Should an Entrepreneur Invest in Multi-Unit Franchisee?
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Over the years, as investment opportunities are increasing, entrepreneurs are now looking at multi-unit franchisee models as well as a sure shot way to grow their businesses. Eventually, such units actually become standalone business models and self-sufficient entities. Here are some advantages of operating a multi-unit franchise:
If you are looking for a stable sense of growth, you can opt for this model. Here, you can also enjoy a higher expected success rate, as you have multiple locations to earn out of and will not be dependent on the success of only one location. “There are also saved costs because of the efficiencies of having one back of the house for multiple locations. Additionally, franchisors will often offer reduced fees and royalty breaks for Multi-Unit Franchisees to entice them to invest at a higher dollar amount initially,” shares Andrew Seid, consultant, MSA Worldwide.
Developing Strong Bonds
One thing that a franchisor looks for is building bonds of trust with his or her stakeholders or franchisees. If more and more franchisees are willing to follow a multi-unit model, this will benefit every franchisee as the franchisor itself will be willing to download more regions under one trusted franchisee. For those who are looking at sticking to a certain brand or service under a franchise; only land up benefiting from good relations build over a period of time with a franchisor.
Because the model has been tried and tested already at your initial franchise, replication is only natural and has very low sense of risk to it. So, you have the biggest advantage of not having to reinvent the wheel. Also, you have already got a standard operating procedure in place, all this goes a long way in quickly replicating the model in a new spot, within the same region, unless you have the acumen and know how to go multi-region.
Return on Investment
There is minimal risk involved in financing yourself if you wish to go the multi-unit way of franchising. This is because, with a set franchise model in place, you would have by now earned credibility and are safe to arrange for finance from a nationalized or private bank. With experience in running a business, banks find it easier to lend money to such individuals and feel ensured that will not go in bad debts.
This is a kind of model that creates a sure shot framework for overall growth for the brand, the franchisor and the franchisee together. For a multi-unit franchise model, a franchisor will invariably look for someone who has the ability to motivate a large group of people, has a set record of managerial experience, can work and innovate under pressure with a proven record of achievement with advanced market knowledge of their area. As a franchisee, if you know you have these attributes, rest assured, the business under your umbrella is going to only grow this is in turn, goes onto benefit the franchisor and the brand.
This article was originally published on Franchise India by Uttara J Malhotra.