Multi-Unit Franchises: Scaling to Success.
In Franchising, the pinnacle of success as a franchisee is the multi-unit franchise owner. Multi-unit franchising is not for the faint of heart, but more so the hardened, business savvy investor; the courageous business leader who shows no fear.
The difference between a single unit franchise owner and a multi-unit franchise owner is the focus on scalability. Yes, multi-unit franchise owners have access to more capital and generally more business acumen, but what really separates them from those of us who get stuck as operators is the never-ending commitment to scaling a business model.
As a business owner, it many times is easy to get caught up in the small details of what makes the business work day to day and be pulled into $10/hour positions, flipping burgers or mopping the halls. Multi-unit franchisees don’t even let this be a consideration, although they focus on details, they are willing to sacrifice short time profitability for long term gains in the business. They invest in people and look to their staff as being an asset, not an expense. They believe in culture, vision, brand the bigger picture.
So why do some people succeed as multi-unit franchisees and others get stuck in a single location, essentially buying a job?
First, the Multi-unit franchisee is not looking at a daily Profit and Loss Statement. They manage with a longer term approach to the business, making decisions initially week to week, then month to month, then quarter to quarter. There is planning incorporated into decision making and in how to manage the business in order to avoid short term “fires” and obstacles that prevent the business from achieving success. A successful multi-unit owner manages from a position of strategy as opposed to fear.
Second, the multi-unit franchise owner puts an extreme emphasis on systems and structure as opposed to just dollars. Operational, Marketing and Technology systems are imperative to a successful multi-unit franchise investment. There is a core focus and belief that with good, proven systems and structure, the profitability will soon follow,;short term profitability without systems doesn’t last. When investing in franchises, the training platform, KPI’s, unit level performance, franchise marketing systems and other mechanisms are what drive a franchise investment decision, not short term fads.
Third, the multi-unit franchisee appreciates leadership and vision from the franchisor. They want to know, understand and believe in 5, 10 and 20 year plans for the business. They need to see and feel that the franchisor is motivated by long-term success that matches their commitment to the brand. Good multi-unit franchisees generally do not make quick decisions and instead evaluate options carefully and with great scrutiny.
Once a strong franchise investment is made, they continue to invest in that brand now that the unit metrics are understood and the business model is proven. VR Junkies, a virtual reality franchise based in Utah recently sold a Multi-unit franchise offering to Martin Hall, a proven and successful Multi-unit franchise and business owner. The plans include the development of 15 units, with groups of 5 units each to prove consistency. With each five unit group succeeding, the next group will be opened and developed. What attracted Mr. Hall to the VR Junkies brand was the unique market positioning in virtual reality, strong operating systems, simple operating model and a leadership team focused on capturing market share in virtual reality.
Multi-unit franchise ownership requires an ability to pull away from emotionally-driven business decision making. Business and franchise owners who act out of fear or emotional swings have a tough time getting out of the day to day business and scaling. The long term benefits of multi-unit franchising have been proven to be enormously profitable for some – in fact, people have launched public companies of multi-unit franchise chains and build massive organizations using the model. When it comes to franchising, it pays to think from the perspective of scale.
Christopher Conner is the President of Franchise Marketing Systems and has spent the last decade in the franchise industry working with several hundred different franchise systems in management, franchise sales and franchise development work.