Why do franchisors want multi-unit franchisees?  | Global Franchise
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Saturday 20th August, 2022

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Why do franchisors want multi-unit franchisees? 

Insight

Why do franchisors want multi-unit franchisees? 

Growth is the name of the game in franchising, and why grow one unit at a time when you can expand with multiple locations at once?

Franchising, like all business models, is one that focuses heavily on growth. This growth can take many forms, and while profitability is usually the holiest indicator that guides strategy in many businesses, it’s not so simple in franchising. 

Franchising relies on outsiders who have a desire to open their own business, and believe they can succeed with a specific brand. While there are many who are considering open their own single unit, there are far fewer franchisees who can sign a deal for multiple units. 

Multi-unit operators are picky people; they know they’re in demand and don’t just opt for the first brand they speak to and receive a glossy brochure from. They conduct painstaking research and many expect a more VIP process from the franchisor than single-unit developers. However, successful multi-unit franchisees will bring more success and profit. 

“Speaking on behalf of PuroClean and our growth year over year, franchise owners with multiple locations have the ability to generate more cash flow in the home service category if managed and scaled appropriately,” said Tim Courtney, vice president of franchise development at PuroClean

“We’ve seen tremendous success with multi-unit owners who follow our system and utilize our full support team that we have available.” 

Approaching multi-unit franchisees should involve some sense of planning to put a brand’s best foot forward. Many franchisors have cited the importance of trade shows to make those strong in-person connections with multi-unit operators searching for their next brand, as well as trade publications. Multi-unit franchisees tend to be strongly plugged into the world of franchising. 

Some brands turn to franchise consultants to secure those multi-unit franchisees as they simply promise more sustainable growth. 

Why are multi-unit operators in such great demand? 

Single-unit operators can take a lot of work. Many are inexperienced and are just venturing into the world of business for the first time. Even after the work has been put in and the new franchisee has been educated in their new role, it can still all end in failure. There is often a gulf in difficulty between what the brochure promises, and how things work out in reality. 

It’s for this reason, among others, that franchisors are always searching for multi-unit franchisees. While nothing is guaranteed in franchising, multi-unit operators are more likely to get their units successfully off the ground. Their experience means they already have the connections to run a site, whether that’s staff or securing funding from a lender. 

“Multi-unit franchisees tend to be more experienced in the sector, they tend to have some sort of organization they can rely on,” said Matteo Frigeri, founder and director of Seeds Consulting

“There already may be layers of management and a significant level of staff available. Also, because they are multi-unit franchisees, they will have already some connections for the funding and most of them will have relationships with banks.” 

Franchisors also need to consider managements costs when the system begins to grow. It might have been fine at an early point, but consistent recruitment of single-site franchisees will result in the growth of the management team. Franchisors would prefer to keep their own teams nimbler, and speak with a single franchisee who owns 20 units, as opposed to 20 individual owners and operators. 

“Franchisors prefer them because, obviously, to deal with 20 franchisees, it’s different than dealing with one franchisee,” said Frigeri.  

“And brands like Domino’s versus Pizza Hut, for example, has shown exactly that in the U.K., where Domino’s has a much smaller number of franchisees.” 

Experience counts for a lot, and multi-unit franchisors are replete with it. From funding to staffing, they will require less maintenance than single-unit owners, and will expand the brand that much faster, and probably with more success. 

“Multi-unit franchise owners that have experience in business, sales, finance or other related backgrounds are very attractive to brands because franchisors see the determination and current business acumen within that individual to set him or her up for immediate success,” said Courtney. 

How do brands attract multi-unit franchisees and what do they expect? 

Multi-unit operators know their value when they begin making inquiries with a brand, and to some extent, expect the brand to be cognizant of that value. 

Prospective multi-unit franchisees ask a lot of questions and want a lot of information before diving in head-first and investing potentially millions of dollars. The type of forecasted and projected information that is provided to single-unit franchisees is often not good enough for multi-unit operators, they want to see how an actual site is working, more often than not. 

“Prospective franchise owners in the home service category normally ask to connect with current franchise owners in the system to get a feel for PuroClean, which offers a wealth of knowledge from current owners who have completed the start-up process,” said Courtney. 

“We host “Meet the Team” days, where we conduct virtual and/or in-person sessions at our home office in South Florida with each department for prospective franchise owners. These sessions touch on a multitude of aspects of our franchise owner support, from growth and financing to marketing.” 

Multi-unit operators are not new to the business – they know what success looks like. By spending time at a store and looking at its numbers, they won’t be convinced by persuasive sales talk or a glossy brochure. The best brands will happily give franchisees that access, as they want prospective multi-unit franchisees to see the success and open their units.  

Competitor analysis is important, operators want to know that they can turn a profit without too much competition in the area or sector. 

“If they are investing for example, in an established, competitive category, which could be coffee, for example, they will want to know how that coffee brand trades against their direct competitors,” said Frigeri. 

Where can multi-unit operators be found? 

Trade shows and trade publications represent strong opportunities to reach multi-unit operators, who are often plugged into the world of franchising. Franchisors can bring franchisees along to trade shows for multi-unit operators to speak to. Having franchisees to speak to can allay fears and tell multi-unit operators that franchisors are confident in the model, and are happy for prospective franchisees to pick the brains of current franchisees and learn about the good and bad. 

The Multi-Unit Franchising Conference represents one of the best trade shows, if not the best for multi-unit franchisees and franchisors. Motivated and eager franchisees attend these events, not just to network, but to learn. There are numerous education tracks that present intimate and interesting ways to connect with possible multi-unit operators on their level, as opposed to an advert. 

They also keep abreast of changes in the industry, and the best way to do that is to read a regularly published trade journal or magazine. Many accept advertisements and advertorials; a cost-effective method of reaching the brand’s target audience. 

Networking is essential in this echelon of franchising. Prospective multi-unit operators tend not to send queries through contact forms; they can likely source a phone number or email address of the head of franchise development to get a direct line. Facetime with such candidates is essential to gaining their trust, and initial contact is always easier to make in the conducive environment of a trade show, and gives them an opportunity to meet with members of the executive leadership team. 

“Prospective owners also ask to hear from the executive leadership team on the corporate side of the company to better understand how the organization is run at a national level and to know the vision and growth plans for the brand as a whole,” said Courtney. 

The VIPs of franchising 

While franchisors can create amazing brands, streamlined operations and world-beating marketing campaigns, it’s the franchisees who actually perform and do the work of the franchise. Multi-unit franchisees amplify this effect by opening multiple locations at once with more success and normally, fewer costs. 

Franchisors recognize this and have always courted potential franchisees and spent lots of time with them to win them over. This is doubly true for multi-unit franchisees, who can often be the object of desire for multiple franchisors at any one time. Multi-unit operators require a more personalized touch through the process, and will ask more invasive and probing questions than single-unit franchisees. 

Any established brand that seeks to grow rapidly will have to use multi-unit franchisees eventually. Perpetual single-unit growth cannot work for every brand and category. 

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