The nuts & bolts of franchise growth strategies

Hey readers!

Whenever I work with someone to buy a franchise, we talk through their long-term growth plans. 

Fundamentally, there are two types of growth you can pursue.

So today let’s take a quick look at:

• horizontal vs vertical expansion.

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Horizontal growth is when you buy or start more units of the same franchise. 

Often this means expanding into new territory, but not always. If a franchise is doing unexpectedly well in a particular area, the brand might choose to add more units and increase their density. 

If your goal is horizontal growth, it’s worth buying more territory up front to protect your rights to those areas. 

The tradeoff? You’re forced to commit more upfront. 

Sometimes this is worthwhile, and there are definitely circumstances that warrant it. But generally I’m all about keeping your options open (looking for those ↗️3 E’s of franchise ownership).

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Vertical growth means operating multiple different brands in the same market. With more moving pieces, your strategy gets more sophisticated. 

When you’re looking to grow vertically, you have to choose your priority: diversification or synergy? (And yes, it’s a business buzzword punchline, but stay with me here.) 

Synergic businesses share resources and/or benefit one another. 

Let’s take a hypothetical bathroom renovation business. Three types of synergy worth considering:

• Real estate. Home services businesses can be pretty light on brick & mortar real estate. You could buy or start another business that shares warehouse or shop space. 

• Staff. High-ticket, non-recurring home services like renovations often have very similar sales functions. You could share sales staff, or even hire a single operator to oversee both managers.

• Customers. Find ways to sell multiple services to the same customers. Interior design, cabinetry, other renovations — what are you existing customers already buying? 

Diversification, on the other hand, means you’re de-risking from one particular vertical. 

If you feel like the macro-environment is looking unfriendly to home services, you might want to get into something totally different.

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There’s no one-size-fits-all answer to franchise growth. 

(If there were, nobody would pay me for franchise strategy.)

It comes down to you: your risk tolerance, your experience, your resources… and what your big picture goals are from business ownership.

If you’re ready to move on this, give me a call and let’s make it happen!

Got 59 seconds?

Magic Johnson made $40M playing basketball. Now he’s worth $1.5 billion. Here’s how, in 59 seconds.

Thanks for reading!

If you have any questions, just hit reply to this email — or book a call and talk to my team!

• Connor

P.S. I have two free online events coming up. Sign up and come learn something!

• May 1st: Anatomy of a Franchise Holdco, with Will Smith from Acquiring Minds. What does it actually look like to own a bunch of franchises? We’ll be getting into the real nuts and bolts. RSVP here!

• June 12th: The 3 Hottest Franchise Models in 2025, with Michael Girdley. I make a living helping people buy franchises. But I’d rather quit than set people up with these ones. RSVP here!

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