Whether you already own a franchise or are thinking about purchasing one, you may be wondering: is multi-unit franchising the right choice for you? Buying multiple units requires a substantial investment, so it’s important to take a close look at this model first.
What is Multi-Unit Franchising?
Multi-unit franchising has grown in popularity over the past few decades. With this ownership model, a single franchisee owns and operates more than one unit, usually within the same general area. Often, the owner buys several units and starts by opening one, then eventually expands to additional locations. Multi-unit ownership provides a great chance for growth and wealth creation.
Your role as an owner will change depending on whether you own a single franchise or multiple units. Owning one location typically means you’re at the store every day and manage the day-to-day activities. As a multi-unit owner, while you’re still involved full-time, your focus shifts toward expanding the business and managing the bigger picture. In this case, you’re more likely to hire a manager to handle the daily operations.
Advantage: Stability
When it comes to growth and performance, your chances of success increase with multi-unit ownership. Your overall results will be more stable since they won’t depend only on one location. For example, if one location has a downturn, the other locations may offset this with higher business.
Advantage: Economies of Scale
Owning multiple units helps lower costs per unit because fixed expenses are spread across several locations. These economies of scale can apply to costs like purchasing inventory, marketing, staffing, and training, making the business more profitable and efficient over time. This is particularly helpful in industries with low profit margins.
Advantage: Potential for Higher ROI
Due to cost savings, reduced expenses, the benefits of economies of scale, and a higher chance of success, multi-unit franchise ownership can lead to a higher Return on Investment (ROI).
Advantage: Increased Influence
Typically, owning multiple units gives you more influence within the franchise system. The franchisor is more likely to consider your feedback and needs.
Thinking About Multi-Unit Ownership?
Keep in mind that a larger initial investment means more risk at the start, although the risk will be spread out across multiple locations over time. While multi-unit ownership can be more profitable in the long run, it may take longer to see results. There are various approaches to multi-unit ownership. If you plan to open multiple units right away, carefully consider the financial investment and time commitment involved.
Both single-unit and multi-unit franchising offer opportunities, challenges, and rewards for those willing to put in the time and effort to succeed. Is multi-unit franchising right for you? Ultimately, deciding which path suits you best depends on assessing your personal goals, capabilities, finding the right franchise, and making an informed decision.
