What is the difference between a single-unit and multi-unit franchises?
The primary difference between a single-unit and multi-unit franchise is the number of units owned by a single franchisee. In a single-unit franchise operation, the franchisee owns only one unit. In a multi-unit franchise operation, the franchisee operates and owns several units in a particular location.
This means higher levels of profitability, less risk which is spread out across the units, more control over each of the units’ operations and more brand consistency in terms of how the franchise units and their products or services are marketed to the wider public.
What’s more is that training across multiple franchise units by a single owner can be streamlined, reducing expenses, resources and time spent and providing a sharper training experience for staff.
How does a multi-unit franchise work?
A multi-unit franchise works in a similar way to a single-unit franchise. The franchisor and the franchisee will sign a franchise agreement, which will spell out both sides’ rights and responsibilities. However, in a multi-unit franchise operation, there will either be a separate franchise agreement for each franchise unit or a comprehensive and detailed franchise agreement for all the units.
Once the formalities have been completed, the franchisee will have more of a strategic role to perform in terms of ensuring that each franchise unit operates optimally and according to the franchisor’s requirements. As a result, multi-unit franchise ownership can lead to higher levels of profitability and reduce operating costs as these will be shared across the different franchise units.
What is the perfect number of multi-unit franchises to have?
In short, the number of franchise units that a franchisee will or could purchase will depend on multiple factors such as finances and access to capital, management experience, long-term goals, ability to juggle multiple locations, training staff for new units, and more.
Owning several franchise units as part of a multi-unit franchise agreement comes with a wide range of benefits, not least of which is higher levels of turnover and profitability. However, every individual franchisee has a different and unique budget and goals and this means that there is no “perfect” number of units that a franchisee should own.
How to be an effective multi-unit franchise owner?
If you are contemplating purchasing multiple franchise units and you want to be a successful multi-unit franchisee, there are both tangible and intangible things to consider.
On the tangible side, you’ll want to double-check the figures and determine whether you can actually afford these units. On the intangible side, you’ll need to develop highly strong management and leadership skills because these will come in handy when you are delegating tasks to your team. Delegation in multi-unit franchising is key.
Furthermore, in order to be successful, you’ll have to create and refine effective recruitment strategies and invest in your employees’ development.
As a final point, always look at the bigger picture. What are your long-term goals and how will multi-unit franchising help you achieve them?
What is the difference between a multi-unit franchise and a master franchise?
A master franchisee is a franchisee who is considered a sub-franchisor. They are allocated rights and obligations of developing the franchise brand in a new location by recruiting and training new franchisees, selling franchise units and ensuring continuity and coherence of the parent brand in the new location. A multi-unit franchisee, even though they may operate in a particular location, is not responsible for recruiting franchisees or training them, nor are they responsible for expanding the brand to new territories such as in international locations. Although at first it may appear that there are few if any differences between a multi-unit franchisee and a master franchisee, these are some serious differences to consider.
