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Why You Should Choose a Franchise with Diverse Revenue Streams

When you’re investing in a franchise model, it’s imperative to find a business that both protects your cash flow during tough times, but also provides opportunities for growth.

A key strategy for accomplishing those two goals is filtering your decision making process through this question:

Will this business give me a return on my investment through various sources of revenue?

Franchise businesses that can answer this question with an emphatic yes are more likely to thrive during any economic circumstances.

In this article, we’ll explore several examples of franchises in a variety of verticals who execute on this strategy well, including security franchises, pet clinics and day spas.

Maintain relevance to your customer base

As an owner, you don’t want to be in the business of providing one time services. Your goal is to increase customer lifetime value by continually adding more value to their experience. That’s how smart franchises build revenue as well as retention. They double down on the relationship aspect of business.

PetWellClinic is a veterinary franchise that epitomizes this advantage. They offer convenient, affordable and comprehensive wellness packages made with the pet’s health future in mind. In addition to wellness care like vaccines, chronic condition treatments and elective lab tests, clinics carry a variety of prevention products.

Just read this Yelp review from one of the happy dog owners:

“This staff was amazing. Kind, compassionate, professional & competent. They handled the matter in a way where everyone, including my dog, was safe. My wild dog was happy when he left. I will always take him here now. We are truly grateful.”

When your franchise has customers like this, you want to service their needs in as many ways as possible. Considering OakScale's Pet Industry Analysis reports that that $99.0 billion will be spent on our pets in the U.S. this year alone, taking the opportunity to diversify is barking up the right tree.

Ultimately, when your business diversifies its revenue streams, you stop being a vendor and start becoming a source of holistic improvement for your customers. Now you can meet their most pressing needs in more ways than one, which ultimately makes them love you more over time. If you think dogs are brand loyal, wait until you meet their owners. Woof!

(By the way, PetWellClinic Recently made headlines when they signed a record 23 unit franchise development agreement with a multi brand franchise owner. They're barking up the right tree!)

Protect your business during downturns

Covid certainly showed how quickly even the hottest markets can cool. And it won’t be the last time that happens. Forces of nature and other global events over which we have zero control will continue to hurt small businesses. For that reason, pursuing franchise opportunities within multiple income streams is a key part of job security over the long term. You’ll want to insure your franchise holds up even if the economy slows.

Speaking of safety, let’s look at an electronic security franchise to drive home this next point. Surveillance Secure has been offering integrated access control systems (including touch-less solutions), video analytics, and perimeter sensors for many years. This electronic security franchise also offers cloud storage for its electronic security solutions with remote client access and 24/7 support.

But they made headlines in 2019, when after fifteen years in the business, they decided to launch their franchise opportunity. Now entrepreneurs who have a passion for customer support and business development (even if they don’t have a background in IT or security) have been excited about joining this brand. 

With their comprehensive safety and security solutions for facilities, employees, and merchandise, economic downturns aren’t preventing these franchisees from thriving. This well diversified security franchise has grown in recent years into a highly attractive business opportunity to meet the needs of a growing industry.

Are you pursuing diversified franchise opportunities like this? If so, then you can feel confident in the success of your business. Surveillance Secure is merely one example of a brand that gives owners the best chance of higher average revenue accrual per unit. But just remember, the whole is greater than the sum of the parts. The other key to diversified businesses during economic downturns is that all of your business lines cross sell one another, which can lead to an overall uptick in profit.

Adapt to changing markets over time

Four words: Financial resiliency and flexibility. This is your final reason for investing in a franchise with diverse revenue streams. Doing so will buoy your brand in the face of trends and changes as the industry evolves.

A Moment’s Peace is another great example. This salon and day spa franchise offers customers numerous products and services to help them relax, rejuvenate and get the most out of their “me time.” They have ten distinct revenue streams in one spot, from beauty services to gift products to spa parties and special events. This is precisely what makes their franchise both scalable and sustainable.

According to recent financial reports from A Moment’s Peace, their franchise has higher average ticket and gift card sales than the national average. Diversity of revenue streams is a cornerstone of the stability of their financial model, and a big contributor to consistent revenue growth and out performance of industry norms.

Not every franchise can say that. Which is why many businesses are struggling as the norms of culture, economics and business are changing. Wherever you ultimately invest your dollars, make sure product and service diversity gives you the flexibility and resilience you need to sustain profit over five, ten and twenty years.

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As a reminder, here’s the question potential franchisees should always be asking:

Will this business give me a return on my investment through various sources of revenue?

Whether you invest in a security franchise, pet clinics, day spa or some other business, make sure you are protecting your cash flow during tough times, and also providing opportunities for customer growth and loyalty down the road.

Scott Ginsberg is the Head of Content at FranchiseHelp. His first piggy bank became bacon 36 years ago.

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Jesse: Ladies and gentlemen, thank you for standing by, and welcome to the FranchiseHelp, Inc. Understanding the FDD for Franchisors Conference Call. During the participation, all participants will be in a listen only mode. Afterwards, we will conduct a question and answer session. If you have a question, please press the 1 followed by the 4 on your telephone. Your line will be briefly accessed from the conference to obtain the information. If at any time during the conference you need to reach an operator, please press star zero. As a reminder, this conference is being recorded Wednesday, May 7th, 2008.

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