Everyone who knows anything about franchising knows that the people who make the most money are the multi unit franchise owners. As a single franchise owner or an owner-operator, you can do well, but you take on more risk and your reward is limited. Why is that? Let’s take a look.
Decreased Risk for Multi-Unit Franchisees
When you learn about stock market investing, one of the first things you learn is that you have to diversify. That’s why so many people invest in index funds instead of single stocks. If you invest in one company and it tanks, you’ve lost everything. On the other hand, if you’ve invested in 20 companies in different industries, you may see one or two tank, but many more will do well and some will stay about the same. In general, the good will outweigh the bad and you’ll come out ahead (even though it’s possible you could have done better with one – the downside is just much bigger).
Restaurant franchises and other types of franchises are much the same. If you have one location, it could be forced into bankruptcy by increased local competition, the closure of nearby major employers, etc. If you’re a multi-unit franchise owner, it’s very unlikely that all your locations are going to close.
Bargaining Power for Multi-Unit Franchisees
Whether you have one franchise location or twenty, the franchisor is going to want to work with you to make it a success. They want to keep their brand strong and keep those royalties coming. However, if you have 20 locations, it’s much more likely they’ll be willing to work with you on things like startup costs and royalty rates. After all, losing you would be much worse than losing someone with just one store.
Rewards Are Scaled with Multi-Unit Franchising
If you have one location, there’s a tendency to get heavily involved in the day-to-day operations and artificially limit your earnings. If you have multiple franchise locations, you’ll have to create systems and start letting other people do the work you would have done. You may earn slightly less per location, but once you get that system going, you can duplicate repeatedly to grow your fortune faster.
Multi-Unit Franchise Opportunities
It can be hard to find a good multi-unit franchise opportunity. Although almost all franchisors WANT multi-unit franchisees, not all of them are prepared to be a good partner to one. For that reason, it’s best to stick with established franchisors who already have a number of multi-unit franchisors and who understand how to be a good partner in that kind of situation. That’s also the best way to make sure you’re working with a company that will help you safeguard your investment by keeping the brand strong.