Multi-Tasking: What It Takes To Be A Successful Multi-Unit Franchisee

Twenty years ago, franchising meant buying the rights to and opening a single unit or business. But a changing trend has taken hold during the last two decades. Today, it's not uncommon for a single franchise operator to have 5, 6, or even dozens of units. FRANdata research notes the number of multi-unit operators now tops 34,000, and those operators control more than 155,000 franchised units in the U.S. It's a growth strategy that has proven effective but it should be approached with caution.

Multi-unit operators are generally wired differently then their single-unit counterparts. Successful multi-unit operators are typically experienced, skilled, professional business executives who have chosen franchising as their business model. They possess the skills, training, capital, infrastructure, and vision to operate numerous units and have the ability to continue adding units to their portfolio--without stressing their organization or their stomach.

Of course these are just the kinds of traits franchisors are looking for as they seek to develop their brands into additional territories and conquer more market share. Franchisors know that a solid infrastructure and core set of operating procedures and standards must be in place for a multi-unit franchisee to succeed. If not, the franchisee and the franchisor could both suffer.

Numerous multi-unit franchise opportunities exist today throughout the QSR landscape and in services such as senior care, hair salons, massage, home maintenance, children's activities, pet care, and more. Not surprisingly, in recent years, private equity has taken note of the profit potential of the multi-unit franchising model, buying into multi-unit franchise organizations or acquiring them outright. Private equity loves to invest in strong business operations.

Multi-unit franchising has seriously altered the traditional franchising model with far-reaching effects. Franchisors have changed the way they screen prospects, the way they handle training, the way financial performance representations are provided in franchise disclosure documents, and even the way contracts are written.

As you've probably ascertained, multi-unit franchising is not for everyone. It's hard work, often complex, and there are serious risks involved. But if you have the following three attributes in place you've significantly improved your chances of succeeding.

  • First, you must be able to finance the additional locations/territories. That means you need deep pockets, or at least access to deep pockets. This may require business partners and/or lenders who then have skin in the game and can influence the way you conduct your business. This is a key factor to keep in mind if you are an independent thinker and operator.
  • Next, you must be able to form an organization with a management team and infrastructure to command your expanding empire. You may be able to remain hands-on with a handful of units, but once you grow to around 10 or more units it's no longer feasible for you to oversee day-to-day operations. Somewhere in here, you will need to bring in a team to handle day-to-day operations, finance, marketing, and HR. Delegation is critical. Do it and get out of the way.
  • Finally, you must have leadership skills. You come to the game with vision, ambition, and inspiration. The challenge is communicating these crucial intangibles to your expanding organization and keeping them intact as they filter down to your unit managers and front-line staff through your in-house team. Leadership is necessary and achievable; but is never simple or easy.

If you have the background, experience, and drive to take on these challenges, then multi-unit franchising offers you a path to achieve your dreams. But you can't do it alone. Rely on people, partners, and delegation--plus a large helping of your own passion, patience, dedication, and hard work--and yes, you can grow a multi-unit empire.

14.6: Service Based Franchising: Where the Action Is
14.8: Multi-Brand Franchising

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