After successfully establishing themselves in the market, franchisees can look up to further growth with multi-unit and multi-conceptual franchising. Let us explore these concepts and their standing in the industry
Fanning entrepreneurial spirit among prospective investors, franchising has been at the forefront as the ideal business model to expand and grow. After reaching the break-even period in the first franchise business, franchisees can find further growth in multi-unit and multi-conceptual franchising. But there are some issues to keep under consideration.
Multiple facets of multi-unit franchising
Multi-unit franchising means owning more than one franchise store of a particular brand at a time. As franchisee cannot be present at all the outlets, franchise managers can be hired to look after the day-to-day functioning of the franchise outlet.
Main factors behind the rise of multi-unit franchising are:
Increase in profits: Increased profitability for both franchisees and franchisors is one of the main factors for the steady rise of the concept. The multi-unit franchisees gain in terms of capital as well as power. They are sure to earn more profits than single-unit franchisees. Moreover, the franchisor, in most cases, reduces the franchise fees and royalty for multi-unit franchisees since they also benefit from expansion by a single franchisee.
Increase in experienced franchisees: Taking up of the franchise business by successful corporate personnel and retirees after requisite experience in their respective fields also lead to increase in multi-unit franchising. These individuals are enriched with knowledge and experience, therefore, find it easier to manage and run multi-units. These entrepreneurs have the know-how, confidence and ambition to successfully expand their franchise systems and multiply profits.
High savings: Multi-unit franchising ensures cost-effective use of financial, material and human resources. As mentioned earlier, a franchisor usually reduces his fee and other charges for his multi-unit franchisee. Moreover, having more than two outlets reduces efforts and capital. Here’s how.
Concept of multi-concept franchise
Multi-concept franchise involves buying franchises of different brands from different franchisors simultaneously. This concept can also bring in lots of profits in following ways.
Regular cash-flow: A franchisee with many brands has the advantage of a regular and steady cash flow. Having different concepts and brands gives your customers more choices. For, if a certain product does not sell well at a particular time zone, he will gain enough from the presence of other brands and products.
Something to fall back on: All businesses hit rough patches once in a while. If a franchisee has many brands, he will not depend on only one brand and its success. If one brand does not do well, he has other brands as well.
Co-branding benefits: Keeping two or more brands in a single store also boosts profits. For example, having an ice-cream outlet next to fine-dining or fast food outlet will add up to its sales.
Flip side ofmulti-concept franchising
It has been seen that multi-unit franchising is more prevalent than multi-concept franchising in the present scenario,. This is because of lack of freedom offered by franchisors to the franchisees in taking up the franchise of other brands. Franchisors may feel that their brand will not be paid due attention by franchisees and his attention will be divided. However, few franchisors do provide this freedom.