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Delving into a franchise presents a financial planning challenge, especially for first-timers. How much money you will make and if franchise ownership will fit your needs is probably top of mind – and it should be.
But here’s a question you may not have thought about: With so many franchise brand choices that show promise and proven success, should you consider buying only one franchise unit?
After all, a second or third franchise unit could mean twice or three times the revenue and profit. But there is more to the decision than simple multiplication. Single franchises can create income ranges that vary considerably by franchise type, location, and owners. If a single franchise unit does well, it could foretell longer-term success with more locations; however, a single franchise unit might very well be enough for you.
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Key to the Decision: You are Unique
Even though franchisor success is based on a repeatable concept, your specific salary requirements and working environment preferences will differ from another prospective franchisee. And based on your work ethic and style, you could be happier with a single location that is carefully managed rather than juggling multiple locations.
A franchisor cannot tell you how much money you will make, so you must plan your financial success on some considerations that determine if you are better suited for a single franchise location.
- You are a first-time business owner. A single location means you can devote your time and efforts to your new franchise without being pulled in multiple directions.
- Control matters to you. A single location allows you to manage (or even micromanage) every detail that influences your success. A well-oiled and tightly managed single franchise site is often a top producer.
- Quick success is needed. With one location where you work diligently, you are more likely to realize the financial gains you need in a shorter period. If you have multiple locations, there will be multiple up-front costs and fees to recoup. A single location offers a lower hurdle of debt to overcome.
- You don’t enjoy managing people. This is not a personal flaw. Multi-unit owners must rely on others to execute business operations. If you don’t like training employees and dealing with labor laws, a single-unit franchise will better suit your personal preferences.
- Your finances and net worth limit expansion. There is a good reason to consolidate your financial resources into a single unit. You know your up-front costs and can plan accordingly.
- You value balance. Multiple locations can be overwhelming in their constant intrusion. If work/life balance is of high value, it is easier to choose your work hours when there is only one franchise site. Full-time, hands-on ownership is demanding, but you will have more flexibility to include what is important to you.
Few first-time franchise buyers opt for multiple units. As you consider your longer-term goals and personal preferences, you will likely commit to a single location at first. If any of the considerations here apply to you, a single location will suit you well
And hey – you can always change your mind. If your first franchise inspires you to expand, you can choose to do so after you’ve learned your franchise operation and how best to proceed. Or a strong performance at a single location might be enough to satisfy you.
Anne Daniells is a co-owner of Enterprising Solutions, a professional services firm specializing in corporate communication and financial improvement for businesses where she shares decades of corporate and entrepreneurial experience—including franchise ownership—in her writings on business culture. She has authored hundreds of articles for publications including AllBusiness.com, TweakYourBiz.com, and MSN.com. Reach out via her website for more on where corporate culture, communication, and human architecture collide.