Shop Smart: How to Make a Wise Multi-Unit Investment

Recent years have seen more and more franchise investors seeking a package of franchise units. This type of ownership, called multi-unit franchise ownership, has seen a spike in popularity.

The most recent information from FRANdata shows that over half of all franchised units — 54% — are controlled by multi-unit owners. Some of the largest franchisees own hundreds of units across several different brands.

 

Whether you are franchisor looking to attract more multi-unit moguls or hope to oversee a small network of businesses as a multi-unit franchisee, here are some important key points to consider:

 

Key Point #1: The Bottom Line

Pursuing a sustainable investment plays out the same whether you are seeking a real estate property or a business. The decision begs the question — what’s the bottom line? Scrutinize the numbers, analyze the ROI, and take a good survey of the overall financials of the franchise before stepping into the model.

Key Point #2: Unit-Level Performance

Examine the economics of the business at a per unit level. A company worth investing in has taken the time to tailor its growth according to its capabilities, focusing on maximizing profitability for each unit rather than throwing all the darts at the board and hoping some stick. Intentional growth strategies make for more successful units and sometimes that growth is slow and steady. It’s better to own two remarkably performing units rather than four mediocre ones.

 

Key Point #3: The 3 P’s

You have most likely heard the famous “3 P’s” of business — people, product, and process. Investors seeking to expand their portfolios with a franchise need to evaluate the business from this standard. Are the right people in the company’s leadership positions? Are the products and services well-defined, in demand, and sustainable? Are the processes streamlined and all gaps closed?

 

Key Point #4: Solid Support System

Marketing, operations, training — what support modules are in place for the franchise? Does the franchisor have the capacity to support the growth rate produced by attracting many multi-unit franchisees? As you shop for franchises, find first-hand accounts of current franchisees and their experience with the support they’ve received.

 

Key Point #5: Allows for Absentees

If a franchisee is to own several businesses at once, the system must be so fool-proof that the business can work for an absentee-owner as the business is scaled. Ensure the business allows for scalability and can further expand throughout the years. If you are a franchisor, it’s always a good idea to take a deep dive into every nook and cranny of your operations to make sure that your franchisee, whether single unit or multi-unit, has an efficient, strong blueprint to follow.

 

Multi-unit franchisees have the opportunity to make money faster, enjoy the benefits of a solidified system, and have several revenue streams all at once. Franchise Marketing Systems can guide you in some of the most experienced multi-unit franchises in the marketplace and help you find a fit that you’ll love.

Visit www.fmsfranchise.com to learn more. Connect with my team at 800.610.0292 or email us at [email protected].

Chris Conner has worked in the franchise development industry for almost 20 years and helped over 600 brands franchise their brand and develop franchise distribution channels. He founded Franchise Marketing Systems in 2009, which now includes a team of 27 franchise consultants based in and Canada and supports brands around the world to grow and scale through franchise expansion. Visit www.fmsfranchise.com for more information