Many brands are still working on cracking the code to one of the most lucrative keys to expansion – multi-unit growth.
It’s no secret that franchisors hope to grow through multi-unit expansion. When you look at the benefits, the choice is obvious. For starters, you have franchisees who understand the model and don’t require the same amount of training as those who are new to your system. Often times, they bring a well-trained staff ready to help tackle this next adventure at a new location. These franchisees are also eager to succeed because they’ve invested twice the amount of capital, and they are the ultimate brand loyalists.
While some in the franchise development space have mastered this multi-unit mindset, others are struggling to find success within their own system to spark new growth. Across the board, we’ve found three common trends that have resulted in franchisees reinvesting in the brand. Here’s what they are:
1. Visible Ongoing Support from the Executive Team
It’s no longer enough for an executive team to say that “they’ll be there every step of a candidate’s journey, from signing to opening.” Franchisors need to be available to answer their franchisees’ questions as long as those franchisees are a part of the system. As soon as a franchisee no longer feels supported by their system, they lose interest in future development.
Executive Director of Development at Wireless Zone®, Keith Dziki, says maintaining the relationship with existing franchisees is one of the most important aspects of his job.
“My role is to not only increase brand awareness to new investors, but to position our existing franchisee family for future growth opportunities,” said Dziki. “My team and I work daily with existing franchise owners, our operations team and Verizon to identify gaps in trade distribution and position our existing owners to increase their location footprint.”
Currently, Wireless Zone® has approximately 390 locations. Those locations are made up of 96 franchise operators, 89 percent of which are owned and operated by multi-unit operators.
“Multi-unit growth is very important in the way Wireless Zone® expands today. The wireless industry has become very competitive across the carriers and having multi-unit owners opening additional locations allows for a quicker ramp up as they are able to repeat the successes they achieved in their other doors.”
2. Consider the Scalability of Your Model
While franchise models that cost hundreds of thousands of dollars have a compelling return on investment, the high startup costs often result in a longer break-even time for franchisees, making the decision to open multiple units difficult.
Franchisees with lower startup costs for investors and a faster break-even are often more enticing to potential multi-unit operators. Take, for example, franchises like GYMGUYZ and Mosquito Joe. They have created mobile concepts that are highly scalable because they don’t require brick and mortar locations. Now, as a franchisor, you can redefine what it means to be a multi-unit owner. Rather than counting locations based on real estate, you can tally your success based on the number of territories served.
Concepts like these are consistently ranked as some of the fastest growing franchises, not solely based on ramp up time but also because of the reinvestment from an established franchise base.
3. Compare Your Operating Costs with the Competition
When you look at your franchise offering and your competitors, where do you stand? If your cost is higher than average, why? While competitive analyses will always be a part of the industry, franchisors often look to cut costs in the wrong areas.
Office Evolution is a great example. The coworking space franchise knew that their competitors were targeting large, urban cities with massive real estate locations. Looking to fill a void for their target tenant, suburban entrepreneurs, the brand opted to find smaller footprint real estate locations in the outskirts of the city to ultimately cut costs for their franchisees and make it more convenient for their clientele. It was a win-win for everyone.
Another example is Papa Murphy’s. The company makes take-n-bake pizzas that their customers cook at home. What would be the point of requiring their franchisees to make room for an oven or tables for their customers to sit at? Instead, they found a way to maximize the space of tiny real estate locations. Because of this, most Papa Murphy’s locations don’t require build out, they can move directly into existing locations saving their franchisees time and money.
While reducing the size of your footprint isn’t an option for every franchise concept, take a look at where you can cut back to make growth easier for your franchisees. You might be surprised at what you find and how valuable those changes can be for future growth.