The first step to become a multi-unit franchisee

Franchising is a great way to achieve financial freedom and independence. Using this business model, many people across the world have been able to open their own business and see the dream of business ownership become a reality.

 Within the US franchise sector, which is composed of over 4,000 brands and over 775,000 business units, the vast majority of franchisees are single-unit operators. 

 Operating one unit is good way to enter the entrepreneur world, but if the goal of the investor is to have true financial and time freedom, this path is the slowest. And there’s a catch because the business may become, basically, another job. Think about it: the franchisee is in charge of managing operations, and opening and closing the business every day, tasks that are a manager’s responsibilities.

This is why so many franchisees and independent business owners explore the multi-unit model. If you are considering making this switch, continue reading to discover the first step you’ll need to take and what this model implies.

The first (and most important) step towards the multi-unit franchise model 

Having a second unit will double your profitability. And then, if a third unit opens, you’ll be tripling the profitability, and so on. This is why operating a multi-unit franchise will eventually give you financial freedom. And, since you will be able to hire a management team to run each unit so you can oversee the operations, you’ll also gain more time. Sounds great, right?

But operating a multi-unit business it’s not easy. To be successful, business owners need to understand the difference between having one unit and multiple ones before they decide to make that jump. That is the first step: to be clear on everything that this model implies.

What it means to be a multi-unit franchisee

Here are some insights on what you need to become a successful multi-unit franchisee:

• Capital

You already obtain enough capital to open the first unit. But if it was based on your savings, you may not have gone through the process of accessing other people's money or capital. So be ready to do so this time. It’s not the same to qualify for a single franchise unit when the lender knows that you will be in it day in and day out, than to qualify for multi-unit when your management and leadership skills must be a lot more sophisticated to be able to run a multi-unit business at a distance.

• A Human Resources system

When you open the next unit, you'll be doubling the number of people that you'll be leading. The number will grow again when you have three, four, five units, and each one of them will need a complete team, which will be under your responsibility. If you have the adequate system, you’ll be able to hire the right people, train, retain, and inspire them to do a great job.

• Information and data

It is critical to have some sort of reporting and information. Aside from the access to this data, you also need to understand what are your key indicators, goals and targets, as well as the knowledge and strategies of how you’ll be able to achieve them.

• Negotiation skills

You’ll have to manage the day-to-day expenses of all your units and this volume means potential savings you can have by doing a bulk investment. For example, for renting a small warehouse, trash collection or carpet cleaning. Being able to negotiate will come in handy.

• Control from the distance

When you manage one unit, you are in that store supervising the people and overcompensating when things go bad. But it's not the same when you have multiple units because you can’t be in all the stores all day long. Not having detailed control systems for your revenue and expenses can turn a great business into a failing business.

Having management systems will help you duplicate your operations in all of your locations. That is one of the secrets why franchise brands can grow into so many units across the world, because they have a clear and disciplined system for how to operate their brand to replicate their products, services and image in other states, cities, and countries.  You must create the same discipline with your business management systems.

A multi-unit franchisee success story

I have a client that began his entrepreneurial adventure with one unit, as many people do. He was very good at running the store because, before acquiring the franchise, he was a manager of the same brand. 

Once his unit was successful, he wanted to grow and acquire a franchise of the same brand that he was already operating. Soon he realized that splitting his time between the two stores was very challenging, since he wasn’t big enough to have a supervisor or a district manager.

He eventually stabilized and some years later, the franchisor offered him the opportunity to grow even more, with two more units. As soon as he acquired the new locations, he realized that the operation was even crazier, trying to oversee the units at the same time and keep up with the cost, the accounting, the payroll and the people in all of his units. That was far from what he had dreamed of. 

That's when he reached out to us at the American Franchise Academy. We provided guidance so that he could implement the systems to manage his business and, eventually, he could even delegate operations.

Although he knew how to operate, he lacked the management side of an enterprise. But with mentoring and coaching, he learned about cash management, people management, cost controls, banking, and all of the systems that franchises and businesses need to have sustainable success.  This helped him achieve true financial and time freedom.

If you are a franchisee and this is also your goal, consider the multi-unit model, but remember that first, you have to understand what it takes to be successful. Get prepared to do it the right way. Only then, you can jump into it with your eyes wide open.

Reflections:

• Has your business become a self-employment?
• How much of your business depends on you? Can you delegate some tasks?
• Do you have the right management systems to run your business?
• Are you ready to become a multi-unit franchisee or do you need to be better prepared?

Do you like video?  Watch this topic in our YouTube Channel.  Subscribe and see all of our future LIVE sessions where you can ask questions.

To learn more about how we can help you create and implement multi-unit management systems, visit us at American Franchise Academy.

If you would like to work directly with Aicha Bascaro to build your Multi-Unit successful enterprise, make an appointment with her here:  www.callwithaicha.com