How to Unlock the Potential of Multi-Unit Franchise Ownership

In short

Rob Lancit opens with scale: nearly 850,000 franchise establishments in the United States, almost half of them run by owners with more than one location. He writes for the single-unit owner who has reached break-even and is deciding whether to expand or leave a working business alone.

His first test is honesty. Before a second unit, an owner should open the books, get an outside opinion from a financial planner or accountant bound by a fiduciary duty, and check performance against the franchisor’s benchmarks. The second test is labor and demand. Surveys of franchise owners keep naming an unreliable workforce as a top complaint, so he asks whether a second strong general manager can be found, or whether splitting the current staff creates a new risk. A neighboring territory may look similar, and its demand will still not be identical.

He then lists what multi-unit ownership can bring: several revenue streams, fixed costs spread across locations, better vendor terms on bulk orders, more local visibility, diversified operating risk and a higher valuation at exit. He follows the list with a caution. Owners should repeat the validation they did the first time and call multi-unit owners in their own network to learn where the trouble is. He tells them to expect setbacks, because two struggling locations are worse than one that was thriving.

Summary by the editors of this site. The original is Rob’s own writing; read the original at the source.