Multi-Brand Franchising May be Declining

Multi-brand franchising, where several different franchise brands, often in different industries, are held by one conglomerate, may have max'd out.

According to an article at bluemaumau, a franchise blog, some franchise experts are saying that buyers should be wary of conglomerates.

"Franchise conglomerates, those holding companies that own multiple franchise systems and brands, can buy various brands within their own niche, such as Raving Brands buying restaurant brands. Or conglomerates can be as diversified as athletic shoes and ice cream, as troubled NexCen Brands is," the article reported.

The bluemaumau article continued, "Darren Tristano, Executive Vice President for Technomic, Inc., a restaurant and vendor consultancy that tracks the 500 largest restaurant chains, thinks there has been a surge of franchise conglomerates over the past few years.

"But where conglomerates were once buying companies, they now are trimming down. Tristano also thinks the future of these franchise conglomerates is shifting away from multi-brands. He states, 'Over the course of time, we've seen Wendy's move in that direction with Tim Horton's, Baja Fresh, Café Express, Pasta Bravo. But they have divested from that.'"

"Metromedia Restaurant Group, parent to the Bennigan's, Ponderosa and Bonanza brands, has denied a report that it was ready to file for bankruptcy and said Wednesday that it was working with its lenders to restructure its debt," also according to the blog.

This means that buying a franchise from a successful independent franchisor, where there may be a simpler structure, with personalized support, will be attractive to many new franchise buyers.

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