As we all know the world runs on money. If you are wanting to multi-site the very first thing to analyse is your ability to fund another business. Do you have access to funds to finance not only the new purchase but your living expenses as well? Often the franchisor will have approved lenders that are invested in their system. If this is the case then the opportunity to access money is greater as the lender will loan on equity in your existing business as well as the business unit you are about to buy into. But this in itself can be a problem. You will be well and truly invested into the franchise system with a lot of debt in your name as well as a franchise agreement that ensures you are locked in for a specific period of time. You want to be sure of two things. Firstly that the franchisor you are working with is “in it for the long term” and secondly that the businesses are profitable. You are investing as much into the franchisor and their business operations as you are in the new site. All your eggs will be in one basket. If the franchisor sells out or goes bust you will also, by default, be affected.
2. Team Structure
When you multi-site you will definitely need a strong team behind you. It is impossible for you to be in two places at once so you will need a strong leadership team not only in your existing business, but in your new business as well. The good news is you can be developing this team in your existing business so that when you do multi-site it is simply a matter of spreading them over the two sites. This team will know the rules, how you operate and what you expect of them because you have trained them. So spend time developing systems in your business that keeps your leadership team accountable.
3. Business Case
So once you know you have the money and you have the team, it is essential to look at the business case on offer. Just because your existing business is going well does not mean that the new site will, particularly if it is a greenfield site. There are many factors that add to the success of a site, i.e. position, customer demographic, foot traffic, quality of retail premises etc. Be sure you still do extensive due diligence on the new business. Put as much time into this research as you did in your first store.
As you cannot be in both places at the same time, you really need to consider what is your long-term plan. How big do you want your empire to be? What region or area do you want to cover? Remember you really have to be able to be there on relatively short notice if there is a problem. You don’t want to be spending hours or even days travelling do you? Can you utilise technology to help manage your sites such as camera monitoring or do you actually need to be on site often. If so, do you have the time and ability to do this?
Timing is everything. Don’t be caught up with all the razzmatazz of owning a new business. You have to spend time growing and learning to be a business owner in your chosen franchise system. You have to be sure you have implemented systems over and above those of the franchisor to keep your team accountable. You have to establish great customer service and product quality methods. You must know how to implement good marketing campaigns in your local area. You have to develop your support networks such as a good accountant and business advisor. You have to develop your leadership team. You have to know your business inside and out: what are your peak times; when are the down times; when does the majority of repairs and maintenance take place; what makes a good employee; and what are the best training methods. Once you have experienced all these things in your first store and know how they work, then is the time to look to purchase your next store.
Taking the next step in your franchise journey is just as risky as taking your first step in franchising. So do your research, develop your business plans and budgets and as always establish your operational key performance indicators to monitor your business – right from the first day of trade.
– See more at: https://www.franchise.edu.au/home/topics/franchise-business-management-topics/i-wish-i-had-known-when-to-multi-site?dm_i=2Y5A,77IT,1OZOSQ,MPJP,1#sthash.RwZdfHlg.dpuf