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The Rise of Multi-Unit Franchise Ownership

By: Bill Bradley

 

The Rise of Multi Unit Franchise Ownership

The franchise industry is seeing rapid growth in multi-unit franchising, and it’s a trend that won’t be going anywhere any time soon. The biggest reason for this is multi-unit franchising provides an opportunity for tremendous (and stable) growth and wealth creation for all parties involved—the brand, franchisor and franchisee. The International Franchise Association (IFA) says multi-unit operators are changing the dynamics of the franchise industry.

But before we get into the details, let’s talk about the biggest difference between single- and multi-unit operators—their business goals and areas of focus.

Single-unit franchisees operate a lot like small business owners. They act as the manager of their franchise and are heavily involved with day-to-day operations. On the other hand, multi-unit operators are more experienced business owners who concentrate on scaling their network of locations. As opposed to relying on the success of one location, multi-unit operators earn revenue from multiple franchised units.

From Single-Unit to Multi-Unit Franchise Owner

Opening your first franchise location is a lot of work. It’s your first time working with this particular franchisor, so there’s a learning curve when it comes to real estate decisions, training, buildout speed, marketing and more. The process takes an immense amount of energy, time and money for both you and the franchisor.

Many single-unit operators consider expanding after experiencing the sweet taste of success. And the best part about opening your second unit is that it’s far easier than the first time around. The more locations you open, the better access you’ll have to capital. This gives you the opportunity to step away from day-to-day operations and groom additional staff to run the business, so you can focus on growth.

Because you already know what it takes to succeed in the franchise system, it often means lower risk for you and the franchisor. Even better, every unit you open thereafter becomes easier and easier to get up and running.

In Business, Growth Is the Key to Success

If you’re already successfully operating multiple units, there’s a good chance you’ll have the desire and capital to expand even faster. Since this isn’t your first rodeo, you probably have strong social capital, including business relationships in your market that help streamline development and operational processes.

If you own multiple units in the same market area, you get the benefit of sharing expenses across multiple locations, including marketing that benefits all units, staff members between locations, supply chain discounts, and more. You may even consider area development or master franchising.

The more locations you have, the more valuable your business becomes. Growth (and hopefully success) naturally follows from there. And, you’re even better positioned to withstand an economic downturn.

Altogether, this makes you a no-brainer investment to a franchisor who wants to use your experience to grow their business, and in turn, yours. It’s why so many franchisors offer discounted fees to multi-unit operators; they’re looking at the bigger picture and aim for steady and long-term growth.

Published: April 30, 2019
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Source: America's Best Franchises

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Bill Bradley

Bill Bradley is founding member and CEO of America’s Best Franchises, LLC.  Bill founded three financial services firms, Ocean Shores Ventures, Denali International and William Bradley Enterprises. In addition, to launching America’s Best Franchises in 2005, Bill orchestrated approximately 20 private equity transactions in excess of $31 million, and launched five specific purpose private equity partnerships.

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