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Franchise Advice


Opportunity knocks


Multi-unit franchising can be a very attractive prospect but


it’s crucial you plan thoroughly before growing your business, writes Euan Fraser, founder of AMO Consulting ↓


great thought – you can spend the day in your car surveying your empire.


M


But, of course, it’s not as simple as that. There’s a lot of hard graft needed, even in just choosing the first site, securing the property, and finding staff and training them, all before opening for business. Just repeat what you did before, right? Maybe you’re familiar with the famous phrase,


“you have to spend money to make money”. In multi- unit franchising, it’s very true. It sometimes seems that you’re taking three steps forward and then two steps back. Let’s consider the following scenario: just as your first unit is becoming stable and you’re making a reasonable profit, there’s an opportunity to acquire the territory next to yours. The owner is retiring and you know the business has growth potential. It’s very tempting, until you begin to think about the implications. Can you afford the purchase price or will it stretch you too far? How will you service two territories when you’re already so busy? Can you afford to employ someone to help you? Now all this may seem rather gloomy. It’s not meant to be but it is better to be realistic about the opportunity. So let’s consider some of the things you should be thinking about.


Assess yourself Some healthy self-analysis is going to help. Multi-unit ownership takes an entirely different set of skills than being a single owner-operator. You’ll need to make a very honest personal assessment before deciding whether you can stomach delegating important duties to managers and other employees. Can you let go of your ‘baby’ and trust them to deliver the same standards of excellence as you do, or will you be


ulti-unit franchising has a nice ring to it, especially if you happen to be the owner of four or five units. It’s a


forever hovering over them waiting for them to make a mistake?


Be patient You have to understand that building a multi-unit business takes time and money. There’s no point in rushing to open new units before the current ones are performing as well as they can. You end up with a mediocre business that operates average units. Opening another unit is not going to have a positive impact on your lifestyle or wealth in the next 12 months – you’ll be taking a step backwards for a year or two to get the benefit later when each business unit is mature.


Assess your franchisor You need to select a franchisor that understands multi-unit franchising. It’s worth asking how it coaches franchisees through the growth process. Does it have a development process that it leads you through? You should look for a franchise that has discounts for people buying multiple units. Lots of fees are set up for single-unit owners. If the franchisor charges a £1,000 technology fee, should you really pay £3,000 if you own three units? Ask about discounts on franchise fees and management service fees. Look for additional training for your staff, too. Sometimes the franchisor limits training to one or two people. Make sure it will accommodate enough people for all your units. The franchisor should also have systems in place that support multi-unit owners, such as IT systems that talk to each other across your business units.


Find a support system


Assess the community of fellow franchisees; will you be able to rely on them for advice and support? It’s just as important as who the franchisor is. If they’re


in it for the long haul, then the influence they have on the brand is much more important. Talking to other multi-unit owners will be


invaluable for working out where you are excelling and where you are coming up short. I would encourage a multi-unit owner to find support and education everywhere they can.


Build a strong team


This is the most important and, for most people, the hardest aspect of multi-unit ownership. You will need to build strong teams within each unit, establishing an effective layer of management to handle overarching operations. You need to start building a group of potential managers within each unit.


Multi-unit franchising is growing rapidly in the UK because it works for the franchisor, as it deals with fewer franchisees. It works for franchisees too, if you understand what’s required and you’re prepared for the following:


• You’ve been through it before and you are much more ready for a new unit


• You have a much better feel for how to market and grow your business


• Economies of scale (ie marketing and stock purchasing) start to work in your favour


• Your training of new employees is more focused and effective


• You are treated with more respect by the franchisor (more units, more revenue, more importance)


• You have a much greater revenue and, hopefully, profit stream


• Cashflow can initially become a critical issue • Risk and reward comes into play more strongly – you now have a lot more invested in the business


30 | The Franchise Magazine 2017


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