The franchising industry has seen a steady uptick in the number of multi-unit operators in recent years, and franchisors know this offers them a big benefit. When a franchise company has fewer operators who each own a number of units, it is easier and more cost-effective to provide ongoing support to their franchisees.
For a franchisee, multi-unit ownership presents a different set of benefits and challenges compared to operating a single location. If you’re on the fence about whether you want to operate more than one location, it’s wise to weigh all the pros and cons before taking the plunge into franchise ownership.
Advantages of Multi-Unit Franchise Opportunities
Owning multiple units is a growing trend because franchise buyers have realized that it provides some distinct advantages. Here are just some of the key reasons why increasing numbers of new franchisees are gravitating toward multi-unit franchise opportunities.
- Higher earnings. You can expect your earnings to rise correspondingly when you open additional locations. Keep in mind that expansion brings extra expenses, such as manager salaries for individual stores, so you can’t simply multiple the earnings from your first location by the number of units you own.
- Economy of scale savings. You’ll save money on supplies and products because you’ll be purchasing a greater volume of goods.
- More effective use of advertising dollars. When you have a number of locations in a given geographic area, you can expect your advertising costs per store to decrease significantly.
- Less of a learning curve. You’ll learn the ins and outs of setting up and operating the business with your first unit, so you’ll have fewer surprises and find it easier to establish, manage and market additional locations.
- Protection against downturns. When you own a single store, a slow period can adversely affect your bottom line. If you own multiple units, the stores that do well can offset a downturn at others, and this can help even out any losses.
Additional Considerations of Multi-Unit Franchise Ownership
Along with the above benefits, owning a number of franchise units comes with some unique challenges. To help you decide if you have what it takes for multi-unit franchising, ask yourself the following questions.
- Do you have the necessary skills? Running multiple franchise locations requires a specific skill set. As a single-unit operator, you’ll handle your store’s day-to-day operations and interact with customers. As a multi-unit franchisee, you’ll hire and oversee staff to run your individual locations, so it’s more of a managerial role.
- Do you have deep enough pockets? Most franchisors who sign a multi-unit agreement with an operator require that the franchisee opens stores on a prescribed schedule. This means you’ll need to be able to access financing as needed for each startup and maintain healthy cash flow at each location while you expand.
- Are you able to multi-task? Even though you’re not as involved in the day-to-day operations of each location, you can expect to have more responsibility and more headaches as the ultimate decision-maker for multiple stores.
- Can you tolerate greater financial risk? You’ll need to invest and/or borrow to open each additional franchise location, so you’ll be assuming greater financial risk than you would with just one location. Before you can become a multi-unit owner, you’ll need to decide if you have the fortitude to take on the added stress of risking a lot more money.
Once you’ve considered all the above pros and cons of multi-unit ownership, it’s time to start looking at franchise opportunities. To learn more about becoming a multi-unit owner of a proven sign and printing franchise, contact us at today at Signarama.
