Nearly half of all U.S. franchise owners operate multiple units, often achieving higher revenue and stronger market presence. Success in multi-unit ownership depends on honest self-assessment, market demand, labor availability and strategic planning.
Among the nearly 850,000 franchise establishments in the U.S., almost half are operated by owners with more than one location – multi-unit franchisees. These individuals have had to invest significant capital, go through training, launch the business, endure the growing pains that inevitably come with expansion and growth and reach the breakeven point.
While the benefits can be substantial, multi-unit expansion carries higher risks, requiring caution and resilience. The decision to expand to multiple units takes serious contemplation. For those looking for reassurance, there are positive signs to consider multi-unit expansion.
Before considering expansion, owners need to be completely honest with themselves about their business performance. It doesn’t hurt to get an unbiased opinion from a financial planner or accountant. Owners should conduct an accurate review of their financial performance and determine if they’re meeting the franchisor’s benchmarks for success.
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Two factors play an important role in the decision: labor situation and local market demand. Many franchise owners complain about not having a reliable workforce. If an owner has an excellent general manager at their current location, they need to consider whether they can find a similar performer for the new location.
Local market demand is also key. While business may be booming at the current location, the demographic makeup of the additional territory may be different. Owners must take a strategic and cautious approach to scale properly.
When owning more than one franchise location, everything gets multiplied — investment, staff, inventory, marketing spend, and hopefully, the bottom line. Owners gain multiple revenue streams, which can greatly increase income and wealth.
They can spread fixed costs across multiple locations, negotiate better terms with vendors and suppliers, and increase visibility in the local market.
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Above all, owners should expect setbacks. Multi-unit expansions rarely come off without a hitch. If they’re bold enough to consider making a move that could double or triple their business, they should always proceed with caution.
Unless they’re the first owner among an emerging brand, it’s highly likely that someone in their franchise network is a multi-unit owner. They should reach out to them and get a good reading on their own multi-unit expansion experience. By doing so, they can find out where the hidden pitfalls lie and make plans to circumvent any trouble.
It’s also worth considering the potential long-term effects of multi-unit expansion on the business. With careful planning and strategic decision-making, owners can minimize risks and maximize benefits. By taking a cautious and informed approach, they can unlock the potential of multi-unit franchise ownership and achieve greater success.
Success depends on many factors.
