FNB Franchising Summit 2015 Owning and operating multiple franchise units

Morne Cronje

Franchisees who make a success of their current franchise often consider  owning a second or multiple franchise units. Franchisors might also grant a second or multiple units to existing franchisees as they have proven that they can make a success of their franchise.

“A multi-unit franchisee is defined as the franchisor awarding the right to a franchisee to operate more than one unit within a defined territory. To manage and run multiple franchise units requires ongoing dedication and commitment,” says Morne Cronje, Head of FNB Franchise. There are a few factors to consider before embarking multiple franchise units.

1. Expenses
A multi-unit franchise owner will have higher expenses not just due to the normal additional operating expenses, but also due to the need for a good infrastructure. Owners will need to ensure that the units are consistent throughout and will have a higher capital requirement as revamps to the outlets will be required.

2. Sound Financial Management
The franchise owner needs to ensure that they are able to run an outlet successfully.  Financial management is crucial and the owners need to be able to manage their finances efficiently in terms of loan repayments and cash flow management which can contribute to the success of their businesses.

3. Staffing
The franchisee’s infrastructure must be evaluated to ensure it will cope with the opening of an additional outlet, it might require the appointment of  additional staff. 

4. Support from Franchisor
It’s important to ensure that the franchisor is supportive of the venture, as they may have limitations on the number of outlets a franchisee may operate.