The popular saying “go big or go home” holds true when it comes to franchising. If you are looking to own a franchise, buying a single-unit franchise is like buying yourself a job. However, when a person owns and operates multiple units of a franchise (multi-franchisee), they have gotten themselves a business empire.
Who is a multi-unit franchisee? A multi-unit franchisee is someone who owns and manages two or more locations of a single franchise brand. Forget whatever you might have been told; the main reason for someone to get into the franchising business is to make money, as simple as that. And the best way you can make a lot of money from franchising is by becoming a multi-unit franchisee. Let’s look at the case of Greg Flynn, America’s largest restaurant franchise owner who now operates over 2400 franchise locations. He was the first US franchise owner to become a billionaire in 2012. Grey started just like everyone else when he purchased an Applebee’s franchise back in 1999.
How to Become Rich with Multi-Unit Franchising
The key to becoming rich as a franchisee is by taking advantage of compounded returns. Big franchise owners, like Glen Flynn, continue to open more branches with what is basically “house money.” That is, revenues accrued from the first franchise unit are used to finance the next. When you own several locations, you can survive on the returns from one outlet and use the profits from other locations to expand your franchise business. When your business has grown enough, you can hire regional managers to help manage your stores, building a system that fetches your money whether or not you are onsite.
This is how Khurram Burney, a multi-unit franchisee operator with The Halal Guys, expanded his business. He claimed that his sole regret is not thinking of going big right off the bat. Khurram said in an interview, “What I would have done differently was definitely have a bigger territory. I have five stores and wish I would have signed up for 10 to 15 units.”
The more profitable franchise units you operate, the more opportunities you will have. Savvy multi-franchisees are able to identify struggling franchise units around them and buy up these stores at a reduced price. Since a successful multi-unit franchisee already has working systems in place, they are usually able to turn these struggling stores into profitable ones within a short period of time.
Besides, franchisors are always looking for successful multi-unit franchisees to partner with. So they may woo you to operate other non-competing franchise businesses in your territory, allowing you to broaden your franchise portfolio and generates more income. This was what Greg Flynn did when he bought Arby’s, Taco Bell, and Panera Bread franchises in addition to his first franchise, Applebee’s.
Many people don’t think about having an exit plan when venturing into franchising. If you own multiple units of a franchise, the franchisor will want to buy back your top-performing locations at a higher price. But let’s say that does not even occur. When you have operated two or more successful franchise units, you will have a business that you can sell when it’s time for you to leave or try something else.
Lower Your Risk with Multi-Unit Franchising
A lot of people think owning a single franchise unit is less risky than being a multi-unit franchise operator, but the opposite is the case. When you own multiple franchise units, your risk is spread out across the different locations – not concentrated. For instance, if you had just a pizza location downtown during the coronavirus pandemic, you would probably suffer as offices close down. But it is also during this pandemic period that suburban restaurants got a lot of take-out orders. But if you had diversified your franchise portfolio, your other franchise units would have compensated for each other and helped you deal with the situation.
Multi-Unit Franchising Means Reduced Costs and More Leverage
For multi-unit franchisees, the lowering of the operating costs begins right off the bat, as franchisors tend to offer discounts on the initial franchise fees when you buy more than one location.
Also, multi-unit franchise owners have an advantage when there is a labor shortage since they can easily move employees as necessary to cope with any staffing issues in the short term. Plus, owning multiple locations lower labor costs. A lot of franchise concepts nowadays don’t need you to have a general manager at each outlet, so you can hire a super manager to oversee several stores. This kind of management structure helps you save costs because instead of employing a general manager who earns $65,000 at every location, you can just get a super manager who will collect about $80,000 and help manage all your stores.
As a multi-unit franchise operator, you will also have more leverage with suppliers than single-unit owners. This will help lower the cost of goods and give you a higher bargaining power to receive your supplies on time as a bigger customer, which can be a huge advantage during supply chain constraints.
You will also save on marketing costs if you have multiple franchise locations since the amount to promote a business in an area will be the same whether you have one store or multiple outlets.
The Ideal Brands for Multi-Unit Franchising
If you want to become a multi-unit franchisee, the first step is to look for a suitable brand. While you may be tempted to go for recognized brands such as Subway or McDonald’s, the best time to make loads of money with these popular franchises was when they were just starting out.
Nowadays, it takes to franchisees a long time to reach the break-even point, even with well-known brands, and it’s not easy to recover your initial investment, not to talk of generating revenue.
People who want to get rich with multi-unit franchising should go for new and up-and-coming franchise companies. Bear in mind that Subway and other well-known businesses began with just a single location before they boomed. As a franchise owner, you want to grow with a brand right from the start.
Conclusion
If you are thinking of becoming rich through franchising, it’s important to make a long-term plan and begin as a multi-unit franchisee. Join a strong new brand in its early years, open multiple franchise outlets, re-invest initial revenues into the business, and build a franchise empire you can sell in the future, providing enough money to last you and your family for the rest of your life.
