Top 5 tips on multi-unit franchise expansion
Multi-unit franchising – owning a number of business units, whether a suite of territories with one franchisor, or running operations with more than one brand – is generally considered to be the route to franchise growth. Here’s the top 5 to consider:
1. Handing over the reins:
When expanding into a multi-unit franchise, the biggest change is from managing the one unit to supervising managers to manage on your behalf. If your style is to micromanage, you’ll have to start learning how to trust managers.
2. There are benefits from the added financial support:
There are times when some units will do well, and others may underperform. One of the benefits of owning multiple units is that the successful ones can support the struggling ones, which means you are reducing your risk.
3. Get better at managing your cashflow:
Cashflow is more challenging with multiple units; vat and corporation tax are greater and can catch you off guard. Put in place a good cashflow forecasting process.
4. Don’t grow before you’re ready
There’s no point operating four average units that make only as much as two outstanding ones – you’re just creating headaches for yourself. Multi-units must generate a sustainable momentum and culture; doing that means perfecting each unit before moving on to the next.
5. Assess yourself:
Some healthy self-analysis is going to help. Multi-unit ownership takes an entirely different set of skills than being a single owner-operator, so make a very honest personal assessment before deciding if it’s for you.
The positives
- You’ve been through it before and you are much more ready for most of the surprises with a new unit
- You have a much better feel for how to market and grow your business
- Economies of scale (ie marketing and stock purchasing) start to work in your favour
- Your training of new employees is more focused and effective
- You have a much greater revenue (and hopefully profit) stream.
But bear in mind!
- Cashflow can initially become a critical issue
- Less time to devote to any one unit – you must let control go to your managers
- Risk/reward is heightened: you have a lot more invested in the business, but therefore have more of your money at risk.
To learn more about multi-unit franchising, attend the Multi-Unit Franchise Conference held at The Franchise Exhibitions.
