Multi-unit franchising allows a franchisee to open more than one unit.
This type of operation used to be uncommon and mostly considered when franchisees were well-established in their field and ready to grow after years of practice.
Nowadays, multi-unit franchising is quite usual and an opportunity a lot of franchisees consider when first purchasing their business. In fact, according to FRANdata, 52 % of all franchises are now multi-unit operations.
This type of format is made for someone who is comfortable letting go of control and confident in a team of managers to operate the day-to-day business. With multi-unit ownership, franchisees will be responsible on other levels of operation.
There are many pros to owning a multi-unit franchise.
A franchisee who has owned and operated a single unit in a specific field and further develops in that area is well-versed in the market. They know which customers are interested in their business, what areas to invest in and where their strengths and weaknesses lie in the industry. They are familiar with the brand, the operation, the marketing and all other aspects of the business. They may even have created a strong customer base that can be brought fourth to other units.
They would take a lot less time to train and develop, but rather can use their expertise and experience to create a successful outcome. Franchisees can train their managers and staff on site efficiently and easily. They can also apply their direct familiarity with the business to help develop their employees.
Owning many units can obviously increase profit and it is likely that the business is doing well if it is developing further.
Depending on the business and the franchisee, units can cross multiple locations. This can be either positive or negative, subjective to the owner. Some people are able to stay within their hometown and operate a business from their office. Between webinars, conference calls and technology, operating many units across the country has become easily plausible. It’s common for many businesses to function nationally by taking advantage of technology and connecting on many other levels.
However, this could be time consuming and franchisees will have to make location visits and clock a lot of hours on the road. With time and investment, franchisees will be able to balance the many units, whether they are spread far and wide or within the same town.
Franchisees will have to invest more money to secure more locations and some franchises offer discounted prices with more purchases. Owners will have to use their profits to continually invest and for the first while, cash flow may be tighter but as success continues, so will accessible money.
Some of the cons are dependent directly on the capability of the franchisee and the business in which they invest.
Those interested in multi-unit franchises have some past experience in corporate business and can accommodate easily to large-scale ownership. This truly limits opportunity for those considering further development and may decrease the chances of success.
Multi-unit training is limited and franchisees are expected to understand how to take on the business, since they have managed to run a successful single unit operation. Though the franchisee will take on a whole different level of responsibility, they will work with the franchisor more directly but are expected to understand how to juggle many units at once.
Starting a franchise can be a risky endeavor, though it is usually successful. By investing in many units, a franchisee is multiplying their risk. This pressure can be handled by someone willing to invest in their managers and staff and willing to allow them to take over the business.
Those interested in multi-unit franchises should truly grow their first unit to ongoing success. If their first unit can function profitably and properly without the franchisee onsite, with a dedicated and self-sufficient staff, the owner can confidently walk away and consider investing in more units.
A franchisee should consider how another unit will affect them personally, financially and from a business standpoint. There are many questions they should consider before growing their investment.
- Can they properly run multiple units through conference calls, emails and constant across state communication?
- Are they willing to travel to help set up and create a successful business?
- Are they willing to step aside and hire a competent staff to run the daily operations?
- Can they continue growth with less accessible cash flow for a short amount of time?
With technology at the tip of our fingertips, investing in multiple units is easily achievable from a franchisee’s home office. Someone who is willing to train themselves on a whole other level and step out of the operations for a new experience, while also managing their profits for investment properly will successfully benefit from developing their business.
This decision cannot be made lightly, but rather from a strategic standpoint that will consider future outcomes and self-reflection.
That being said, multi-unit franchising is the new norm. It’s becoming an essential and expected investment from franchisees. Those new to the franchising world, should truly reflect on the field and brand they are purchasing and envision whether or not they could operate many units in the future.
It wouldn’t hurt to talk to other franchisees about the risks and benefits they discovered throughout their journey.
Look out for our next special feature: AUTOMOTIVE Franchising
ABOUT THE AUTHOR: After receiving an English Degree, followed by a Journalism Diploma, Gina Gill became a freelance journalist in 2008. She has worked as a reporter and in communications, focusing on social media. She currently works as a community information officer with Epilepsy Society, while pursuing her writing career at the same time.