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What To Consider Before Diversifying Your Franchise Portfolio

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December 28, 2016

From our diet to our portfolio to our exercise routine, we are continually being told to “diversify, diversify, diversify.” Whether it’s a greater variety of foods, expanded stocks, or modified workouts, they all lead to a more balanced life. But sometimes juggling all this variety can be tricky, especially if you are also looking to diversify your franchise portfolio. Download our 10 Things To Know Before Opening a Restaurant Franchise PDF to learn more about opening a franchise.

The first question you should ask yourself is: should you diversify or focus? If you’re looking to diversify because one of your franchises isn’t succeeding the way you want it to, diversifying might not be the best option. The best time to diversify is when the ground is stable and you have a solid platform to build off of. Opening another restaurant will take your precious time away from the restaurant that is struggling, and it will continue to struggle without you. Buckle down and focus on that space, get it running smoothly and efficiently again, and then look to the horizon.

Look to the market. Are your current franchises stagnating? This could be because the market has become saturated, or you’ve reached critical mass of loyal customers. If your current restaurant franchise is doing well and is holding a steady profit margin, take a look around. Decide what else your community needs that would increase your profits and open up a restaurant in a new sector of the market for you and for the community. For example, it could be breakfast, or a great lunch spot, that would help balance your current dinner-focused franchise. For the up and coming trends of 2017, read our article.

While you’re looking at the market, look for what is underrepresented, what brands already exist, and what brands want to open their first franchise in the area. Some markets might be saturated in your community. If there is a Starbucks or Subway on every corner, don’t assume there is a big market for those stores. It could mean that that segment is already saturated and might not be a good investment. But if there is a lack in breakfast restaurants, or a brand that is currently unknown or underrepresented, they could fill an untapped segment. Read our article on why breakfast is the fastest growing restaurant segment to learn more.

This is only 3 of quite a few factors you should consider before diversifying your franchise portfolio, but three essential questions. They will get you started in your decision-making process and help ensure you make the best investment with your time and money. 

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Topics: Franchising Tips

Written by Anna Hetzel