Multi-Unit Franchising: The Key to Achieving Financial and Time Freedom
Dec 10, 2024
A few weeks ago, I had a great conversation with Josh DuBois from “Conquer the Mind Podcast”. As we both agreed, franchising gives entrepreneurs a great opportunity to succeed in the business world, but that doesn’t mean that people just invest in a brand, and magicall,y that turns into a profitable business.
“Investing in a franchise doesn’t guarantee anything. It's what you do with the opportunity that franchise is giving you that will make you see the generational wealth aspects of it”, mentioned Josh.
That opportunity is multi-unit franchising. This implies the ability to go from operating a single unit to opening a second, third, or fourth location and then scaling even more, whether with the same brand or by exploring other ones in different industries, to multiply the profits.
The difference between owning one and multiple units
First, let me explain why owning a single unit won’t do the trick. When you have one unit, your role as a franchisee most likely includes the responsibilities of a Unit Manager, for example, opening and closing the store, managing the costs, capturing and increasing sales, hiring and leading the team, and taking care of the customers.
- If you are running the operations, let me tell you something: what you have is a job.
Plus, your performance and business management will fully determine the results and profits you obtain.
Let's say that your franchise revenue is $600,000 a year. The average franchise business will probably give you an operational profit (EBITDA) of 10%. Taxes will take away half of that, leaving you with only 5% of the amount. That would mean that, at the end of the year, that one unit will give you $30,000 (60,000 / 2) in profit.
If you're managing the unit, then you should get the manager's salary of around $50,000. So, all and all, you have a $ 80,000-a-year job (30,000 + 50,000).
That doesn’t sound so bad, does it? It's a pretty good number. Plus, you are your boss, meaning nobody tells you what to do or how to do it. You dictate your schedule, and you're responsible for everything.
But did you get into franchising to get a job? I really don’t think so. Most people who get into franchising see this industry as an opportunity to be rich. And the only way for you to have more revenue than is by duplication.
How to multiply your profits
Owning one store limits your profit since you can't increase sales significantly, resulting in little left over.
But, if you have $80,000 profit in one store, then open a second one and hire a manager to operate that location, you’ll get an extra $30,000 profit. That means that you go from having $80,000 a year to $110,000 (80,000 + 30,000).
The next step would be to hire another manager to run the first store for you. Perhaps you won’t have the $50,000 paycheck and only $60,000 in profit ($30,000 from store #1 + $30,000 from store #2). But guess what? Since you're not running any unit, now you can open a third location and get an extra $30,000 a year.
So now, you're making $90,000 with three locations, but you're not running any of them because someone else is doing all the managing work. You're now a District Manager overseeing those three locations.
Imagine you eventually go to six stores and have $180,000 in profit a year (30,000 x 6) without being in the stores from open to close. If you hire a District Manager with a salary of $70,000 (out of the $180,000 profit), you'll have $110,000 a year (180,000 - 70,000). And, since you are no longer overseeing the operations of your units, you can focus all your time on opening your next six units.
The power of duplication
Now, you go from $110,000 to $220,000 without running the business, at least not directly, since that's the responsibility of the District Manager. This is what happens if you are in a multi-unit growth mode, which is what gives you not only financial independence but also time freedom.
The toughest phase is what we call “the 2 to 4 units hell” because when you are there, you don’t make enough money to hire a District Manager, and you have to run all the stores by yourself. But once you pass it, the multi-unit franchising journey gets easier!
Especially if you have disciplined business and management systems in place and apply them over and over again. That’s how you become more successful, access capital without trouble, and decrease your turnover because of all the growth opportunities you create for the employees.
Multi-unit franchising is the path to having time and financial freedom. I want franchisees to have their dreams come true, be successful, spend time with their families, and take a long vacation. And while doing that, give opportunities to others. That's what happened to me: I started as a pizza delivery driver, later became an assistant manager, manager, and then continued to grow within the industry, resulting in a successful career.
Multi-unit franchising is the way to achieve all of that. Our purpose at the American Franchise Academy is to protect the American dream of business ownership through franchising. We are focused on helping franchisees become multi-unit so they can have time and financial freedom and give opportunities to everyone.
If you want to begin this multi-unit franchising path or have a true partner to accompany you in this endeavor, I invite you to explore COMMAND, our signature program for franchisees who want to run profitable, successful enterprises without burnout.
During 12 months, you’ll receive intensive training and group coaching sessions that will allow you to take control of your franchise, spend less time working, and scale your profit.
Explore more about COMMAND here: AFA’s COMMAND Program
Or schedule a call with admissions to find out the features, benefits, and outcomes you can expect by joining our Mastermind program: Call with Admissions
WATCH THE COMPLETE PODCAST INTERVIEW ON OUR YOUTUBE CHANNEL HERE.
