5 Multi-Unit Franchise Advantages And Disadvantages

Is a multi-unit franchise better than owning only a single unit? For some business owners expanding gradually to a network of outlets is worth the risk. However, this could also be challenging and potentially lucrative.

Yet, there are certain challenges multi-unit business owners face. The following are some of the advantages and disadvantages of multi-franchises.

5 Actually Advantages of Owning a Multi-Unit Franchise

When you have granted permission to your franchisor to buy and operate more than one unit, this brings many advantages such as:

1. Stable Income

Multi-unit franchises are more stable than single units and generate higher profits. Business owners can expect higher revenues because multiple locations will contribute to the revenues. Their risk is also spread out; revenues are not dependent upon only one location.

2. Your Chances of Success are Higher the Second Time

You’ve already done this successfully. You’ve already selected a great location, built out a location, and ran a successful marketing campaign. You can do this again.

3. You Can Take Over Failing Units

If your business is going well, you can acquire failing locations inside of your system at a low cost. You can then use your experience to make them profitable.

4. Scale Equals Greater Profits

Multi-unit franchisees spend more on advertising, marketing, training, and staffing. This allows you to negotiate bulk discounts from your suppliers and earn a greater profit. You already have experienced, trained staff whom you are paying.  When you purchase additional units your marginal cost will be lower, allowing you an excellent return on investment (ROI) for multiple locations.

5. Improved Franchisor Relations

Multi-unit franchisees are more important to franchisors than single-unit franchisees because they generate higher profits.  Franchisors value business relationships with multi-unit owners more. They often give them better terms and support.

The following are the disadvantages of owning a multi-unit franchise:

Multi-Unit Franchises Disadvantages

The following are the disadvantages of owning a multi-unit franchise:

Multi-Unit Franchise - Disadvantages | Franchise Consultant and Coach

1. Increased Risk

When you invest more money, you are putting more capital at risk. There is always a chance that you may lose your money.  You may also face cash flow challenges. 

2. Lack of Focus

Multi-unit franchisees sometimes find it harder to focus on particular units. This makes it harder to deal with issues as they come up which could result in lower profits.

3. Staffing

Finding and managing the right employees becomes more challenging while managing multiple locations.  

Conclusion

For the right franchise investor, investing in multiple units can be a smart investment. Just like any investment, there are risks. 

My blog about “5 Questions To Ask Before Investing in a Multi-Unit Franchise Business Opportunity” could be helpful for you. 

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