Multi-Unit Franchisees Are Satisfied But Expect More

By: Multi-Unit Franchisee
Published: September 14th, 2016

New data released by Franchise Business Review reveals that multi-unit 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, advertising, training & 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 energy 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 units, 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 automotive 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 food industry are multi-unit owners, especially in the QSR and fast casual 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