Choosing a franchise can mean accessing a proven business model that should come with good odds of success. However, when you start shopping around for a franchise, you might want to consider one where you can own multiple units or locations. Doing so can open you up to multiple advantages, including the five you’re about to read.
1. Enjoy Steady Revenue
Owning multiple franchise units increases your odds of having a steadier stream of revenue, and that’s because your cash flow and profits are coming from multiple sources. This is no different than how a river is stronger overall when it has multiple tributaries flowing into it. In the world of business, it’s known as revenue diversification. When you own multiple locations, a single branding campaign stretches your marketing dollars over more than one location, giving you more investment returns.
2. Take Advantage of Cost-Sharing
Stretching marketing dollars over multiple locations is one example of an economy of scale, and that’s when an enterprise can lower costs by growing the overall production. Staffing is one potential benefit. If one location has a labor shortage during vacations, call-outs, or peak periods, other nearby franchise units can potentially temporarily contribute staff. You can likewise spread overhead costs over multiple locations using the same maintenance, accounting, and payroll resources across the board.
3. Capitalize on Higher Success Rates
When you purchase a second unit of a franchise, you take it over already knowing what you have learned from the first one. With each additional unit, you increase your knowledge and experience about the customers in that market and the ins and outs of that franchise system. Your decisions get better, and you get more adept at avoiding the mistakes of the past. With enough units, you can leverage your position to negotiate better supplier pricing for more cost savings and higher profit margins.
4. Upgrade Your Earning Capacity
Your cash flow will improve considerably as your number of revenue streams goes up. You’ll enjoy far fewer bumps in the road, and stores can help carry one another through various cycles. Reaching more consumers can inspire brand loyalty, so you have consistent branding across your market.
5. Assume Control of Failing Units
Multiple units might give you the financial resources to assume control of a failing unit and turn it around. Surrounding a failing unit with multiple revenue streams, bringing in seasoned staff from successful units, including it in area marketing, and applying your own experience and expertise are all ways to help a sub-par location turn into something productive. These units are sometimes available at a discount if the prior franchisees or owners want to walk away from something they no longer want.
Manage Your Risks
While there are many benefits to owning multiple franchises, you need to be ready to manage the potential risks. More locations mean higher investment risk, it can be difficult to focus on a specific unit in your chain, staffing requirements are higher, and your units might compete with one another if they’re too close. Owning multiple franchises also means being able to pool and share resources in ways that can prevent these potential downsides.
