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Anybody who gets into franchising needs to make an important decision – whether to build a single business or an empire.

If all you’re looking for is a steady, reliable source of income, then a single branch of a single franchise might be enough for you. You’ll get to be your own boss with the backing of a bigger brand.

But if you’re more ambitious, if you’re willing to take risks in order to build something bigger, to earn the big bucks and leave a legacy, then you need to think about your franchising empire. And because not all franchises are suitable for this, you need to start planning even as you’re researching your first franchise. What’s best for a lone outlet might not be best for fulfilling your grand dreams.

In this article, we’ll explore the advantages of a franchise empire, how to pick the right franchise at the start, different approaches to empire building, and the skills you’ll need to develop.

The Advantages of a Franchise Empire

There’s a good chance that you already know whether you want to go big. A lot of this is down to personality – do you dream of grandeur or of contentment, of achieving something epic or something good enough?

But if you’re still making up your mind, here are some of the reasons you might want to build that empire.

Security

If you have a string of businesses instead of just one, then your position is more secure. If something goes wrong with one, then you can fall back on the others. Your fate isn’t tied to the success of a single product in a single market.

Legacy

For many entrepreneurs, their goal isn’t just to provide for themselves, but to provide for their family, both now and after they’re gone. If you want something to pass down the generations then a franchise empire can be your legacy.

Finance

There are distinct financial advantages to going big:

• Easier loans – A bank is more likely to provide a business loan for expansion than for a new business, because expansion is grounded in proven success.
• Many franchisors lower the fees for additional outlets, encouraging their most successful franchisees to help the brand expand.
• Efficiencies of scale reduce your costs per unit.

How to Spot an Empire-Worthy Franchise

If you decide to go big, then you’ll need to find the right sort of franchise to start with.

Finances

First, look at the financial state of the franchise, with an eye on the features that matter for expansion.

Does the franchisor business have the resources, investors, and financial planning to support this brand in the long run? You don’t want to commit to a business that’s not going to support you.

Is there serious long-term potential? That means growth supported by long-term social and economic trends, not the latest fleeting fashions.

Are the financial returns good? You need a business that will fund the next outlet, and the next, whether that’s through profits or the loans you can secure against it.

Market State

Does the business have a significant market share in the areas where it’s working? A brand that’s taking off in a big way can help with your expansion strategy.

Working within a fragmented or under-franchised market can also help. It’s easier to expand by competing with mom-and-pop businesses than by battling a brand giant.

Space to Expand

The biggest franchise brands will often have limited territories available, which limits your opportunity to grow. Even a franchise that doesn’t yet have a large, visible presence in your area may have sold out all its franchising opportunities in the local territory. This happens when a franchise brand catches on with investors, who buy up multiple territories and then open the units one at a time according to a schedule. You therefore need to check whether a franchise has space for you to set up in, not just now but in the future.

Working with a franchise broker helps with this, as they’ll know which brands are experiencing rapid growth and which have room for expansion. They’ll also have contacts to introduce you to the more suitable brands.

Scalability

Some businesses are designed to be run by a single owner operator, while others are designed to scale up into multi-unit businesses, and those are the ones you need to build an empire.

There are three key components to this.

Equipment

With the right equipment, an outlet can increase the business it does without a proportionate increase in staff, keeping costs down. Automation is a good sign, but beware of hype – make sure that you understand how this specific tech will help you scale up.

Systems

A good brand will have systems to help you scale up, including:

• Checklists for building out every component of the business.
• Vendor and supplier lists.
• Customer management systems that let you easily expand and track your customer base.
• Staff management systems.

People

Delegating to managers gives you more freedom as the owner, and more opportunity to work on expanding. A good brand for empire building is one that not only lets you hire managers to work under you, but has space for one of those managers to run multiple outlets. That way, you can keep down managerial costs.

You need suitable systems for managing staff and customers across multiple sites. Look at the infrastructure being provided. Could you deploy skilled personnel over several outlets to share their experience? Will the systems and equipment support this?

Recurring Revenue

To build a franchise empire, you need franchises that provide steady sources of recurring revenue, preferably with revenue increasing over time simply by the way that the franchise operates.

These are franchises where the same customers keep coming back, so that any new leads add to your revenue instead of filling gaps. This way, income snowballs, building a strong financial base to sustain and expand your business.

Memberships are good for this – many customers keep paying their gym membership even if they’re not attending regularly, locking in a portion of revenues. Ongoing contracts, such as those for cleaning and maintenance, fill a similar role. As long as you do a competent job, a client is likely to stick with you rather than have to negotiate with a new supplier.

A franchise that’s set up to deliver a stream of new customers can fulfill the same function. If they’ve got strong corporate accounts or a well-run call center that regularly feeds fresh business to franchisees, then you’re more likely to see recurring revenues.

Expansion Strategies

There are various different strategies for expanding your franchise into a franchising empire, but fundamentally, they’re built on two approaches:

• Opening up multiple units of the same franchise.
• Opening up different, complementary franchise units.

Many entrepreneurs use elements of both, but you have to start somewhere. Separating them out is useful for thinking about how they work and for deciding how to approach your expansion.

Multi-Unit Franchising

Benefits

If you’re running several outlets of the same franchise, then you only have to learn how to run the franchise once for all of them. You can efficiently apply your knowledge and experience across all the units.

Your marketing, supply networks, and other infrastructure will also be more efficient, not just through bulk purchasing but through how they support each other. Marketing for one outlet of a brand will help other outlets in the area, so if you own more of them, then you see more of the benefits.

You can also benefit from efficiencies when hiring managers. A single manager can oversee multiple units, saving money per unit on your most expensive staff.

Practicalities

Many franchises are keen to encourage multi-unit owners, as this lets them expand faster and gain efficiencies of scale in supporting franchisees. Any ambitious franchise will look for ways to support and encourage you, and you’ll benefit from working with an ambitious franchise.

If your finances mean you need to start small, then you can build up one unit at a time. But if you have the funds, you can buy licenses for multiple units at once. Some franchises encourage this through discounted packs of licenses. Others offer discounts when existing franchisees add extra units.

Multi-Franchise Empire Building

Benefits

The greatest benefits of operating a mix of franchises come from cross-marketing, which is a powerful option for gaining more from a single customer base.

This involves combining brands that can offer different services to the same list of customers. You can then cross-market from one of your businesses to the others. For example, house painting clients might also be interested in kitchen remodeling.

This stretches your marketing dollars by letting you use the same leads multiple times. It also means that you’re more likely to succeed in pitching your services to those leads, as you’ll know them and their interests.

Practicalities

When expanding by cross-marketing, it’s important to pick the right franchises.

Obviously, they need to be in the same area to serve the same customers. It’s not enough to think about franchising territories, you need to look at how far you can deliver services to, or how far customers will reasonably travel for an outlet.

Look for businesses with similar client bases to improve cross-marketing, but don’t go too similar – running multiple different dessert outlets might cannibalize your own business.

You won’t see the same benefits of scale as with single brand expansion, but cross-marketing can improve your revenues in other ways. It also makes you less vulnerable if a specific sector or brand faces a downturn.

The Skills for a Franchise Empire

What sort of skills do you need to foster to face the challenge of empire building?

Long-Term Thinking

It takes years of work to build an empire, so you need to focus on long-term strategies, not get-rich-quick schemes. Plan for what you’ll be doing down those years, while retaining the flexibility to adjust to circumstances.

Facing Challenges

There are going to be obstacles and setbacks along the way. You’ll have to be able to face them and keep going undeterred. That means having faith in yourself, a strategic view, and the ability to turn challenges into opportunities.

Understanding Leverage

For a franchise empire, leveraging finance means increasing the return you’ll get on your outlay. Can you get a loan that adds a bank’s capital to your own, leading to bigger profits and a better return?

But it goes beyond finance, into looking for advantages you can use that your competitors don’t have, and how one part of your business can support another.

Calculated Risk Taking

You have to be comfortable taking risks, but not so comfortable that you end up making reckless decisions. That means assessing those risks using available information to make calculated investments in the right franchises.

Do You Want an Empire?

Building a franchise empire isn’t for everyone. But if you can find the right franchise, pick your preferred strategy, and develop the skills and outlook you need, then it could be your path to a secure financial legacy.