so you need to be able to deliver on what you promise.
Without proper focus, overextending can lead to diminished service quality.
And depending on whether staff works across multiple facets of the franchise, responsibilities may become stretched. You don’t want them helping one customer when they get a call about related to another part of the business, which also demand your immediate attention.
The smart thing to do is have dedicated people for each part of the diversified business operations. This will ensure that every customer gets top-notch service.
Also, while you may be knowledgeable about your original focus of the franchise, you need to do your homework and ensure that your new and expanded services match the skills and expertise of those who work there. Hiring experienced staff is crucial for success.
Once you establish a strong reputation for excellence within your franchise, customers will deliver positive word-of-mouth and repeat business will come naturally.
It’s Time
So, if you’re thinking about diving into the world of franchising, now is the perfect time to take proactive steps toward success. Start by thoroughly researching the various franchises that pique your interest, paying special attention to those that offer diversified service models.
A multi-stream model reduces risks and enables franchisees to take advantage of diverse market opportunities, paving the way for long-term sustainability and growth.
Remember, trends evolve quickly, and adaptable franchises willing to follow them will thrive.
Charles Bonfiglio is president and CEO of Tint World, a provider of automotive, residential, commercial, and marine window tinting and security film services. With Automotive Styling Centers in the U.S. and abroad, each franchise location houses approximately 20 profit centers, ranging from in-store accessory installations to offsite sales and installation.