The rise of small multi-unit operations and what they’ll mean for franchising

People owning two or three units rather than a single unit is becoming increasingly common. This is primarily due to a growing confidence amongst franchisees in their business and that the franchising industry is booming in general. But what does an increase in multi-unit ownership show?

On a fundamental level, although the number of franchise units has risen by 10% since 2015 – now sitting at 48,600 – the number of franchisees has remained consistent at around 20,000. This is in essence due to the jump of multi-unit franchisees, from 29% in 2015 to 36% in 2018, as reported in the 2018 bfa NatWest Franchise Survey.”

To me, there is no better signifier of an industry succeeding than individuals looking to not only remain in franchising but upscale operations. Once people become franchisees, they stay a franchisee, eventually looking to establish multi-unit operations, either with the same company or a different franchise system.

A nurtured business

In many cases I believe the reason franchisees are running two units, opposed to multitudes, are in part because the franchisee hasn’t necessarily bought it with the intention of growing the business exponentially but nurturing it. It’s then the natural next step for them to upscale, due to the time and hard work they have put into investing in the customers, staff and business, and seeing the stability that comes with this. Becoming a multi-unit owner doesn’t always mean the franchisee has relentless ambition and is driven by future goals. Qualities I believe are essential to being able to scale up and do so successfully are good leadership, level headedness and positivity, as well as an element of drive and hunger. If you’re able to emulate these qualities when running your own franchise and find that owning a second or third unit will be beneficial to you and the opportunity becomes available, then go for it.

Reputation, referrals and requests

When growing a business over a long period of time, even just as a franchisee and without the wider brand awareness, this can consolidate, nurture and increase the reputation of the brand. In turn, this can lead to out-of-territory enquiries if there isn’t a franchise already in that region. It can be difficult for franchisees to turn down sure clients for future business. This is a major reason for single unit franchisees to upscale as it allows for franchisees to see where the business is coming from and take advantage of a whole new customer base while not biting off more than they can chew. It’s fantastic to see smaller franchisees reach this level of stability and reputation that they can take the opportunity to gradually grow their business and develop themselves as multi-unit owners.

Legacy

While I praise the budding entrepreneurs who are spearheading the franchise industry, I’m also happy to see the single unit franchisees who are the backbone of this industry start to grow their businesses and take on more units at a rate that suits them, securing themselves a lasting legacy, the chance for higher financial stability, an optimal work-life balance and the opportunity to experience running multiple operations.

I’m adamant when the next survey comes out multi-unit will continue to rise, with more people seeing the acquisition of another unit as a natural progression, abetted by the fact people are younger, as well as those with a real drive to own more and more systems over time.”