District Manager: How Many Units Should They Oversee?Nov 22, 2022
Multi-unit franchisees can truly have time and financial freedom. But the more stores they operate, the less attention they can give each one.
- That’s why having a district manager becomes critical to ensure that all units function optimally.
But, how many stores should they oversee? Here are five considerations you must analyze to make sure the district manager performs at their best.
If the units are far away, your district manager will spend a significant amount of time getting from one store to another.
And, if the distance is considerable enough, there may be an increase in expenses like gasoline, hotel (if they have to spend an overnight), food, and other supplies required to travel.
This means that even within your organization, how many units a district manager should oversee might differ, depending on how close or far the units are.
How complex your business model is and the industry you operate in will also influence the number of units.
It’s not the same to supervise a business with 150 employees, that requires a lot of equipment and maintenance, and has customer challenges as one with only 10 employees, fewer issues, and not that much equipment.
The time the district manager spends detecting opportunities, reviewing the information, reporting, and analyzing the business to make an effective plan, will increase or decrease depending on these aspects.
If you have a high level of complexity in your business, then the district manager must supervise fewer units so that they have enough time to execute and maintain the systems in each store. If the operation is simpler, they can handle a bigger number since fulfilling these tasks should be fairly easy.
When promoting your next district manager you should consider that being a unit leader is nothing like being a district manager.
Your candidates' training, knowledge, and experience will make a huge difference in their performance. It is crucial that they know exactly what to do and how to be a good district manager, and that they have a set of skills, learnings, systems, and processes to execute the job properly.
If your new leaders haven't had that training and development, give them fewer units until they figure out what are the tools, processes, and routines they need to be successful. Contrariwise, if the person has prior experience and already knows what to do, assign more stores.
The district manager’s salary requires additional benefits, a bonus program, and operational expenses (vehicle, gasoline, repair, maintenance, travel). And all of that money will come from the cash flow of your business.
That’s why you have to be conscious of the cash flow from each of your units, and calculate how many units will cover the investment of a multi-unit leader.
For example, if you require to have a cash flow of at least five units so you can invest in a district manager, this will be the minimum of units needed before you hire a new district manager.
5. Business and Personal Goals
How many units do you want to have? When do you want to have them? If you want to add, for example, six units within 12 months, clearly, you're going to need a leader to oversee those units.
But if you only want to have four more units in the next two years, you as a multi-unit franchisee could fulfill that role.
A smart thing to do is grow based on the district manager's area, to make sure your growth will give you the best return on investment and that your district manager will oversee the units correctly.
You should also consider your personal goals. One of our clients was directly managing one unit and overseeing two more, and she was quite overwhelmed when she joined our Flagship Program for Franchisees.
As we worked with her, she concluded that she rather have well-deserved time freedom than money in the bank. Of course, she wanted profitability, but having that desired freedom was more precious to her and she was willing to give up the cash flow to pay for a district manager.
If on the contrary, you want to accumulate as much profitability as you can, you may end up absorbing the district manager role yourself until you reach that financial goal.
As you can see, resolving how many units a district manager should oversee depends on many aspects. This is one of the things that we help our franchise clients determine, through our Flagship Program.
Learn more about how we help franchisees go from one unit job into a multi-unit enterprise at Multi-UnitSuccess.com and register for our next information session.
For those of you that already have a district manager, or are in the process of hiring or promoting someone into that position, consider giving them the training and development they need to be successful and give you the financial and business results you want.
For that, we have developed a Multi-unit Leadership Training. Go to DistrictManagerTraining.com and join us in our information sessions to know mpre details and the outcome you can expect.
I hope that you got value out of these five considerations. If you want to acquire more tools to help you become a successful franchisee and business owner, follow us on our social media (Facebook, Instagram, LinkedIn) and subscribe to our YouTube Channel, where we share tips and knowledge to inspire you and help you grow.
And don’t forget to listen to our podcast Franchise Success Formulas on Spotify and Google Podcast.
- How many units do you want to grow into?
- Do you have the necessary cash flow to cover the investment of a district manager?
- Are you considering growing within the district managers’ area to ease the supervision of the units?
- Are your district managers skillful and do they have the processes they need to be successful?
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