How To Become A Multi-Unit Franchisee

Operating multi-unit franchises can be challenging and profitable but how can you go from a solo-entrepreneur to a multi-unit franchisee?

August 20, 2018

Operating multi-unit franchises can be challenging and profitable but how can you go from a solo-entrepreneur to a multi-unit franchisee? Before you become a multi-unit franchisee, you need capital and support to succeed.

Understand The End Game

It’s easy to get caught up in the fantasy of owning and profiting from multiple franchise locations but the reality can be very different from fantasy. While it’s true that owning multiple businesses can improve overall profitability, it is also true that being a multi-unit franchisee will launch you into an entirely different system. Here are some things about the end game of multi-unit franchising you should understand:

  • You can’t micromanage multiple stores. If you’re accustomed to a more hands-on approach to managing your business, you can’t carry this over to a multi-unit franchise. You must relinquish control to other people so that they can manage your business.
  • You must handle macro-level issues exclusively. Multi-unit franchisees can’t get caught up in the minutia of a business—they must focus on the macro-level issues such as profits, expenses, growth, cashflow etc. If you take your eye off these macro-level issues you will drop the ball and possibly damage your business.
  • You need a dependable team behind you. No multi-unit franchisee operates alone. If you want to be successful or even just survive, you need a team of talented and dependable people who can help you run your business.

Be Prepared To Invest

Successful multi-unit franchisees understand that you must be prepared to make a substantial investment into your business. You will need to invest in:

  • Franchise fees
  • Fixtures
  • Equipment
  • Branding/Signage
  • Staff Hiring and Training
  • Property improvements
  • Computer systems
  • And more

The more you’re willing to invest in the right kinds of things, the more likely your business will succeed. Attempting to go the “discount” route could harm your efforts to grow and gain profitability as a multi-unit franchisee.

Find A Financial Partner

Multi-unit franchisees need financial partners who have faith in what they’re doing, are willing to invest in their business, and have the capacity to provide the capital needed to grow. You must be very careful about which lender you partner with because you want someone who is equipped to offer lines of credit and loans that will help you meet your goals. Look at your lender as a silent partner in your business. Don’t move to hastily when choosing a lender, take the same amount of care you would take if you were investigating a potential business partner.

Choose The Right Contract

If you’re signing onto a multi-unit agreement with a franchiser, read the fine print. Some multi-unit franchise agreements require you to open new franchise units every year or every other year. You need to be sure that you can meet any timetable that is laid out in the agreement. Think about the requirements that are needed to meet the multi-unit franchise agreement and make sure you have a plan in place to make this happen. There are some benefits to signing a multi-unit agreement such as discounted franchise fees and exclusive access to a certain territory. In many of these multi-unit franchise agreements, the franchiser is prohibited from giving another franchisee access to your territory.

Before you become a multi-unit franchisee, make sure that you have the support and capital you need to succeed.

West Coast Franchise Law

If you have any questions about franchising, please contact the experienced franchise and business law attorneys at West Coast Franchise Law today at (206) 903-0401 to discuss your situation. Nate Riordan is a 2023 Franchise and Bankruptcy Super Lawyer with over 20 years expertise helping clients achieve their business goals.