Franchisors considering or managing multi-unit franchising need to carefully plan a multi-unit franchising strategy, along with aligned infrastructure and support. Such consideration should be undertaken regularly, to ensure the right multi-unit franchising strategy (if at all relevant) is employed for the circumstances.
There are multiple forms of multi-unit franchising employed by franchisors, aside from a more typical single-unit franchising model. Prototypical multi-unit franchising forms include sequential/incremental franchising, area development, area representation and sub-franchising – with the last two and sometimes three often described as examples of master franchising.
These forms in themselves can be organised in different ways, and sometimes companies utilise a spectrum of franchising forms for different situations. The relevance of selected forms for an individual franchisor can also change over time.
Most important here, from a best practice perspective, is ensuring an optimal multi-unit strategy is employed for the situation. For some companies, certain multi-unit franchising forms are simply not viable, or may have disadvantages that outweigh the advantages. Related, there are multiple factors (e.g., industry and business lifecycles, market size, geographical dispersion, unit business complexity etc) that influence their relative appropriateness (including attendant advantages and disadvantages).
Ensuring the right multi-unit franchising strategy for the franchisor situation should be considered regularly and involves a detailed assessment. Long-term, this is an important franchisor strategic and structural consideration for optimising both franchisor and franchisee return.
In summary, franchisors need to carefully consider, on a regular basis, which multi-unit franchising strategies (if any) are appropriate and optimal for their business situation and objectives.
Relevant questions:
- What multi-unit franchising form/s do you currently utilise and are these still optimal for your organisation’s situation and objectives?
- What opportunities are possible, from both a franchisor and franchisee perspective, from an improved multi-unit franchising strategy?
About the Franchising Best Practice 500 Series
This is part of a series of franchising best practices. Franchize Consultants is sharing and publishing these best practices weekly for the betterment of franchising. We know that better knowledge and execution of franchising best practices leads to bigger and more valuable franchisor and franchisee businesses.
We have assembled the first 40 best practices into The Best Practice Handbook, which is available for purchase.
