I think it would be really cool to own more than one franchise location.
Do you picture owning multiple locations?
Cruising Through Town
Can you picture yourself cruising through town, visiting each of your franchise locations?
Popping in to check up on things?
Looking through receipts, calculator in hand? Counting.
Meeting with your managers?
Addressing issues? Solving problems?
Walking back to your car, taking a backward glance at the business you built?
Over and over again?
That’s what owning multiple franchise locations might feel like.
And, what a feeling it would be.
Franchise Ownership: How Cool Would It Be To Own Multiple Locations?
Multi-unit franchise ownership sure has a nice ring to it, especially if you already are a multi-unit franchise owner. But, getting to that place probably wasn’t easy. A few sleepless nights were probably included at no extra charge.
If you made the smart choice of including your spouse or significant other in your decision, you probably experienced joint-sleepless nights. But, at least you were in it together. When you’re contemplating the purchase of a franchise, family members really need to know-and need to understand what you’re thinking about doing.
Franchise Tip: Get your spouse/significant other involved early in the process.
Money. That’s why. Mostly.
(I say mostly, because there could be a bit of ego involved in owning multiple franchise units.)
Most of the prospective franchise owners I work with are looking to make money-a good deal of money. They’re willing to to take some risk to get there, but in the end, they want to make a lot of money. And some of the folks I talk with are willing to risk a lot in order to own a business. I try to talk them out of that strategy every time.
Financial *risk is part of the game when buying a franchise. There’s just no way around it. That’s one of the reasons most people don’t look into owning a business.
*If you want to learn specific ways to lower your risk when buying a franchise, read this.
But, risk can equal reward if you do a lot of things right before you sign a franchise agreement. One of the things you can do is to read up on franchising. Get educated on what franchising is and what franchising isn’t.
In addition, try to find real-life examples of people who have already purchased franchises-in this case, owners of multiple units. You don’t even have to find franchise owners who own the franchise concept (s) you’re interested in. See if they’ll sit down and talk with you; their experiences can really benefit you, and potentially save you from potential headaches down the road.
How Multi-Unit Franchise Agreements Work
When you buy multiple franchises, unless you’re looking at an existing franchise business for sale, you’re not going to be buying them all at once.
You’ll sign what’s called a multi-unit franchise agreement.
The agreement will state build-out times…dates that you’ll be expected to have your franchise units up and running.
For example, you may sign an agreement stating that your first unit must be up and running within 6 months of signing the agreement, the second unit 18 months after that, with additional units opening every 12 months depending on how many units you committed to. Does that make sense?
Now, there are factors that can delay build-out times, and they mostly have to do with real estate, which is something you can’t control.
Franchise Tip: Ask other multi-unit franchise owners if they were plagued by real estate issues and what the franchisor did if units were not opened up in time. Flexibility on the part of the franchisor would be nice if the real estate situation was ugly, and you weren’t able to find a suitable location.
If your *net worth isn’t at least $600,000, multi-unit franchise ownership isn’t for you.
Multi-unit franchise opportunities tend to be in retail or food service, so the investment range is going to be in the mid-to high-end of the spectrum anyway. Individual units will have investments of at least $150,000 in most cases, but probably more like $250,000+. That means 3 franchise units could easily cost a quarter of a million dollars.
*If you haven’t done a net worth statement, you can use my Free Net Worth Calculator. Just grab your financial information, plug in the numbers, and Wella! Print it out and hold onto it for future use. The franchisor is going to request a net worth statement anyway.
If you’re thinking of opening up multiple franchise locations, there are opportunities galore.
How cool would it be to own several franchises?
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