The Truth About Multi-Unit Franchisees

We are sitting at the franchise unicorn bar – talking all good things franchising, working through the challenges of franchise development and franchisee success.

“Finding franchisees, any type of franchisee is super tough,” I say. “You have to convince someone to invest their hard earned money into a business that they don’t have much control over.”

“True,” says the franchisor.

“Before that convincing, you have to have a great brand, great product, great leadership, great vision, great profitability, great validation, great growth plans, great suppliers,” I say.

“Boy, that sounds tough,” says the franchisor.

“Sure is. What about your brand? Do you have all that?” I ask.

“Well, we are a super crowded category. We have a solid product – in fact, I believe despite our 3.5 star rating on Yelp, that we have the best product on the market. Our leadership team is fairly new – but we have a combined experience of more than 100 years. Our investment ratio is a little less than 1-to-1. Most of our franchisees validate. They aren’t growing with us, much, but they are happy – or rather content. Yes, I would say you have all that.”

“Are you sure?” I ask.

“Sure are. The challenge we have is not our business – it’s leads. Know how to get those.”

“I do.”

“How?” they ask.

“Improve all of the above,” I say.

“Impossible. We have to get leads now. We have to grow. We need more franchisees. In fact, we need multi-unit franchisees. They will buy more units and open more units.”

“Well, you see, it’s not that easy. You have to understand that franchisees and business operators are two different personas. A franchisee, in my opinion, is making a huge, awesome decision to open a franchise. Maybe two locations – but doesn’t really think a whole lot about scale. A business operator comes to the table looking for scale. The challenge with the business operator is that they are super sophisticated. In fact, they have built wealth already – and are looking to build more. Thus, most likely, they have the ability to call BS on your business model. Thus, you better be ready to talk through your game plan. 

“Ok,” the franchisor says a little deflated.

“Don’t worry, business operators love opportunities. This is why they buy underperforming locations. They know that by mixing the right location with the right people, operations and investment, profit can turn. So, create your new business plan. Have a great story. Lift up those who are excited. Incentivize your franchisees to grow. Support them more. Focus on product innovation. Take responsibility – ala Domino’s.”

“Ok, this makes sense,” they say.

“And then, you have to know how the process works. Multi-unit operators within other brands know the costs, the models and the profitability. A multi-unit owner from another brand needs to hit a roadblock with their other brand in order to diversify. This is tough. This is a long process. And if you listen to most multi-unit operators, they have parameters – often focused on profitability, both short term and long-term. They probably know you – especially if you have done a good job with PR, content and marketing. You have to deliver a why you, why now.”

“Ok, all of this makes sense,” the franchisor says. They pause. A smile comes on their face. “I get it. I totally do. So, do I exhibit at the Multi-Unit Franchise conference?”

“You should – when you have the above answered, have a plan, and use that booth for prescheduled meetings. But don’t let that be your only tool to tell that story. Fix up your Website, make sure your story is sound, leverage your franchisees. Tell a clear story.”

“Awesome,” they say, and then pause again. “Now, what about those leads?”