Multi-Unit Franchising: How and Why You Should Pace Your Expansion

Shifting from a single franchise to a multi-unit franchise allows you to leverage the economies of scale to grow your business. But how and why should you carefully pace the expansion of your franchise business?

Master Your Business Model

Before you shift to or expand your multi-unit franchise, you must master the business model. If you’re making mistakes in a single unit franchise, those mistakes will only be multiplied and magnified in a multi-unit scenario. If you can perfect the way you execute your business model in one franchise, it’ll be easier to implement the same successful strategies on a larger scale expansion.

Build A Strong Reputation

If you’re an owner with a single franchise unit, it’s important that you build a reputation for professionalism and business savvy in the franchise industry and great customer service with customers before you expand. Using your existing reputation it will be easier to attract the right customers quickly to your new franchise units. Also, if you are known as someone who has run a profitable franchise, it will be easier to get the loans you need to expand.

 Gain Working Capital

You need money to successfully expand your franchise, and you can’t always depend on a line of credit to meet all of your needs. As you consider expanding your multi-unit franchise business, you must have the working capital necessary to make investments. Also, having enough cash on hand will inspire more confidence in lenders to loan you the money you need to grow.

Talent Access

Good help is hard to find. Before you expand your multi-unit franchise, you must be sure that you have access to a workforce that is capable of doing the jobs you have available. Check the data on the target locales where you want to open up new franchise units—is there a workforce available who is skilled enough to do the job and can you afford them? You need to know this information before you expand your franchise.

Market Research

Every franchise owner dreams of cornering a lucrative market, but you’ll need more than a dream to successfully expand a multi-unit franchise. You must do research to find out if your target locales have enough of a customer base to purchase what you’re selling. Don’t skimp on this process, you don’t want to open up a franchise unit in a location that simply can’t deliver enough customers.

Look For Drawbacks

There is a drawback to every type of expansion—what is yours?  Will you need to make substantial investments in training talent, upgrading a building, marketing and branding? Will that investment be difficult to recoup? You must look at all the possible drawbacks to a multi-unit franchise expansion so that you’re not stuck with a money-losing venture that could completely sink you financially.

Shifting Your Paradigm

When you go from running a single-unit franchise to operating a multi-unit franchise you will be required to make major changes in the way you think and operate. While it is possible to have hands-on supervising of a single franchise, such micro-management becomes impossible even at two or three units. Franchise owners who want to expand their business must learn to delegate major responsibility to other people and they must be prepared to deal with the complications and complexities of managing a business with so many moving parts. If you want to successfully expand your franchise business, you must pace yourself so that you can make the mental adjustments necessary.

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