Every franchisor wants to attract a "certain type" of franchisee, and lately, the type of franchisee every franchisor seems to want is a multi-unit franchisee.
OK, maybe not every brand wants to sell more units to fewer franchisees, but it's something our team hears more and more - franchisors looking to attract deep-pocketed investors rather than hands-on moms and pops. And in fact, 54% of the franchise industry is controlled by multi-unit operators.
It makes sense. In theory, multi-unit franchisees are easier to manage, bring in more money, and in some cases, are more satisfied with the brand overall. What's always been common practice in food franchising - requiring franchisees to commit to opening multiple units as part of their franchise agreement - is now becoming common outside of food. But attracting multi-unit franchisees and keeping them happy isn't as easy as just changing your franchise agreement.
6 Ways to Attract More Multi-Unit Franchisees
1. Post everything you can online.
Multi-unit franchisees tend to be business-savvy entrepreneurs looking for their next best business opportunity. As one successful area developer told us, he’s constantly researching different franchise opportunities, and the bulk of his research is online.
As a franchisor, you need to put everything you can online—financial info, franchisee satisfaction data, testimonials from current operators. We give you this same advice for attracting single-unit franchisees, but for multi-unit franchisees, it’s even more important. And when the information is verified by an independent third party, it carries even more weight.
2. Make sure your franchise system is set up for multi-unit ownership.
Most franchise systems WANT to sell multiple units to fewer franchisees but that doesn’t mean you SHOULD. Do you have the resources and systems in place to actually support multiple-unit operators?
Franchising.com's article, Building a Management Mindset: 5 Keys to Multi-Unit Success, says the top two must-haves are: maintaining scalable systems (delivered by the franchisor, executed by the franchisee) and screening, training and coaching (franchisor and franchisee).
Before you start selling multi-unit agreements you need to make sure the brand’s business plan, marketing, systems, corporate management, and culture are all set up in a way that supports franchisees who will be managing more than one store.
3. Adapt your development process for multi-unit franchising.
A one size fits all approach doesn’t work when it comes to attracting multi-unit operators. Candidates looking to invest in multiple units often come in with a different perspective than first-time, single unit candidates. Often multi-unit candidates have invested in other brands already and have been through the development process.
Mitch Cohen, a multi-unit franchisee and panelist on FBR’s webinar, Wooing the Sophisticated Multi-Unit Franchisee, says when he is considering investing in a brand, he’s first looking at closures, resales and pending litigation, and then at working with a salesperson who has knowledge of the area, how long it takes to develop the area, and the process of development and outlay of cash. “I’m looking for a franchisor that’s willing to have a similar perspective...in growing the brand and growing it smartly, and not just being a revenue stream,” said Cohen.
4. Connect current multi-unit franchisees with prospective ones.
The only way for prospective franchisees to know whether your franchise system really does work for multi-unit operators is to ask multi-unit operators, so it’s your job to make these conversations happen. Highlight for candidates which franchisees own multiple units and encourage them to contact these franchisees as part of the validation process.
You can speed up the process by walking candidates through franchisee satisfaction data (segmented by multi-unit owners) so they already know how franchisees rate your system and if there are areas that are low, you can share what you’re doing to address them. When candidates already have the data in hand, it helps them ask the right questions and makes for more productive conversations for both the prospective and current franchisee.
5. CEOs, meet with candidates!
Multi-unit candidates are making a significant investment, and they want to know that the brand's leadership is invested in them, and accessible to them. If someone on your executive team isn’t willing to make the time to meet with the candidate early in the process and attend discovery day, the franchisee is likely to walk. Check out these five ideas shared by franchise leaders for making discovery days more effective.
6. Recruit from within.
When you have single-unit franchisees that are already successful and bought-in to your system, the next logical step is to approach them about expansion and how it can help them grow their business. But beyond existing franchisees, opportunities exist among corporate employees. Employees are already familiar with your company, its values, and have the operational knowledge to get up and running quickly.
Randy Shacka, president of TWO MEN AND A TRUCK, says they often recruit from within the organization. “We are firm believers in providing career paths for anyone who works at TWO MEN AND A TRUCK whether for corporate or for one of our existing franchisees. One in three of our franchise owners began working on the trucks as movers or as customer service representatives,” says Shacka.
If you're looking to expand the number of multi-unit franchisees in your system, start by measuring the current satisfaction of your franchisees. Without this data, you risk raising red flags that can kill the deal during the development process, or worse, bringing in multi-unit operators with the proper infrastructure and support in place, which can damage the franchisee as well as your brand reputation.
Franchise Business Review can measure franchisee satisfaction, help you understand the strengths and weaknesses of you system, and for brands with high satisfaction, provide you with opportunities to get your brand in front of qualified candidates. Contact me at firstname.lastname@example.org to learn more or click here to schedule a 10-minute demo.