Why Franchisees Should Consider Growing Their Portfolio with the Same Brand
Multi-unit franchise ownership can be an incredibly lucrative career path. Whether you already own multiple units or are just beginning to look at adding more units after the success of your first, there are a variety of ways to go about growing your franchise portfolio.
While a popular strategy is diversification in a different category or industry, sometimes the best path is deepening your investment with a brand you are already established with – if it is the right franchisor.
Here is why you should consider growing your multi-unit portfolio with the same brand:
Connection to your ‘why’
For countless people, taking the leap into business ownership through franchising is a big, life-changing decision. You likely did your due diligence – conducted competitive analyses, got validation from other franchisees, so on and so forth. Simply put, there is a reason why you invested in the brand you did.
Was it the freedom it would provide for you and your family? Strong unit-level economics? A concept you passionately believed in? If you’re considering growing your portfolio, check in on your ‘why’ and discern if the reason(s) still hold true for you, and if the franchisor relationship has helped you fulfill the things you set out to do.
Something to note is if you are in a position to grow your portfolio, that’s a pretty good indicator that you’ve been successful in your business which should be motivation enough for you to look at your existing brand as your next investment.
Beyond your why, there could be tremendous growth opportunity within your existing brand. For some brands, that could be adding more units to high-demand zones in your trade area, widening your footprint into a new state, adding components to your business model, or expanding your offerings.
A big reason why I decided to invest in Hand & Stone was its differentiated revenue model which presented a huge growth opportunity. At the foundation, Hand & Stone has two modalities – massage and skincare – yet both of those are very diversified because the brand offers a variety of enhancements such as hot stones, percussive therapy and CBD oil that customers can add on to their service. That, with a very compelling membership model, has helped not only strengthen the unit-level economics of my locations but also enabled me to add more units at a rapid rate. In just seven years, I’ve grown from a single unit to 30 across five states and have plans to add more before the end of the year with the long-term goal of having 100.
Have you truly tapped into all the potential your brand has?
Operations and training
There’s an adage that goes, “jack-of-all-trades is a master of none, but oftentimes better than a master of one.” That can be applied to many things, but I would argue not when it comes to operations and training. Even if you’re with the same brand for 10-20 years, you’re always learning and growing; figuring out what works and what doesn’t. Sticking with your existing brand not only helps you refine and enhance these areas when scaling your portfolio, but also creates tremendous opportunities for your people, allowing them to rise through the ranks.
For example, in keeping my focus on Hand & Stone, I’ve not only developed a deep and intimate understanding of the dynamics of the business – which sets my people up for greater success – but I’ve also recognized my own needs as the person at the helm of the ship. Over the past seven years, I’ve built a team around me that provides support in the areas I need most. Today, I have a chief operations officer, a vice president of operations and six regional managers, three of which are my youngest children who worked their way up to that title.
The fact is, there’s a large learning curve when entering any new franchise system so eliminating that hurdle by deepening your investment in your existing brand can alleviate the burden on yourself and those you lean on day-to-day. As you get going, you’re making money and you’re confident in your team, it can make a lot of sense to stay with the same brand.
Of course, all these points should only be considered if you’re satisfied with your franchisor, your business and the overall relationship. These are key, not only to the success of your business but your happiness. Below are some other things to consider when growing your portfolio – whether with the same brand or not:
- Category leadership: I chose Hand & Stone because I felt strongly about the brand and the category, and because it was the obvious winner of its competitors. It was the same when I was a Papa John’s franchisee. Brands become leaders of their respective categories for a variety of reasons, and you should look into what got them there; what they’re doing better than their counterparts.
- Core values: There are countless franchise concepts out there that can make you money, but are you proud to be a part of that brand? Whatever brand you choose to invest in, it’s important that it aligns with your core values. This not only helps keep you honest and accountable in your business but builds passion and morale among your people.
- Culture and leadership team: In many ways you’re reliant on your franchisor so you need to feel good about the company culture and the leadership team. Obviously, leaders can change but if the company has a strong culture, the right people will come in to uphold it.
- Resilience: COVID-19 pulled the veil back in many ways and showed us which businesses could withstand extreme economic downturns and which had cracks in the foundation. In growing your portfolio, you should be looking at how concepts performed during the pandemic, what support the franchisor offered its franchisees, how the company has rebounded and what its future looks like.
- Economics: At the end of the day, we’re in this business to make money so the economics must make sense. Do your due diligence in the concept you’re looking at and any competitors. Which has the best unit-level earnings? Which has the most opportunity for growth?
Eric Danver is Hand & Stone’s largest multi-unit operator with 30 spas open across five states. Prior to joining Hand & Stone, Danver developed a large Papa John’s portfolio over the span of 25 years, owning and operating 53 locations at one time. To learn more about franchising with Hand & Stone, visit www.handandstonefranchise.com.