Single-unit franchise ownership is much different from multi-unit franchise ownership. The two types of operators often have different business goals and priorities. So, how do you decide which is right for you? As always, America’s Best Franchises has got you covered with all the pertinent details to help you make a decision.
Although both types of ownership have similarities, the two differ in many ways as well. Both have the right to use the franchisor’s trade name, marketing materials, support, operational system and more. But let’s start by describing the two types of franchise owners.
What is a Single-Unit Franchise Owner?
Single-unit franchise ownership is when a franchisor grants a franchisee permission to operate one single location.
Single-unit franchising typically appeals to first- and part-time business owners. It also appeals to married couples — one person keeps their job while the other manages the franchise business.
This group of people tends to invest their life savings in order to start their entrepreneurial journey, so their risk tolerance is lower than that of a multi-unit owner. This type of franchisee usually owns and operates the business themselves.
Benefits of Single-Unit Ownership
Franchisors understand that single-unit franchise owners operate at a slower growth rate than multi-unit franchisees. So, there’s not as much pressure or expectation on a single-unit franchisee to open more units.
As we mentioned earlier, single-unit franchise owners often mortgage their homes or use their retirement savings to fund their business. That means they have more motivation to succeed and there’s more invested in every decision made; to them, failure is not an option.
And since they are often first-time entrepreneurs, single-unit operators have a lot more say in how the business is run on a day-to-day basis. Owning and operating the business themselves can, in some cases, eliminate the need to hire additional staff.
Franchising one single unit also means less money is required up front. Multi-unit operators sometimes start with a single unit when testing out a new or emerging franchise concept.
What is a Multi-Unit Franchise Owner?
Multi-unit franchise ownership is when a franchisor grants a franchisee permission to operate more than one location, often in the same area or region.
Multi-unit franchisees are usually more seasoned business owners and have much more capital to invest. They often operate under an Area Developer Agreement; that’s when the franchisor awards a single franchisee the right to operate more than one unit within a defined area, under a development agreement and based on an agreed‐upon development schedule.
Multi-unit operators focus less on day-to-day operations and more on growth. It’s also not unusual for an organization — a team of experienced business owners — to run a multi-unit franchise operation.
Benefits of Multi-Unit Ownership
Although becoming a multi-unit franchisee requires a much steeper investment than single-unit ownership, it offers more stability and higher chances for success. That’s why many franchisors offer investment discounts to those interested in multi-unit ownership. More units mean increased sales volume, and if done strategically and correctly, a massive payoff for both franchisor and franchisee.
More profit means there’s more money to dedicate to advertising. The money advertising brings in can be put back into the business for things like additional employees or better employee benefits. And since multi-unit owners need supplies for all of their stores, they have the ability to negotiate better prices from suppliers and vendors.
The International Franchise Association (IFA) says multi-unit operators will soon dominate the franchising industry in the foreseeable future because they are specifically structured for fast-moving expansion.
To Sum It All Up…
Single-unit and multi-unit franchise owners require different skill sets to achieve success. They also typically have different goals in mind when it comes to business ownership. And just because a single-unit operator finds success doesn’t necessarily mean they’ll do as well running a multi-unit operation.
Before choosing which type of ownership is right for you, you must first get a full understanding of your capabilities. And when you start searching for the perfect franchise that complements your skill set, there’s no better place to begin your entrepreneurial journey than America’s Best Franchises. Click here to begin the search.