MULTI-MANIA
MORE FRANCHISEES THAN EVER ARE ADDING NEW UNITS
Franchisees are an optimistic lot , expansion-minded , on the grow , always alert to new opportunities . And for them , multiunit franchising represents one of today ’ s most attractive opportunities . Whether it involves increasing the number of units of their current brand or adding new brands to their holdings , the allure of multi-unit franchising is attracting the best and brightest franchisees in the business with increasing frequency .
During the past 20 years , what began as a trickle has become one of the hottest vehicles for building a business rapidly and sustaining it through the years . FRANdata puts the number of multi-unit operators at more than 40,000 , and they control more than 200,000 franchised units in the U . S .
Successful multi-unit operators are a different breed than the single-unit franchisees they are displacing . Light years beyond the old “ buying a job ” mentality , they are skilled , professional business executives who have chosen franchising as their business model . They possess the skills , training , capital , infrastructure , and vision to keep adding units to their portfolio — without stressing their organization or their stomach .
Even during the recent economic upheaval , savvy multi-unit franchisees continued to expand , especially in QSR and in services such as senior care , hair salons , massage , home maintenance , children ’ s activities , pet care , and more . After all , if you can make money with one unit you can make even more with two , three , or more , right ?
Well , yes — but it takes a certain skill set , dedication , and infrastructure to make it all work effectively and efficiently . If you ’ re a regular reader of Multi-Unit Franchisee magazine , especially our ongoing profiles of successful multi-unit franchisees , you know exactly what we mean .
All the right pieces must be in all the right places for a multi-unit franchise organization to succeed . If they ’ re not , the results can be disastrous for both franchisee and franchisor . At its best , however , multi-unit franchising allows franchisees ( and franchisors ) to increase their unit count , market penetration , and profitability more rapidly than a single-unit owner ever could .
Multi-unit franchising already has altered the landscape of franchising in many ways , and will continue to do so . In recent years , private equity has “ discovered ” the profit potential of multi-unit franchising , buying into multi-unit franchise organizations or acquiring them outright — even doing the same with franchisors . And you know they appreciate the benefits and value of a diversified portfolio !
IF YOU HAVE THE BACKGROUND , EXPERIENCE , AND DRIVE TO TAKE ON THESE CHALLENGES , THEN MULTI-UNIT FRANCHISING OFFERS YOU A PATH TO ACHIEVE YOUR DREAMS .
According to franchise attorney Lane Fisher , “ The emergence and growth of multi-unit franchisees is having a profound effect on franchising . It is rapidly changing prospective franchisee screening standards , the quality and substance of existing training and operational support , pressuring franchisors to make financial performance representations in their franchise disclosure documents , and affecting the way contracts are written by redefining ‘ non-negotiable ’ rights and deal breakers .”
Fisher says that although multi-unit franchising is clearly a growing trend , particularly in food , it is not appropriate for all opportunities . “ Sometimes it is a function of timing , as many new franchisors use various forms of multi-unit franchising to grow in early stages ; or in other cases the unit economics simply will not support the additional layers of infrastructure to make the investment worthwhile ; and in other cases multi-unit expansion is at odds with corporate philosophy , or the lack of expansion capital in a particular industry .”
In other words , while multi-unit franchising is the way to go for any franchisee seriously looking to grow their organization , it ’ s not a slam-dunk , it ’ s not for everyone , and it ’ s far from easy . In fact it ’ s hard work , and fraught with failure . Successful multi-unit franchisees must do at least three things well :
1 . You must be able to finance the additional locations / territories . That means deep pockets , or at least access to deep pockets . This often requires business partners and / or lenders who then have skin in the game and can influence the way you conduct your business . This is an important reality to keep in mind if you are an independent thinker and operator .
2 . You must be able to form an organization with a management team and infrastructure to command your expanding empire . You may be able to remain hands-on with a handful of units , but when you reach 10 or more it ’ s no longer feasible for you to oversee day-to-day operations . At some point , you will need to bring in a team to handle everything from operations to finance to marketing and HR . You must learn to delegate and get out of the way .
3 . Leadership is the final ingredient . You come to the game with vision , ambition , and inspiration . The challenge is communicating these crucial intangibles to your expanding organization and keeping them intact as they filter down to your unit managers and frontline staff through your in-house team . Necessary and achievable ; never simple nor easy .
If you have the background , experience , and drive to take on these challenges , then multi-unit franchising offers you a path to achieve your dreams . But you can ’ t do it alone . Rely on people , partners , and delegation — plus a large helping of your own passion , patience , dedication , and hard work — and yes , you can grow a multi-unit empire .
Multi-Unit Buyer ’ s Guide 9