Multi-unit franchising, where individual franchisees own multiple units continues to be a significant trend in the franchise sector worldwide.
Research by the Franchise Relationships Institute shows franchisees who operate multiple units, now generate over 50% of Australian franchise sector revenue. Franchise Relationships predicts this percentage will grow because it gives franchisors a great way to expand the group using people they know and who know them and it gives experienced franchisees in the group a new, challenging way to expand their own business.
In the US multiunit franchising has become the go-to strategy in recent years because franchisees are drawn to the idea of significant financial gains and lower operating costs produced by owning multiple units. There is also a safety net in owning more than one site because franchisees are not dependent on income from only one unit.
This trend means there are new kinds of franchisees coming into franchising. Traditionally, franchise groups looked to bring in franchisees to manage one unit. Today in the States, 1% of franchisees own and manage 26% of all franchised outlets.
In the States, this sector is made up from:
- Family run franchises operating up to 5 units.
- Entrepreneurs getting together as business partners to operate 5 to 8 more units.
- Corporately trained executives establishing mini-organisations with 10 or more units.
Corporate business franchisees are becoming significant owners and they can hold a significant number of franchises from many different franchise groups.
So, how do you become a multiunit franchisee and build a business which can give you so many advantages?
My journey in franchising started over 30 years ago when I purchased a Bedshed franchise in Fremantle, Western Australia. I then grew to become a Bedshed multiunit owner with seven outlets. This experience has only grown as I became a franchisor with seven brands and over 120 outlets and a franchise consultant and mentor helping many take the journey into franchising and expand their franchise groups one way or another.
Experience tells me there are a number of things to take into account.
Go in with eyes wide open
People purchase a franchised business for so many reasons and each of us will have as many reasons to measure our own success in business.
Some of us are looking for a way to bring in the money to live. Some of us are passionate about a particular product or what a product can do for people and would do almost anything to work in that area. Many of us are looking for a business we can grow.
Not many of us purchasing our first franchised business though, really understand what’s involved. Many of us buying a franchised business are new to business and are looking for a safe way to learn how it all works as well as making the money we think we deserve.
Whatever your experience in business and whatever the reason you are looking to buy a franchised business, it pays to go into it with eyes wide open. Especially if your measure of success is to eventually grow your business significantly through multiunit franchising.
Know what your new franchised business can do
If your aim is to grow your business by owning more than one franchise in a group, make sure before you sign that Agreement that this is going to be possible. A highly specialised business which only has the opportunity for a few outlets in your region will probably not give you the chance to build your multiunit empire. Think about your options for growth.
Know what you have to do to make it happen
Whatever business skills you have or don’t have when you purchase a franchise, you will have to learn more.
First, how to get things done the franchisor’s way. Making the franchise system work in a business model where everything needs to be consistent, look the same, feel the same means you absolutely have to know where you follow the system and where you have the latitude to go your own way.
Understand how a franchisee business journey promotes growth over the years
Every franchisee, especially a franchisee new to business, will have a journey to take to gain the skills to operate more than one franchise unit.
Understand the basics
First you will have to concentrate on learning how to deliver the service or product the franchisor’s way. You might be an experienced restauranter but if you purchase a franchised restaurant you will have to learn how to manage that outlet their way, a more difficult task if you have habits to unlearn. It is no accident that Maccas make prospective franchisees work in one of their restaurants for a year before they are considered.
Through this time franchisees new to business will also have to learn business basics.
Most franchisors have this aspect of support and training under their belt. Their operations manuals will cover technical details to one level or another and their support staff will know how to help.
Get business under control
Once the basics are covered, the pressure will be on to really understand how business works. Key will be truly understanding:
- Marketing and what can be done at a local level to lift your trade
- Staff management and what can be done to develop a skilled team
- Customer service so you become the best and most popular
- Financial control through business growth, a tricky balance
And a one that has exponentially changed business post COVID.
- Managing a business in a digital environment
The very best franchisors know they have to help their franchisees develop their business skills. I have a Franchise Simply Radio Show interview with John O’Brien from Poolwerx explaining that when his franchise group was just a few years old, he was forced to completely change his whole support team from one focusing on the technical aspects of pool cleaning and maintenance to a team more focused on business skills needed to manage business growth.
Being able to manage an array of software will be included in this suite of business skills starting with Xero to look after the books, and probably software for project management, client relationship management and email, operations in the cloud are going to be the simplest systems needed in most franchises.
Unfortunately, business training and digital management is where most franchise support drops the bundle. But it is essential you have these business skills under your belt if you want to grow your business significantly. So, if franchise business support and training is lacking then get your own.
Find a good coach with franchise experience, pay the money for their time and put in the effort to learn everything you can about building a business at this level.
Then understand you will have to grow personally to work on the business and leave running the business to others
Give up working in the business managing the day to day of customer service. Absolutely key is the fact that you must delegate running the daily operations of your business to staff. Absolutely key is the fact that you must step away and work fewer hours but get more done through great team building.
Now is the time to work on the business rather than in it. Your business coach should be able to help here too.
It’s the unexpected that creates the magic
I had another Radio Show interview with Scott Greenberg discussing the research he has recently done for his book, ‘The Wealthy Franchisee: Game-Changing Steps to Becoming a Thriving Franchise Superstar’.
Inevitably, Scott found the wealthy franchisees were those who built their business through purchasing more franchise units.
What was surprising though, was that the usual factors did not really play a part.
Scott found you do not need to have the best territories in the group. Yes, your area does have to have some potential but a good franchisee will make a success of any of their business outlets, even those in more mediocre areas. He cited examples of non-performing franchise outlets being taken up at a low price by the top performing franchisees in the group and being turned around to become profitable.
Certainly, when I was a Bedshed multiunit franchisee in the 80’s at the beginning of my franchise journey, I was asked by my franchisor on a couple of occasions to put an offer in for badly performing outlets in my region and I found I was able to create one of the best outlets in the group.
Scott also found that you do not need to become a workaholic, working 80 hours a week, losing contact with your family and your life. Actually, the exact opposite is more successful for building business. You need to become a proficient business owner with the ability to delegate and have the time and emotional energy to manage the business from an overview perspective.
And finally, Scott found you do not need to come into franchising with lots of business experience. A franchised outlet gives those new to business a great place to more safely establish their first business venture and learn about the nuances of making it all work. In most cases the franchisor will have done the hard yards, establishing the brand and putting in systems to make delivery of the product easy and some will have great systems to help you learn about business too.
What Scott did find is that there are three personal characteristics all wealthy franchisees have.
Keep a clear head
Life in business is a journey. Sometimes things will be rosy and go well but more often than not things will seem to go wrong. It is so easy to react instantly with emotion when that happens and allow ourselves to feel fear, anger, frustration and allow these emotions control the way we respond.
Scott found that the wealthy franchisees did not respond in this way. They were able to separate themselves from emotion and control it fast which meant they were then able to examine the situation dispassionately, look at the data and what was actually happening. In turn, this meant they were then able to make clear headed decisions on how to move forward.
They all employed this strategy with every potentially adverse situation they faced. Managing staff, managing their relationship with their franchisor, handling difficult customers, facing difficult business circumstances and financial constraints. They embraced mindset learning and used techniques to better understand why others around them were responding the way they did and to better manage themselves.
The bottom line is – get rid of the ego and stay calm and centered.
I have to confess it was well into my business journey when I first started to understand this. I met a great guy, Paul Blackburn from Beyond Success in early 2000s, a mindset guru who has a wonderful way of explaining how our mind and emotions work and how to better manage them. There are a couple of great interviews with Paul in my Franchise Simply Radio Show podcast series available on Spotify and iTunes if you are interested.
Stick to the system
The next thing Scott Greenberg considers to be a central trait of the wealthy franchisees who own more than one outlet is, as I have mentioned above, they stick to the proven system developed by the franchisor. If you are going to manage more than one outlet, you need to have a central system to get the work done efficiently,
The success of any franchise group depends on a good system controlling the way everything is done to maintain brand consistency. So, use this system.
This doesn’t mean you have to keep all your new business ideas to yourself. As John O’Brien from Poolwerx has told me, ‘I haven’t had a good idea for years, they all come from my franchisees’. Poolwerx depends on franchisee engagement and ideas to keep the brand current and the systems up to date.
So, engage with the group and get your ideas up for consideration. Do your bit to help with training activities, put yourself on things like the franchisee advisory council or it’s sub-councils, engage with your franchisor and help to build the brand system and the confidence of your fellow franchisees to build the group as a whole.
Use your business to improve the life of all touched by it
The very best franchisees Scott came across were not in business for the money. Of course, they were there to grow the business and succeed and along the way the money grew too.
But in the majority of cases, they were there to improve the life of their customers both with their products and with the best customer service ever. Great customer service was a central tenet behind every wealthy franchisee business and all spent time training their staff to make sure this was an essential part of every customer contact.
These franchisees also saw that working to have a great relationship with their franchisor, helping their staff to enjoy being part of the team and improving the life of anyone around them was essential to their working life.
Only then will you have the skills to become a multiunit franchisee
In conclusion I have found you can’t build a business empire by just purchasing lots of franchise outlets. You have to put in the work to grow in business and put your ego aside in the process.
I have found success only comes when you:
- Learn to build business by understanding basic business skills which today includes a good grasp of cloud based business management
- Then delegate so you can work on business and not in it
- Give yourself the time and emotional energy to concentrate on what’s important for business growth
- Concentrate on your mindset and that of your employees to manage your relationships with staff, franchisor and your customers
- Drop the ego and concentrate on building your business for the love of it and to improve the life of all who are touched by it
- Be proud of what you have achieved
The franchise sector and most franchisors have done so much to develop this amazing way of building business so, if this is something you want, embrace it and enjoy the journey from new business owner to multiunit franchise owner with pride.