There are many reasons to consider multi-unit ownership and especially in today’s business environment when many prime locations are becoming available by the day. Single and multi-unit franchisees seeking to capitalize on these opportunities may or may not be right to expand their business by adding locations unless they’re effectively prepared to do so to ensure success.
Typically, expansion is the result of an opportunity or challenge that presents itself – an empty building, a fellow franchisee going out of business and even a competitor expanding into the local market. Unfortunately, many fail transitioning from single unit operations to multi-unit as well as expansion from one market to another or even from one side of town to the opposite side of town.
The key to multi-unit success is being prepared, developing a plan and most importantly, answering very important questions with honest responses. Listed below are some of those questions:
Why does multi-unit ownership excite you? What does a day-in-the-life of a multi-unit operator entail? What do you hope to achieve thru multi-unit ownership? What is your long-term vision with multi-unit ownership? What skills are required for successful multi-unit ownership? Would you consider your current operation a success?
How important are systems to a multi-unit operation? Will you operate two businesses or one enterprise? How will your responsibilities change in a multi-unit operation? Do you enjoy managing people? Do you delegate well? How important is record-keeping to a multi-unit operation? How important is accountability to short and long-term success?
Is bigger really better (and easier)? Is it truly perception or reality? Does one plus one equal two, three, one, or zero? Beyond financial benefits, how does economy of scale present additional advantages?
How important is location to your long-term vision? Why is location of the second or next store or restaurant critically important to a multi-unit operation? Is there really economy of scale in marketing and public relations for a multi-unit operation? What will be necessary to capitalize on economy of scale possibilities?
Can your decision stand the test of time? How do you know when you’re ready to further explore multi-unit ownership? What steps must be taken to get from thought to reality? How must you prepare for multi-unit ownership?
What happens if the second or next location fails? What happens if the first or other location(s) is/are adversely affected by the new location(s)? What happens when you want to retire or move on? Does this complicate your exit strategy goals?
How will multi-unit ownership affect your personal life? Understanding risks involved, are you willing to proceed? Are you comfortable with being an entrepreneur as opposed to just a business owner? Are you considering multi-unit for the right reasons? Are you (truly) committed to move forward? Do you NEED to do this now? Do you REALLY NEED to do this now? AND… do you truly love what you’ve been doing up to this point?
Upon honestly answering these questions you’ll have a snapshot of things you may need to put into place and/or improve upon along with a better idea of whether or not multi-unit ownership is right for you.
Note: Franchisors should require franchisees requesting multi-unit ownership to answer these questions and utilize the responses as part of their approval process.