Advice for opening another location
Many entrepreneurs who have successfully opened a franchise will not want to simply sit back and rest on their laurels. Rather, they will be looking to expand their business. Many even open a franchise with an eye on eventual expansion, in which case, it’s worth taking a look at the top multi-unit franchises, ranging from business services such as FastSigns to restaurants such as Checkers and Rally’s.
Of course, continued success is never guaranteed, so making sure you expand in the right way is essential. BOSS has put together some key pieces of advice for any franchisee considering expansion.
Get Your Original Location Ready
As you’ve most likely learned from your first location, opening a franchise isn’t simply as easy as signing on the dotted line. Before you start focusing on another location, you need to make sure that your original business is in good hands.
Eric Stites, CEO and founder of Franchise Business Review, a leading market research firm that specializes in franchisee satisfaction and performance, explains “The ideal time to open another franchise location is going to be based on building a strong staff support team to run your current location while you focus on getting the second location off the ground. If you have a strong manager in place, and they have a team of good, reliable employees supporting them, you are probably in a good position to focus on your next location.”
You might need to spend extra time hiring and training new staff to make sure that everything will run smoothly as you shift your attention to a new endeavor. Make sure the success of your first business is not being jeopardized by your expansion.
Strategize and Acquire Capital
By now you have an idea of the franchising costs for your business, but be aware that a new location could take longer to get off the ground than your first business. In addition to hiring new staff, you will need to market to a new area. Look back at your original marketing plan and make adjustments. The SBA offers a SizeUp feature on its site that allows you to search by industry and city to see what your competition will look like in a new area and to find areas with potential customers as well as the best places to advertise.
Once you’ve devised a marketing strategy, build a forecast of your business finances. You will need to make sure you can continue to cover operating expenses for your current location and franchising fees and setup costs for the new one. Additionally, you will need emergency funds in case unforeseen difficulties arise. If the new venture isn’t as successful as you anticipated, you need to be sure you have reserve cash to keep your first, successful franchise afloat. Loan aggregators such as Fundera can help franchisees search for capital for expansion, ranging from SBA loans to term loans and lines of credit.
Now is also a good time to look back at your initial business plan and see what was successful and note areas that could use improvement. As you strategize for your new location, you might think of some good ideas to incorporate into the current one.
Consult a Franchise Attorney
Ideally, you contacted a franchise attorney before opening your first franchise, if so it’s time to re-establish that connection. When talking to the franchisor, you want to be sure that you have the best plan moving forward as you expand. Eric Stites explains, “Ideally, you want to have some flexibility to delay opening additional units if the business doesn’t go as planned. The safest route is to avoid signing a multi-unit agreement altogether and consider additional locations only after your first business is up and performing to your expectations.”
Expansion needs to be done on your terms and only when you are ready; an attorney helps make sure you aren’t pressured into moving too quickly by an overzealous franchisor.
Once all the paperwork and preparation of the first location is complete, it’s time to begin staffing the new franchise. If the new location is not far from your original franchise, there could be temptation to have current staff help open the new location before investing in a new staff. However, doing so risks spreading employees too thin — something that could ultimately be detrimental to both franchises.
Although hiring additional staff is more costly, doing it earlier in the process is beneficial to both locations and gets a necessary step out of the way before you have two fully operational businesses to run.
Keep an Open Mind and Evolve
Some ways of operating in one location might not work as well at another, be prepared to make adjustments in the new location, even if it means abandoning ideas that made your previous location a success. At the same time, be willing to take strategies that have proven successful at one location and incorporate them into another. When done properly, and at the right time in your franchise’s growth, expansion can ultimately be something that not only provides additional revenue but also makes every business stronger.