Person reviewing investment trends

As a franchise owner, you’re in business not just to earn a living, but also to make money. That means treating your franchises as investments and looking for ways to maximize profit. The most obvious way to do this is owning multiple units of the same franchise in different markets.

Multi-unit franchise owners are usually more focused on growth as, theoretically, profits rise exponentially with the number of locations you own. And multi-unit franchising is more popular than ever. According to Entrepreneur Magazine, more than half of all franchises (54%) are owned by multi-unit franchisees.

The multi-unit model is especially appealing to absentee or semi-absentee owners who run their franchises solely as investments.

But, as with any investment, franchise owners should also consider the benefits of diversification.

What is Diversification?

Diversification is allocating your investment dollars strategically among different assets to manage risk. In other words, you’re not putting all your eggs in one basket. There are no risk-free investments, and anyone who tries to sell you one is lying.  Different investments grow at different rates — some are riskier than others. That’s why mutual funds are popular. A good money manager will combine safer, slower-growth stocks or bonds, with riskier, higher-return investments to balance your portfolio. While some may lose money, others will grow, keeping you at an acceptable rate of return.

4 Benefits of Diversifying Your Franchise Portfolio

Diversification is as important with franchises as it is with other investments. Benefits include:

  1. Reducing your risk.

It’s often said with high risk comes high reward. But high risk can also come with big losses. If you own several different types of franchises, even if some aren’t doing well, others will still be earning money.

  1. Insulating yourself against changes in the economy.

Some businesses are what’s known as “recession resistant.” They provide goods and services that are necessary, no matter how the economy is doing. For instance, if homeowners are victims of fires or floods, they cannot put off calling a home restoration company. But, if the economy is trending toward a recession, they may put off that big home improvement project they were planning. Owning a variety of franchises increases your chances of maintaining income streams even when the economy dips.

  1. Taking advantage of the needs of specific markets.

Even the most popular big-name franchises don’t perform the same in every market. Maybe there’s too much competition to support another coffee shop or pizza place.

You need to research each the market to uncover the needs of your targeted consumer.

  1. Cross promotion.

Diversifying your franchise portfolio allows you the chance to cross-promote your different ventures. If you own complementary brands, the customer base for all your businesses may be similar. For instance, if you own a remodeling franchise and a redecorating franchise, customers of one will likely be interested in the services of the other.

Home Franchise Concepts Can Help

Every time you buy a franchise with a different company, you’re starting over. You must learn the ins and outs of that particular product or service as well as the business model provided by the franchisor. And while most franchisors are reputable, there are some that are not. Invest in one of those and you may not get the training and support necessary for your franchise to succeed.

If you are looking to diversify, consider franchises offered by highly regarded companies with proven track records. Home Franchise Concepts, in business for three decades, is one of North America’s best known families of brands in the thriving home improvement industry. Currently, we are nine brands strong: Budget Blinds®, The Tailored Closet®, PremierGarage®, Concrete Craft®, Kitchen Tune-Up®, Bath Tune-Up®, Two Maids®, AdvantaClean®, and Aussie Pet Mobile®

Each brand offers strengths for investors looking to diversify their portfolio. And, since they all fall under the home improvement/home services industry, there are many opportunities for cross promotion if you own multiple Home Franchise Concepts franchises.

Contact Us Today

If you’re interested in finding out more about how you can diversify your franchise portfolio, contact Home Franchise Concepts today. One of our franchise advisors will share more about each one of our brands, so you can see which brand is the right fit for you.