Should Your Business Have Multiple Units Before Franchising?

Having multiple units before franchising will increase your credibility, improve your cash flow and fine-tune the proven business model you’re trying to sell.

Don’t tell that to Glen Bell, though. In 1962, Bell opened the first Taco Bell restaurant in Domney, California. Two years later, he decided to franchise, and retired Los Angeles policeman Kermit Becky became his first franchisee, opening a Taco Bell restaurant in Torrance, California. In 1970, Bell took the franchise public — and the rest is franchise history. Today, the quick food restaurant serves over two billion customers each year at 7,072 restaurants, with more than 93% owned and operated by independent franchisees and licensees.

Massage Envy is yet another example of a successful brand that took the franchise dive right out of the gate. After opening a single Massage Envy location in Scottsdale, Arizona in 2002, founders Leonesio and Shawn Haycock immediately started franchising. Today, the membership-based massage franchise brand has more than 1,000 locations across the country.

“I think it just depends on the franchisor and the business they’re selling,” said Corey Elias, director of franchise development at Franchise Captain. “If it’s a truly unique model with no competition, it might make sense to franchise immediately, so nobody has time to compete,” he said. “There’s a company called Smash My Trash that’s probably the fastest-growing brand I’ve ever seen. They go to dumpsters with this machine that they use to smash down the trash, which provides a big cost savings to companies’ trash hauling fees. In a year, they’ve sold 350 franchises.”

With a plan to “disrupt the commercial waste industry,” the mobile trash compaction company, founded in 2015 by Justin Haskin, might have been wise to franchise immediately. Over the past six years, numerous competitors have emerged, some of whom Smash My Trash has tried unsuccessfully to sue. 

According to Lauren Coulter, director of franchise development for emerging brand Biscuit Belly, having more locations will certainly make potential franchisees more comfortable that they’re investing in a proven business model, but there are benefits for franchisees who get on board early. “Certainly, being able to pick your location knowing that you don’t have any competition is a huge plus,” she said. “And for a lot of our early franchisors, there’s also the opportunity to be very hands-on in the development process. Everybody we’ve signed really wants to be engaged, and that was an important part of their decision.”

On the flip side, said Coulter, a company that only has one or a few locations won’t have that data some investors want to see. “It’s a real catch 22,” she said. “In a perfect world, we would have loads and loads of data to support our brand’s success, but without having 20 or 30 units, it’s difficult to derive.”

According to Elias, there’s no one-size-fits-all blueprint for every company thinking about franchising. “There’s no one answer,” he said. “What’s right for one company might be wrong for another. At the end of the day, it’s about knowing your brand well enough to determine the best path forward.”