There are many ways a franchisor can grow the franchise brand. Multi-unit franchising is one way for some of the most well-known brands to grow their system, especially within the retail sector.
Some types of franchise systems are more suitable for multi-unit franchising than others. For example, in a retail franchise the store can be operated by the franchise owner or any of its staff members who have been properly trained, making a retail model more suitable for multi-unit franchise ownership.
However, for franchisors to allow any of their franchisees to take on more than one franchise, they must give a lot of consideration to the issues arising with owning more than one business. The most important question to ask is whether the franchisor’s system is suitable for multi-unit franchising. This means whether the type of the franchise business allows for the delegation of most duties to an employee within each franchise business.
Once it is established that the franchise system is suitable for multi-unit franchising, the franchisor would need to consider the following:
The business and financial performance indicators that should be implemented by the franchisor to ensure the conduct of all franchise businesses operated by a multi-unit operator are successful.
Development and implementation of training program(s) tailored to teach its potential franchisees all the required management and business skills, which are required to operate multiple businesses.
Requirements of multi-unit franchisees in running more than one business, which are very different and more involved than those of single unit operators, and developing support system able to assist the needs of multi-unit franchisees.
Development of recruitment programs assisting multi-unit franchisees in their hiring needs both at entry and managerial level.
Following the initial considerations and choosing to allow multi-unit franchising within the franchisor’s system, each of the potential multi-unit franchisees must be considered, taking their personal and business circumstances into account.
Questions to ask should include whether such individual has:
- the ability to be strategic in their approach to the management of all the businesses in their control
- enough financial backing or the ability to obtain the required funds without overstretching their ability to repay
- the ability to learn all the skills required to become a successful multi-unit operator, for example people management skills and understanding of the financial data, if they do not possess these skills.
Some franchisors put in place financial programs which assist their franchisees in purchasing more than one franchise. However, extra care must be taken in ensuring franchisees that are offered financial assistance are capable of satisfying all their liabilities.
One last consideration for franchisors is implementing incentive systems and bonus structures that will allow the franchisees to keep their staff motivated and encouraging high level of performance.
Invest in infrastructure
It goes without saying that allowing multi-unit franchising within the franchisor’s system should not be a decision made on a whim. Lots of thought and consideration must be given to the internal and external factors, suitability of the system and its franchisees as well as capacity to support them. Those franchisors choosing to embark on this path of expansion must invest into infrastructure to be able to cope with the additional requirements of training and support. However, if carried out properly, multi-unit franchising offers many benefits to the franchisor by grooming from within and provides inspiration for something greater to the franchisees.