Multi-Unit Franchisee Magazine 2013 Buyer's Guide - Page 7

MULTI-UNIT NEED TO KNOW Buyer’s Guide expansion capital in a particular industry.” In other words, while multi-unit franchising is the way to go for any franchisee seriously looking to grow their organization, it’s not a slam-dunk, it’s not for everyone, and it’s far from easy. In fact it’s hard work, and fraught with failure. Successful multi-unit franchisees must do at least three things well: 1) You must be able to finance the additional locations/territories. That means deep pockets, or at least access to deep pockets. This often requires business partners and/or lenders who then have skin in the game and can influence the way you conduct your business. This is an important reality to keep in mind if you are an independent thinker and operator. 2) You must be able to form an organization with a management team and infrastructure to command your expanding empire. You may be able to remain handson with a handful of units, but when you reach 10 or more it’s no longer feasible for you to oversee day-to-day operations. At some point, you will need to bring in a team to handle everything from operations to finance to marketing and HR. You must learn to delegate and get out of the way. 3) Leadership is the final ingredient. You come to the game with vision, ambition, and inspiration. The challenge is communicating these crucial intangibles to your expanding organization and keeping them intact as they filter down to your unit managers and front-line staff through your in-house team. Necessary and achievable; never simple nor easy. If you have the background, experience, and drive to take on these challenges, then multi-unit franchising offers you a path to achieve your dreams. But you can’t do it alone. Rely on people, partners, and delegation—plus a large helping of your own passion, patience, dedication, and hard work—and yes, you can grow a multiunit empire. SPREADING THE RISK Multi-brand franchising allows multi-unit operators to balance risk and ride out the uncertainties of the marketplace in many ways: CASH FLOW. A franchisee ECONOMIC CYCLES. Operating brands in different industries can help minimize the ups and downs of an uncertain economy. Casual dining as a segment took a huge hit in the recession, while bargain-priced fast food continued to do fairly well; new car dealers suffered while automotive maintenance and repair businesses held their own and expanded. SEASONAL CYCLES. A lawn care franchise in a four-season climate slows to a crawl in the winter. Ice cream, lemonade, and frozen desserts peak in the warm weather, so why not add soup and sandwiches as the weather cools? Adding a second business to balance out the seasons will keep employees engaged and the cash flowing in. New brands can be in related sectors (maid service, electrical, plumbing, home insulation), or in completely different areas (food, rental centers). with several units of a casual restaurant brand ventured into rental stores. Stocking a new rental store with merchandise is expensive, and monthly rental fees don’t cover the purchase price for 6, 12, or 18 months, tying up valuable cash in inventory. The daily cash flow from the restaurants was the perfect complement to keep the organization healthy until the rental stores started showing a profit— which they did handsomely in time. DAY PARTS. Breakfast, lunch, dinner, late night, and in-between. Whether it’s food or services, consumers and businesses have needs 24 hours a day. If your business makes the majority of its sales at breakfast and lunch, adding a brand that peaks in the afternoon and evening will make for a longer day, but also a stronger bottom line. SURPRISES. Fast food operators have been hit hard over the years by news of salmonella, E. coli, employee misbehavior, and other developments beyond their control. Having other brands in your portfolio can help you stay afloat until a negative situation is remedied and trust in the brand restored. MULTI-UNIT BUYER’S GUIDE 2013 2 5