No offense to the millions of single unit franchisees out there. Not everyone has the financial power or time or desire to start master franchising or area development. Most franchise locations are actually smaller scale operations with many franchisees operating at most one or two locations. These single unit operators contribute a staggering amount of development and success, both for their own personal career goals and for the myriads of brands out there.
Now, what about the flip side when looking at master franchisees across the country? What kind of profits are they experiencing? In this case let’s focus on restaurant food sector master franchisees. Franchisees running multiple locations in the food industry experience huge benefits that go above and beyond the development of the industry as a whole. Last year, profits were at a growth rate of 9 percent, a figure that surpasses the overall industry according to the Monitor 200 ranking for 2013. Restaurant Finance Monitor regularly keeps track of what’s happening for restaurant franchises across the country.
A group of 200 franchisees running multiple locations saw profits jump 10 percent in 2012 compared to the previous year, a figure that speaks loud and clear to the rate of growth when stacked up against the 1.3 percent growth rate seen by the overall industry. So it is indeed clear that many franchisees choosing to invest in multiple restaurant industry franchise locations are experiencing an impressive return on that investment.
When looking at increased food costs as well as the pressure businesses may feel related to staffing costs, be it healthcare or minimum wage related, franchisees operating on a larger scale stand in an advantaged position with greater room to deal with potential shortfalls and challenges. Also, the longer a franchisee has been in the industry, the more locations it operates, and the stronger the brand’s history, the greater the likelihood of receiving affordable financing from lenders. In most cases, these franchisees operate upwards of 50 locations.
What can this mean for smaller franchise operators? Though it’s never too late to watch closely and learn from other more experienced operators, the truth is, many franchisees have much on the line with an investment decision that involves their personal assets and a desire to make franchising a dedicated career. Larger operators certainly have more leeway, as well as more responsibility.
Choosing to operate more than one or two locations is often something franchisees consider after some experience accumulates with a franchisor and it becomes desirable to expand their operation. The choice to operate multiple locations is by no means minor and must be closely evaluated with the franchisor to decide whether or not increased involvement with a brand is realistic and if it will turn a reasonable profit. After all, our latest Prospective Franchisee Survey indicates that potential earnings are of prime importance for franchisees conducting research.
To check out franchise systems that welcome qualified franchise partners seeking to operate multiple locations, click here.