Is Now the Time to Buy and Operate More Franchises or Franchise Locations?

By Evan Hackel

People are returning to work, people are spending more, and in general, business is up.

This is a very positive time for businesses growth. Franchise owners, who by their nature are quick to take advantage of opportunity, and considering whether now is the time to ad new locations within the franchise organization where they already own one or more units. Still others are thinking of going farther afield and buying a different franchise.

Yes, it all sounds positive. ?But there are some fundamental questions to ask before charging ahead and adding new companies or locations to your portfolio of businesses.

What are those questions? Let’s take a closer look.

Is There Untapped Potential in the Franchise(s) You Already Own?

This might sound like obvious observation, but if you own a location . . . you already own it. And that alone provides you with certain important advantages. You don’t have to invest money to buy it. You don’t have to learn how to run it or learn about its products. You don’t have to staff it from the ground up. You don’t have to stretch yourself thin by managing businesses in multiple locations.

So that all plays into the question of ease and convenience. But there is an even more important question to ask . . .

Is there untapped potential in the franchise or franchises you already own?

In many cases, owners of current franchises forget to ask this question. Instead of making sure they are making all the profit they can from what they already own, they think of adding locations.

Yet it is often better to consider whether it is possible to generate more profits by:

·????????Freshening up a location by making it cleaner and more attractive

·????????Putting up better signs and capturing more of the traffic in their current locations

·????????Advertising and marketing more effectively

·????????Replacing ineffective salespeople with better performers

There are almost always ways to generate greater profits, provided an owner recommits to making current franchise all they can be.

Do You Have the Resources, the Time and the Will to Run Multiple Locations?

Some franchise owners underestimate the amount of work it will take for them to own and supervise additional franchises. They assume that because they have learned how to run business in one location, it will be easy to add additional units.

Yet that is not always the case, still more questions follow:

·????????Can you realistically expect to manage multiple locations, or are you already stretched too thin? (Don’t let unrealistic optimism color your answers to this question.)

·????????Do you have the expertise to run the kind of franchises you are considering? If you’ve run an automotive service franchise, for example, that doesn’t necessarily mean you will be able to run an ice cream scoop shop. (Some skills might transfer, but be realistic.)

·????????Can you find excellent on-site managers to supervise additional locations? Or are you going to have to spend lots of time in multiple locations?

·????????Can you find enough strong employees to staff them up? If you are already finding it difficult to staff one location, how can you expect to staff more?

·????????Where are you in your personal and professional life? If you were already thinking of retiring in a few years, for example, is this a realistic time to think about adding new responsibilities?

How Good Are the Franchises You Could Add?

Again, there are a lot of questions to ask:

·????????Are they already strong business entities that are making money? What do the books look like? ?

·????????Are they underperforming businesses that could become more profitable quickly under your leadership?

·????????Were they being mismanaged in some identifiable way that you can quickly turn around?

·????????Is there already a strong manager, or strong employees, who will stay on under your ownership??