Steve Jackson, CEO of Hungry Howie’s Pizza & Subs, compares multi-unit franchise ownership to having children. “The first one or two units you can handle, but more than that, you’re outnumbered, and it requires a different skill set and a different type of franchisee. It also requires a different type of franchisor.”
There is no doubt that if you are considering becoming a multi-unit franchisee, there are many things you need to be aware of. Here are a few of the pros and cons of multi-unit ownership:
“We have systems in place that enable our franchisees to do an orderly increase of locations and to effectively oversee all their locations,” says Jose Merille, President of Estrella Insurance. “We offer extensive training for all of our franchisees. In the case of the multi-unit operator starting for the franchisee with the capacity to grow a specific territory consisting of multiple locations ranging from 10 to 50, we do a lot more extensive training with them and/or the management personnel they bring on board.” Although only 33% of Estrella Insurance’s franchisees are multi-unit operators, they run 74% of all of its locations.
“We give our franchisees multiple platforms that enable them to connect, support, and learn from each other,” says Stacy Eley, Vice President of Operations at MY SALON Suite. “They include an online private Facebook group and weekly conference calls. In addition, we have implemented a mentoring program where new franchisees are partnered with a mature franchisee who offers them support and encouragement.”
“With four units, we are already seeing cost savings in areas of the business, specifically with resources that can be shared between the studios,” says Painting with a Twist franchisee, Todd Owen. “The ability to interchange talent between the studios has been very beneficial.”
“As a multi-unit operator you have flexibility of personnel,” says Merille. “You can transfer, promote, or compensate them in ways that encourage them to remain and move up the ladder.”
“If you have a long-term horizon to be attractive to a buyer, then you can do exceptionally well with multiple units,” says Ben Midgley, President of Crunch Fitness Franchise.
“Not fulfilling a multi-unit agreement can create an adversarial relationship between the franchisor and franchisees because it holds up a territory/area that could be developed by someone else,” says Jackson of Hungry Howie’s Pizza & Subs.
“Careful consideration must be taken to allow the necessary amount of time to break even and become profitable for each unit,” says Merille of Estrella Insurance.
For more advice regarding successful multi-unit franchise ownership including what to look for in a franchise from a multi-unit investment perspective, tips from multi-unit franchisees, and how to finance multi-unit expansion, read our latest Top 50 Multi-Unit Franchises guide.
