Multiple-unit franchising occurs commonly in retail franchises, but is not so common in service franchises.
For one reason, most service franchises involve the business owner providing the services to the end user.
In retail franchises the end user purchases the goods, and often can do so equally from either the franchise business owner or a franchisee staff member.
As such, retail franchise businesses (and service franchises that can be operated with staff) are more scalable and therefore suited to multiple-unit franchising.
Where the franchise business model is suited to multiple-unit ownership, franchisors often encourage existing franchisees to consider taking on additional stores or territories.
This can help franchisors to maintain franchise business growth and lowers the acquisition cost of a new franchisee.
During periods of strong economic growth, multiple-unit franchising becomes more commonplace as existing franchisees look for opportunities to grow, and potential new franchisees are increasingly scarce.
Franchisor Support for a Multi-Unit Franchisee
The type of support required by a multiple-unit franchisee can often differ from that provided by franchisors to a single-unit franchisee.
While a high-level of franchise operational support will still be required similar to single-unit franchisees, multiple-unit franchisees will be more focused on business and financial performance indicators and require access to greater franchise management expertise accordingly.
Multi-Unit Franchisee Transition
Growing by acquiring additional franchises can provide a career path in business for a franchisee.
Becoming a multiple-unit franchisee can both challenge and enhance a franchisee’s skills, while also increasing their rewards from the franchise business.
Most successful multiple-unit franchisees start with one franchise outlet and grow sequentially by adding additional franchise outlets as franchise business opportunities become available. It is less common for a new franchisee to start as a multiple-unit operator from the outset.
Transitioning from a single to multiple-unit franchisee can be a difficult leap for a franchisee.
Single-unit franchisee owners are focused on the internal workings of their franchise business and often allocate themselves both a management and operational role, whereas successful multiple-unit franchise business ownership requires a greater focus on management skills (ie. working on the business, rather than working in it).