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When Taking the Next Step to Becoming a Multi-Unit Franchisee, Consider These Metrics Before Investing
From labor costs to competition in a market, multi-unit franchisees need to do their homework
Multi-unit franchise development is popular. There is no denying that. According to Multi-Unit Franchisee, multi-unit franchise operators control 55 percent of all franchised units in the U.S.
But opening additional units doesn’t come easy. There is a lot of work that goes into getting new locations off the ground even for the most seasoned franchise operator. Here are some of the most common metrics and factors multi-unit franchisees are considering before investing.
Market Analysis
Market population, traffic patterns, average household income, expendable income, and demographic breakdowns, among other elements, are all key development factors savvy multi-unit owners examine before entering a market.
Along with understanding the ins and outs of a market’s economic picture, a multi-unit franchisee needs to figure out the market’s saturation point for a particular industry vertical before committing to a development schedule. Jon Crowe, a multi-unit franchisee with Toppers Pizza, has three units in Lincoln and Omaha, Nebraska. He said he considered the other pizza shops in the area and even the market’s food sensibilities before deciding how and when he wanted to grow.
“As a multi-unit franchisee, you have to keep in mind what is popular in the market you are looking to invest in. For instance, Omaha is very particular about its pizza so we knew that the perfect location was critical to our overall success,” Crowe said. “By offering a better quality pizza with fresh dough and fresh ingredients, and delivering it at the same speed, or quicker, than the other major national chains, we knew that Toppers Pizza would stand out in a city like Omaha that is passionate about its food and where it comes from.”
Real Estate
Location, location, location. The old adage rings true even to this day, and never more so than for multi-unit franchise development. End cap, in-line, stand alone, college campuses, airports, food courts – all are viable development opportunities for the right kind of investor that knows what he or she is looking for. Jay Hummer, a development agent for MOOYAH Burgers, Fries and Shakes, said truly understanding real estate trends can help with the decision-making process.
“There are so many additional factors that go into choosing the correct piece of real estate and it’s not as simple as just analyzing the population and income,” Hummer said. “Prospective franchisees should keep in mind a few factors, such as occupancy and labor costs. But it is fascinating to own multiple units. If you have the passion for the business and the brand you have chosen, you will have fun doing it.”
Hummer went on to say understanding all the factors that go into real estate selection will help multi-unit franchisees choose a site that works best for their growth needs.
Labor Costs
As a multi-unit franchisee, you will be dealing with a number of employees across several locations. That is why it is important to look at projected labor costs across all your units in order to budget and plan effectively.
Tra Williams, the COO of Lakeview Associated Enterprises, helps the Lakeview Center at Baptist Health Care in Tampa, Florida partner with franchises. He has helped coordinate the launch of two Dairy Queen franchises in the Tampa community, and understands the importance of having a good staff.
“As a multi-unit franchisee, you’re not in each store every single minute, and you won’t always know about the day-to-day operations of the business. People who try to do this can stretch themselves thin and it may not work,” Williams said. “That’s why it is imperative to hire employees that you feel comfortable with and you know will run the stores while you are not there. It takes a tremendous amount of effort to find the right people, but when you do, hold on to them.”
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About the Author
Nick Powills
FollowNick Powills, CFE, founded No Limit Agency in 2008 and serves as Chief Brand Strategist for the Chicago-based firm. No Limit is a full-service communications agency that establishes and elevates brands by bridging Public Relations, Social Media, Marketing, Advertising, Digital, and a lot of creativity, to best strategize well-rounded and successful campaigns for 50+ global franchise brands. By presenting visionary ideas and building real relationships, No Limit is able to create effective media branding strategies to help companies grow. Nick currently leads a staff of writers, media strategists, designers, social media experts and digital producers in an office think-tank where brands are humanized for strong, compelling media stories. Prior to starting No Limit at the age of 27, Nick spent four years working at a franchise PR agency where he mastered the art of building rapport with media outlets and creating newsworthy pitches for earned media placements. He holds a Bachelor of Journalism from Drake University in Iowa.
