One of the hottest business growth strategies in the franchise arena today is not simply growing the business you have—it’s expanding your company with the addition of new brands. Known as co-branding, this approach has become very common with food service operations but works equally as well for a variety of other concepts. In fact, many new franchisees are wisely looking to start their businesses with multiple brands instead of just a single-brand operation. Here’s why:

Having two or more brands under one roof allows you to maximize your resources and your profits. Even in today’s challenging economy, the best real estate locations are not always affordable or easy to get. By housing multiple brands, you can approach lease negotiations from a stronger position because you’re getting more space, yet your per unit overhead will be lower than if you had just one brand, which means you can more easily afford that desirable “out front” location.

You might also be able to even out customer traffic if your different brands are seasonal or if they tend to attract customers during different hours of the day. With a single management team overseeing the entire company, you can afford to pay higher salaries and attract top talent.

And you’ll get more mileage out of your marketing dollars.

The key to successful brand add-ons is compatibility in both concept and operations. Even though you’ll be operating the units separately according to your franchise agreements, putting them side-by-side has to make sense.

For example, it’s illogical to add a lawn care franchise to a hair salon but it makes perfect sense to add a tanning, massage or cosmetics brand to a hair salon. Though there will be differences, the operational structures should be similar enough so that a single manager can effectively run both without confusion or conflict.

This is what we’ve accomplished with The Tan Company and MassageLuxe. Both brands—a tanning salon and a massage therapy salon—can stand alone, side-by-side with each other and with other concepts such as fitness centers.

If you currently have a business, adding a new brand with compatible products and services allows you to increase the revenue you are currently receiving from your existing customers even as you increase your customer base through the attraction of the new brand.

For example, we have put a Tan Company franchise in a Gold’s Gym and we’ve also put some units in independent fitness centers. These units provide additional revenue streams for the gym owners. They also increase customer satisfaction and loyalty because they are conveniently meeting a need that wasn’t previously being met at that location. The Tan Company also attracts its own clientele, which then become prospective customers for the fitness centers.

Will it Work for You?

To decide if adding a brand to your current business is a viable option, ask yourself these questions: Is your company established and stable? Are you looking for creative growth strategies? Do you have space in your facility that is not being utilized? Do you have a management and operations team in place that can run things while you work on the process of purchasing and setting up the new brand? Will your existing staff be receptive to cross-training so they can work in both brands? If you are a franchise, will your franchisor allow you to add a brand?

Next, consider what type of add-on will work with your current operation. What additional products and services are your existing customers buying from other companies? If you offer those products and services, will at least some of your existing customers switch from their current provider to you? Is there a market for those other products and services that is also a market for your existing business, so that if customers were attracted by the new brand they might also become customers of your existing company? Make a list, do your market research, and then start shopping for the right brand.

If you are looking for a franchise to purchase, keep the co-branding concept in mind as you shop. It can be cost-effective to start with two brands in one facility because your real estate costs will not be significantly higher and you will probably enjoy some economies of scale with build-out and other startup expenses. If you can’t afford the cost of the second brand at the start, consider including that acquisition in your near- or long-term plans.

An important issue to keep in mind is that you must meet the requirements of the franchisor even as you co-brand. In most cases, that means operating each brand as a separate entity and maintaining its identity.

If, for example, a fitness center wants to add tanning beds as an additional service to its clients, it can certainly do that by simply purchasing the equipment. But if it wants to offer The Tan Company experience under our brand and benefit from our reputation and marketing programs, it must meet and operate under our franchise policies and procedures. This is a reasonable requirement that you should expect from any franchisor.

We are so impressed with success of franchisees who have co-branded The Tan Company and MassageLuxe that we are targeting this strategy in our current expansion plans and are aggressively seeking additional qualified owners who want to establish both of our brands in the same facility. Multiple brands under one roof can work in virtually any type of franchised operation and now is the right time to make this strategy work for you.

Todd Beckman is president and founder of The Tan Company, a tanning salon franchisor, and MassageLuxe, a massage therapy salon franchisor. He can be contacted at (877) 321-5893 or visit www.thetanco.com or www.massageluxe.com.