What Franchisors Want You to Know About Multi-Unit Franchise Ownership

A large tailwind in franchising right now is the increase of large-scale investors building up their portfolios with multi-unit deals. Multi-Unit Franchisee magazine found that there are 44,000 multi-unit owners in the country currently, and they control 53.9% of all franchised units. 

In addition to the number of entrepreneurs who own multiple franchises increasing, the size of the average portfolio is growing: now 5.2 locations, up from 4.8 a decade ago. 

With multi-unit owners having such a significant impact and role in the franchising world, brands value their partnerships and investments. Many franchise systems are built with large networks of support to allow these operators to focus on continued expansion and aid them in scaling. Multi-unit franchisees enjoy the benefits of growing with the company, and both sides of the agreement reap the benefits. 

Multi-Unit Investors Have Support for Day-to-Day Operations

Franchise systems are constructed with an immense amount of support both at the unit level and on the corporate side, so multi-unit owners don’t have to get tied up in the rudimentary tasks of running the business. With a trusted staff operating the location or territory and executives at headquarters to help with marketing, accounting, coaching and more, franchisees can instead focus on how to keep growing the company. 

This model works extremely well for many brands, such as the wellness concept The NOW Massage, where managers run boutiques, and the corporate staff supports franchise owners with sales, marketing, recruitment and training so owners can continue to open more locations.

“The NOW Massage boasts a scalable model that allows for franchise owners to easily open multiple units,” said President Jeff Platt. “As franchise owners do so, there are many synergies and economies of scale that come into play that allow for ease of growth and expansion in their marketplace.”

A Larger Agreement Has Multiple Revenue Streams and More Profits

While there is more capital that’s required for a multi-unit deal, once the businesses are up and running, this also means more profits. With several customer bases and streams of revenue, there is more opportunity and less risk. FRANdata estimates that multi-unit franchisees make a collective $200 billion in revenue each year.

“Here's the reality: one unit is busy, but multiple units are valuable. You leverage your opportunity with a less-than-equal risk,” said John Francis, franchise advisor with 30-plus years of experience as a multi-unit owner for brands like Cost Cutters, City Looks and PostNet. “When everything is on a larger scale, the upsides start to exponentially outweigh the downsides. In my opinion, the best way to really make a business investment worthwhile is through multiple units.”

Many Brands Incentivize Franchisees to Invest in Multi-Unit Deals 

With all the money to make in multi-unit franchising, brands are eager to partner with large-scale investors who are growth-minded and can help accelerate scaling goals. Many companies offer different incentives to attract candidates for multi-unit deals or offer existing franchises reduced fees to add additional locations or territories. The same goes for vendors and suppliers, who will give better pricing to those who buy in bulk. 

“With many concepts, there are discounts on subsequent contracts. If you buy one, the franchise fee is $20,000, the next one is $15,000, the third will be $10,000, and so on,” Francis explained. “If you're buying more equipment or more inventory, your buying power gets bigger, and your cost might actually go down. It can make you more competitive within the system and the segment.”