By Danessa Itaya
Franchising is a business model with proven rewards. Franchise owners are empowered to get the most out of their investment by the features that differentiate franchise opportunities, such as repeatable processes, scalable systems and shared resources.
Successfully implementing the essential elements of the franchise model is one of the most reliable pathways for entrepreneurs to achieve financial freedom while mitigating the risk associated with opening an independent small business.
Similarly, multi-unit franchise ownership amplifies the advantages inherent in the franchise model. Multi-unit franchise owners can benefit from economies of scale that create high potential returns based on a consolidation of resources. Once you’ve built one successful franchise brand location, you can replicate the process by applying tools and processes you’ve already mastered. You can see bigger returns with less heavy lifting.
Expanding and diversifying into multi-unit franchise ownership can take many forms. Some franchise owners enter the industry with the goal of quickly opening multiple locations in a territory, so they will start with a multi-unit agreement. A franchise owner might open an additional location (or locations) in a nearby territory after successfully operating a single franchise unit for a while. Other franchise owners, focused on diversifying their holdings, might build a portfolio of multiple franchise brands in a variety of industries.
Here are some of the specific benefits that come with multi-unit franchising:
- Shared resources: Successful franchise owners have already implemented the systems that power operations and are familiar with the processes and technology that guide the company. Setting those systems up in a new location takes less time, and the learning curve for owners and their teams is dramatically reduced. Similarly, sharing supplies and inventory across multiple locations means each unit does not have to maintain a full range of physical products at all times. Additionally, bulk discounts may apply to many purchases.
- Established connections: Owners of existing franchise businesses have existing relationships with vendors, distributors and financial institutions that can be leveraged immediately. If you open multiple locations at once, you’ll only have to establish those critical relationships once to serve all locations.
- Enhanced value: The savings and efficiencies of multi-location ownership add up. A multi-location franchise agreement will likely be greater than the combined value if each location was individually owned. That means greater returns on your investment.
- More opportunities for team members: With additional franchise locations, you can continue to develop and promote your team members, whether it’s taking on more responsibility, or leading one of the locations. And with strategic management, team members can be deployed across multiple locations to create staffing efficiencies. Those opportunities can add up for owners, too. With additional revenue multiplying profits, you can invest in a management team to oversee day-to-day operations while you focus on the big picture.
- Economic resilience: Spreading risk and costs across multiple locations can protect franchise owners during economic disruption. Owning more than one franchise location can make it easier to weather harsh economic times.
Like any franchise opportunity, it’s important to consider some fundamentals before committing to a multi-unit ownership agreement. The smooth transition from single-location ownership to successful multi-unit operations requires that the initial unit is firing on all cylinders.
Make sure you have sufficient cash and credit for ongoing operations and opening expenses. Assess your team and their performance, and honestly evaluate your own ability to maintain a high-level executive vision and delegate day-to-day operations whenever possible.
If you have ongoing challenges that haven’t been addressed, you may carry those with you to any new units. In that case, you’re multiplying challenges, not advantages. But when it’s done right, multi-location franchise ownership can help drive franchise owners toward their goal of financial freedom.
Danessa Itaya is president of Bio-One®, the most trusted crime and trauma scene cleaning franchise in the United States and part of the Five Star Franchising platform of brands. Itaya has more than 30 years of experience in the franchise industry, including 10 years of national and international leadership experience. She serves on the Women in Franchising Committee of the International Franchise Association and was named one of Entrepreneur’s Top Influential Women in Franchising in 2022.