So you have successfully franchised your business. It's been bringing in fantastic revenue for a couple of years. And now, you are seeking expert franchise advice to determine whether it’s time to diversify your business or stick to the same lane!

Well, you have probably heard the phrase “never put all your eggs in one basket”. It's wise advice that applies to many life scenarios, including your franchise business model. Depending on a single source of revenue makes your business more vulnerable to losses and disaster. 

That's why most companies prefer diversifying their franchise portfolio or building upon their existing business. 

So, which option should you choose to improve and secure your revenue?

Advice On Expanding Your Franchise: To Double Down Or Diversify?

Opening and running the first franchise is always the most demanding process. Once you have successfully tackled that step, you can take all your time to plan the next move. Your experience and market knowledge will help you choose the correct path to expand your business.

For now, here’s a comparison between the benefits of diversifying your business and sticking to the familiar path.

What are the benefits of diversifying your business?

1. More opportunities and returns: 

Regardless of the industry you are operating in, diversifying your business will bring more opportunities for you. You can make more money and get more profitable returns. Plus, if your primary business is not working well, you can still manage to get resources with the profit of your diversified portfolio.

The more extensively you diversify the portfolio, the less risk there will be of all the franchises struggling simultaneously. So, create franchises catering to diverge industries or markets to protect your business from market recessions. Get expert franchise advice on what products and services you can sell besides your current franchise.

2. Cross-promotion to different markets:

Opening complementary firms is another perk of diversifying your franchise. The businesses can be entirely different, yet you can use them to promote each other. By picking the correct franchise, you can co-market the brands and help push both of them. For instance, if your first franchise is a bakery, you can diversify it to create a product and equipment line for baking. You can sell cutlery, cake decorators, party decorations and other related items.

However, if you are a franchisee, check restrictions and contract terms enforced on or by the franchise owner.

3. Lower risks: 

Spreading your portfolio may seem like a daunting task at first. However, it will lower your financial risks in the long term. It will give you plenty of room for returns. And even if one of your brands goes down, you can still survive depending on the other brands.

Why may you choose to stick to the same market?

1. It’s familiar

One of the most common reasons for business owners or franchisees not to diversify their ventures is the comfort of staying in a friendly market. It means you don’t have to learn about the business location, market trends and other aspects. You can utilise your existing knowledge to apply it to your new business or take franchise advice from specialists.

2. Consistent growth

Sticking to the same brand has its own benefits. You have already established connections and relationships and aced your marketing strategies. It will give you a leg up over your competitors. If you are a franchisee, you can expect more support, location assistance and deals from your franchisor. Building on your existing franchise also means you already have trusted suppliers and vendors to help you get better deals for your new branch.

3. Diversifying is challenging:

Diversifying can be complicated in the franchise market, especially if you don’t have expert guidance. You will have to spend time identifying your target market and suppliers and ensure no overlaps with your current franchise.

What’s Your Choice?

Diversifying your franchise business or building on the existing one- both has their perks and cons. If you have a hard time determining which option is best for you, follow these tips:

1. Focus on your skills: Assess your skills and find out which type of company you want to tap into.

2. Keep an open mind: If you get an opportunity to diversify your business, keep your mind open and take your time to analyse its aspects.

3. Utilise your experience: You have already gained much business knowledge and experience. Use this wisdom and understanding to assess new opportunities and evaluate their risks. 

Final Thoughts

Hopefully, these points and expert franchise advice will help you determine whether you want to diversify your franchise or stay in the same market. Both of these options have their own benefits and cons. The key is to analyse your targeted market, skills, resources and risks to identify the best option for you.

Author's Bio: 

Author is a professional franchise consultant and author from Sydney. He offers advice on different types of business models and market research.