Multi-Unit Franchisees Are Satisfied But Expect More

Multi-Unit Franchisees Are Satisfied But Expect More

New data released by Franchise Business Review reveals that franchisees are more satisfied overall and enjoy operating their franchise businesses slightly more than single-unit franchisees. The data was obtained from a study involving nearly 25,000 franchisees representing more than 350 brands that the firm conducted during the previous 18 months. 9,478 franchisees (38%) of the study's participants identified themselves as multi-unit operators. Franchise Business Review is a market research firm specializing in franchisee satisfaction and performance.

Overall, multi-unit operators tend to score 2% to 7% higher than single-unit operators on their satisfaction and enjoyment with their franchise business. That said, multi-unit franchisees also have higher expectations for their franchisor and are more critical of areas like technology, system innovation, & support, and communications. These higher expectations are the result of multi-unit operators having much more invested in the brand as well as more at risk.

83% of multi-unit operators surveyed say their attitude toward their franchisor is mostly positive, compared to just 17% who indicate their attitude is mostly negative. Multi-unit franchisees are also 6% more likely to feel valued by their franchisor, as compared to single-unit franchisees within the same system. This is likely due to the fact that franchisors often focus more time and on their larger, top-performing franchisees.

Single-unit operators clearly see the value in the future of multi-unit ownership. A two-thirds majority (66%) of those who were surveyed indicated that they plan to purchase additional franchise compared to just 48% for existing multi-unit operators. And while a few of the multi-unit operators surveyed own 10, 20, or even 50+ units, just 9% of all franchisees own more than five.

Multi-unit ownership also varies greatly from industry to industry. In the industry, for example, only 16% of operators recently surveyed have multiple locations. Business services is similar, with just 18% of franchisees owning more than one unit. On the other hand, the majority (51%) of franchisees in the industry are multi-unit owners, especially in the QSR and sectors. The reason for so many multi-unit operators in the food industry is that many food franchisors focus on recruiting experienced, more sophisticated operators who have the skills to manage a larger organization.

Key Insights from Today’s Multi-Unit Franchisees

  • 85% enjoy operating their franchise business
  • 84% enjoy being part of their franchise organization
  • 83% feel more positive or equally positive about their business compared to one year ago
  • 79% respect their franchisor (the corporate entity)
  • 78% would recommend their franchise brand to other candidates
  • 77% would “Do It Again”
  • 76% believe their franchisor operates with a high level of honesty and integrity
  • 74% trust their franchisor
  • 74% believe that their franchisor cares about their success

Biggest Gripes of Today’s Multi-Unit Franchise Operators

  • 52% feel their franchisor could do a better job involving franchisees in important decisions
  • 27% believe that their franchisor’s use of technology is average or poor
  • 25% rate the innovation of their franchisor/brand as average or poor
  • 24% rate their franchisor’s advertising, marketing and promotional programs as average or poor
  • 21% think system-wide communications are average or poor

Top Areas of Strength Within Their Brands According to Today’s Multi-Unit Franchisees

  • Senior management encourages a strong team culture
  • Senior management promotes a clear vision for the company
  • Quality of the products / services

How Long Today’s Multi-Unit Franchisees Have Owned Their Businesses

  • Less than 2 years  14%
  • 2 – 5 years            28%
  • 6 – 9 years            20%
  • 10+ years              38%

The Number of Units / Locations / Territories Today’s Multi-Unit Franchisees Own

  • 2 units / territories     52%
  • 3 units / territories     17%
  • 4 units/territories         8%
  • 5+ units / territories   23%

Today’s Multi-Unit Franchisee Geographic Mix (US and Canada)

  • Northeast       17%
  • Midwest        25%
  • South             36%
  • West              18%
  • Canada            4%

Breakdown of Market Size For Today’s Multi-Unit Franchisees

  • Small (Under 100K population)       28%
  • Medium (100K-249K population)    27%
  • Large (250K – 499K population)      17%
  • Major Metro (500K+ population)     28%

Average Hours Worked Per Week by Today’s Multi-Unit Franchisees

  • Less than 30 hours        11%
  • 30 – 40 hours/week       17%
  • 40 – 50 hours/week       27%
  • 50 – 60 hours/week       23%
  •       60+ hours/week       22%

General Demographics of Today’s Multi-Unit Franchisee

  • Median age 45 – 54, while just 8% are 34 or younger, and 33% are 55+
  • 81% are Caucasian, 5% Asian, 4% Hispanic, 3% African American, 7% Other
  • 63% are male, only 27% are female-owned business, while an additional 10% report being male/female partnerships
  • 46% have a bachelor’s degree, while 19% hold an advanced degree
  • 10% are U.S. military veterans

Pre-Tax Income of Today’s Multi-Unit Franchisees

  • Multi-unit franchisees report an average annual Pre-Tax Income of $123,000, compared to $72,000 for single-unit franchisees
  • 26% of multi-unit operators report earning an annual pre-tax income over $150,000
  • 14% of multi-unit operators report earning an annual pre-tax income over $250,000

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