Entrepreneurs new to the franchising industry may believe that a single unit franchise is the best option to start.
In a multi-unit operation, a franchisee will typically work less in the daily operations of a single unit, and instead focusing on strategy and business management at a higher level and hire an experienced director of operations, general managers, and staff to oversee daily, store-level operations and focus more on strategy and the business side.
Multi-Unit franchisees are drawn to the potential for significant financial gains produced by owning multiple units, and the ability to achieve greater operating efficiencies.
Some of the major benefits of becoming a multi-franchisee include:
According to the International Franchise Association Education Foundation, while just under 20% of all franchisees are multi-unit owners, they account for more than half (52.6%) of all units, and they average between 4.3 units (in single-brand systems) and 5.83 units (in multi-brand systems).
This means that more than half of all output produced by franchise businesses is generated by multi-unit franchisees. According to the International Franchise Association’s Report “The Economic Impact of Franchised Businesses: Volume III, Results for 2007”:
Franchised businesses were the cause of $2.1 trillion of annual output or 9.0 percent of all private nonfarm output in the United States in 2007.