Owning more than one franchise brand is now all the rage. This guide is the only one you’ll need to read to learn if multi-brand franchise ownership is for you.
Owning franchises across several different brands is now hot and trendy in the franchising sphere. In fact, of the 450,000+ franchise units in the United States, 53% percent are currently owned by either multi-unit or multi-brand franchisees. The tide has moved away from single-unit franchise ownership and company-operated model towards multi-unit franchisees who are capable of dealing with several brands at the same time.
With multi-brand franchisees expected to control over 76.5% of franchises in the next 5 years, the franchising world is experiencing a seismic shift in ownership style. And there are lots of reasons for this paradigm shift in franchise ownership.
The Benefits of Owning More Than One Franchise Brand
(1) Weather Harsh Economic Times
During the Great Recession of the late 2000s and early 2010s, many franchise owners were hit hard by tough economic times. Unfavorable interest rates, high costs of living, and low disposable income meant that some franchisees had to cut their losses. Interestingly, figures showed that multi-unit franchisees that invested in several franchise brands weathered the economic turmoil. On the other hand, the small franchisees, mostly single unit owners, were hit the hardest by the economic storm.
(2) It’s Easier for the Franchisor
More and more franchisors are favoring franchisees that own more than franchise brand, and with good reason. They have discovered that partnering with a few multi-brand franchisees is much easier than dealing with scores or hundreds of single unit franchisees with little or no experience running a franchise business. It’s a matter of making a smart business decision for franchisors. It’ll bring down the costs of administration, on-boarding, and training.
Multi-brand franchisees, on the other hand, will more likely to get favors from the franchisor. They’ll probably get reduced royalties, cheaper inventories, and much more.
(3) Smooth Unit Development
Franchisees who own more than one franchise brand have seen it all. They have developed many units from the ground up, and the chances are that they have robust relationships with vendors, shopfitters, and real estate agents. Often that means multi-unit franchisees will have a smooth, hassle-free way for unit development.
(4) It’s Great for Emerging Brands
In an era when most brands are looking to leverage first-mover advantage, fast expansion and growth are critical. That’s where multi-brand and multi-unit franchisees come in handy, especially in the up-and-coming fast-casual franchising niche. These franchisees have the skill set, the experience, and the know-how to help expand new brands across many regions and perhaps across the country.
(5) Consistency Matters
Single-unit franchisees can certainly expand a franchise brand pretty quickly, but that comes with a set of challenges. The franchisor will start “herding cats” and might end up neglecting his role as the custodian of the franchise brand. Instead of dealing with several distraught single-unit franchisees, the franchisor could be better off focusing on what really matters: marketing and building the brand’s image. In other words, owning multiple franchise brands creates consistency and an elevated sense of professionalism.
Moreover, the best way for franchisors to create consistency is to leverage the tools, the systems, the techniques, and the technology that multi-brand franchisees bring to the table.
(6) Easy Sharing of Resources
Buying inventory in bulk allows multi-unit franchisees to negotiate for better services and get volume discount rates. But, more crucially, owning several different brand franchises allows for easy sharing of excess goods, helping prevent overstock and spoilage (in case of a food-based franchise). This can also bring added advantage when it comes to filling orders and better use of warehouse space, therefore increase per-unit cost savings.
(7) Greater Stability
Multi-unit franchisees are a darling of franchisors. They make their work easier and, in return, franchisors offer an array of exclusive perks for them. A multi-brand franchise owner tends to be more stable, particularly financially. When the growth of one brand is slacking, they can compensate with brisk business in other brands.
Your franchising appetite should go beyond one brand. It is a great way to ensure that you’re stable, maintain consistency, and cultivate stronger relationships with other stakeholders, including franchisors.