The franchise industry comes with several benefits, one of them being the opportunity for expansion. Unlike owners of start-ups, for example, who may spend years building and growing their brand before expanding, franchisees have the potential to expand to multiple units at a much quicker scale. Some may consider this venture while already operating an existing franchise unit, while others may immediately choose to hit the ground running by investing in multiple units from the jump.
Multi-unit franchisees can reach more communities and customers, boosting the potential for more profit. However, it raises the question—are you ready to own multiple franchise units? Below are some questions to help you determine if you’re ready for this next step.
WHAT IS MULTI-UNIT FRANCHISING?
According to the latest reports, 43,212 multi-unit operators in the U.S. manage more than 223,000 franchised units. But what is a multi-unit operator? Typically, when a franchisee owns multiple units within the same franchise system, they are considered a multi-unit franchisee. However, that doesn’t necessarily mean they own 50+ locations—any franchisee who owns more than one location falls under this category. This is not to be confused with multi-brand franchising, where a franchisee will invest in locations across multiple brands.
If one of your goals is to diversify your franchising portfolio, you may invest in different types of franchises. Alternatively, if you want to expand within a franchise that you’re already familiar with and finding success in, choosing to stay within that franchise system and operate more locations may be a better option. Either way, multi-unit and multi-brand franchising can co-exist. Deciding which approach to take can help determine your readiness.
HOW IS YOUR FRANCHISE CURRENTLY OPERATING?
For those already in a franchising role, you may remember how thrilling it was to take the first step in owning a business. The potential to expand can be equally exciting. However, before proceeding, look at your current location’s performance. What is going well? Can improvements be made? Is there still more to be done to feel settled in your current location before considering another? Assess how things are operating now and work out any kinks before expanding, as any difficulties you encounter may carry over to another location.
Managing inventory, for example, is a great place to start. If you are expanding within the same franchise system, the costs associated with purchasing inventory and other items for your locations can be reduced thanks to economies of scale. Additionally, you may be able to make deals with your suppliers and vendors because you can make purchases for more than one unit at a time.
ARE YOUR FINANCIALS IN LINE?
If you are considering investing in multiple franchise units, be sure you fully understand the associated costs. More locations obviously mean greater investment, but planning ahead is key if you require outside financing to fund your investment.
Examine how you’re currently managing your finances and see if it’s feasible to invest in more than one location. If your location’s current finances are in a bit of disarray, forming a plan to keep organized and build your financial literacy skills can be a big help before expanding.
DOES CUSTOMER DEMAND WARRANT MORE LOCATIONS?
You might be ready to invest in multiple franchise units, but is the territory in which you want to expand ready? Many multi-unit franchisees may choose to own and operate multiple locations within one territory because it can be convenient. However, determining customer demand is important. If you are already in a saturated market or there is not as great of a need for more locations to service your potential customer base, opening additional locations may not lead to success. You could even end up competing with yourself as you try to get customers to visit one location over the other.
One of the ways to know if you are ready to own multiple franchise units is by feeling confident in your market research. Consider factors like industry projections (does the industry and/or market your franchise is in support room for growth?), customer demographics, and consumer demand for the products/services the franchise offers.
ARE YOU READY FOR A CHANGE IN ROUTINE?
If you are an existing franchisee, the change from operating one unit to multiple may take some getting used to, especially if you’ve fully invested time and energy into your single location. Changes can be in your commute, responsibilities, the number of employees to lead and manage, and so on. Feeling organized and confident in how you will balance each location while ensuring optimal communication with everyone involved (employees, managers, franchisor, etc.) is key.
Prior to expanding, ensure you and your current lifestyle can bear a greater responsibility and, often, a greater time commitment, especially in the beginning when it may take up more of your time to get your additional franchise units off the ground.
HAVE YOU CONSIDERED YOUR FRANCHISE OWNERSHIP MODEL?
A franchise ownership model centers around the amount of time you put into the role. An owner-operator model requires franchisees to be hands-on day-to-day and fully involved in the process. An absentee model is on the opposite end of the spectrum, where a franchisee is removed from daily operations. A semi-absentee model meets somewhere in between. Absentee and semi-absentee ownership models are often the popular choice for franchisees interested in owning multiple franchise units, mainly because it’s impossible being in two places at once.
To determine if you’re ready to become a multi-unit franchisee, consider your current lifestyle, what ownership model you’re in currently (if you’re already a franchisee), and the time commitment you’d like to invest. For example, an absentee approach may be a better option if you are considering owning a significant number of units. Meanwhile, if you are considering just one additional unit, a semi-absentee approach may be better suited for you. It comes down to the goals you’re looking to achieve as a franchisee.
ARE YOU CONFIDENT IN YOUR TRAINING AND BUSINESS OPERATIONS?
When a franchisee owns multiple locations, it’s essentially copying and pasting unit to unit. This is why it can be incredibly important to feel confident in the initial training you were provided, as you will then apply your learnings across units. A firm understanding of how to run your franchise’s operations efficiently can offer the reassurance you need to repeat it. Depending on the franchise, seeking support from your franchisor about a specific business operation or regulation before investing in multiple units can save you time and build your confidence in running each location successfully.
FRANCHISING WITH DOGTOPIA
Dogtopia offers several business models to support your goals and lifestyle. Our multi-brand/multi-unit franchisees fall under our “experienced empire builders” franchisee profile, as they are often looking to develop a large market quickly. With our quality training and support, our team will guide you through the process of owning and operating multiple Dogtopia locations in a style that works best for you. Click here to learn from some of our multi-unit franchisees and the success they’ve enjoyed.