Vary Your Approach: Engaging single-unit, multi-unit, and multi-brand franchisees

Successful franchise growth depends heavily on recruiting the proper set of franchisees for your brand and system. Single-unit franchisees can be owner-operators or investors. A multi-unit franchisee can be a former single-unit operator looking to grow or a multi-unit developer wanting to expand. The major trend over the past five to 10 years has been multi-unit developers opening units with different brands. 

Each class of franchisee needs different support structures. Recruiting into each class requires specific techniques and strategies.

Single-unit franchisees

Single-unit franchisees are the largest group of franchisees. Especially for emerging brands, they are the bread and butter of franchising as they are more likely to fall in love with and give a chance to new and less proven brands. They are often first-time business owners looking to be hands-on operators but can also be investors looking to have an operator run the day-to-day business.

While they bring their own skills and expertise, single-unit franchisees often haven’t run their own business before. Highlight how your franchise system provides training, marketing support, and operational guidance and show why your brand has been successful in the past.

Many single-unit franchisees want to leave their corporate jobs and gain some control over their work-life balance. Focus on the areas of your brand’s unit-level operations that speak to this desire. Can the franchisee hire a manager to run the day-to-day business and still take home a comfortable ROI? Can they ensure that they have more time at home with their families rather than working late at the office? 

Without sharing anything too sensitive or confidential, provide candidates with the opportunity to experience some of the day-to-day operations firsthand at an existing location. That hands-on experience can give insight into whether this business is the right fit. It also serves to get them excited to be part of your brand. It helps them visualize what they will be building with your help and guidance.

Single-unit tips include:

• Offer financing assistance. Partner with lenders or financial consultants who can help candidates navigate and overcome hurdles in the investment process.
• Leverage local marketing. Use targeted local advertising and community events to reach potential franchisees in specific markets.
• Highlight success stories. Share testimonials from successful franchisees to inspire confidence.

Multi-unit franchisees

More than half of all franchised units in the U.S. are owned by multi-unit franchisees. They are looking to scale their operations in a specific brand based on their previous business experience. The pool of potential candidates continues to grow as the industry moves toward the increased efficiencies of the multi-unit structure.

Demonstrate how your franchise model can be replicated across multiple locations. Explain how economies of scale can improve profitability as franchisees expand. Identify whether the franchisee candidate is growth minded or operations minded. The unit operations have to meet your high brand standards, but the most effective multi-unit franchisee will be pushing to see how fast they can effectively grow out of whatever territory they’ve been granted.

Multi-unit franchisees provide more value to a brand for less support than single-unit franchisees. The fee structure, territory grants, and other elements of the franchise program should reflect that. It’s common to provide discounted initial franchise fees to developers who commit to multiple locations, but also consider reduced or descending royalty structures based on commitment and performance. You are spending less time and money to support each location and can afford to reduce some of the costs paid directly to you. 

Multi-unit franchisees typically see increased efficiency by centralizing many aspects of their operations, such as supply chain and human resources. Highlight what elements of your brand can be best leveraged to help impact their ROI. 

Multi-unit tips include:

• Emphasize brand strength. Showcase your market position and growth potential to attract experienced investors.
• Facilitate networking. Connect prospects with current multi-unit franchisees to share experiences and best practices.

Multi-brand franchisees

The fastest growing segment of franchising is multi-brand operators They are typically sophisticated investors looking to diversify. They often start out as multi-unit franchisees who have built out their market and are looking for new brands for that market rather than venturing into different markets with their original brand.

Highlight how your franchise can complement or supplement existing brands in a portfolio. Often, the same customer base, employee base, or suppliers can be leveraged for multiple noncompeting brands. Brands may have similar company cultures and values to ensure that there aren’t conflicting goals. 

Your brand may have the flexibility to adapt to a variety of systems, technologies, or other elements of either the franchisee’s existing operations or those imposed by another brand. Demonstrate how you could help the franchisee increase efficiency.

One great way to get in front of multi-brand franchisees is to participate in expos, such as Franchise Update Media’s Multi-Unit Franchising Conference. Such events are priceless opportunities to engage with sophisticated candidates.

Multi-brand tips include: 

• Highlight cross-promotion opportunities. Explain how your brand can benefit from and contribute to a diverse portfolio.
• Provide comprehensive market analysis. Offer data on how your brand performs alongside other concepts in various markets.
• Emphasize franchisor stability. Showcase your company’s financial strength and long-term vision.

Recruiting the right franchisees requires tailored strategies for different operator classes. By understanding the unique motivations and needs of single-unit, multi-unit, and multi-brand franchisees, franchisors can attract candidates who are best positioned to succeed.

Andrew Seid is senior consultant at MSA Worldwide. Contact him at aseid@msaworldwide.com or 860-604-9189.

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Michael H. Seid & Associates
MSA provides domestic and international franchise advisory services to franchisors and companies seeking to establish franchise and licensing systems. Learn More