Things To Consider Before Buying Your Second Franchise Unit

Making the leap from one to two or more franchise units can be daunting, especially if you’re a first time business owner or just getting your feet wet in the franchise industry. There is so much to learn and manage with just one location, and the path to scaling your business may seem insurmountable.

Nevertheless, recent data from 2019 shows that 54% of all franchises are multi-unit operations, which means growing a franchise business is not only common but do-able.

Some of the most valuable information in franchising comes from other franchise owners who have lived through similar situations. 1851 Franchise spoke with several multi-unit and multi-brand franchise owners to hear their advice on expanding and scaling a franchise. Here are their tips for franchisees looking to become multi-unit owners.

Master Your Craft

As a franchise owner, you should dedicate yourself to learning the ins and outs of every facet of your current business and making that as successful as possible. The well-being of additional units depends on your knowledge and ability to replicate the success of location number one.

“Take the time when you have a single unit to learn every aspect of the business,” said John Greff, owner of seven Workout Anytime locations. “Develop excellent systems that can work for you when you’re not there and then apply those systems to multiple units.”

Sajib Singha, owner of eight Dairy Queen*s, two Captain D’s, two Papa John’s and one Schlotzky’s, echoed the sentiment, saying, “You need to understand the basics of each franchise to make sure you have a full grasp of the fundamental needs. That way, when you pass the baton onto the next person to run things, you know your business will be okay.”

Build a Team You Can Rely On

Single unit franchise owners are often on location regularly, if not full time. They are highly involved because they are building a business and want to oversee day-to-day operations. But you can’t be everywhere at once. The more you grow your locations, the less able you are to manage each specific unit, which means you’ll need to invest in hiring the right people who will be able to lead and carry out your vision when you’re not there.

Paget Rhee, a multi-unit franchisee with BeBalanced Hormone Centers, said, “When you only own a single-unit, it is all about focusing on the customer, but with multiple units, you need to learn how to inspire a team,” she said. “The better you are at hiring and training an experienced team, the more it will encourage them to make the client experience perfect even when you aren’t there.”

Do the Math

As with any business decision, do your homework before expanding to a second franchise unit to make sure it’s a sound and profitable decision. Consider the added expenses of additional resources, utilities, rent and supplies. Where can you scale and economize to save money? How will you allocate your budget to maximize efficiency?

Greff certainly pays attention to the numbers: “I’m a bit of a Scrooge. Literally, any dollar that I spend has a calculated ROI. We really focus our attention on spending 99% of our energy and resources on the things that are going to have the biggest impact on the bottom line.”

By tracking your expenses and what generates the most revenue for your first location, you can make a better formula for success for all subsequent locations.

Learn To Let Go

As much as you might like to be heavily involved in the day-to-day with multiple locations, you likely won’t be able to. It’s just not possible. If you insist on trying anyway, the end result is usually a very unhappy and micromanaged team.

To set multiple units up for success, you have to find the right team, train them thoroughly and then trust them to get the job done. This means you’ll have to let go of the reins to an extent so the team can take ownership.

“Work on building a team, allowing your leaders to feel important and valued and try not to micromanage them,” advised Tara McLain, owner of four Hand & Stone franchise locations. “It’s not about me — it’s about the team that we’ve created in each individual location. And it’s about empowering the leaders within the organization to want to be there and build the culture.”

Singha and Greff also acknowledged the importance of their teams to the overall success of their portfolio. “Without my team, I am nothing,” said Greff.