5 Common Multi-Unit Franchise Mistakes

There are many mistakes owners can make when transitioning from single-unit to multi-unit ownership. Here are the top five that all single-unit owners out there should take into account before jumping into the deep end of the franchise ownership pool.

Not capitalizing properly
It’s simple. If you don’t have enough capital resources to open a business, then it’s not going to work. What’s not so simple and is a common mistake that single-unit owners make while transitioning into multi-unit ownership is not setting aside enough money to run multiple locations at once. A multi-unit owner cannot make the mistake of only looking at the initial capital expenditure aspect of each location and not be prepared with the proper capital reserves to break even or to account for slower than anticipated starts.

“Many owners have just enough to open additional locations, but not enough to keep them open,” said Sean Fitzgerald, Chief Development Officer at No Limit Agency*. “A bad month in one location could be challenging, but a bad month for multiple locations can be crippling.”

Not operating units as separate businesses
Another common mistake is treating multiple locations as a whole business instead of individual businesses. When adding new locations to their portfolios, many multi-unit owners don’t have proper staffing and even pull resources from one location to bring to another. A lot of times this will leave one location understaffed and the owner wondering why their results aren’t where they should be and eventually leads to the over-allocation of staff members.

Assuming success can be easily replicated
Just because you have one successful operation doesn’t mean you will be successful with the others. Success can be replicated, but so can failure. You have to become a team leader and put other people in the right positions.

“The ability to be successful through others should be your goal, “said Philip Schram, VP of Franchise Development for Buffalo Wings & Rings.

When you own one location, you may be doing the marketing, taking care of customers and other day-to-day operations. When you’re a multi-unit owner, you need someone to be that leader when you’re not there and you need to put the right team and processes in place.

Neglecting outlying locations
Depending on where the owner is located in relation to their businesses, they could have a location or two that are outlying. More often than not, the stores that are closest to where the owner resides will end up receiving more attention.

“[Outlying] locations always suffer,” Fitzgerald said.

Not only that, but those locations don’t have the benefit of shared marketing initiatives and local brand awareness.

Not following through on new marketing campaigns
New business openings are normally handled with a brand new marketing plan, but as an owner opens new locations, the need to do so seems to diminish. The problem with this goes back to running each location as a separate business. Just because someone may know of one of your new locations doesn’t mean that everyone will, so you need to start off your new location as you did your first. Many owners at this point in the game think that if they build it, then people will come. This is another misconception and your new location should really be treated like no one knows about it.