Expanding a franchise concept through multi-unit agreements has benefits for both the franchisee and franchisor.
The franchising industry is booming with new brands creating more options for franchisors and franchisees. Individuals can fulfill their dreams of owning their own business through franchise ownership. One of the hottest forms of franchising is multi-unit franchising.
Over the past few years, there has been a steady expansion of multi-unit franchising allowing franchisees to operate more than one unit in a given territory. This attractive opportunity for entrepreneurs has grown drastically and multi-unit franchisees now own 53.9% of the total franchise units in 2022.
Choosing multi-unit franchising may be the right strategy for your new business venture.
The Franchisee
A multi-unit franchise can be a great opportunity for you to expand as a franchisee if you are ready. Are you excited about the brand, enjoy the people you are working with at the franchise company, and have access to capital to develop multiple units? Some benefits of multi-unit franchising include the ability to build a larger management team and leverage them over more than one operation, streamline advertising and marketing expenditures for all of your locations, and increase sales to build more financial wealth.
Oftentimes there is a financial benefit by signing on as a multi-unit operator in a franchise system. Typically, the franchisor will reduce the upfront franchise fee if you commit to purchase more units when you sign on. The agreement may allow you to have the rights to a development schedule for expansion in your area with multiple locations or territories over a period of time.
When one has the rights to develop multiple units, the franchisor is as committed to you as you are to them. When expanding to more units you and the franchisor will agree to the timeline in opening those locations. Once you have your first location or territory open, the operations behind opening your second, third, or additional units will get easier to operate and your systems will become more streamlined given your knowledge and experience.
Build a trusting the team to help you open more than one unit.
Another benefit of having centralized locations or territories is the ability to travel between them more easily, share staffing resources, and reduce overhead expenses needed over more than one location.
Keep in mind, opening multiple units across your designated geographical region can come with some challenges too. It is impossible for a multi-unit franchise owner to be physically present in every location at the same time. While you may feel the desire to control every facet of unit operations, multi-unit expansion will require you to implement an infrastructure of both management and staff whom you can count on. You will need to delegate responsibilities to a trusted team who is ready to help you grow. If you are not willing to give up some of that control and need to be involved in every aspect of the business operations, then multi-unit ownership might not be right for you.
The Franchisor
For the franchisor, multi-unit expansion can be a great strategy as it typically helps with accelerated growth of the franchise brand. This is a significant commitment for the franchisor to make so you need to find the right multi-unit franchisee who can expand the brand, opening additional units as promised on the development timeline.
A large benefit of multi-unit expansion is the trusting relationship you can build with the right franchisee or group who wants to grow and build your brand. This deep connection can be immensely beneficial to both parties, leading to a stronger business for everyone.
Each unit in the territory or region will be opened by the same franchisee; therefore, creating less challenges and having strong operational stability with the right franchisee. By having this uniformity across the business, it should result in a more organized business plan for growth and allow you to focus on fewer franchise partners to work with as they open multiple units or locations. Both the franchisee and franchisor will be able to grow and expand their businesses faster than with single unit franchisees.
Faster growth of units and sales revenues.
Is Multi-unit Franchising Right For You?
The multi-unit approach has increased in popularity over the last several years because of its many benefits for both the franchisee and the franchisor.
· Accelerated brand growth
· Stronger franchisees
· Faster revenue growth
· Established franchisors
No matter which side you are on, it is important to look at multi-unit franchising from the perspective of your goals, adequate access to capital, and the right level of support to make the brand and each individual business a success.