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What to Consider Before Opening a Second Franchise Location

There may be many reasons for opening a second franchise location. Expansion of your business is one of the obvious reasons. Increase in business profit possibilities is another reason. You go into business to make money, and franchising is proven to be very profitable. So if you have one location that is going good, why not open a complimenting location?

You can build profits by promoting customer loyalty and thus grow your business. Do make sure, however, that both locations are convenient, provide great customer service and have the same commitment to quality.

Reasons for Expansion
  • Business growth is a great reason for opening a second location. New outlets can give you higher business potential, increase exposure, profitability and success. You may find that your first location does not have enough room to house your products or you may have customer requests to provide more convenient locations.
  • Having opened one successful franchise, you will be able to model after your success, and investors will be willing to give you more funds to open a second location. Investors will be highly motivated to reinvest and help you carry on your success and their money returns. They will also be excited about the potential higher profits. Building up your business is a very attractive perk.
  • As you build your franchise in other areas you will cause competitors to think through their ideas and possibly close up shop. Basically you are potentially reducing competition.
  • Customer service at one franchise should be carried out at the next franchise and customers will rave about your products and or services. Opening a second franchise will promote brand loyalty and returning customers.
  • Group purchasing can be taken advantage of if you have more than one location. You will be able to buy in bulk and which in turn saves money. You may also have the opportunity to take advantage of vendor discounts for higher purchases and distribution scheduling can be adjusted.
  • Dedicated distribution is a definite plus. As you open more sites, you may be given preferential treatment by distributors.
  • Advertising can be divided between two stores. This will give added incentives to advertising discounts, provide a high distribution and brand awareness, and will save you money in the long run. 

Conclusion

Opening one franchise is a wise decision and will help higher your income. With guidance and help from your first franchise plus additional help from the parent company you will be able to model or mirror your second location and continue making profits.

To expand your business, do make sure, though, to have sound legal counsel in setting up your growth. Have an attorney draw up your franchise agreement package to make sure your business is in compliance with local laws. It’s better to be safe early on, than risk breaching any law.

About The Author

Alam Qureshi is a Certified Business Intermediary (CBI), Certified M&A Professional and Broker of Record at ProClient Brokers Inc., Brokerage. He helps franchisors in expansion of their brands and assist franchise buyers find right franchise in their situation. Call us 416 364 5550 or CONTACT US to get in touch.

Date modified: 10-30-2019

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