5 Secrets to Success in Multi-Unit Franchises
You have seen the stories about everyone from normal folks to professional athletes building big multi-unit franchise empires.
It is no accident that they accomplished feats worthy of magazine articles, it is by following a process that scales their empire. These are not lottery tickets and those owners knew they were in control of their success from day one. So, what is the secret you ask?
Here are your multi-unit keys to success:
1. Find a business where the role of the owner is a good fit for you.
Working with franchise candidates for over 20 years I know that every franchise company has built their model to support a specific type of owner best. If they are looking for great salespeople and you don’t want to be out selling, then that would be a bad match. If they would require you to me running a restaurant daily and you don’t want to do that it would be a bad match.
Build a model of how you manage, how you sell, what you want your work days to look like and what your goals are. That is a very basic version of what we do with our candidates but it will get you generally pointed in the right direction.
No matter how good a business looks, if the model does not fit you then keep looking for your perfect franchise! Your success story will be built around something you do well.
2. Look at the entire market for growth opportunities.
You may do best with stable businesses that could have a ten year run or longer, not just the hot sizzling concepts of the moment. When we look at concepts to present to our candidates we get cautious when a business seems to be a passing fad. Fad businesses can be rolled out as a quick hit investment, but generally even the very experienced and well-funded candidates that know how to play that game prefer to avoid them.
It is a natural thought process that takes many candidates directly to restaurants for their first investigations but the franchise industry is much broader than just food brands. Over the past 30 years franchising has expanded into a multitude of retail and service categories. The way those brands build businesses has also changed so that people looking for empire building opportunities can build larger organizations and run them in a CEO role.
The benefit in many of these service based concepts is that they are core needs, those services we will always use and will not run the course of a fad product or be severely impacted by the stock market. You may have the opportunity to keep this type of franchise in your portfolio for ten to twenty years, maybe more.
3. Make sure you are picking a partner you can work with.
When I look at franchises for myself, there are two main sections of the investigation for me, the information gathering section and the partner picking section.
The information gathering section is simply working through a list of questions I have and information I know I want to gather to be in a position to say yes or no. The partner picking section is far more important to me. When I become a franchise owner I want to know that whatever I need to find success will be provided. More importantly I want to know that this is a joint effort, not just me buying a manual and a logo. When I go to a Discovery Day with a franchisor I am happy to go through whatever they feel I need to see, but the most important parts of that day for me are what happens between the meetings with department heads. Having the opportunity to spend time with the franchise company senior staff, training team and support staff are critical.
4. Have a funding game plan for the first 5 years, don’t make it up as you go.
Your funding plan will be just as important as selecting the right company. As you grow you want to make sure you are not hitting a point where you are tight on money and cannot execute your plan. Keep in mind that it’s often easier to get money up front than while operating in a pre-profit stage of growth.
There are some creative ways to build a funding plan from SBA and conventional loans to 401K Rollovers and stock portfolio financing. Finding expert resources will be key at this stage. There are some great companies out there that specialize in franchise financing. Sometimes the perfect plan is a using a combination of resources to get to your goals with the best funding approach.
5. Know where you want to end up.
One of the big challenges we see with people beginning to venture into multi-unit growth plans is that they don’t have a clear vision of what they want to build and how to get there. While the process may take some time they need to be executing a plan or else they risk getting “comfortable enough” along the way and not progressing towards the vision they had when they began the process.
Your plan should include both financial and lifestyle goals. Map out a plan over the first 5 or more years as to how many units you want open on a quarterly basis. Your funding plan will tie in and you will be able to set specific parameters that trigger the next unit opening.
You will also want to understand the role of the owner at each step from the first unit to the last one. Initially you may be more personally involved in daily operations and eventually become the CEO. At each step in between you may find a slightly different owners role.
Multi-unit franchise growth is as straight forward as building a single unit, you just need to understand the steps, have a game plan and follow the system you bought into. What will your success story be?
George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both start-up and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980.