ABSTRACT
One will be managing a franchise network if he wants to establish several franchises. To prevent conflicts or monetary losses against the franchise, it’s critical to stay current on the legal implications of the franchise network. It also implies that the franchisee is in charge of creating and managing every franchise unit individually. While he might keep a check on the working of each unit to observe activities, it’s far more probable to appoint a skilled management staff to oversee individual units or several branches at once. Multiple franchising can be a quick path to accomplishment and development, but it has drawbacks. All legal and economical implications are discussed here.
INTRODUCTION
Basically, after running their business in one franchise every franchisee wishes to own multiple franchises in similar or different businesses. If multi-unit franchises are owned wisely they might lead to increased profit potential. This kind of business requires a great devotion of time as everything needs to be examined closely. Resources might be shared but the risks involved are also not that minute in a multi-unit franchise business.
A franchisee has to keep in mind every crucial even a small factor in his mind while he is entering into a new franchise agreement as it should not be in breach of the previous individual unit franchise agreement. Even in some cases, a franchisor might not allow a franchisee to own multiple franchises due to his reasons or implications. Indulging yourself in the business of multiple franchising by expanding your units could be a very profitable decision, but there are various aspects that you should know as explained hereunder.
WAYS OF OWNING MULTIPLE FRANCHISES
It seems easy to own a single franchise but while thinking about owning multiple franchises one has to keep in mind various commitments and conditions. Still, there are several ways in which a person can own several franchises.
- While expanding business properties, franchise owners must take several variables into account, including equipment, financial aspects, losses, resources, franchise procedures, infrastructure, the desire for expansion, skills involved, and the partnership between the franchisee and the franchisor.
- If someone wants to own multiple franchises, he has to first analyze his previous franchise agreement if he initially owns the one. It becomes important as the same might be prohibited by the agreement entered.
- It might include obtaining the franchisor’s approval, incurring extra or supplementary charges for purchasing the new franchise, finishing further training, and offering more data or proof of your monetary and managerial prowess.
- The operational manager could be appointed to manage the multiple franchises involving all the chores of the business.
- Expertise in the business of one franchise helps to use this experience in operating the other franchise business.
- An individual who is specific and frequently encouraged to take part in the regular activities of the division is needed to manage a particular franchise.
- Furthermore, as an individual manages numerous properties, the ability to make wise hiring decisions and then hand off a number of the regular responsibilities to those reliable staffers becomes extremely crucial.
- However, staying accessible whenever issues arise and whenever significant choices must be taken continues to be a crucial component of the job
POINTS TO KEEP IN MIND WHILE THINKING TO OWN MULTIPLE FRANCHISES
Every coin has two sides, similarly, there are various pros and cons of owning multiple franchises. Before a franchisee wishes to expand his network he must keep in mind the negative consequences along with the positive ones so that he might not regret his decision at a later stage.
ADVANTAGES: There are various positive aspects of owning multiple franchises which are listed below:
- Growing Influence/ network: Greater negotiating leverage as a result of network size offers a franchisee an explicit influence over the situation as well. Compared to other solitary franchisees, he will have a greater financial stake in the channel if he owns many units. This indicates that by talking with the franchisor effectively, he can promote adjustments or enhancements.
- Better bargaining and discounts: A franchisee with a network of multiple franchises makes him bargain for changes to his fresh franchise agreement’s conditions that will adequately meet his commercial objectives, such as a decrease in cost.
- Financial management: Monetary benefits could be wisely earned from the multiple franchises. In multiple franchises, an increase in the network leads to an increase in power to bargain for better discounts overall.
- Balanced expenses: Further, multiple franchise units could be operated in a coordinated way by balancing their expenses and other training schedules.
- Lesser investment costs: Even if it might require lesser staff the same staff could manage more than one franchise business and also same pieces of equipment could also be used in multiple franchises. Thus, there could be shared resources in the multi-unit franchise business.
- Similar Procedure: All the franchises may adopt an identical blueprint, that streamlines processes and tends to make all the tasks simpler to understand and maintain.
DISADVANTAGES: Several drawbacks or pointers to keep in mind before you own multiple franchises are mentioned hereunder:
- Hefty Investments: Generally, if someone is operating more than one franchise he has to invest more money with the expectation of higher returns. But the hidden aspect of this reveals various expenses which initially we are unable to recognize. Many a time hefty investments are required, for instance in various kinds of equipment and even if we manage with all the available staff but still few newer recruitments will be there for sure.
- Higher risks: In any kind of business, there are ups and downs but huge investments in multiple franchises might hit us so hard when we are unable to gain the expected profits.
- Management issues: Even if a franchisee has a lot of experience as an owner of a single franchise or as great expertise, still, there are a lot of problems that one has to face while operating multiple franchises and are not present while dealing with the single franchise business. There are potential issues relating to staff and equipment inclusive of ways of dealing with all these.
- Interconnected units: Loss in the business of a single franchise could impact the operation of all the other franchises. Shared resources may also impact the same.
- Setbacks of owning multiple franchises in the same business: By continuing with a single franchise, one essentially places all of his figurative skills in the same place. He can end up losing it all if his franchise business falters or worse, declines. Expansion might complicate business, though a single setback won’t wipe out everything.
CONCLUSION
It is highly improbable that a multi-unit franchise owner may achieve the same profits or output from his other units as he was able to achieve from his foremost unit. Sometimes results might be better than expected or achieved and sometimes conditions may worsen so much that it would become difficult to handle it or to make it stable. Still, all this depends upon the skills of the franchisee and his operational or management team that how wisely they handle things, and how precisely they manage all the factors required for the successful running of the multiple franchises business. It requires a proper investment of money, resources, and training skills as the workload increases. Staying focused, combining various activities, and sharing ideas aids a lot in the whole procedure of managing multi-unit franchises. Various factors like your background and skills, etc. affect multi-unit franchising but if things go right away then you may end up with a good amount of revenue.
REFERENCES
- 5 Biggest mistakes people make when buying a franchise <https://www.inc.com/adam-heitzman/5-biggest-mistakes-people-make-when-buying-a-franchise.html> accessed on 13 November 2022
- What Are Multi-Unit Franchises (And How to Do It Right) <https://kickfin.com/blog/multi-unit-franchises/> accessed on 13 November 2022
- Own Multiple Franchises? How to Balance Your Time Among Them <https://www.franchisedirect.com/blog/own-multiple-franchises-how-to-balance-your-time-among-them> accessed on 13 November 2022
- 5 Advantages of Multi-Unit Franchise Ownership <https://noodlesfranchising.com/5-advantages-of-multi-unit-franchise-ownership/> accessed on 13 November 2022
AUTHOR – ABJOT KAUR
