Multi-Unit Franchising: What's the Magic Number?

While some franchisees like to build up their business network at their own pace, others prefer to have an end goal in mind. Multi-unit franchising takes a lot of hard work and dedication, but it can also be addictive, so you might find yourself asking: what’s the perfect number of branches to launch?

---

According to the latest BFA-HSBC franchise survey, 36 percent of franchisees operate more than one business unit in the UK. Looking at the statistics, multi-unit franchising appears to be rising in popularity, as increasing numbers of investors recognise the benefits of managing more than one site.

The franchise model lends itself well to multi-unit franchising, and most franchisors are happy for single-unit investors to open additional businesses under their brand as time goes on. With the necessary resources and support already in place, it’s fairly easy to replicate your first site and open a second, third or fourth one.

What is the perfect number of multi-unit franchises to have?

Sadly, there’s no ‘perfect’ number of franchise units. The answer depends on the individual and comes down to a huge range of factors, including your budget and ambition, your desired lifestyle and the number of available nearby territories.

While it’s difficult to pinpoint the ideal number of franchise units for the average franchisee, we can provide some advice on reaching your perfect network size with a rock-solid business growth strategy. If you’re ready to run a multi-unit franchise portfolio or you’re considering adding to your existing businesses, keep reading to find guidance on achieving network growth.

How to grow your business network to the right size

1. Know when to grow

There are two key factors to consider when deciding whether to launch another franchise unit:

• Is your current business network performing well? If you’re able to consistently make a good profit without sacrificing a healthy lifestyle, you can expand your business knowing your new venture is unlikely to damage the rest of your portfolio.

• Do you have enough money? It can be tempting to look at additional investments before you save enough capital or secure the required funding. Underestimating how much it’ll cost to bring a unit to profitability is one of the biggest reasons behind franchise failure. So, make sure you have contingency funds, even if you’re a seasoned franchisee.

Until you can answer both the questions above with ‘yes’, it’s a good idea to postpone launching another franchise unit.

2. Develop a clear growth strategy

Before you finalise your next franchise business opportunity, make sure you know exactly what you’d like to achieve through the investment. What is your target, when would you like to reach it and what steps will you take to accomplish your goal? The plan you put in place will influence the choices you make leading up to the launch of your next unit.

For example, if you’d like to expand within your local area but your surrounding territories have already been claimed by other franchisees, you may have to become a multi-brand franchisee. Joining another franchise brand involves a lot of careful planning, as you’ll have to make sure your choice complements your existing business(es).

On the other hand, if you’d prefer to stick with your current brand, you may need to look further afield for territories and manage units in different parts of the country.

If neither of these options are right for you and you’re unable to develop a growth strategy, it might be worth pausing your plans.

---

>> Read more:

• Franchising 101: What is a Multi-Unit Franchise?
• You Know You're Ready to Run a Multi-Unit Franchise When…
• Is 10 The Magic Number For Multi-Unit Franchisees?
• The secret to being a successful multi-unit franchisee

---

3. Consider new units and resale opportunities

When you start to look for franchise opportunities, you may have the chance to take on an existing unit from another franchisee, as well as launch your own business from scratch. The choice you make may affect your success as a multi-unit franchisee, so consider your options carefully.

Usually, you can limit risk if the franchise unit you buy is already up and running, but it will probably come with a hefty price tag. Securing a fresh territory for a new branch will involve more time and effort, but you’ll save money and have the satisfaction of knowing you developed the business yourself.

Are you unsure whether to choose a new unit or resale opportunity? Calculate the projected return on investment of the openings you find, and consider your long-term goals and appetite for risk.

4. Give yourself time to work on your business, rather than in your business

If you want to launch more than one franchise unit, you’ll need to spend time analysing and planning your business growth. You can’t complete this step if you’re constantly concentrating on the day-to-day operational tasks associated with running your existing unit(s).

If you don’t have a team of employees who can take some work off your plate, you could consider out-sourcing some of your tasks. It may seem counterintuitive to spend extra money at this point, but you’ll only be able to grow successfully when you give yourself the time to plan your next moves.

---

>> Read more:

• 5 Qualities of a Successful Franchisor
• 4 Things Franchisees Never Have Time for But Are Essential for Running a Successful Business
• How to Launch a Franchise and Get Noticed
• 4 Elements of a Successful Franchise
• How to Start a New Business on a Shoe-String Budget
• The Ultimate Guide to Franchising Success

---

5. Get the right people in place

Part of preparing your business for expansion is making sure you have capable and hard-working leaders to manage daily operations. If your current employees aren’t committed to your growth strategy or able to put the foundations in place for the business’s development, you’ll be in a weak position moving forward.

Just as franchisors should be able to teach franchisees how to implement their business model, franchisees should be able to coach managers to perform well within the company. By hiring candidates with previous managerial experience and training them effectively, you can give them full responsibility of individual units while you focus on growth.

6. Know when to stop

Regardless of the goals you made when you first became a franchisee, you should be prepared to pause or stop your business growth strategy when the time is right. You may have had your heart set on owning a certain number of franchise businesses. But multi-unit franchising is tough, and you may end up damaging your overall profitability and work/life balance if you don’t know when to stop.

If you’ve built up a successful portfolio of businesses, don’t risk jeopardising them by continuing to chase your original dream - or trying to live up to other people’s expectations. Be content to grow at your own pace and congratulate yourself on your successes.

Discover more resources on running your own business

Brush up your franchising knowledge with our selection of recently-published articles or use the search box to find business guides on particular topics. We cover every element of the franchising world, from finding the perfect investment opportunity to selling your network before retirement.