By Sam Hall
Entrepreneurs who have mastered the art of running a single franchise unit often look forward to their next business challenge. The thought of operating more than one storefront or territory may be overwhelming as you begin your life as a franchise entrepreneur. However, as you mature as a franchisee, you should be aware of the exciting growth opportunities that may be available to you within the franchise system.
Your franchise journey does not have to end at one successful location. Not only can you acquire additional franchises to operate, you can also help other entrepreneurs realize their dreams by entering into a master franchise relationship with your franchisor. Multi-unit franchising and master franchising are exciting ways to grow your business, and each raise special considerations for you and your franchisor.
The term ‘multi-unit franchising’ simply refers to the operation of more than one franchise units by a single franchisee. This can be an attractive expansion option for an experienced operator who has become familiar with the franchise system’s operations, procedures and marketing strategies.
The franchisor’s perspective
Multi-unit franchising raises some interesting considerations from a franchisor’s perspective. In addition to the typical pre-screening done to ensure the suitability of a prospective multi-unit franchisee, a franchisor also needs to consider how granting additional units to a particular franchisee might influence the franchise system at large.
A careful balance must be struck. On the one hand, multi-unit ownership can be a useful way to expand the franchise system, gain deeper market penetration and generate increased revenues. On the other hand, the franchisor must be careful to preserve its authority within the system, to ensure conformity of standards for the benefit of all franchisees. In the best of cases, multi-unit franchisees and their franchisor work with the shared vision of advancing the profitability and success of the franchise system.
Additionally, the business failure of a particularly large multi-unit franchisee may have negative ripple effects on the franchise system as a whole. A franchisor will seek to mitigate this risk through careful pre-screening of prospective multi-unit franchisees.