5 Encouraging Facts to Know About Multi-Unit Franchising
There's a convincing case to owning more than one location.
The popularity of multi-unit franchising is no longer up for debate. Data from some of the leading market researchers in the franchising industry have been analyzing this trend and have found hard evidence that owners with more than one location are more common than you think. It's estimated that there are now 45,000 multi-unit owners in the U.S., amounting to 228,000 units, which accounts for more than half (54.8%) of all franchise business units.
If you're just beginning the investigative process, or you're a current franchise owner considering expansion, here are five encouraging facts about multi-unit franchising.
1. It's no recent trend, fad or phase
The popularity of multi-unit franchise ownership is no overnight phenomenon. In fact, interest in owning more than one unit appears to have happened over the last decade. Not only are single-unit owners looking to expand their territorial footprint, but this proposition has picked up interest among the investor class. For multi-unit franchise operations (MUOs), the average number of units rose from 4.8 to 5.1% over the past 10 years.
2. A level playing field
While large franchisors and an ever-increasing amount of private equity groups have a formidable stake in the establishment of multi-unit franchises, they're not the most dominant players. A look at the average share of units controlled by franchisees reveals that almost half (42.3%) only own between two and five units. These owners make up more than twice the amount of the next closest group at 19.6% (owners of more than 50 units). And from 2010 through 2018, there was a 23% increase in entry-level multi-unit operators.
3. Industries with the most MUOs
Some franchise categories lend themselves to multi-unit franchising much better than others. The 2021 Annual Edition of the Multi-Unit Buyer's Guide reveals the top 10 industries with the most participation. Not surprisingly, QSR topped the list. beauty-related concepts followed closely behind, with automotive, retail, food and clothing & accessories rounding out the top five spots. For a look at the rest of the MUO-friendly franchise categories, here's an online version of the guide.
Related: Considering franchise ownership? Get started now and take this quiz to find your personalized list of franchises that match your lifestyle, interests and budget.
4. There's plenty of MUO data out there
The franchising industry is well-known for the sheer amount of data and resources available to prospective franchisees, and information on the multi-unit sector is prolific. Whether you're interested in the best multi-unit categories or a ranking of the most profitable franchise concepts, the information is readily available. Franchise Business Review publishes an annual list of the best multi-unit franchise opportunities. Give it a look here.
5. A multi-unit operation works for semi-absentee owners
The rise in popularity of multi-unit franchising among the investor class highlights the attraction of semi-absentee ownership. The investigation of multi-unit franchises as a means to diversify business ownership portfolios is on the rise. And a majority of these candidates have no interest in running the day-to-day operations — they're on the hunt to find the best talent, so they can sit back and "manage the manager". Beyond seeking multi-unit operations in one category, the interest in investing in multi-branding franchise operations is also on the rise. Building wealth over time requires diversity and, for some, that means treating multi-unit franchise ownership like any other investment vehicle.Related: Is Multi-Concept Franchising for You?
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