Small business resource Chron recommends that franchisees consider the benefits of expanding their business. A second location allows business owners to leverage customer loyalty and take advantage of existing market opportunities. Take time to research the issues that could impact your expansion success before breaking ground on a new store.
Current revenue
The first step in considering a second franchise location is to evaluate the performance of your first store, according to Entrepreneur. Your initial franchise is likely providing a tidy profit if you're already considering your next move. However, the investment required to start a second franchise is similar to the cost of the first. Be sure to review your revenue stream and include a budget for unseen expenses. Afterwards, approach a lender for insight on your available credit.
Market trends
No franchise can be successful without the support of a healthy market base. However, the customers who frequent your first store likely won't be making the commute to your second location. Franchisees will have to start from scratch when it comes to researching demand and determining if a market exists for their second store. Thankfully, franchisors offer additional support in this arena for ambitious owners looking to expand. Lessons about the market learned from managing your first store will inform your entrepreneurial instincts, notes the U.S. Small Business Administration.
Employee performance
A major factor to consider when evaluating your expansion options is the strength of your current employee pool. A group of dedicated, reliable employees reflects a healthy work environment and will contribute to the success of your store. Franchisees are likely remiss then to open up a second store without resolving personnel issues that exist at the first. Furthermore, a network of strong employees will create a set of familiar faces that can be groomed for management. You can create a consistent work culture between the two stores by transferring strong employees from one location to the other.
Personal confidence
The final step in deciding to open a second franchise location is a gut check. You should feel confident and comfortable with the idea of doubling your risk and responsibility before expanding your business. Be sure to take stock of the opinions of friends and family. A reliable network of personal support will sustain your motivation as you overcome the challenges of operating multiple locations.