Franchisor Validation

Is Multi-Unit Franchising A Viable Option For You?

You may be thinking about opening two franchise business locations at once, or you might be looking to expand from a first successful location to a second. There are some things to think about, either way.

You need to make sure that the locations are far enough apart that they don’t compete with each other — but also close enough that it’s easy enough for you to travel between them. Having a great store manager at each place is a must, of course, but you’ll still want to check in with both locations regularly.

Be sure to check territory protections in the contract of your first franchise to make sure you’re not running afoul of the rules. Then think about market saturation. This is easy if you’re opening a second franchise location. If you have more business than your single store can handle and you notice a large portion of your customers are coming from an area you’re considering for a location, it’s likely a great idea to expand. But if your franchise sometimes struggles to bring in enough customers, opening a second location may divide the same number of customers between two stores.

If you’re thinking of opening two at the same time, just be sure to include that possibility in your initial market research. You’ll be able to determine the best locations for your two businesses

Opening a second franchise means increased risk. You’ll have more employees to manage and more customers to care for. “It’s harder to manage two locations,” one franchisee told us. “When the cat’s away the mice will play – and with two locations an hour and a half apart, I was away a lot.”

On the other hand, he also found that employees at the two locations would both support one another and enjoy a little competition.

Financially, a proven franchise business is not the same as a new start-up. A lot of the work you do can be useful for both franchises, so having two locations doesn’t necessarily double your work hours or your costs – but it can double your income.

One franchisee found that the franchisor was willing to give him a break on the cost of both locations when he opened two at once. He was able to get volume discounts on orders, and the two locations rarely had low months at the same time, so the income from one could balance that from the other.
Still, it can take time for any business to begin making money, so you need a fair amount of capital to start two businesses at once. Look over your franchises and think seriously about the amount of stress you’re willing to accept.

The biggest factor to consider, in the end, is trust. Can you trust someone else to run one location while you’re attending to the other? You’re not going to be all places at once and it’s inevitable that disasters will occur at some point at both locations. Having someone you trust to run things smoothly in your absence is important.

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