What Does It Take to Build a Multi-Unit Portfolio?
Multi-unit franchise ownership within a single brand can be an attractive option for franchisees. Owning multiple units allows franchisees to expand their portfolio and create additional revenue streams with a concept they already feel comfortable in. Owning more than one franchise unit also enables owners to focus on scale, creating more efficient systems for hiring, training and day-to-day operations – all of which can lead to continued growth.
But what does it take to become a multi-unit owner? From my perspective, there are two main qualifications:
- The ability to build and manage a team
- Adequate capital
As long as you can manage all of your locations and stay well capitalized, multi-unit ownership can be an effective strategy to dramatically raise your growth ceiling.
Growing Versus Managing Your Business
As a single-unit franchisee, there’s no shortage of tasks that preoccupy your time. At any given moment, you’re balancing daily responsibilities ranging from operations to human resources to marketing, while still having to maintain the presence of mind to effectively manage your staff. With so much to juggle at once, franchisees who cannot prioritize their time are bound to have little room to grow.
That’s why building the right team around you is critical in order to scale up the number of stores you own. Going from operating one unit to two units is, in my opinion, one of the biggest challenges a hands-on franchise owner will ever face. “How hard is it really?” you might ask. Well, you’re dealing with a literal 100 percent growth rate. You’re doubling your staff, your operations and materials, while effectively cutting your time in half. Multi-unit growth certainly requires an adjustment period.
The key is hiring the right people to replace you as the sole manager in your stores. Hire people that are outgoing, energetic and engaging, as well as those who can serve as operators in your place. I always tell owners to hire from within if they can, but sometimes that’s not always possible. In that case, consider building relationships with employees at other retail businesses who have the right attitude and management experience possibly looking for a change.
Once you have the right franchise managers in place, you can focus on growing your business instead of constantly managing it.
How to Know You’re Ready for Growth
There is no hard and fast rule about when it’s time to grow. It often varies from owner to owner. Here are four questions to consider to help you determine readiness for expanding your portfolio to additional locations:
- Do I feel like I have a firm grasp on my existing store?
- Do I understand the cadence of the system and how it works?
- Have I built a solid team and customer base?
- Do I have the proper capital I need?
If the answer is yes across the board, then it’s likely time to grow.
Growing Close Together
I always encourage our franchisees to grow as concentrically as possible to develop synergies across all their locations. Opening another unit in the same market may seem counterintuitive at first, but it can be beneficial in the long run.
For one, the more stores you have out there, the more people will see them and begin talking about them. Multiple stores in one market can serve to help spread the visibility of the brand and increase convenience.
Second, with multiple stores in the same general market, you can better manage costs associated with transporting materials and travel. When you’re ready to open another store, it’s the franchisor’s responsibility to help you with store pacing and store placement, but these are always important things to consider.
Is the Concept Right for Multi-Unit Growth?
Not all franchise models are ideal for multi-unit growth. For example, many systems are built upon on franchisee managers. In those cases, there’s not a lot of margin for growth. In other instances, we see franchisors that don’t invest in systems to train multi-unit owners, rather they expect their franchisees to figure it out on their own without any additional training. At Smoothie King, our franchise development team invests in tools, systems and development incentives to help foster multi-unit growth.
Consider this: are you a franchisee that’s suited for one-store ownership or do you want to build a multi-unit portfolio?