Multi-Unit Franchise Ownership: A Promising Model

March 16, 2018 12:00 am Published by

Do you want your franchise network to develop quickly? Then perhaps you have already thought about multi-unit franchising. This business growth model helps your banner get well-established in a certain territory by boosting brand awareness and reputation among customers. It is also a good way to have fewer franchisees to support, to build better relationships with franchisees as all communications become simpler and faster, and to reduce the risk of having underperforming franchisees. It is also a great way to cut your costs: less training needed, less staff support, less recruitment costs, and easier access to financing for franchisees who wish to open additional points of service. Pretty attractive, right? But are you really ready for this strategy?

First of all, make sure that multi-unit franchising is consistent with your business concept. Do you have a strong organizational culture? Can it be used in the context of multi-unit franchising? What is your relationship with your current franchisees? Do you have an effective recruitment process in place? Multi-unit franchising is not for everyone. Candidates must prove themselves and must be ready to live a different experience. Just like some employers making the mistake of promoting their best employees into higher management positions, resulting in these employees feeling stressed out and unhappy simply because they are not cut for the job, multi-unit franchising may not be the right route for some franchisees. Make sure that your franchisees with the potential to acquire several points of service actually have the will, attitude and skills for it. Their life will certainly change when they run 2, 3, 4 or even 10 franchises.

Moreover, if your network is not structured for multi-unit franchising, there is a risk that some franchisees who have more power because of the number of points of service they own would want to play a more central role. As a result, strained relationships with other important franchisees could affect the health of your network. Hence, an excellent working structure and good relationships across the network are essential for the success of this model.

Multi-unit franchising also implies certain ideal franchisee profiles. You may need to adapt your existing practices and processes in order to be consistent with the identified franchisee profiles. For example, such entrepreneurs must have strong management skills, even stronger than single-unit franchisees. As a franchisor, you are to adjust the level of your support to continuously challenge and push multi-unit franchisees to excel at their game, while taking into account the evolution of your business model.

According to the Fédération française de la franchise (Annual Franchise Review 2016), 28% of franchisees operate several points of service under the same banner, while only 14% operate several points of service under different banners. Among those operating several points of service under the same banner, 16% have 2 locations and 12% have 3 and more locations. Nearly 3 franchisees in 10 (28%) plan to invest in another point of service, mainly in the same network, showing a steady trend since 2013. Entrepreneurs in the 18-34 age bracket are the most ambitious ones: 43% of them consider opening another point of service under the same banner, compared to just 8% in 2009.[1] It is a promising concept with great potential. However, you must be ready and well prepared for it.

FlagFranchise team