Sometimes, ambitious entrepreneurs look beyond owning just a single franchise unit. In fact, multi-unit franchise owners now account for more than half of all franchised units in the United States today!
Here’s a closer look at multi-unit franchises, including what multi-unit franchising is and what the benefits of multi-unit franchises can be.
What is Multi-Unit Franchising?
Multi-unit franchising is when a franchisee operates and owns more than one unit, usually in the same region.
For multi-unit franchise owners, Area Developer Agreements are used to specify the number of multi-unit franchises that can open, in which places, and over what time frames. Individual franchise agreements are then signed between the franchisee and franchisor. In many cases, a schedule or required time by which the franchise unit must be opened under the Area Developer Agreement is also stipulated.
Multi-unit franchising has increased in popularity in recent years as more and more entrepreneurs have looked to owning multiple units as a source of income. Under this franchise model, franchisors often bring in operating principals to run each individual franchise unit.
Multi-unit franchising requires a higher level of initial investment compared to single-unit franchising. However, some franchisors offer lower fees and reduced royalties for multi-unit franchisees.
What are the Benefits of Multi-Unit Franchising?
Multi-unit franchising offers a number of advantages compared to owning just a single unit. Here’s a quick look at just some of them.
Greater Potential for Sales and Revenue
By controlling multiple franchise units in an area, entrepreneurs have increased potential for higher sales and ultimately revenue. This creates the opportunity for greater profit, especially for franchisees who control large swaths of territory.
When entrepreneurs own multiple franchise units, they can easily market them in a single advertisement, both digitally and traditionally. Likewise, they can also test promotions at a specific location before rolling them out to all of their franchise units. Multi-unit franchising, ultimately, makes advertising much more efficient overall.
Shared Resources and Greater Efficiency
Multi-unit franchise owners can also purchase goods and services in bulk to not only save money, but also share them among their locations to prevent overstocking. In addition to goods and services, this advantage also extends to human capital. By sharing employees between locations, franchisees can cut down on hiring and training costs and easily move employees between locations depending on where they’re needed most.
In some cases, multi-unit franchise owners can obtain financing easier due to the fact that banks are often more receptive to multi-unit loans.
More Influence with Franchisor
Owning multiple franchise units can often give the franchisee increased clout with the franchisor, potentially making them more receptive to their feedback and specific needs.
Multi-Unit Franchise Opportunities: A Path Forward for Franchisees
The multi-unit franchise trend is growing quickly among entrepreneurs. Given the advantages of multi-unit franchises, especially the potential for greater sales and revenue, it can offer a path forward for entrepreneurs looking to boost their potential profit and growth!