11 Benefits of Scaling to a Multi-Unit Franchise
Jan 30, 2024
There are many amazing benefits of becoming a multi-unit franchisee. For example: growing such an enterprise allows you to obtain true time and financial freedom, whereas operating just one unit is practically the same as having a job.
There are a lot of other benefits that come from scaling a multi-unit organization, which can significantly impact the overall success and profitability of the business.
The following are 11 key advantages of growing into a franchise enterprise:
1. Multiplying Profits
This is basic math: one unit gets you X amount of the money; two units, 2X; 3 units, 3X; 4 units, 4X; and so forth and so on.
So every time you open a new unit, you'll be multiplying your profits.
2. Economies of Scale
Operating multiple units allows you to benefit from economies of scale because you can split certain costs between all your units to optimize your financials.
For example, if you have an above-store team to support the enterprise, the cost per unit will be lower as you open more units.
You can also benefit from this when negotiating with your vendors for services like maintenance or cleaning. When you bring into the table a portfolio of units that need that same service, you can get a lower cost per unit because of the volume.
These economies of scale will improve your profitability per unit.
3. Diversified risk
If you have 1 or 2 units that are underperforming, you can compensate for those poor results with all the other stores that are doing well, and therefore, you’ll have a more stable organization.
You will also have the time to design strategies to fix them or analyze if it is best to relocate, close, or sell.
Being a multi-unit franchisee allows you to be stronger, less vulnerable, and make smarter decisions, ensuring more stable overall revenue and profit.
4. Brand recognition and marketing efficiency
If you have a large organization with multiple units, you're more than likely to own a region. Therefore, every effort you make to impact the area as a whole will also be beneficial for all the units.
Owning the market allows you to be much more efficient in your marketing efforts and every unit you open will give you incremental brand recognition.
- Having that extra brand recognition increases customer’s trust, and therefore, brings more sales.
So, in the end, growing will allow you to increase your sales because people will discover you and get to know who you are, what you do, and what you deliver.
5. Streamlined operations
Every time you open a new unit, you gain experience, learn more knowledge, and acquire new best practices that you can implement across all units, either existing ones as well as future openings.
Think about it! As you grow in your organization, you can:
- Develop better systems and get more consistent service standards.
- Design more effective training programs so your people are properly trained.
- Achieve operational efficiency because procedures, processes, and policies are implemented the same way in all the units.
All of this, assuming you are creating and documenting systems to train your people so you can delegate responsibilities, and then follow up to make sure things are being done as they should.
Beware! While it is true that you will have better operational efficiency and better profit by owning a muti-unit organization, you need to have all these processes and procedures in place to ensure that every unit operates the same as the next one.
6. Greater influence within the franchise system
Depending on how big you get and how good you are performing, you can become an influence within the franchise system.
Why can you have a say in the franchisor’s decisions? Because clearly, you are successful and you know more than the average franchisee. Therefore, they're going to be interested in hearing what you have to say, and they will listen to you more than they would a single-unit franchisee who may or not be successful.
Also, you have to remember that the franchisor wants to ensure that you are successful. So you may receive more attention and support from them.
7. Opportunity for territorial development
If you are a multi-unit franchisee and you're building an enterprise this means that you're successful, and therefore, the franchise owner is more likely to give you a larger territory because they trust that you're going to do a good job.
So not only that. Other fellow franchisees who want to sell their units could offer their units to you first knowing their legacy will be left in good hands.
And, as you capture more and more territory, you might be able to take over potential competition even within the same brand, and therefore, have a much bigger opportunity of control.
8. Attracting great talent
Larger operations can attract and retain higher-quality staff, including experienced managers because you’ll be able to offer great growth opportunities for them. This can lead to better overall performance of each unit.
People can come into the organization from the bottom and have a career that is satisfactory, fun, and that pays more money because they're growing within the organization.
9. Asset building
Another benefit of becoming a multi-unit franchisee is that you get to build assets with each additional unit you manage. And with that, you get a higher value for your business, year over year.
- So the more units you have, the higher the net worth for you as a franchisee is going to be.
This is also a great way to open opportunities for a future sale or to leverage to continue your growth in your organization.
10. Leveraging experience
You can also avoid past mistakes, meaning you can really leverage all that knowledge and experience that you're getting as you grow your franchise, and apply those best practices in your organization every day.
Every new unit is a potentially better, smoother, and quicker path toward profitability because you are leveraging the experience you have through the years of building a multi-unit organization.
11. Achieving freedom
We already established you get to have financial freedom because as you open more units, you multiply your profits. But you also can obtain time freedom since along the way, you build a leadership team that knows your culture and organization, and who you trust enough to delegate the day-to-day operations.
Ultimately, this allows you to have more flexibility with your time, which then gives you the freedom that you want and deserve.
- The more units that you have, the more leadership infrastructure you need, and the more freedom you can have.
These are some of the key advantages of operating a multi-unit franchise. But for you to enjoy all of them, first you have to create the systems, processes, and procedures to support that large organization. Otherwise, it will become more of a headache.
Along with the benefits of scaling a multi-unit organization come a lot of increased responsibilities that relate to having multiple businesses. You also require solid business acumen, effective management skills, and the capacity to handle the complexities of a large organization.
You can acquire that knowledge and experience through the COMMAND Program here at the American Franchise Academy. This best-in-class program focuses on giving franchisees the tools and resources they need to build and manage a multi-unit enterprise so they can achieve their business and financial goals.
I hope this blog post inspired and excited you to make your business growth happen. If it did, how about subscribing to our YouTube channel? Or follow us on our podcast so you can continue to grab tips, ideas, and information to have success with your franchise.
Reflections:
- How much risk-averse are you?
- Are your systems, processes, procedures, and policies well documented so people can get properly trained?
- What would you do with the time freedom you obtain by owning multiple units?
- What other benefits can you think of growing into a multi-unit franchisee?
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