As a whole, franchise models offer the ability to own and operate a business, while taking advantage of its systems and support to attain financial freedom. A proven franchise brand allows its franchisees to overcome many challenges that new, independent, small-business owners often face. Franchise systems and support streamline a wide range of processes, from training and operations to merchandising and workflow management, just to name a few.
Compared to single-unit franchise owners, for multi-unit owners these benefits and advantages can have an exponential impact on profit and revenue levels.
Whether you’re interested in opening a second or third location after successfully establishing one franchise location, or you’re looking to enter franchising by opening multiple stores at once, or you want to diversify your assets by owning franchises in more than one industry, multi-location franchising can open a wide new world of opportunity.
The advantages of multi-location franchising
An increasing number of franchisees are adopting multi-unit ownership. Economies of scale drive the potential for higher returns without duplication of efforts. Once you’ve built one successful franchise brand location, you can replicate the process by applying tools and processes you’ve already mastered. The learning curve and sweat equity involved are lower, but the returns can be just as great or greater.
Here are some of the specific advantages of multi-unit franchise ownership:
- 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 an additional store or stores, without the risk that another franchisee will move into that area.
- Bulk licensing discounts offer significant possible savings. Purchasing the license for one or more additional 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.
- When the decision has been made to exit, selling a multi-unit territory is exponentially more valuable than a single location, given the guaranteed exclusivity of the territory, established market equity, level of market saturation, and other factors.
Additionally, existing relationships with vendors, distributors and financial institutions can be leveraged immediately.
Similarly, diversification serves to protect 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 hand-on involvement in daily operations, owning multiple locations can reward a strategic, higher-level executive vision.
What to look for in 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?
The options and opportunities for multi-unit franchising are nearly endless, so 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 plan that will get you there.
By Charles J. Bonfiglio
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.