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Don’t Let Cost Control Paralyze Your Success!

multi-unit franchising numbers planning profit sales Sep 27, 2022
Cost control

 Being mindful of your expenses is a critical responsibility for a multi-unit franchisee. However, that alone cannot drive your long-term success. If you focus only on cost control, you won’t be able to move forward with strategic thinking and growth for your business.

  • Every franchise brand has a proven financial model, we call it unit economics. 

There are five things about your business and the franchise brand that you need to be aware of to truly maximize your profits, make the most of your investment, and be successful as a top-performing franchisee


1. Understand the Unit Economics of the brand

This is the first step for you to be a successful franchisee. Financially speaking, you need to know the limitations of the brand you invested in. That means, knowing how to maximize the average indicators based on the experience that the franchise has had in its existing years.

Some of those indicators are:

These will determine the average unit economics for that particular brand. And that is the base on which you need to operate. 


2. Compare your performance against the average

You need to know how you are performing against the standard. You can find that information either from the franchise’s activity or from fellow franchisees. 

Go line by line on each of the financial numbers to understand where you are, because you might be ahead on sales but far behind on labor, or ahead of the product cost but behind on labor. 

Are you familiar with the three most important numbers of your business? Read this to discover them.

You can also look at the commission and compare yourself to other franchisees because they are managing a brand just like yours. The locations are different, but they work with the same brand, business model, and unit economics. 

Investigate how several franchise business owners are doing, because different units operate in different ways. This will help you identify where you are in each of your units and as a whole against those basic standards. 


3. Define targets by cost line item

To maximize the profitability of your business you have to define a clear and smart target for each of these expense line items, without going below reasonable levels. They can be either brand or franchisor provided or defined by you. 

Some of them can be theoretical, others ideal, and perhaps in some areas, you might not have any of those, for example, in labor cost. But at least that way, if you have a clue on how other franchises are performing, you will know where you need to be.

You also need to understand how each of those line items work in terms of volume and based on the different situations and intricacies in each of your units. 

Once you have an idea of what the brand standards are, and defined the targets in each expense line items, you must focus on them, and train and coach your team on the critical drivers. That way, they’ll be able to do the actions they need to minimize the ways in each of those line items. And from then on, manage and expect results. 

With these five keys, you’ll achieve the expected financial results.


4. Maximize every revenue channel

To achieve long-term success as a multi-unit franchisee, you need to now focus on how to bring more sales and revenue. Spend time analyzing your revenue channels. Whether you have a food service, drive-thru, counter, dining, takeout, or delivery, you must evaluate how can you improve each and every one of those channels to maximize your revenue.

Find inspiration by looking at the top-performing franchisees in your brand and learn from the strategies they are implementing. Whatever they do, you should be able to do it to a certain extent, especially if their location and demographics are similar to yours.


5. Grow units to multiply success

If you can have a certain level of cost control in your unit and ways to grow your revenue day in and day out, you have to execute this fifth step. Otherwise, you'll never have a true multi-unit enterprise to achieve your financial goals

Learn about the pros and cons of becoming a multi-unit franchisee.

  • The only way you will multiply your success and exponentially grow your profits is by opening more units. 

Think about it! If your franchise unit makes $55,000 a year in net profit, and you spend your overall time on cost control, maybe you’ll get to $75,000 of profitability. But what if you spend as much focus and attention on opening another unit? You may have another $55,000, which means you'll double your profit!


This is the value of not focusing just on cost savings. You cannot save yourself for success. So how can you get to this point? You have to have your business management systems in place. This will allow you to understand what your costs are, what the smart targets are, and how to define them. 

Also, train and coach them to make sure your teams are controlling those expenses, have local store marketingand increase sales and revenue, year over year. And then, on top of that, how to open more units, in a successful, confident, and consistent way.

Ultimately, that will help you truly multiply your profitability.

If you don't have the systems to make all of these things happen, our Multi-Unit Mastery Masterclass workshop is for you.

In it, we teach all of the systems you need to get from point A to point B to point C, and eventually become a multi-unit successful franchisee. If this is of interest to you, go to to register for the next free masterclass. 

  • At the end of the day, that is what The American Franchise Academy focuses on: protecting the American dream of business ownership through franchising.

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  • Are you performing against that average? Are you better? Or are you right at the middle? 
  • Are you training your team on the critical drivers to minimize the ways in each of your line items?
  • How can you improve all of your revenue channels to increase revenue? 
  • How ready is your growth plan to open more units?