For franchisors and franchisees alike, growing through multi-unit ownership seems like a “no-brainer”. Yet past failures tell us it’s harder than it looks. Why? It may not be what you think. This is the first of a four-part series that busts 4 great myths of multi-unit expansion.
Today’s great operators know how to be successful in the model. Why not expand their reach to more territories and we’ll grow together? Franchisees will have to work harder, but they’ll make more money and increase their ROI (and we all know that profits are the key to franchise-happiness). Franchisors will have fewer people to support, better operators and less headaches. The hardest part is getting the financing in place. Once that’s done, the rest falls in line. Right? Wrong on four counts. It’s time to bust four great myths of multi-unit franchising. Keep reading to learn the truth.
Myth #1: The Hardest Part is Getting the Financing
Clearly you need a business plan that demonstrates where the money will come from and how it will be paid back. It’s your road map to building business value. This includes a source of cash flow (cash reserves or a credit line) dedicated for the new territory. Many expansions have failed because owners robbed the cash flow and financial capacity of their first unit to support the second.
Getting the necessary financing is essential, but it is not difficult to accomplish with a track record of profitability from unit #1 and a solid business plan for units 2+. Getting the financing is not the hardest part, it’s giving up control of operations – a necessary step in enterprise development. Micro-managing operations of multiple locations doesn’t work, no matter how much financing you have.
Watch for three more multi-unit myths to bust in the coming days!
ICFE Special Session on Successful Multi-Unit Expansion
My colleagues and I will be presenting a full day session entitled: Advanced Financial Essentials: Driving Profitable Growth Through Multi-Unit Expansion at the Institute of Certified Franchise Executives special sessions on Saturday, February 8th at the IFA conference in Orlando. If you are seeking to expand your network through multi-unit ownership, I encourage you to join us!
Follow this link for more details and registration options: