Franchise Lawyer Blog

Is It Time to Consider Multi-Brand Franchising?

As the economy continues to pick up, many entrepreneurs and investors here in New York as well as all over the country may look to expand their portfolios. For multi-unit franchisees, this might mean it is time to think about adding another brand. In fact, multi-brand franchising is a way not only to diversify one’s investments, but also to build a stronger business organization.

Multi-brand franchising is exactly what it sounds like-a business person or entity operating several brands, often in different industries. For example, one might be a franchisee with an ice cream brand as well as a shoe brand. While multi-brand franchising offers numerous opportunities, it is not without risk and as such it is wise to seek legal counsel prior to taking such a leap.

The main benefit of multi-brand franchising is diversification, or spreading out the risk of negative market factors. Multi-brand franchising also allows franchisees to gain leverage when it comes to shopping center leases, as well as generate economies of scale. For example, an owner may be able to obtain reduced rates by using the same contractor for multiple outlets, as well as the same payroll company, human resources staff, etc.

Another significant perk of multi-brand franchising is the flexibility this can give a business owner when it comes to geography. Some multi-unit franchisees may be unable to grow in their current locality, but adding another brand allows one to expand without travel or relocation.

With all of these advantages, why wouldn’t a franchisee want to venture into multiple brands? Each industry has its own nuances, and it is important to have a sufficient understanding of a business before investing in it. Additionally, if a franchisee does not have reliable management staff to oversee the existing outlets, it may not be the best time to concentrate on expansion. Of course, it is also necessary to make sure multi-brand efforts will not conflict with existing franchise contracts and obligations. Existing agreements should be scrutinized to be certain that such activities are permitted by franchisors and landlords.

In the end, the franchisee must decide whether it is feasible to run multiple businesses, and if so it will be beneficial to work with a franchise law professional to ensure one is set up to achieve short- and long-term multi-brand objectives.

Source:, “Building Brands: How To Expand From Multi-Unit to Multi-Brand Franchisee,” Kerry Pipes, 2013

● Our business law firm has extensive experience in franchise law, offering legal services for both franchisees and franchisors. To learn more about multi-unit and multi-brand franchising, please visit our firm’s Multi-Unit Franchisees & Area Developers page.

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