Most investors know the wisdom of diversifying their portfolios to hedge against market fluctuations, and choosing a multi-unit franchise business can be a smart way to put this strategy to work. It offers multiple income streams with the reliability of a proven brand, so you can invest in a single entity without using an “all in one basket” approach. It's been a solid plan for one of our Ford's Garage franchises, which has even diversified into other restaurant brands.

While before franchise Ownership or business experience is highly beneficial, not always a strict requirement INVESTING. What is essential is to have strong management skills, a solid understanding of business operations and the ability to learn quickly. If you lack direct franchise experience, partnering with experienced managers or investing in training can bridge the gap.

Managing multiple units requires more management skills and well-planned systems to effectively handle operations, staffing, inventory, and guest service. Here are some considerations to think about before committing to this strategy.

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1. Financial stability and growth

Benefit: Having more units means more income streams, which can improve yours financial stability and growth potential. You can spread costs such as marketing, supply chain management, and staff training across multiple locations, so unit costs are lower and overall profitability is higher. Successful units can compensate for underperforming ones, providing a balanced portfolio. The increased volume and potential for long-term partnerships also give you greater negotiating power with suppliers, owners and service providers.

Keep in mind: The financial commitment is significantly higher with multiple units. If the group is not properly supervised, the financial strain can be significant – especially during economic downturns or if some units do not perform well. Financial struggles often develop when franchises receive more units than they can afford. The ideal number of units varies based on market conditions, financial capacity and operational capabilities. But a typical starting point is three to five units, which allows economies of scale to be achieved without overburdening the management structure.

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2. Operational efficiency

Benefit: Having standardized processes and best practices across all locations can improve performance and stability. In a restaurant franchise like Ford's Garage, menu offerings are common to all locations and service standards are consistent. Our guests know what to expect at location B because they experienced it at location A. Having service and performance standards that are recognized and uniformly enforced enables you to hire and retain a higher level of team members.

Keep in mind: The locations of your units will affect the level of support they give each other. Very close – and they are inside ComPeTITIon. Too far apart – and they cannot support each other. Most important will be your franchisor's policies; they can have a development agreement that defines the radius within which new units can be opened to avoid cannibalization and ensure adequate market coverage. Be sure of your prospective franchisor's policies before committing.

3. Greater brand visibility

Benefit: Mastery multiple units in a region can improve your brand visibility and market dominance, increasing guest loyalty and competitive advantage. If a guest has had a satisfactory experience at one of your locations, they are more likely to patronize other locations because of your trust in them. It can also discourage competitors from entering one of your markets.

Keep in mind: Bad experiences at one place can keep guests away from others. Make sure your team is aware of this risk; they are reflecting on their location and the whole group. And most people know that you can lose confidence much faster than it was built.

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Research tips

To be as informed as possible before taking the plunge, potential investors should do the following:

• Analyze the franchise's past and future financial performance and growth trends. How much demand is there for its products or services in the target markets? Is it likely to continue? Understand the competitive landscape and how the franchise differentiates itself.
• Evaluate the level of support provided by the franchisor, including training, marketing and operational assistance. For me, this is a critical part of the decision-making process.
• Talk to current franchisees to gain insight into their experiences and challenges. Conferences like the Multi-Unit Franchising Conference provide opportunities to network, learn about new trends, meet potential franchisors and gain insight from industry experts. They are a great way to educate yourself and make informed investment decisions.
• Examine your personal goals and objectives to see if your future investment aligns with them. Investing in the same industry can provide operational synergies and easier management due to familiarity with the business model. However, diversification into different industries can reduce risk and create new opportunities.

The smart start

Investment in a many units franchising can diversify your portfolio and build a substantial business, but it is essential to have a clear understanding of your financial and operational capabilities. Leveraging franchisor support and industry resources will further increase your chances of success. This is why franchising is a great opportunity for investors. Most brands have standards, systems and procedures in place, so you'll be joining an established organization that has the operational basics worked out.