Multi-Unit Franchises - What Do The Experts Say?
What are multi-unit franchises?
Multi-unit franchises, multiple franchises or multi-franchises is an agreement whereby franchisees are allowed to own, operate and manage more than one franchise in a territory.
What type of entrepreneur is the multi-franchise for?
The multi-franchise business model is designed for entrepreneurs and investors who have the operational and economic capacity to develop various franchises. They must have a solid background in business, leadership and team management, as well as the commitment to the growth and success of their network of stores.
Franchising.com has a similar definition. According to the portal, multi-unit operators are executives with the necessary experience and skills who choose the franchise model as their business model. They have the technical and management capabilities, capital and the vision to operate several units. They also have the ability to continue adding units to their portfolio without putting their company's position at risk.
Advantages of Obtaining a Multi-Unit Franchise
Having a franchise network provides the multi-franchisee with different advantages:
- Greater stability in the business as it does not depend on a single location to be successful. Franchise expert Rick Bisio writes in Forbes that franchisees who have the ability to operate multiple units are better prepared to overcome negative economic cycles.
- Possibility of having several stores in various sectors as an opportunity to diversify investment and operations. This makes Jeff a unique option in the market, as it can offer franchises in the laundry sector (Mr Jeff), beauty salons (Beauty Jeff), fitness boutiques (Fit Jeff) and relaxation and wellness (Relax Jeff).
- With the exclusivity of the area, most of the population density is covered and the possibilities of having competition are reduced. In fact, the franchise database Frandata attributes the success of multi-unit franchises to the non-compete clause that different franchisors include in their contracts, as franchisees have to look for other growth opportunities in other verticals or in other areas
- The costs are lower since the purchase of inputs are on a large scale and they have better payment conditions. In addition, a number of savings opportunities arise due to economies of scale in all departments, for example, the greater impact of investment in marketing and personnel programs.
Factors to consider to be successful with multi-unit franchises
- Geography: one of the important factors is to choose the areas where the multi-unit franchises will be opened. The population density must be high enough to ensure the regularity of customers and users. In addition, for multi-unit franchisees that already have units in the region, knowledge of the local market will provide a competitive advantage.
- Financing: the franchisor must have the financial capacity to open the proposed franchises in the established time. According to Eddy Goldberg, there are various sources of financing that franchisees can explore, such as franchisors themselves, since they might have agreements with banks to speed up loan processes. Investing partners are a good option if the skills to carry out the project are present but there is not enough money. Finally, state aid, since various governments have economic boost programs for entrepreneurs with more competitive interest rates.
- Human resources: multi-unit franchises require more staff, which means creating larger infrastructures from the human resources point of view with more specialized departments. In addition, the possibility of professional development within the organization helps attract and retain talent with initiatives such as career plans. Companies that operate the multi-unit model, such as NPC International, have more than 1,300 employees, and FLYNN has more than 400 employees on their LinkedIn profiles.
- Synergies between businesses: in addition to being able to apply the know-how to different units and reduce learning expenses, multi-unit franchises can also apply the best practices of individual franchises to the rest of their organization. This becomes an opportunity to improve processes and develop joint strategies in various areas of the business, including the purchase of provisions or marketing and growth strategies.
Grow with cross-selling with Jeff
Jeff is the first company on the market capable of offering an online and offline ecosystem in different sectors. This offers the possibility of diversifying, reducing business risk, obtaining economies of scale and compensating for economic or seasonal cycles.
With our cross-selling strategies, multi-unit franchisees can take advantage of all the scalability of digital businesses with the recurrence of our sectors.
Learn more about our verticals:
Success stories about Multiunit Franchises
Finally, the following video shows you 3 stories from multi-unit franchise owners, told at the Multi-Unit Franchising Conference.