What you need to know about owning and managing multiple franchise units

Want to build an empire through multi-unit franchising? Read this first

By SME South Africa

After achieving success in one franchise unit, it's not surprising that many franchisees go on to acquire a second, or even third franchise unit. This is known as multi-unit franchising.
"A multi-unit franchisee is defined as the franchisor awarding the right to a franchisee to operate more than one unit within a defined territory. To manage and run multiple franchise units," says Morne Cronje, head of FNB Franchise. 
An example of a franchise brand with many multi-unit franchisees is Vodacom. Thirty percent of the 179 Vodacom shops nationally are run by franchisees who own more than one operation.
One of the biggest advantages of multi-unit franchising, according to Christo Botes of Business Partners Limited is that it allows a business owner "to grow an empire" without the risk of starting and growing a new business.
While there are benefits, including growth potential, managing more than one franchise unit is not without its challenges says Cronje.

• See also: 10 things you need to know about multi-unit franchising

Here are 4 factors that Cronje says franchisees interested in multi-unit franchising should consider.
1. Higher expenses
Not only does a multi-unit franchise owner face "normal additional operating expenses", but they also need good infrastructure, which can drive expenses up.
"Owners will need to ensure that the units are consistent throughout and will have a higher capital requirement as revamps to the outlets will be required," says Cronje.
2. Good financial management
"Financial management is crucial and the owners need to be able to manage their finances efficiently in terms of loan repayments and cash flow management which can contribute to the success of their businesses", he says.
3. A good team
Additional outlets will require additional staff. It is therefore important that a multi-unit franchise owner have the right people in place, says Cronje. This also means the business owner will have to be HR-savvy to deal with any issues that may occur.
4. Support from franchisor
"It’s important to ensure that the franchisor is supportive of the venture, as they may have limitations on the number of outlets a franchisee may operate," says Cronje.