Multi-unit franchising, which was relatively rare until recently, has become the norm in the franchising world, accounting for a majority of franchise units and over three-quarters of all restaurant franchise units.
For the businessperson or investor, becoming a multi-unit franchisee has many benefits. First, by owning multiple units of the same franchise at different locations and by owning units of different franchises, you diversify your business both geographically and by industry.
With multi-unit franchising, you create multiple income streams and build an “empire” that is better able to weather an economic storm than a single location.
Additionally, because many multi-unit franchisees focus on a particular region, marketing, logistics, recruitment, and all other aspects of running a business are more streamlined. And the more stores you have under one franchise, the more you save in overhead and the more you capitalize on your prior experience.
Finally, multi-unit owners typically have stronger relationships with lenders, realtors, suppliers, and others involved in setting up new franchises. And franchisors would much rather deal with a single, multi-unit owner than with 10 or 20 different individuals because it’s easier to coordinate operations.
In many cases, a multi-unit franchisee will have an area developer agreement with franchise headquarters, which will specify things like how many units the franchisee will open, the schedule for opening those new franchises, the territory the franchisee will develop, and discounts that may apply to the franchisee.
Discounts may include fee reductions, royalty breaks, and other perks that are meant to encourage the franchisee to invest a larger sum of money upfront. Opening a greater number of franchises does cost a lot more than opening just one unit, though the cost per unit will tend to decrease.
Executing this kind of a multi-unit plan takes a lot of coordination and budgeting, but it frequently pays off in the end. Other multi-unit owners may never have planned to own more than one location. They may have opened new franchises of the same brand gradually, as they felt they were able.
Whether they became multi-unit owners initially or through incremental growth, multi-unit franchisees become “managers of managers” rather than managers of stores. This transition requires a shift to more administrative as opposed to hands-on work, and that relies heavily on good organization and communication skills. Anyone willing to make that transition can do well as a multi-unit franchisee.
While you can manage multiple units of any franchise, some are more conducive to multi-unit management than others. Hot Dog on a Stick, for example, makes it easy and quick to start up new units and simple to manage them. This makes it a great candidate for multi-unit franchising.
Another factor to consider is the group of which the franchise is a part, if any. Hot Dog on a Stick is part of Global Franchise Group (GFC), which has hundreds of franchises within its fold, many of which have seen phenomenal growth over the years.
Multi-unit franchising seems to be the way of the future, and those who get involved in it now can take advantage of this trend. By expanding your business both geographically and across industries, you can improve stability and weather the worst economic storms.