Franchises in Australia contribute heavily to the country’s economy. The market size of the franchising industry stands at $172 billion, with countless opportunities to excel and flourish. Franchisees who succeed with their franchise locations can build upon their success story by opting for multi-unit ownership. Many franchise opportunities in Australia offer franchisees the option to business franchise units at multiple locations. This opportunity can allow franchisees to expand their income and widen their portfolio, building an enviable business empire. If you already have a franchise location, you may wonder if you should start a second unit. Is it time to invest in a second franchise? Let's explore how you can decide.
Advantages of Operating Multiple Locations of the Same Franchise
Many leading franchise businesses around Australia offer multi-unit ownership rights. For example, ActionCOACH Australia and Anytime Fitness, two top franchise businesses for sale in Melbourne, allow franchisees to open several units. Is this an opportunity that you would like? The following advantages may help you decide.
● Economies of Scale: Two franchise locations under the same owner can share resources to drive down costs. The franchisee partner can spread out fixed operating costs between two or more units to make it more cost-effective. Marketing activations can also benefit multiple business locations in the same region. Similarly, owners can leverage economies of scale for other resources while running multiple franchise stores.
● Better Franchising Terms: When a franchisee partner opts for a second or third unit, they can ask for better contractual terms. They can negotiate reductions in franchise fees or royalties. They may also seek exclusivity rights in a specific region to minimise competition and drive profits.
● More Stability: Having multiple locations can help you widen your portfolio. If one of your franchises runs into issues, the other ones can balance out the losses. Multi-unit ownership also ensures higher revenues for greater financial stability.
● Credibility and Influence: A multi-unit franchisee has local influence and credibility as a business owner. They can streamline their operations more effectively with the help of the credibility they garner.
Disadvantages of Choosing Multi-Unit Ownership
Multi-unit ownership may not be suitable for some franchisees if they are daunted by the following disadvantages.
● Requires Extensive Business Experience: Managing multiple business locations is no easy job. It requires business acumen and experience to tackle the complexities of a large-scale business. Hence, multi-unit ownership may be unsuitable for someone new to the field.
● Risk Exposure in Certain Scenarios: When you open multiple franchise locations of the same business, you have greater exposure to the risks that affect that enterprise. For example, if your franchisor goes out of business due to unforeseen events, you will lose all your investment across multiple locations.
How to Decide if You Should Buy Multi-Unit Franchise Rights?
You should weigh the abovementioned pros and cons to determine if the multi-unit ownership model is right for you. If you think you have the experience and ability to pull it off, you should consider this option. For more advice, stay tuned to Australia and New Zealand's top franchise magazine with a comprehensive franchise directory and expert tips!
