Multi-Unit Franchisees are People With Vision, Skills, and the Financial Wherewithal to Manage and Scale a Business
If you are considering franchising you may be thinking about starting small and adding additional units in the future. The strategy makes intuitive sense but depending on your long-term goals and financial situation it may not be the best approach.
I am a strong proponent of multi-unit franchising. Indeed, over 50% of my clients invest in multiple units. A multi-unit franchisee invests in more than one unit, typically in the same geographic area. In my experience, the primary reason that many people do not join with multiple units from the beginning is that they are not introduced to the idea or do not understand it.
Multi-unit franchisees are people with vision, skills, and the financial wherewithal to manage and scale a business. They are empire builders and have confidence in themselves and the concept they join. They are also intentional and deliberate about their growth. Toward this end, franchisors will help them create a development plan that sequentially launches their units. This lets you apply your resources in a way that helps you maximize your success.
If you are considering launching multiple units the time is always now! With leading brands, you need to act quickly. If you do not purchase multiple units when you have the opportunity, they may be sold out when you want to add them. This can leave you short on your growth strategies.
By investing in themselves, multi-unit franchisees are able to protect their territories and set up large businesses. All franchisees are different. For growth-oriented franchisees, multiple units allow them to scale significantly more than they can with single units. The power of multi-unit franchising lies in several factors.
The Benefits of Multi-Unit Franchising
Greater Income Potential
Successful franchisees understand the concept of scale. You can grow an empire more deeply by penetrating the market and also by adding additional territory. Assuming all units are created equally, with three units, you should be able to generate three times the revenue than a single unit. The increased revenue not only means a greater net income but also provides franchisees with additional options on how to run their business.
Many of my candidates want to build their businesses and eventually transition into semi-absentee ownership. Said differently, they want to be able to spend less time in the business over time and create a better work-life balance. It is difficult to reduce time commitment without hiring someone. The higher revenue and income that multi-units provide offers the financial ability to do just that.
Franchisors provide financial incentives to franchisees who purchase multiple units at the same time. In addition, some franchisors charge lower royalties when franchisees reach certain revenue breakpoints and those numbers are based on a franchisee, not the individual unit.
Further, the average cost of each unit can be reduced by spreading fixed costs across several locations. For example, you may need only a single truck to support three units. In addition, you may gain economies of scale and secure better pricing from vendors. All of these factors can significantly improve the cost economics of multiple units.
Reduced Staffing Expenses/More Skilled Staff
Multi-unit franchisees generally have adjacent locations or at least ones that are in a close geographic area. This allows franchisees to transfer staff based on the business needs of the locations, leading to reduced staffing expenses and a stronger, more skilled staff.
Franchisees learn a lot about their businesses when they open their first units. They can leverage that operational expertise as they scale. This allows them to launch and run subsequent units more effectively from the start. They can use experienced staff from their first units to help open additional ones. The expertise generates better operational and economic results more quickly.
Owning multiple units also reduces risk. It provides more opportunities for success and diversifies, geographically, your investment.
As you can see there are many benefits to owning multiple units of the same franchise. If you are an empire builder, this could be the approach to make your franchise dreams come true!