Being a franchisee in a successful brand is a significant achievement that typically takes lots of time, money, hard work and excellent execution by the franchisee at the local level. If you developed yourself to this level of success, congratulations! It is no accident, and you deserve to be proud and excited about achieving this success.
Oftentimes, successful franchisees are looking for ways to scale their business beyond a single unit. In this article, I'll be sharing imperative advice on multi-unit ownership.
What to Know About Multi-Unit Ownership
The first thing to keep in mind, is to proceed carefully. Success with one unit does not guarantee success with the next one, two or ten. Each unit needs focus, proper execution and implementation of the brand. Each unit requires strong systems, great people, appropriate capitalization, and a good location. Everything from service, inventory, pricing and marketing are critical to each franchise unit's success. Just like your first unit was no accident, the second, third and tenth units will be the same. They will require just as much, if not more, time and focus to be well executed.
Leverage Your Franchise Team
One scaling technique is to build the team in your original unit so that you can take some of those experienced and reliable employees with you to the next location or future locations. I had great success with this when I was a multi-unit operator of the PostNet brand in Minneapolis. At the time, I recruited a fantastic manager from a coffee shop. She became a rock star performer, accompanying me to open every new location. Her work ethic, positive attitude, customer service skills and ability to motivate staff were exceptional. Plus, she excelled with customers.
Having those key employees is often an essential advantage to moving into multiple unit ownership in the franchise industry. When you take top-performing operators from the original location, you must ensure the original location can run well without them. It's hard to be in two places at once, like standing on a boat and the dock; sooner or later, you need to jump one way or the other. A good indicator of being ready to expand into multi-unit ownership is that you can confidently shift and move part of your team to a new location, all while your original location continues to thrive and grow.
Financing for Multi-Unit Franchising
Another important factor is financing; new stores cost money, after all. If your original location has been successful, hopefully, you have paid down or have paid off the debt you may have borrowed for that unit. Many franchisees will leverage their original location to borrow funding for the second location. If this is an option, you may be able to get a lower rate and better terms on the loan for the new development.
Franchise owners must identify the importance of training when opening new franchise locations. It's critical to ensure to not cut any corners on training the new team and the new location operations. You want to set up the best possible opportunity in that new location, utilizing everything the franchise brand has to offer. You'll foster the best possible outcome for your new franchise location by fully implementing the whole program from the franchisor using new programs, materials, and equipment.
Multi-Unit Franchise Strategies
If your brand is a retail model, I suggest franchise owners keep their locations within a 20-minute drive. You can waste a lot of time and resources if your locations are spread too far apart. You also lose the advantage of connectivity and shared economies of scale if a great distance separates them. Centrally located units allow you to move inventory and staff around from one location to another. Having them close by makes this much more manageable and valuable.
Also, I promote the cluster effect of marketing, where the two stores can share advertising budgets and community engagement opportunities where you promote both locations simultaneously rather than just individually or separately. Combining and collaborating with multiple locations in the same market becomes a tremendous strategic advantage, especially when you're fighting competition that does not have that advantage.
Sometimes, purchasing a distressed location from another franchisee is a great way to scale and expand your business. However, you want to fully assess the situation and know all that will be required to make that acquired unit successful. Does it need to be relocated or remodeled? Does it need a complete overhaul and staff or equipment? Do not buy the unit unless you are certain you can fix it, know what it takes to do so, and have those resources, time, and ability.
When considering multi-unit franchise expansion, it is beneficial if others in the brand have successfully managed multiple units, as being the first to do so can be challenging. Ensure the brand is equipped for multi-unit development with comprehensive systems, training, and support programs. Your franchisor should be instrumental in facilitating your success with multiple units. Engage with other franchisees; inquire about their experiences, lessons learned, and what they would do differently. Learning from the collective brand experience is invaluable.
If you're wanting to scale as a franchisee and expand into multi-unit ownership, the Franchise Lifecycle Program can help guide you in taking the next step.
If you are looking for support in your franchise, schedule a free 30-minute consultation, and let's talk!
John Francis of Johnny Franchise is an enthusiastic, engaging, and entertaining public speaker, advisor and franchise coach; he speaks from experience and the heart. He is the creator of the successful Franchise Lifecycle Program that will take your franchise to the next level. Franchising is in his blood, and his parents were true pioneers in the industry, turning their family haircutting business into a 1,000-salon franchise empire. He has been a franchisee and a franchisor and has a deep understanding of the issues both face. Connect with John, and you and your franchisees will learn how to look at your business in new, positive, and profitable ways.