Multi-unit and single-unit are very different types of franchise ownership. Both types of franchise operators have different priorities and business goals. How do you choose which type of operator is best for you?
Both types of ownership share many similarities. However, they differ in many other ways. Both can use the franchisor’s trade name, marketing materials, and support system. Let’s begin by explaining the differences between these two types of franchise owners.
Defining the Multi-Unit Franchise Ownership
Multi-unit franchise ownership or multiple business ownership means that a franchisor allows a franchisee to operate multiple locations, usually in the same region or area.
Multi-unit franchisees tend to be more experienced business owners with more capital. They often operate under an Area Developer Agreement. In other words, the franchisor grants a single franchisee permission to operate multiple units within a specific area per an agreement and schedule.
Multi-unit franchise owners tend to focus less on day-to-day activities and more on growth. Also, a multi-unit franchise can have an organization or a group of professional business owners as owners.
Positive Aspects of Being a Multi-Unit Owner
Multi-unit franchise ownership requires a higher investment than single-unit ownership, providing excellent stability and better chances of success. Multi-unit ownership is a popular option, so many franchisors offer investment discounts to interested parties. A higher number of units means more sales volume. If done correctly and strategically, it can be a huge payoff for both the franchisor and the franchisee.
Advertising or Marketing costs are more expensive when there is more profit. Advertising can bring in more money for hiring additional staff or improving franchise employee benefits. Multi-unit owners can negotiate lower prices with vendors and suppliers because they need supplies for all their stores.
Multi-unit franchisors will soon be the dominant force in franchising, according to the International Franchise Association (IFA). They are designed for rapid expansion, too.
Defining the Single-Unit Franchise Ownership
A franchisor may grant a single-unit franchise to a franchisee.
Single-unit franchising is a popular option for newcomers and newbie business owners. This type of ownership is also a good option for married couples, as one person can keep their job, and the other takes over the franchise business.
These people are more likely to save their entire life to start their own business. Their risk tolerance is also lower than for multi-unit owners. This type of franchisee typically owns the business and manages it.
Positive Aspects of Being a Single-Unit Owner
Franchisors are aware that single-unit franchise owners have a slower growth rate compared to multi-unit franchisees. A single-unit owner is not under as much pressure to open more stores or locations.
Notably, single-unit franchise advantages mean that owners of franchise may mortgage their homes or use retirement savings to finance their business. As a result, they’re more motivated; thus, the chances of success are higher.
Single-unit owners are more likely to have direct involvement in the day-to-day running of their business since they are often first-time entrepreneurs. In some cases, hiring additional staff can be eliminated by owning and running the business.
A single unit is less expensive than franchising multiple units. Multi-unit franchisees may start with one unit to test out new concepts.
Which Option Will You Choose?
Multi-unit franchise owners need different skills to succeed. In business ownership, they often have different goals. A single-unit owner may be successful, but that doesn’t mean they will do the same job running a multi-unit operation.
First, it is vital to understand your abilities before you decide which type of ownership you want. Happy franchising!