MULTI-UNIT
NEED TO
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Buyer’s Guide
and infrastructure. And, of course, signing
multi-unit or area development deals also
means dealing with fewer franchisees to
sell more units. Franchisees seeking a new
franchisor partner look for pretty much the
same: a solid management team, strong unit
economics, a well-known and respected
brand name, and an opportunity to develop
a territory over the long term.
Taken alone or together, there are
many reasons that inspire
successful multi-unit franchisees to seek out additional
brands:
GEOGRAPHY.
staff. With a strong infrastructure in place,
a multi-brand franchisee has a built-in
advantage in building brand awareness
in their territory and more easily, rapidly,
and successfully penetrating their market
with a new brand.
TRAINING AND RETENTION.
With two or more brands, a franchisee can
offer employees cross-training, flexibility,
promotions, and a clear growth path as their
“
operating systems differ and must remain
separate, sometimes elements of one can
be applied to another, or to internal operations at the franchisee’s home office. The
same holds true for marketing programs,
recruiting methods, training, HR, and every
other ingredient of franchising success. Keep
them separate to maintain compliance, but
look for areas to adapt good ideas across
your organization.
Franchisors seeking new multi-unit partners are looking for a proven track record
managing multiple units, relevant industry experience, positive cash flow, strong unit
economics, and a solid management team and infrastructure.
Adding a new brand can be
the perfect path to continued
growth in their region for
a single-brand multi-unit
operator or area developer
who has built out their territory, or for
a franchisee of a brand with no local opportunities to build more units—without
having to travel to new or distant locales.
Familiarity with the territory and the dynamics of their market, combined with local
connections and a solid grasp of local real
estate, developers, and zoning requirements
is a real home-court advantage.
FINANCING. A successful track
record with one franchise concept demonstrates your ability to lenders who can
help you launch that next concept. Thriving
multi-unit franchise operators typically
have high net worth, extensive contacts,
and access to financing to open successful
units quickly. These are powerful assets to
have. Your existing operation and the value
of your real estate can help you acquire a
second or third concept, without putting a
stranglehold on your cash flow.
INFRASTRUCTURE. Multi-unit
franchisees with their own accounting, human
resources, and other internal departments
often have excess capacity. Adding brands
can take advantage of that capacity, growing
profits without expanding the home office
skill sets improve. This helps in attracting
and retaining top talent as you build your
organization, always a challenge in any business. And with better-trained employees,
unit economics improve.
ECONOMIES OF SCALE. Once
an organization attains a certain size, several
things get easier and, often, less expensive
since you’re “buying in bulk”: marketing
and advertising, supplier costs and services,
administrative and back-office functions,
and more. For example, one vendor may be
able to service all your equipment and, as
a result, offer you a more economical rate.
CO-BRANDING