Why ‘Less Is More’ Doesn’t Apply in Franchising

Thinking about expanding via multi-unit franchising? If executed correctly, this strategy can provide numerous benefits for entrepreneurs.

• Combined Resources: One of the main reasons franchisees generally consider a multi-unit opportunity is the possibility for economies of scale as it relates to purchasing goods, services and even human capital. Purchasing goods or services in bulk usually offers the opportunity for a volume discount. When it comes to employees, skills and assets can be shared among locations or even the main office, especially as it relates to accounting or human resources. Developing a solid team that can grow within your organization can be challenging, but multi-unit franchisees see those benefits when strategic growth is executed correctly. For example, developing a talented restaurant manager that can assist with opening and training additional locations is key and can take some of the workload off the owner.
• Market Presence: We own more than 15 Applebee’s restaurants in Mexico and are in the process of developing Johnny Rockets in Texas. Working with well-established brands that are recognized by a global audience positively impacts our local business, but it is also beneficial that we operate multiple restaurants under each brand in the same market. Each brand has a stronger presence in its respective area, which increases the chance that our potential customers will see and think of us more often than a competitor. In addition, based on the nature of our markets, we feel strongly that community involvement is key to success and having a stronger market presence allows us to do that from both the resource and logistical perspectives.
• Repeatable Best Practices: Opening the first unit of any franchise is a learning process — unexpected issues arise and adjustments must be made to reduce any delay in opening or potential issues. However, once the first location is opened, the second, third, and more locations are easier, as you have learned from your mistakes and know what conflicts or issues to anticipate. As a multi-unit owner, you can develop your own playbook for success, for everything from real estate and purchasing to marketing and finance.
• Efficient Marketing: Marketing is key to a successful franchise operation and additional benefits come from operating multiple locations. The money spent on a single advertisement can benefit multiple locations within the same media markey. The audience ends up selecting the location that is closest to them, and when all the market locations are under your organization, you benefit from all the customers that the advertisement drives. In addition, your group can creatively test various marketing campaigns without running large financial risks. For example, you can test a reduced price or limited-time-offer menu item at one location to see how it performs, before rolling it out to all locations.
• Greatness in Numbers: As your organization grows in numbers, you gain more negotiating leverage with both vendors and even your parent company. Many franchisors will work closely with some of their larger ownership groups to offer tailored campaigns or strategies that benefit them across their stores, as they know their markets might differ from others. From a vendor standpoint, you have more clout when it comes to purchasing products and services, as you are often buying in bulk for multiple locations. 

Challenges are Manageable