1851

In the world of franchising, there is no “one size fits all” approach. Some business owners are just starting their entrepreneurial journey, while others have a growth-driven mindset to multiply their portfolios. For the latter, multi-unit agreements are an excellent way for them to achieve their goals of expanding. It’s also very beneficial for the companies themselves to grow internally.&nbsp;“Franchisors really want multi-unit franchisees because they are getting somebody who has a ton of built-in resources that can help their brand grow in the right way because they are already familiar with it,” said&nbsp;<a href="https://www.linkedin.com/in/joshuakovacs?utm_source=1851franchise.com&utm_medium=article&utm_campaign=franchising-expert-explains-why-brands-want-to-attract-multi-unit-franchisees-2720498" target="_blank" rel="nofollow">Joshua Kovacs</a>, CEO of Oakscale Franchise Development and multi-unit owner of PetWellClinic and Xpresso Delight USA locations. “And the trade-off is that they are spending less money on support than having to train a bunch of individual owners or single-unit franchisees.”The benefit also extends to franchisees, who are already experts on the company, so the “best thing is just to double down on the brand you've already mastered and open more locations,” Kovacs explained. One of the reasons business owners will sign for multiple units upfront rather than one at a time is because fast-growing companies can run out of territories, and someone else may sign on for a neighboring region they had been eyeing.&nbsp;There is also an advantage to signing franchise agreements earlier because deal terms tend to become more aggressive over time as a brand grows. The first few franchises typically can secure larger areas for cheaper, and then things get more nuanced as the franchisor becomes more sophisticated, Kovacs explained.&nbsp;&nbsp;In order to attract these types of business owners willing to make large investments upfront and take on risks to lock down territory rights, brands must have a detailed multi-unit development agreement drafted.&nbsp;“Franchisors can set up a multi-unit strategy and talk through that as part of their sales process. They need a multi-unit development agreement that goes beyond that franchise agreement if they are going to sell to multi-unit operators,” said Kovacs.&nbsp;Some businesses will pre-define territories in packs of three, five or 10, while others have terms that are more open-ended and up for discussion during the agreement process. This is how franchise owners can sign on for multiple at once and lock in the locations while paying over time.“They would effectively work out a deal where they sign a franchise agreement and pay a franchise fee for that first agreement but are also signing a development agreement to take down all of that city,” said Kovacs. “And the development agreement will typically have deal terms about what the market is, how many franchise fees are being paid upfront, and what their development terms are.”“If they're getting into a franchise for $500,000 and they pay an incremental $200,000 or 300,000 more to lock down territory rights that go well beyond that unit, it tends to make a lot of business sense to do so,” he added.

Multi-Unit Franchising Benefits | Franchising Expert | 1851 Franchise

1851 Franchise

Multi-brand owner and franchise development group CEO Joshua Kovacs breaks down the mutual benefits for both sides of the contract. 

Franchising Expert Explains Why Brands Want to Attract Multi-Unit Franchisees 

franchising-expert-explains-why-brands-want-to-attract-multi-unit-franchisees

TruBlue Home Service Ally

Why This Franchise Broker Became a TruBlue Home Service Ally Franchisee

why-this-franchise-broker-became-a-trublue-home-service-ally-franchisee

Caring Transitions

Exploring the Flexibility of Owning a Caring Transitions Franchise: How You Can Build a Business that Fits Your Lifestyle

exploring-the-flexibility-of-owning-a-caring-transitions-franchise-how-you-can-build-a-business-that-fits-your-lifestyle

Keke's Breakfast Cafe

Restaurant Business: Keke's Breakfast Cafe Expands Nationally With Denny's Backing

restaurant-business-kekes-breakfast-cafe-expands-nationally-with-dennys-backing

Biscuit Belly Franchising

Biscuit Belly Named to Nation’s Restaurant News’ “100 Under 100” After Seeing 40% Growth in 2024

biscuit-belly-named-to-nations-restaurant-news-100-under-100-after-seeing-40-growth-in-2024

Sola Salons

FourCornersSun: Sola Salons Opens in Lakeside Village

fourcornerssun-sola-salons-opens-in-lakeside-village

Buying a Franchise Masterclass

 Franchise Opportunities

Get Support Buying a Franchise

How to Buy a Franchise White Paper

How to Buy a Franchise

How to Sell Franchises

How to Grow a Franchise

Find a Franchise Supplier

1851 Franchise Opportunities

Franchisor News

Franchisor Power Rankings

FranCamp Mastermind Summit

Franchise Development Website Builder

Franchise Resources

What ALEC-Laffer's Report Means for Franchising

Website Awards

Power Rankings

About 1851

Advertise on 1851

Contact 1851 Editorial

Terms of Use

1851 Login

GROWTH CLUB LOGIN

facebook

instagram

twitter

linkedin

youtube

McDonald’s Is the Latest Franchise To Bet Big on Beverages with 500-Store Premium Drink Test

mcdonalds-is-the-latest-franchise-to-bet-big-on-beverages-with-500-store-premium-drink-test

Friendly’s Parent Company Acquired by Multi-Unit Franchisee as More Owners Take the Lead in Brand Acquisitions 

friendlys-parent-company-acquired-by-multi-unit-franchisee-as-more-owners-take-the-lead-in-brand-acquisitions

Subway - John Fitzpatrick Named CEO - Breaking News - 1851 Franchise

Subway Names Jonathan Fitzpatrick as New CEO, Effective July 28

jonathan-fitzpatrick-subway-ceo-leadership-change

AI Is Reshaping Franchising: $100 Billion Valuations and Hyper-Localized Advertising

ai-is-reshaping-franchising-100-billion-valuations-and-hyper-localized-advertising

Mega Franchisee Sizzling Platter Acquired by Bain Capital

mega-franchisee-sizzling-platter-acquired-by-bain-capital

Top 25 Franchise Marketing Leaders: Kelsey McManemin — Vice President of Marketing, HTeaO

top-25-franchise-marketing-leaders-kelsey-mcmanemin-vice-president-of-marketing-hteao

Franchise Masterclass: Building Predictability in Your Franchise Funnel

building-predictability-in-your-franchise-funnel

Plante Moran: Trusted Financial Advisors to More Than 180 Franchise Brands Nationwide

plante-moran-trusted-financial-advisors-to-more-than-180-franchise-brands-nationwide

Missy Maio - Gong Cha - Top Franchise Marketing Leaders - 1851 Franchise

Top 25 Franchise Marketing Leaders: Missy Maio — Vice President of Marketing and Global Partnerships, Gong Cha

franchise-marketing-leader-missy-maio-gong-cha

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores - Agg - 1851 Franchise

Hooters Leans Into Franchising With Closure of 30 Company-Owned Stores

hooters-franchise-model-company-owned-closures

Hely and Hiral Patel Bring Their Longtime Dream to Life With The Brass Tap

brass-tap-franchise-pasadena-maryland-hely-hiral-patel

1851 Keyword - The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

The Secret To Succeeding With a Part-Time Franchise Is Picking the Right Model

part-time-franchises-picking-the-right-model

Navy Veteran and Professional Artist Couple Open Caring Transitions in Texas

Navy Veteran and Professional Artist Couple Set Out to Build a Purpose-Driven Business With Caring Transitions in Texas

navy-veteran-and-professional-artist-couple-set-out-to-build-a-purpose-driven-business-with-caring-transitions-in-texas

Why This Real Estate Broker Decided To Bring Caring Transitions to Central Texas

caring-transitions-san-marcos-kyle-chad-hardin

Sola Salons Franchisee Grows Salon Freedom Into a Multi-State Powerhouse 

sola-salons-franchisee-grows-salon-freedom-into-a-multi-state-powerhouse

Franchising Expert Explains Why Brands Want to Attract Multi-Unit Franchisees

MORE STORIES LIKE THIS