MULTI-UNIT
NEED TO
KNOW
Buyer’s Guide
expansion capital in a particular industry.”
In other words, while multi-unit
franchising is the way to go for any franchisee seriously looking to grow their organization, it’s not a slam-dunk, it’s not for
everyone, and it’s far from easy. In fact it’s
hard work, and fraught with failure. Successful multi-unit franchisees must do at
least three things well:
1) You must be able to finance the
additional locations/territories. That
means deep pockets, or at least access to
deep pockets. This often requires business
partners and/or lenders who then have
skin in the game and can influence the
way you conduct your business. This is an
important reality to keep in mind if you
are an independent thinker and operator.
2) You must be able to form an organization with a management team and
infrastructure to command your expanding
empire. You may be able to remain handson with a handful of units, but when you
reach 10 or more it’s no longer feasible
for you to oversee day-to-day operations.
At some point, you will need to bring in a
team to handle everything from operations
to finance to marketing and HR. You must
learn to delegate and get out of the way.
3) Leadership is the final ingredient. You come to the game with vision,
ambition, and inspiration. The challenge is
communicating these crucial intangibles to
your expanding organization and keeping
them intact as they filter down to your unit
managers and front-line staff through your
in-house team. Necessary and achievable;
never simple nor easy.
If you have the background, experience, and drive to take on these challenges,
then multi-unit franchising offers you a
path to achieve your dreams. But you can’t
do it alone. Rely on people, partners, and
delegation—plus a large helping of your
own passion, patience, dedication, and
hard work—and yes, you can grow a multiunit empire.
SPREADING
THE RISK
Multi-brand franchising allows multi-unit operators
to balance risk and ride out the uncertainties of the
marketplace in many ways:
CASH FLOW. A franchisee
ECONOMIC CYCLES. Operating brands in different industries can
help minimize the ups and downs of an
uncertain economy. Casual dining as a
segment took a huge hit in the recession,
while bargain-priced fast food continued
to do fairly well; new car dealers suffered
while automotive maintenance and repair
businesses held their own and expanded.
SEASONAL CYCLES. A lawn
care franchise in a four-season climate
slows to a crawl in the winter. Ice cream,
lemonade, and frozen desserts peak in
the warm weather, so why not add soup
and sandwiches as the weather cools?
Adding a second business to balance out
the seasons will keep employees engaged
and the cash flowing in. New brands
can be in related sectors (maid service,
electrical, plumbing, home insulation),
or in completely different areas (food,
rental centers).
with several units of a casual restaurant
brand ventured into rental stores. Stocking a new rental store with merchandise
is expensive, and monthly rental fees
don’t cover the purchase price for 6, 12,
or 18 months, tying up valuable cash in
inventory. The daily cash flow from the
restaurants was the perfect complement
to keep the organization healthy until the
rental stores started showing a profit—
which they did handsomely in time.
DAY PARTS. Breakfast, lunch,
dinner, late night, and in-between. Whether it’s food or services, consumers and
businesses have needs 24 hours a day.
If your business makes the majority of
its sales at breakfast and lunch, adding
a brand that peaks in the afternoon and
evening will make for a longer day, but
also a stronger bottom line.
SURPRISES. Fast food operators have been hit hard over the years
by news of salmonella, E. coli, employee
misbehavior, and other developments
beyond their control. Having other brands
in your portfolio can help you stay afloat
until a negative situation is remedied
and trust in the brand restored.
MULTI-UNIT BUYER’S GUIDE 2013
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