by Greg Nathan

last updated 10/09/2019

Greg Nathan is Founder of the Franchise Relationships Institute (FRI) and author of several best-selling franchising books including Profitable Partnerships. For more information about Greg and FRI’s work, including their Multi-Unit Diagnostic tool, go to www.franchiserelationships.com.

12 Tips for multi-unit excellence

by Greg Nathan

last updated 10/09/2019

Greg Nathan is Founder of the Franchise Relationships Institute (FRI) and author of several best-selling franchising books including Profitable Partnerships. For more information about Greg and FRI’s work, including their Multi-Unit Diagnostic tool, go to www.franchiserelationships.com.

Greg Nathan of Franchise Relationships Institute explains how to tap into the power of multi-unit franchising as a growth strategy

Multi-unit franchising, where franchisees own and operate more than one business unit or territory, is increasingly popular. For example, a McDonald’s franchisee might own four or more restaurants, while many petrol stations are operated by multiple franchisees who might own 10 or 20 outlets in the same region. Even in the service sector, it’s not uncommon for franchisees to own multiple territories, while in retail the same franchisee might own 2 or 3 outlets in neighbouring areas.

This approach offers franchisees and franchisors an efficient path to boost sales, profits and market share. Offering good franchisees the opportunity to own several business units increases the appeal of a franchise through offering a path to growth, reduces the cost of recruitment and training for franchisors, and helps to overcome the current shortage of prospective franchisees which may be restricting expansion.

However, despite the benefits for both parties of being able to ‘grow with who you know’, there are also significant risks. In this article, I’ll share 12 evidence-based tips for franchisors from our years of research and experience at the Franchise Relationships Institute.  

Create measurable expandability criteria

You need to know whether a franchisee is capable of running multiple units – especially if the potential for multi-unit franchising was not in your original plan, and existing franchisees were recruited for their ability to run single units. Create a checklist of the capabilities and resources known to impact on a franchisee’s performance in your network, particularly those relevant to running multiple units.

The expandability criteria should be linked to a rating system that enables the franchisor team to objectively compare franchisees against predefined standards, described using observable behaviours. This type of behavioural rating system brings a high level of internal consistency and is known as a Behaviourally Anchored Rating Scale or BARS.

Make the expandability criteria transparent

Transparency enables everyone in your network to have a shared understanding of what excellence looks like. It also places an onus on the franchisor team to ensure their criteria are clear, fair and relevant. This is particularly important if several franchisees are vying for the same business expansion opportunity. High potential franchisees will want to know...

 

This article is published in full in our most recent issue of Franchise New Zealand magazine. Request a free print copy or download our free digital magazine to read the entire article.

Greg Nathan is Founder of the Franchise Relationships Institute (FRI) and author of several best-selling franchising books including Profitable Partnerships. For more information about Greg and FRI’s work, including their Multi-Unit Diagnostic tool, go to www.franchiserelationships.com.

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