Can I own more than one franchise?

Owning a franchise can be a rewarding way to run your own business with the backing of an established brand. But can a franchisee run more than one franchise at the same time, whether with the same brand or with different ones?

The answer, as our experts explain, depends on the franchise agreement, the franchisor’s approach and the type of franchise opportunity you’re interested in…

What do franchise agreements usually say about running more than one franchise?

The first thing any franchisee should check is their current agreement. Most agreements include strict obligations on time and commitment.

As John Pratt, senior partner at Hamilton Pratt, explains, “Most franchisors impose an obligation on their franchisees to devote their whole time and attention to the franchise they grant.

“The reason for this is obvious – franchisors want franchisees to ‘bust a gut’ to make the franchise successful. They don’t want other business activities to divert their franchisees’ attention.”

These restrictions can make it very difficult for a franchisee to operate more than one brand, especially without the franchisor’s explicit approval.

So can you own two different franchise brands?

In theory, it’s possible. But Vicky Wilkes, head of legal at Aston Villa Football Club warns that “most franchise agreements will contain a provision prohibiting a franchisee from engaging in a business that competes with the franchised business.”

This means that if the second brand overlaps too closely with the first, you risk breaching your existing agreement.

Is it easier to run more than one franchise if they’re from the same franchisor?

Shelley Nadler, legal director at Bird & Bird, notes that exceptions may exist where brands are complementary: “If a franchisor franchised more than one brand, it may be willing to offer you a franchise of more than one brand. Another option is co-branding. This is a technique that has been used internationally. It involves the same franchisee operating a number of complementary franchises from the same premises.”

Still, franchisors tend to err on the side of caution. As Pratt points out, “It would be most unusual for a franchisor to allow a franchisee to enter into a franchise offered by another franchisor, whether in a related area or not.

“The fear would be that you would not devote sufficient time to both franchises and one franchise would inevitably lose out.”

Can you own multiple outlets of the same franchise?

Yes – in fact, some franchisors actively encourage it. Nadler highlights how this works in practice: “It is often the case in fast food franchises for franchisees to have multiple outlets of the same brand.

“Individual store managers manage these outlets. It is the franchisee’s responsibility to recruit and train suitably experienced staff and ensure that they operate the outlets in accordance with the system.”

Pratt adds that “some franchisors are keen to encourage their franchisees to take additional franchise territories if they make a success of their original franchise purchase.

“Indeed, some franchisors have formalised this arrangement by granting franchisees a development agreement so that if they successfully operate their first franchise they then have rights to open additional outlets.”

However, the franchisor will want to be sure that you have the financial resources and management capacity to handle the expansion.

As Wilkes explains, “If the franchisee wishes to operate the same franchise business in a different area, the franchisor will need to be satisfied that the franchisee has both the financial and practical capabilities to operate both businesses.”

Conclusion

The bottom line is that multi-franchise ownership is possible in certain circumstances, but only with the franchisor’s consent and a clear structure in place.

It is far more common – and often encouraged – to expand by taking on additional units of the same brand, rather than trying to run two entirely different franchises.

As Nadler sums it up, “Whether or not you can own more than one franchise depends on the type of franchise that you operate and the approach of the franchisor.”