Special Edition: Is Multi-Unit Franchising For Me?

How Do I Know? Multiunit franchising offers benefits - and risks - but it's a method of franchising that can be fruitful

Sometimes one is just not enough.

Just ask Joe Karcher. The son of Carl's Jr. founder, Carl Karcher, Joe has followed in the franchising footsteps of his father and is carrying on the family banner. And he's doing it not by running just a single franchise, but by opening the doors on more than 40 locations and relying on more than 800 employees throughout Oregon.

"Multiunit franchising just makes sense," says Karcher, who also has the benefit of having grown up in the franchising industry. "If you want to grow and can operate with a hands off management style it can be a great approach."

But how can you decide if it's right for you? With the right set of skills, realistic but ambitious goals, and the right mix of resources (people and capital), you can build your own multiunit franchise empire.

Looking at simple numbers on paper multiunit franchising looks like a great plan - more locations means more profit, right? But it can also mean more expenses and more headaches.

First, let's take a look at the benefits of the multiunit approach.

If you've already got one franchise location open then you're familiar with the system's operations, policies, and procedures. That makes opening and operating additional locations a little easier, and much more streamlined, than starting another business from scratch. "Rely on the franchisor," says Karcher, "they have so many tools and resources readily available to you."

Karcher says it's also important to have established relationships with banks and other sources of financing that can help you fan the flames of expansion and growth. "You want to have personal relationships with banks and finance companies," says Karcher.

Multiunit franchising works best if there is available territory or numerous locations available in your geographic area. It helps because multiple locations within a concentrated geographic area can leverage the power of regional marketing budgets and strategies. Now your marketing efforts can benefit a dozen stores and beyond, not just one.

And a multiunit operation can help you maximize supplier/vendor relationships by providing opportunity for quantity discounts for products and supplies.

Beyond the financial angle, a multiunit operation can benefit from an employee angle as well. It not only gives you the flexibility to move employees around as necessary, but this method of operating opens up many doors for employee growth and promotions that will help you get and keep the best employees, says Karcher.

Multiunit franchising does have its potential pitfalls that you'll want to watch out for.

First of all, it requires additional capital. That's where your friends at the bank come in. Keep your business plans and finances in order and you'll make a much stronger case when the time comes.

"You've got to be a strong leader and you've got to have great people in your system from the top down," says Karcher. "If you're going to operate multiple units, you can't do it all yourself you've got to be able to delegate and know that those people are going to get things done." And finding and keeping those good people is a demanding task.

Karcher also says it can be challenging growing through multiunit expansion when it comes to identifying and procuring the right locations. "Opening a poor location can be a big drain on your whole system," he says. "Finding the right locations with the right demographics can be tough but it's critical."

He also cautions that expanding franchise operators must be patient and conservative. "Your goal is to make a profit, but it may take longer than you expect," he says. Hang in there, work smart, and the payoff will come.

"If you really love your business and you can find good people to help you run it and you can operate as a strong leader then multiunit franchising may be for you," says Karcher.

Published: November 7th, 2007

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