Multi-Unit Franchising: Is Now the Time to Expand?

A solo franchise operation is a business, but multi-unit franchising is an empire!

Franchise ownership offers entrepreneurs the opportunity to employ a proven model to achieve operational success. But if I were to ask you how many franchise owners operate more than one business unit, what would you guess? According to statistics compiled by the franchise research company FRANdata, 54% of all franchises in the U.S. are owned by multi-unit operators. Specifically, over 40,000 multi-unit operators control more than 220,000 franchise units in the U.S.

 

The Ability to Scale Your Business

A multi-unit franchise operation occurs when an owner purchases the rights to own and operate more than a single unit in a specifically assigned territory or geographical area. The expanded network may include two, three or more total locations, however, most instances include two to five additional units. Interest in purchasing the rights to multi-unit franchises has been on the rise for the past decade—primarily because it offers owners the chance to expand territorial operations and boost revenue streams exponentially. It’s a means to create your own “mini-empire.”  

 

How to Allocate Risk Across Multiple Units

Franchise owners who make the investment to go the multi-unit route are easily defined by their “go big or go home” business strategy. However, it also allows an owner to spread the risk over several business units, while allowing collective efficiencies to take root over the enterprise operation. While it’s technically true that the stakes are higher, so is the rate of a return on the multi-unit investment. Instead of relying upon a single income stream, multi-unit owners can spread the risk across several locations, creating an optimal operating condition for generating incremental wealth. Multi-unit ownership of several locations can easily lower operational costs, allow for combined efficiencies and shore up revenue streams across the board. And since multi-unit sales are an attractive proposition for franchisors, it’s not uncommon for them to offer discounted or scalable terms during negotiations, including reduced franchise fees and royalty payments. 

 

A Mutually Beneficial Arrangement

It’s unusual for multi-unit franchise owners to be required to open all locations during the same time frame. In fact, in most cases, the franchisor and multi-unit owner openly collaborate to develop an area development agreement that makes good business sense. In some cases, the direct profits from an initial franchise location can be poured into a second or third operation. Usually, terms are discussed and agreed upon for each individual franchise agreement, spelling out the specific time frame and territorial boundaries for each opening. 

The benefits of multi-unit franchising are mutually beneficial to franchisor and franchisee alike. Bundling multiple franchises into a multi-unit deal drives strong incremental growth and territorial gains for the franchisee and offers stability and great bottom line sales numbers for the franchisor. But what’s really at stake is the opportunity for multi-unit franchise owners to double or even triple their income earning potential, thanks to the multiple revenue streams. Of course, it’s true that multi-unit franchise ownership will require a higher net worth and investment level, but it also comes with the potential to induce a more rapid return on investment. 

Becoming a multi-unit franchise owner requires a strong business acumen and an acute attention to detail. There’s no doubt that this option requires a much bigger commitment of time, resources, and dedication to pull off. Getting in too deep and overextending your resources and cash flow can become a concern, so it’s advisable to conduct a proper amount of due diligence, professional consultation, and research before entering into a multi-unit agreement. But done correctly, a multi-unit franchise owner has the potential to reap exponential rewards on the bottom line of their balance sheet.

If you’d like to see a list of some of the more popular brands for multi-unit franchising, please review this list from Franchise Business Review. Oh, and you better believe Any Lab Test Now made the cut! If you’d like to speak with our franchise development team about the possibility of owning multiple Any Lab Test Now locations, simply fill out this brief form and we’ll be in touch shortly!