Deciding Between Master Franchising and Single Units

When starting a franchise business, one of the big choices to make is whether to stick with a single location or expand into multiple units. This decision really shapes how much you’ll invest, how big your business will be, and how hands-on you’ll need to be. 

“Deciding between master franchising, multi-unit franchising, and single unit franchising is a decision that a lot of franchisees have to make at some point in their franchising journey,” said Ryan Perry, founder of Franchising Path. “Each option comes with its own set of advantages and challenges, and the decision hinges on several key factors including your goals, resources, experience and the market.”

With that said, here are some tips on what to consider when deciding between single and multi-unit franchise opportunities. 

Consider Your Goals and Abilities

Before deciding which way to go, it’s essential to take a good look at your own goals and what you’re capable of. If you’re new to running a business or to the franchise game, starting with just one unit is usually a safer bet. This lets you get the hang of things without too much pressure, figure out what works and what doesn’t, and make sure your business is making money. Then, once you’re comfortable and confident, you can think about expanding and adding more units later on.

On the other hand, if you’re experienced and have enough money to invest, going for multiple units right off the bat might be a good move. This means you’re in it for the long haul and want to grow quickly. With more units, though, comes more responsibility, so you’ll likely need to have a team in place to help manage everything.

“With master franchising, it grants you the rights to operate multiple units within a specified territory and even allows you to sell sub-franchises to others,” said Perry. “It’s a powerhouse for revenue streams, as you not only earn from operating units but also from franchise fees and royalties from your sub-franchisees. However, it’s a complex endeavor that demands solid experience and a significant initial investment. Not for the faint hearted.” 

Think About the Pros and Cons

Starting with a single unit is appealing if you don’t have a lot of money to spare upfront. It costs less to get started, and you won’t have as many ongoing expenses. Plus, you’ll have more control over everything since you’ll be more directly involved in running the business. However, your profits might not be as high compared to having multiple units, and you’ll have to handle most of the workload yourself.

“[Single-unit franchising] is a simpler and more accessible option, requiring less capital and management issues,” said Perry. “However, growth potential is limited compared to the other models, and you’ll have less market influence.” 

On the flip side, having multiple units can mean bigger profits in the long run. You’ll be making money from more than one location, which adds up. Plus, some franchisors offer discounts on fees if you sign up for multiple units, and you might get better deals from suppliers and vendors. But it also means you’ll have to invest more upfront, and managing multiple locations can be more complex and demanding.

“This setup offers economies of scale, allowing for cost savings across multiple units, and provides greater control over quality and service standards,” said Perry. “Yet, it’s not without its challenges, requiring strong management skills and, again, substantial financial resources.”

Consult a Franchise Consultant

Talking to franchise experts can really help you figure out which path to take. These professionals know the ins and outs of different franchise options and can help you find one that fits your goals. Once you tell them what you’re looking for, they can give you advice on whether going for a single unit or aiming for multiple units makes the most sense for you. 

“When making your decision, consider factors like your financial resources, experience, network, growth goals and how much risk you’re willing to take,” Perry said. “Are you looking to build a large-scale empire, or do you prefer a more hands-on approach with just one unit? Consulting with a franchise advisor or other successful franchisees, can also provide invaluable guidance in making an informed decision.”

A franchise consultant will act as a guide to help you navigate the sometimes overwhelming world of franchising.

Success Comes in Different Forms

Whether you choose to stick with one unit or go big with multiple units, there’s plenty of potential for success in the world of franchising. Franchisors welcome both types of franchisees, as each brings its own strengths to the table. It’s all about finding what works for you and what you’re passionate about. 

“I don’t believe there’s a one-size-fits-all answer and depending on how well your initial franchise does will obviously help you decide what to do going forward,” said Perry. “It’s about finding the model that aligns best with your aspirations and capabilities. Whether you’re aiming for market domination or simply dipping your toes into franchising, weighing the pros and cons carefully will lead you to the right path for your franchise journey.”

So, whether you’re dreaming of owning a single neighborhood joint or building a multi-unit empire, franchising can be a rewarding path to owning your own business.

To learn more, check out these related articles: 

• How to Succeed as a Multi-Unit Franchisee
• Why Multi-Unit Ownership Takes a Certain Kind of Franchisee
• What is a Multi-Unit Development Initiative?