Multi-unit franchising is when one franchise owner runs more than one location or area of the business, many companies start by franchising an existing business. This way of growing is becoming more popular. For example, a McDonald’s franchise owner might run four or more restaurants. Many gas stations also work like this, where one person might own 10 or 20 stations in the same region. Even in services like cleaning or fitness, franchise owners often run several locations. In retail, it’s common to see one owner manage two or three stores close to each other.
This strategy can be very helpful for both the franchise owner and the company that owns the brand. When a franchise owner is allowed to open several stores, it can lead to bigger sales, more profit, and a stronger position in the market. It also makes the franchise more attractive because it shows there’s a clear way to grow. For the company, having fewer but stronger franchisees means less time and money spent on training new owners. It also helps deal with the problem of finding enough new franchise owners, which can slow down growth.
But even though this sounds great, there are risks involved. Multi-unit franchising doesn’t work well for every business or every franchisee. Drawing on years of research and experience at the Franchise Relationships Institute, here are 12 helpful tips for franchisors to get this right.
1. Set Clear Rules to Decide Who Can Expand
You need to have clear standards to figure out if a franchise owner can handle running more than one location. If your business didn’t plan for multi-unit owners at the start, you might have picked franchisees who are good at managing just one store. Create a checklist of skills and resources needed for managing several stores. This list should focus on things that affect how well franchisees do in your network.
Use a simple scoring system to compare franchise owners fairly. This system should be based on things you can observe, like how they handle problems or manage staff. Having clear, fair rules helps everyone understand what you expect.
2. Be Open About What You Expect
Make your rules clear and easy for all franchise owners to see. When everyone knows what good performance looks like, it helps build trust. It also encourages franchisees to prepare themselves if they want to grow. When multiple owners want to expand, knowing the rules makes the process fair.
3. Don’t Say ‘No,’ Say ‘Not Yet’
When you review a franchise owner, you might find they’re not ready to run more than one location. Maybe they need to improve some parts of their business, or they aren’t ready to take on more work. Instead of rejecting them completely, tell them they can try again later. Offer coaching and support to help them get better. This way, motivated owners can work on their weaknesses and come back stronger.
4. Get Your Team Involved
Growing your business with current franchisees is easier than finding new ones, but it still takes teamwork. Different parts of your company will need to help, like legal, finance, and operations. Make sure everyone with the right skills and knowledge is involved. This will help you handle contracts, check financial strength, and update technology to support bigger businesses.
5. Look for Franchisees Ready to Grow
Keep an eye on how all your franchisees are doing. Find those who run strong businesses and are interested in growing. Talk to them about expanding and invite them to go through your grow-up checklist. Not everyone will want to grow, but the process can help them improve their current business, which benefits everyone.
6. Let Franchisees Lead Their Own Growth
When you assess a franchise owner’s readiness to expand, you will spot areas where they need to improve. Sometimes, these issues are easy to fix. But when running many locations, small problems can become big problems. Franchisees must take full responsibility for fixing these issues. The franchisor should support them as a coach, checking on progress and offering advice.
7. Teach Franchisees to Work ON Their Business, Not Just IN It
Running one store means the owner often works “in” the business—doing daily tasks. But when they have three or more locations, they must work “on” the business. This means they need systems to track money, manage staff, and check performance so they can focus on growth and leadership. This change can be difficult but is key for success.
8. Make Sure Funding Plans Are Safe and Realistic
As franchisees grow, the impact of their success or failure becomes bigger. It’s important to check how they plan to pay for growth and whether their money plans are strong enough to handle problems. A good franchisor checks that expanding owners aren’t risking their current stores by growing too fast or borrowing unsafely. Some franchisors even work with banks to get early warnings if a franchisee might be in financial trouble.
9. Help Franchisees Find Capital and Financing
Many small business owners don’t understand how banks make lending decisions. This can cause them to make mistakes when applying for loans or accept bad deals. Franchisors should help franchisees find financial experts who know how to prepare loan applications that banks like. This support helps owners get the best deals and avoid costly errors.
10. Have Clear Rules for Partnerships and Management
Sometimes franchisees join together in partnerships to share the costs and risks of expansion. Franchisors should have clear rules about who is responsible for what in these partnerships. They should also require a formal agreement that explains how partners will work together and what happens if they want to end the partnership. This helps prevent conflicts later.
11. Offer Special Training for Multi-Unit Franchisees
Managing many locations means handling bigger teams and more money. Multi-unit franchisees will want training to improve their leadership and financial skills. Many franchisors now offer special workshops, group meetings, and events for these owners. They also hire experienced field managers who understand the needs of larger franchisees and can give better support.
12. Use Experienced Multi-Unit Franchisees as Mentors
Owners who already run several locations can be great mentors for those who want to grow. Invite them to speak at meetings, lead workshops, or give feedback on new ideas. They often have strong opinions and high standards, which can help improve the whole franchise system—if their feedback is listened to in a positive way.
Conclusion
Multi-unit franchising is becoming more common around the world. It helps franchisors work more efficiently and rewards good franchisees by giving them clear chances to grow. While it comes with challenges, following these 12 tips will help you build a stronger, more successful franchise network. With the right support and planning, multi-unit franchising can be a powerful way to expand your business.
