4 Multi-Unit Franchise Tips to Broaden Your Investment Portfolio

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Multi-unit franchise ownership is a very attractive option for many franchisees because it allows them to expand their investment portfolio and create multiple streams of revenue. The latter comes in handy when one of your franchise locations is more lucrative than another: it serves as a de facto rainy-day fund.

Owning more than one franchise unit might also allow you to achieve better access to startup capital, streamline your hiring practices and day-to-day operations, and broaden your financial gains in ways that you might not have imagined when starting out.

As long as you can manage all of your franchise locations and have adequate liquidity, embracing multi-unit ownership can be a potent growth strategy, offer consistent protection against underperforming locations, and dramatically streamline your franchising efficiency.

Tips for Broadening Your Franchising Canvas

The first thing that most people notice about big businesses is that their owners, CEO, and CFO never seem to get bent out of shape during a temporary market downturn or when they can’t get a manufacturer to collaborate with their company.

Tip #1: Choose Different Markets into Which to Expand

Juggernauts of the business world understand that the sheer number of stores under their auspices and the diversity of their goods and services mean that they can afford to take a temporary hit in one area while another aspect of their business thrives.

You can do the same thing with franchising by choosing different locations or industries into which to expand. Imagine that you have three franchise locations in the same indoor mall, and each of these locations is a different business. This means that you’ll be protected against potential stagnation in one industry because you’ll have others to fall back on.

Tip #2: Take Advantage of Economies of Scale

The other reason that nobody panics is that operating a large enterprise brings the benefits of economies of scale.

When you own more than one franchise location, you might find that more lenders are willing to facilitate your growth. Your relationship with marketers and distributors might also improve as your business grows.

You know the territory and the market because you’ve done your homework, you’ve already established close relationships, and you know how to seamlessly pull off area expansion.

Tip #3: Work Closely with an Area Developer

Franchisees with the right combination of enthusiasm, experience, net worth, liquidity, and business experience might be approached by an area developer with an area development agreement.

These are also called multi-unit development agreements, and they typically work by having an assigned area developer work with you to carve out territory ripe for expansion.

An area development agreement might have you open a certain number of stores in a given time frame and give you exclusive franchising rights to operate in that territory. There are serious upsides to this setup.

Tip #4: Consider Focusing on Multiple Nearby Locations

Time and again, multi-unit franchise owners find that personally managing more than one location proves a logistical challenge.

That challenge is heightened when you expand geographically or entrust the lion’s share of the day-to-day decision making to the wrong franchise manager.

Franchise managers can be a great help with hiring and operations, but you might also consider opening more than one location in, say, an indoor mall or within the same geographically concentrated area so that you can maintain tighter control and ultimately learn more about the industry.

Interested in learning more? Then contact us today!

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