Smart franchisees know that multi-unit franchise ownership is the path to wealth. Surprisingly, multi-unit franchise ownership is less risky than single-unit stores.
When an investor buys a single-unit franchise, he has bought a job for himself, but when an investor becomes an operator of a multi-unit franchise, he has built a wealth for himself.
A multi-unit investment operator is a franchisee who owns more than one franchise site for the same brand. The only reason anyone would consider franchising is to make money, simply the most profitable path to franchise is to become a multi-unit franchise operator.
Greg Flynn is an American investor who now owns more than 2,400 franchise restaurants. In 2012, he became the first US franchisee to reach $ 1 billion. Flynn started like any other investor when he bought his first franchise from Applebee in 1999.
How to get rich with a multi-unit franchise?
The way to get rich in a franchise is to jump composite returns in your favor as franchisees like Flynn continue to grow with the money from the property purchased, meaning the profits earned from the first location are used to finance the following.
Once you have a few stores, you can reinvest some of the profits of one life and the profits of the other to grow your franchise business. Once your business is big enough, you will have a territorial management between you and your stores, creating a system that will make you money whether you are at work or on the beach.
Khurram Burney is a second investor who owns a multi-unit franchise of The Halal Guys, which has grown his business so much, and his only regret at the moment is that he did not think much more from the beginning. “What I would have done differently was definitely have more space,” he says. “I have 5 stores and wish I could have signed up for 10-15 units.”
“High-end multi-unit franchise operators can identify underperforming units in the area and buy these stores for a bargain, so the multi-unit franchisee investor will surely be able to change these underperforming stores in a short time,” says Burnie .
The more successful units you open, the more opportunities are available, franchisors are always looking for successful multi-unit operators. This means you can be lured into opening other non-competitive franchises in your area, which also helps diversify your franchise portfolio and contribute faster to getting rich. That was the case with Flynn adding 3 new Panera Bread, Arby’s and Taco Bell franchises to its original Appleby brand acquisition.
When the investor enters into a franchise for the first time, the investor often does not think about the endgame. If you are a multi-unit franchisor, there is what is known as the “second bite of the apple”, which means that the franchisor will more often buy back successful plots at a higher price. And even if you do not, when you have several successful units, you have a business that can be sold when it’s time to retire.
Reduce risk with multi-unit franchise
While many people consider multi-unit franchise ownership to be more risky than single-unit ownership, the opposite is actually true.
With multiple franchise sites, your risks are spread rather than concentrated. For example, during a pandemic, if you only have one restaurant in a downtown area, there will probably be a problem due to office closures. During the same period, however, takeaway orders from suburban restaurants skyrocketed. And if you have a diverse franchise portfolio, your different locations will balance each other and withstand the storm.
Multi-unit franchise = lower cost + more leverage
Reducing operating costs for multi-unit franchise operators starts from the beginning, with most franchisees deducting franchise fees when purchasing multiple locations.
Multi-unit franchise ownership is also a bulwark against the current labor shortage. Multiple locations give owners the ability to relocate employees as needed to cover any short-term staffing issues.
In addition, several outlets reduce labor costs. Today, you do not have to have a general manager in every place and can rent a great one in a few stores. This means that a management structure can be created to appoint a leading general manager with a salary of $ 75,000 to oversee 3 sites instead of a manager at $ 50,000 per site.
The more locations you have, the greater your leverage at suppliers. Not only does this lower the cost of goods, but as a larger customer you will have greater bargaining power to get your supplies on time, which is a particularly important advantage given current supply chain constraints.
And with multiple locations, you’ll also incur marketing costs, because your costs are the same as promoting a single store or multiple locations in an area.
The right brands for multi-unit franchising
For any continuity that wants to become a multi-unit operator, the first step is to find the right brand. While it may be tempting to choose a popular brand like McDonald’s or Subway, the time it takes to take advantage of mature brands is a long process, and it’s difficult to quickly recoup your initial investment, let alone says to make a profit.
Multi-unit franchise operators looking to get rich should consider new and emerging brands. And remember, McDonald’s and other well-known brands started with just one place before they grew. As a franchisee, you want to ride this brand of growth from the beginning.
In short, if you are thinking of franchising as a way to get rich, it is essential to plan for the long term and start as a multi-unit franchise operator. Get in early with a strong emerging brand, commit to opening multiple locations, reinvesting initial profits and creating a franchise empire that can be sold in the future.