By Charles J. Bonfiglio
A proven franchise brand empowers its franchisees to enjoy the benefits of owning their own business while helping mitigate the challenges associated with independent small businesses. Successful franchisors can offer repeatable, easy to implement systems and solutions that support franchisees throughout the lifecycle of the business. Those shared systems serve as a foundation for franchise success, unlocking meaningful opportunities for flexibility and financial independence.
The benefits and advantages inherent to the franchise model are amplified when a single franchisee owns and operates additional locations. Franchisees who want to see their opportunities grow exponentially can take the experience to another level with multi-unit franchise ownership.
Whether you’re interested in opening a second or third location after successfully establishing the first one, or you’re looking to enter franchising by opening multiple stores at once, multi-location franchising can open a wide new world of opportunity.
Multiple advantages of multi-unit franchising
Once a franchisee has built one successful location, the process can be replicated by applying tools and processes you’ve already mastered. Multi-unit franchising flattens the learning curve and reduces the sweat equity required, which can lead to significantly higher potential returns.
Some of the specific ways multi-unit franchise ownership can enhance your investment include:
- A multi-unit area agreement allows you to own your market for that brand. Based on the agreement with the franchisor, you have a certain amount of time to develop additional stores, without the risk that another franchisee will move into that area.
- Bulk licensing discounts offer significant possible savings. Purchasing the licenses for multiple locations is usually accompanied by “multi-pack” discounts for each license beyond the first. In some cases, the more licenses you purchase, the less you will pay for each one. The principle is the same as purchasing items in bulk in a retail setting.
- With multiple locations, team members have additional opportunities. Strategic management allows franchisees to share employees across multiple stores so you have full staffing without having to build a complete team for each location.
- Additional revenue from added locations will allow you to budget for an investment in a territory-wide operations manager, affording the owner the opportunity to step back from daily operations and take on a more strategic role.
- Multi-unit owners can share inventory among all the locations in their area, instead of all inventory being physically available at each store. Multi-unit franchisees can also monitor inventory across all locations as well as taking advantage of bulk discounts when replenishing inventory.
- If a franchisee decides to exit, a multi-unit territory offers more value on resale, based on the guaranteed exclusivity of the territory, established market equity, level of market saturation, and other factors.
Additionally, diversification is a proven sound financial approach that protects franchisees in the case of economic disruption or downturn. Owning more than one franchise location makes it easier to weather harsh economic times. And most franchisors offer discounted franchise fees to multi-unit owners. Signing an agreement upfront to open multiple locations can mean significant savings.
Finally, many franchisees find multi-unit ownership to be a major step toward fulfilling the ultimate dream that led them to franchising in the first place — the financial independence and freedom that come with owning your own business. While owning a single franchise location can require ongoing hands-on involvement in daily operations, owning multiple locations can reward a strategic, higher-level executive vision.
Multi-unit opportunities
While owning multiple franchise locations unlocks new and bigger opportunities, franchisees or potential franchisees should still consider several factors before jumping into the decision to expand or invest in a multi-location agreement that will protect you and the franchisor.
- Do you have the cash or credit required for opening new locations? Does your existing franchise have sufficient cash flow to continue operating successfully while you’re focused on one or more new locations?
- Do you have a trusted team to run your existing franchise?
- Are you confident that you have the executive-level leadership mentality for multi-unit franchising? Can you empower your managers and team members through delegation?
- Have you properly implemented and mastered the franchise resources that will support success in multiple locations?
Multi-unit franchising offers nearly endless options and opportunities. Expanding from single franchise ownership to multi-location ownership can take a wide variety of forms. Whatever your goals — whether your multi-unit strategy is one or two additional locations in your hometown or you’re investing in a large regional franchise portfolio — there’s a multi-unit franchising strategy for you.
Charles Bonfiglio is president and CEO of Tint World, a provider of automotive, residential, commercial, and marine window tinting and security film services. With Automotive Styling Centers in the U.S. and abroad, each franchise location houses approximately 20 profit centers, ranging from in-store accessory installations to offsite sales and installation.