Is 10 The Magic Number For Multi-Unit Franchisees?

09/02/2018 08:00 | Start a business

Mulit unit franchisees

Multi-unit franchisees need a particular set of skills and qualities to run successful franchises. They tend to be experienced, skilled, professional and business minded and have selected owning multiple units as their franchise model of choice. They have the necessary skills, training, finance, and passion to operate multiple units and have the desire to continue adding franchises to their portfolio - without it putting pressure on their other businesses, or their health.

But, what is the right number for multi-unit operators to aim for? Getting to double digits is certainly an aspiration for many ambitious entrepreneurs. So, do you think you could hit the magic number 10? Here are some tips if you think youve got what it takes.

Know the right time to grow

You may have had plans to open more than one franchise from before you even started your very first unit. For others, the idea of running a multi-unit operation only comes after skills, knowledge and confidence grows. The point is, the time for expanding a franchise business opportunity will be different for everyone.

However, the two key drivers for deciding to purchase another franchise are broadly the same for most franchisees. The first is making sure that your current unit(s) are preforming well before considering buying any more. Having existing successful franchises mean that you can expand your business with the confidence that it wont be to the detriment of the rest of your portfolio.

Secondly, you need to be sure that you have adequate capital to grow. It can be tempting to look at additional investments before the required funding is secured. Remember, that underestimating the cost of a franchise is one of the biggest reasons for failure. This applies to your tenth franchise as much as your first.

Have a clear growth strategy

Before you choose your next franchise business opportunity, make sure you have a plan of what you want to achieve and by when. This will influence what type of franchise you should invest in.

For example, if your main priority is to open more franchises within your current territory and surrounding areas, then you may be limited to do so with your current franchise brand. This means that by default you will become a multi-brand franchisee. If this is the case then you need to know which brands will compliment your existing businesses. The benefit of this approach is that diversification of brands allows you to spread the risks of economic uncertainty across your portfolio.

On the other hand, if youre determined to grow your business by opening more successful franchises with the same brand, then you may need to look further afield and manage units in different parts of the country. There is no right or wrong answer, but you should have a robust business plan outlining your growth strategy from the start.

Decide on what type of franchise business opportunity to invest in

When you start to look for additional franchises to purchase, youll be faced with both new and existing franchise opportunities. Of course, theres less risk involved in choosing a franchise that has been up and running for years; even if it does come with a bigger price tag.

Alternatively, you may wish to take a gamble on a new franchise location. You may have the experience and skills to establish a franchise from scratch, but will the cost of building and fitting out the premises be worth the time and effort? To answer this question, you'll have to calculate your projected return on investment, your long-term goals, and your appetite for risk.

Give yourself time to work on your business, rather than in your business

When you aspire to open as many as ten units, you need to focus on whats required to build your business. You cant do this if youre constantly concentrating on the day to day operational tasks associated with running your existing franchises.

This is where out-sourcing will enable you to spend time doing the things that matter. If there are time consuming tasks, or jobs that you dont excel at, youre better placed to leave them to the professionals. It may seem counterintuitive to spend money on getting other people to take away some of your responsibilities to make more money, but only when you have the time and headspace to focus on growing your business will it happen successfully.

Get the right leaders in place

Just as a franchise model should be teachable, when expanding your franchise, you should be able to recruit managers for each unit and coach them in your style of leadership. By hiring candidates with previous management experience and then training them effectively, you can give them full responsibility of operating a unit.

So that you get the best out of your managers, you should give them a sense of control over operations. Once youve developed their leadership skills, their understanding of the franchise model and shared the key performance metrics with them; you should let them do things their way.

You want your franchise units to be in the best possible hands and quality leaders will not perform well if theyre being micro-managed. Let them take care of business while you focus on building the business, and make sure to reward them for their hard work.

Know when to stop

You may have set your sights on owning ten franchises when you started your journey as a multi-unit franchisee, but operating multiple businesses is tough and you should know when to stop. Youll encounter many challenges and obstacles as a multi-unit franchisee which become magnified the more operations you purchase.

If youve built up a successful portfolio of businesses, dont risk jeopardising this by continuing to chase your double-digit dream. Enjoy the fruits of your labour and be proud of your franchise empire, regardless of the number of units you own.

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