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  • Writer's pictureEric Choronzy

Multi-Unit Franchise Growth: The Right Choice For You?

A lot to consider when thinking about growing your empire. Stay small, or go big? Grow within the same brand, or diversify to others? Branch out into other territories, or stay local? Questions primarily only you can answer for yourself, based solely on your goals and desire.

While the confidence in franchising is continually gaining steam, people are attracted to the option of acquiring multi-units as the fast track to profitability and earnings potential. According to a recent report from FRANdata, 54% of all franchises are multi-unit operations, with 43,212 multi-unit operators controlling more than 223,213 franchise units in the United States, the restaurant industry having the highest concentration of multi-unit owners.

All that being said, though it's a lucrative idea for higher growth, and more $$, it's also not for everyone. And before making that decision for yourself, you need to self reflect and think about what it means for you and your future.

Is this the path I'm willing to travel?

The more franchises you operate, the more profit and earnings you can generate. Simple, right? But dedicating yourself to more units takes time, patience, and the desire to want to grow. A few key things to consider when trying to come to that conclusion.

  1. Money - are you capitalized well enough to take on more units, and what's your "risk profile"? This is a fairly straight forward exercise, one that franchisor's can give good guidance around with regards to the overall investment and net worth that's typically required. Along with this, you need to have a decent risk tolerance and understand that you'll likely operate at a loss temporarily while ramping. Being too leveraged at the start can be detrimental to maintaining, however, not having enough capital can be just as crippling, and likely force certain situations into "panic mode", which in turn, can result in making choices you wouldn't otherwise make if you were well capitalized and able to ride the ebbs and flows. Fine line to walk, I know.. It's important to be realistic about your goals, your ability, and your financial security.

  2. What's your WHY? - This probably should come first, but it usually doesn't. People typically get excited of the potential and gravitate first toward "do I have enough money to make this happen" before they actually think about the "why do I want to go this route", hence the reason I included this second. This is probably the most important question that needs to be answered. "What's your why" is really a general way of self reflecting and thinking high level about what your goals are both personally, professionally, for your family, your future, etc. Is this a selfish route that only you want to take because of your own desires, or is it what's best for you, your family, and your future? Big questions to answer, but crucial because if it's something that fits into you and your families future, then the support system is already there, and your path to victory will be that much easier. If it's not, aside from the business hurdles you'll have to overcome, you'll likely also deal with personal/family challenges as well (related to time, money, etc). Find your “why” and really think about your goals.

  3. Time - Time is the most valuable commodity in this world. Also likely your biggest investment. Understanding the amount of time you're going to invest, and if that's something you're ok with, is a big determining factor. Another question only you can answer. Uncovering your "why" should help lead you to this answer as well. If you have a passion and desire for building your enterprise by scaling across multiple units, your family is behind you, your goals align, then the time you put forth will likely be worth it. One of the biggest benefits of single-unit owners that have the desire to grow is the fact that they gain the experience on how much time one unit actually requires. From there, they can gauge what that would mean to have 2, 3, 6, or more, and can plan accordingly. Not only that, they uncover the systems, and processes built to run the operation and can determine how well that can scale across multiple. Granted, after they figure all that out, they have to hope that there's still territories available, but hey, that's one of the risks of growing slow, I suppose. Understand what time, as an investment, is worth to you.

Brand loyalty, or branch out?

As you start to gain experience and feel comfortable with your decision toward expansion, one of the hot topics is whether to stay within brand, or branch out into others. Sometimes, if you're really set on making franchising your future, then expanding into other brands may not only be an option, but it may be required. Relative to the above segment around time, the downside with playing the slow game can result in limiting your exposure with that same brand, or even more importantly, good territories that are still available.

For most in the franchise space, it's all about location. And if you decide 2 years after opening a single-unit that you're ready to grow, you may uncover that there's not much "room to grow", especially if your desire is to stay somewhat local. One of the benefits of growing with multiple units within the same brand early on is that you have more staffing flexibility, potentially lower operational costs, less time as an investment (if you don't have to juggle different processes and system across different brands, etc). If you branch out into other brands, you now take on the risk of new processes, un-chartered territory (that you're not familiar with), and in turn, more time it's going to require from you as an investment. Think about this when setting up your path. Are you at an early stage with the franchise and willing to take the risk that more territories are available if and when you’re looking to expand? If you’re OK with diversifying your brand portfolio, are you ok with dedicating the time it’s going to take to learn and implement new processes, systems, staff, and procedures? If so, have you done the due diligence around that franchisor or brand to determine whether or not, based on the resources and support they provide, it’s going to be worth your time?

In summary, these aren’t revolutionary things we haven’t thought of before. If anything, these can serve as a nice check-list and key reminders on what to consider when looking to expand (if that is the path you’re looking to take).

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