Multi-unit franchising refers to the scenario where a single franchisee owns and operates more than one franchised business. There are several benefits to this. For example, having one single franchisee operate several franchises:
- offers a path of growth for franchisees;
- minimises the cost of recruitment and training for franchisors; and
- helps minimise the shortages of quality franchisees.
This article will take you through five tips for successfully running a multi-unit franchise.
1. Create an Assessment Criteria
Firstly, ensure that the prospective franchisee can operate multiple franchises. To do this, you should create a checklist of the qualities you seek in a franchisee. Such criteria will allow you to measure prospective franchisees against a predetermined standard. You could also create a rating system and a minimum score that you would accept as an operator of a multi-franchise system.
2. Scout Existing Franchisees
Consider scouting your existing franchisees. Regularly reviewing the potential and performance of your franchisees allows you to identify which of your franchisees will likely be successful at operating multiple units.
You should establish meetings with these franchisees and discuss if operating multiple units is a growth path they want. Not all franchisees will want to expand this way, so you must have these conversations early on. This knowledge allows you to pivot your focus to different franchisees if needed.
Continue reading this article below the form3. Engage With Existing Franchisees
Similar to scouting existing franchisees, you must engage with your existing franchisees. When you identify which franchisees want to own multiple units, you should reach out to them and discuss a potential business development plan. You should then monitor their progress and follow up to see how they achieve the prerequisites required to do this.
The franchisee should take an active role in developing this plan. As a franchisor, you should provide them with the resources and support to help facilitate this. However, the franchisee should be at the forefront of the business development.
4. Deliver Education
Growing a franchise unit from one to multiple takes a lot of highly-specialised skills and management. It is not only a matter of putting in hard work. Instead, the prospective franchisee must have a solid infrastructure that allows each unit to run autonomously.
Your multi-unit franchisees need to have excellent systems and processes in place to facilitate this. However, knowing how to develop their skills requires a lot of support and education from you as their franchisor. Providing special multi-unit franchising seminars and conferences will allow your franchisees to develop these necessary skills. In addition, consider connecting them with other franchisees who have successfully operated multiple units to gain mentorship and support on best practices.
5. Provide Financial Support
Finally, providing financial support to your multi-unit franchisees is another way to support this expansion. Facilitating access to a financial advisor or a recommended bank can help your franchisees access competitive finance options to support their expansion. Without such resources, franchisees might be unable to navigate the complex language or processes associated with accessing capital.
Further, you should ensure that growth into a multi-unit franchisee is sustainable. When developing criteria for multi-unit franchisees, assessing their ability to maintain their franchises is essential. This is because you should avoid putting their existing franchise at risk or risk the growth of your entire franchise network.
This publication provides you with the fundamentals for franchising your New Zealand business, including set up, branding and management.
Key Takeaways
Having your franchisees operate multiple units has a range of advantages. However, to ensure you are selecting the right franchisees for this, you should:
- create assessment criteria;
- scout existing franchisees;
- engage with existing franchisees;
- deliver education; and
- provide financial support.
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Frequently Asked Questions
Multi-unit franchising is where a single franchisee owns and operates more than one business. There are several benefits to this. For example, having one franchisee operate several franchises offers a path of growth for franchisees and reduces the cost of recruitment and training for franchisors. Additionally, it helps minimise the shortages of quality franchisees.
To successfully have your franchisees operate multi-unit franchises, you should first develop assessment criteria. You should then scout and engage with your existing franchisees and assess them against these criteria. Next, you should provide them with educational support to ensure their skills are up to scratch. Finally, to ensure running multiple units is feasible, you should provide financial support to your franchisees.
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