franchising aspects Dec, 01 2010

Multi- Facets Of Multi-Unit Franchising

The concept of multi-unit franchising is witnessing a sudden thrust among successful franchisees. Realising its potential, more and more franchisees are joining the bandwagon to speed up profit. Explore more about the multi-faceted benefits of the concept

By Abha Garyali
Sub Editor
Multi- Facets Of Multi-Unit Franchising

Franchising gives young aspiring entrepreneurs the formula to run or own a business successfully. However, many franchisees still consider that a franchisee at a time can only own or run a single outlet. However with advancements in technology, communication and internet, managing more than single outlet is no more a Herculean’s task for successful franchisees. For franchisees, who want to own more than single outlet can achieve newer heights through multi-unit franchising.

A look at Multi-unit franchising

In simple words, the concept of multi-unit franchising business is the opening of more than one outlet of a particular brand by a franchisee. The next logical step for franchisees, who have been running a single store successfully, is to expand their business to earn more profits. Expansion of their business with the same brand is considered preferable as both the franchisor and franchisee may have developed good relations. Moreover, franchisors are keen in offering franchise rights to an old and experienced franchisee who have been successful with the same brand. According to Sameer Kachru, CEO, Go! Chaatzz, “Multi-unit franchising is a wonderful opportunity for franchisees to expand their business. Mostly all our franchisees are running multi-units successfully.” Also highlighting the positive aspects of multi-unit franchising Dipti Taluja, Multi-Unit franchisee, Madame states, “It is a wonderful feeling to be a multi-unit owner. Running a successful business with support of the franchisor and colleagues, gives you a sense of being independent. It adds to a sense of security and a trust on one’s own entrepreneurial skills.”

Let us now have a look at the pros and cons of multi-unit franchising:

Benefits of the multi-unit franchising

The concept of multi-unit franchising business is gradually picking up with its multifaceted benefits. Vikram Sood, Multi-unit franchisee, Go! Chaatzz shares, “I am on my way of becoming the master franchisee of a new concept of Home Delivery model in Go! Chaatzz . Presently running five outlets of this concept in Gurgaon, I am planning to expand in Delhi and Mumbai soon.” This states the advantage of multi-unit franchising. Few factors accelerating the popularity of the concept are:

  • Accelerates profits: Both franchisors and franchisees experience sudden increase in returns through multi-unit franchising. Moreover, for franchisees it gives them the opportunity to expand their businesses and gain more power. Multi-unit franchising decreases per unit expenses as the franchisee can share the expenses with his/her multiple units. As said by Kachru, “Multi-units have multi benefits. Firstly the franchisee can make more profits. More than this the profitable outlets can support the new outlets well.”
  • Stronger relations: A multi-unit franchisee is sure to develop better relations with his franchisor as compared to single unit franchisees. They can also get leverage from franchisors in terms of reducing the franchise fees and regular royalties. As informed by Kachru, “We have developed stronger bonds with our franchisees who own more than a single outlet.”
  • Cost- effective in advertising and marketing: Owning multi-units of the same brand save money in terms of marketing and advertising of the outlets. A franchisee can market all his various outlets through single advertising campaign, as in most cases they are located in one region.
  • Rotation of experienced staff: A franchisee running a successful outlet must have efficient and experienced staff. Therefore, it becomes easier to train and hire new staff for his new outlet as the previous employees can take care of their outlets on their own. Moreover, the staff can be rotated according to the requirement of the outlets. 
  • Management of time: Opening the first outlet demands time and dedication. However, while opening additional units, less time is spent on each outlet, as with every new outlet, franchisee gains experience and expertise to run the outlet successfully.
  • Developing relation with vendors: A multi-unit franchisee has to buy raw materials or products for all his outlets simultaneously. Therefore, he can easily save money in buying the supplies in bulk for all his outlets. Vendors also develop relations with their permanent customers and allow high discounts and other services to them.
  • Contribution of whole family: Running multi-units can also engage the members of the franchisee’s family. A multi-unit franchisee can employ them in different positions at different outlets. This will keep their business in trustworthy hands.

Few challenges on the way

As every coin has two sides, multi-unit franchising with multi-benefits also has few challenges:

Time and efforts is the biggest investment: The franchisee has to put in 100 per cent of his efforts in all his outlets to reap benefits. He has to give equal time and attention to his outlets. Thus, time and effort is the biggest investment in maintaining a multi-unit outlets.

Hiring efficient managers: It is not possible for a franchisee to be available in all his outlets simultaneously, therefore every outlet requires efficient and trust worthy managers. To get dedicated manager is a tough call for franchisees.

Maintaining high success rate: A franchisee running multi-units has to maintain high standards for all his outlets. This can add lot of stress and tension to his personal life also. He can face more pressure from the franchisor to buck up sales and maintain standard.

On the other hand, Sood who has been into the business says, “I have not found any challenge in the concept of multi-units so far. I have been making benefits and more success through the route.”

However, to conclude it can be said that multi-unit franchising offers lucrative opportunity for aspiring entrepreneurs. However, in a multi-unit franchising opportunity, it is better to check out the feasibility of the particular business concept before investing in it.

Related: Opt Franchising For A Smooth Sailing

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