Already own a successful franchise and wondering how else you can grow your entrepreneurial ventures? While many franchisees choose to open additional units under the same brand, you might be asking a different question: Can you own multiple franchises from different brands?<\/p>\n\n\n\n
While undoubtedly complicated, opening a franchise location with a different brand is possible. In this article, I\u2019ll break down everything you need to know about multi-brand franchise ownership.<\/p>\n\n\n\n
The short answer: yes. <\/strong>In most cases, you can own franchise locations from different brands if your FDD allows it. However, this doesn\u2019t mean it\u2019s always a good idea.<\/p>\n\n\n\n Most franchisees start by expanding within the same brand<\/a>, but many franchisees choose the multi-brand route, often called “multi-brand ownership”, to spread risk and open new opportunities.<\/p>\n\n\n\n Research by FRANdata<\/a> revealed that among franchisees owning more than 25 units, 41% operate across multiple brands<\/strong>, averaging four different names in their portfolio.<\/p>\n\n\n\n Owning multiple franchise brands isn\u2019t just for the mega-investors. It\u2019s become a realistic growth strategy even for franchisees with only one or two units under their belt. But just because you can doesn\u2019t mean you should<\/strong>, and it definitely doesn\u2019t mean it\u2019s easy.<\/p>\n\n\n\n When you own multiple brands, there are more employees, more brand requirements, and more moving parts. Of course, the payoff is more profit and diversification, but it\u2019s important to understand all of the complexities and risks before pulling the trigger and purchasing a franchise<\/a> under a different parent company.<\/p>\n\n\n\n While multi-brand ownership is often possible, some franchisors draw a hard line. Your franchise agreement is your key to understanding if it\u2019s allowed or not. Your FA may restrict you from owning or operating any other business, especially if it\u2019s seen as a distraction or a conflict of interest.<\/p>\n\n\n\n If you\u2019re exploring ownership with a second brand, I can\u2019t stress enough the importance of knowing what your current contract allows and what it doesn\u2019t.<\/p>\n\n\n A clear, step-by-step breakdown to help you decide if franchising is right for you\u2014and how to get started.<\/p>\n\n\n\n\t\t\t Some brands are very protective of your time and focus. These parent companies may bake in restrictions into the franchise agreement<\/a>, blocking you from operating other businesses. If you\u2019re considering buying into a second brand, here are the main areas in your franchise agreement or FDD<\/a> to look at:<\/p>\n\n\n\n These clauses usually show up under territory rules or restrictions in the FDD. They exist to stop you from owning or operating a business that directly competes with your current franchise, often within a certain geographic area.<\/p>\n\n\n\n For example, if you run a franchise sandwich shop, you might be restricted from opening anything food-related within 10 miles of your location.<\/p>\n\n\n\n A non-compete goes a bit further than exclusivity. These clauses don\u2019t just limit what you do during the life of the franchise; they may also restrict what you can do after you exit the brand.<\/p>\n\n\n\n For example, let\u2019s say you sell your fitness franchise. A non-compete might prevent you from launching or working with another gym in the same region for a certain number of years, even if it\u2019s your own concept. This protects the franchisor from having former insiders use what they\u2019ve learned to become direct competitors.<\/p>\n\n\n\n These rules typically live in Item 17 of the FDD. Check out my breakdown on how to properly read the FDD<\/a> for a more in-depth breakdown of this.<\/p>\n\n\n\n These are broader clauses that give the franchisor power to deny you from running anything they deem to be a distraction or a competing priority, even if it\u2019s not in the same category.<\/p>\n\n\n\n For instance, if you own a childcare tutoring franchise and want to invest in a swim school, the franchisor might see that as pulling focus from your obligations to their brand. That may sound harsh, but from their point of view, they\u2019re protecting brand quality and consistency.<\/p>\n\n\n\n Conflict clauses often come with vague language like \u201cany business that competes with or interferes with the franchise,\u201d which can be interpreted pretty broadly. I highly recommend clearing up any vague language with your franchisor to avoid confusion or disputes down the line<\/a>.<\/p>\n\n\n\n Even if the two franchises serve different customers, the franchisor may not want you operating another business in the same physical area. Why? Because your attention and loyalty are split, this can affect staffing, marketing, and community reputation.<\/p>\n\n\n\nWhen It Might Not Be Allowed<\/h3>\n\n\n\n
Download the First-Time Franchisee Guide<\/h4>\n\n\n\n
What to Look for in the Franchise Agreement (and FDD)<\/h2>\n\n\n\n
Exclusivity Clauses<\/h3>\n\n\n\n
Non-Compete Clauses<\/h3>\n\n\n\n
Conflict-of-Interest Restrictions<\/h3>\n\n\n\n
Territorial Overlap<\/h3>\n\n\n\n
Other Things to Look Out For<\/h3>\n\n\n\n
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