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Considerations before going multi-unit

By Blake Mitchell
Navigating the competitive business landscape as a franchisee requires significant dedication, time, planning and hard work. Once they are established as single-unit franchisees, many individuals consider growing their business to multiple locations and, thus, operating as multi-unit franchisees.

The problem arises when they have not given due consideration to what will be involved in owning and operating these multiple franchise units, which can be significantly different and more challenging than running a single location. Finances, strategic planning, human resources (HR), marketing and many other aspects of the business need to be planned when making the shift from single- to multi-unit franchisee. The following tips are intended to spark discussions and help franchisees navigate the transition.

Evaluating your current financial situation
Business growth is great, but it has limitations. Often, insufficient funding is the primary factor preventing a new franchisee from adding a second location. A situation can easily arise where access to capital is simply not available, so the individual is unable to open another store.

Other franchisees may indeed have access to sufficient funds, but should not use them. This is typically the case when there are limited unencumbered assets and a reliance on debt to fund the venture. Overextending yourself can lead to larger financial problems down the road, put stress on both professional and personal relationships with those around you and lead you to make other poor decisions with long-lasting effects.

It is important to speak to a trusted financial advisor who will provide honest assistance, to ensure you will expand with multiple locations only when appropriate and you are in a stable financial position to do so comfortably.

Reasons for going multi-unit
Only you can truly justify why you want to become a multi-unit franchisee. The most common reason for expansion is to make more money, but there are a number of other factors that can influence the decision, including a personal desire to improve and grow as a business owner, a need for greater professional fulfilment, an unexpected new opportunity, boredom with present circumstances, outside pressure from friends and family, etc.

In any case, before making the decision to go multi-unit, you should understand your reasons. If the shift makes sense to you, it can help you become a happier franchisee. And if it does not, because it was motivated by external or unaddressed internal factors, then it is time to carefully reconsider the idea. There is no point in running multiple units because of an influence you cannot control; it will not improve your quality of life.

You should already have strong staff in place before going multi-unit.

Speaking with other franchisees
The franchisee community is close-knit and those involved can be a great source of valuable information. Multi-unit franchisees in the same franchise system as you were most probably, at the start, single-unit franchisees too. It is likely they grappled with challenges when deciding to expand.

So, it is recommended to reach out to these multi-unit franchisees before following their example. The easiest way to find them is to reference the franchise disclosure document and check the list of existing franchise outlets.

An even better option is speaking to someone you already know personally and trust, whether or not they are franchisees of the same brand as you, as they can give you an even more accurate and honest impression of what it is truly like to own and operate multiple locations. They can be a more candidate resource of details, making you aware of factors you may not have previously considered.

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