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One of the most exciting times for an entrepreneur is the opening day of a new franchise. There are ribbon cuttings, champagne, open houses and smiles to share (in non-socially distant times, of course). Months have been devoted to developing the best possible scenario for success And then, when the franchise unit performs well, every franchisee wonders if more would be better.
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Does multi-unit franchise ownership make sense for you? It very likely could. As always, a business must fit your personal goals for suitability, work style, and value, but there are also several advantages (and a few disadvantages) to multi-unit franchise ownership:
The Positives
The path of multi-unit ownership can multiply your success level. And it can do that for many good reasons:
- It’s not your first rodeo. If you currently own one unit successfully, then you know what to expect. You understand the ins and outs of running that type of franchise. You are prepared in the best possible way—through experience. If anyone can make that franchise work, it’s the person (you!) who has done it before.
- It’s economical. Running two or three or four of the same business does not cost proportionately more. Owning multiple units create economies based on the scalability of the units. The cost of doing business goes down per unit because many tasks are centralized. HR, accounting, finance, purchasing and other administrative tasks would be in one location without replicating those tasks—and the labor to do them—at each location. That means a quicker road to higher profit margins.
- It earns favor. Your franchisor always has a vested interest in your success. It is one reason that anyone decides to buy a franchise; there is support to help ensure success. With multiple sites, the franchisor understands that you are responsible for a larger part of their success in your geographic areas. As your efforts turn into revenue for the franchisor, you will be more valuable.
These are solid reasons to expand your franchise to multiple units, and many success stories of those who took the step into multi-unit franchise ownership.
The Possible Negatives
Of course, some considerations could affect your timing and choices.
- It’s exponential. When things are good, this is great. But when several units struggle, the pain is also magnified. You could tax your cash reserves, and you must prepare for that possibility. Similarly, more cash flow means more flow in both directions. When software or equipment needs updating, it might strain your budget.
- There is more to manage. It is impossible to be in two places at once. Multiple stores means letting go a bit and trusting others to manage on-site management needs. Evaluate your style; if you prefer hands-on management, multiple units might make you miserable. But if you are ready to expand your team and head to success, it could work well for you.
There are options for franchises and so many choices to make for your lifestyle and future. Multiple units can be exceptionally profitable if it makes sense for your goals and personality. How many are too many? For some, two units might be overwhelming. For you, multiple unit purchases could be the ticket to personal, career and financial satisfaction.
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.