Multi-Unit Franchising: A Full Guide to Growth, Benefits, and Challenges

The franchising industry continues to grow steadily, with more franchisees choosing to manage multiple units instead of just one which in turn is causing more business owners to consider franchise expansion of an existing business. This approach, known as multi-unit franchising, is a proven way to grow faster and build a stronger presence in the market.

Unlike the traditional model where one franchisee runs a single unit, multi-unit franchising involves a single franchisee operating several units, often within the same area. This model has become more popular over time. According to the 2016 franchise report by the British Franchise Association (bfa) and NatWest, about 29 percent of UK franchisees owned more than one unit, and 50 percent planned to open more.

Also, at least one in five of the remaining 71 percent of franchisees in the UK had plans to buy additional locations. Still, many who have managed multiple units or brands say that this path is not for everyone.

Several key factors need to be considered before expanding, such as available resources, business systems, growth plans, and the relationship between the franchisee and franchisor. While multi-unit franchisees usually operate within a certain region, some partnerships go beyond regional or national borders. This model works particularly well in retail and food sectors, where growing a brand in more than one location can bring fast results.

In contrast, the service sector may not always need multiple physical locations to reach more customers. In these cases, the benefits of a multi-unit setup may not apply.

Still, the multi-unit franchise model offers many benefits for both franchisors and franchisees, which helps explain why it has become more common.

Advantages of Running Multiple Franchise Units

For franchisees, growth is easier when they already know the brand. This reduces the time needed for training and brand familiarization. With an experienced team, expanding within a familiar brand can go more smoothly. Strong relationships with banks can also help secure funding for more locations.

A close working relationship with the franchisor also supports this model. Good communication and mutual trust make growth easier. On the other hand, trying to expand into new brands or industries can be costly and may not pay off in the long term.

For franchisors, having fewer franchisees managing more units can make oversight easier. But growth must be managed carefully. A strong desire to expand doesn’t guarantee success.

Does More Units Mean More Success?

Over the last ten years, more business owners have started opening multiple locations of the same brand instead of just one. At the same time, franchisors looking to grow in other countries are choosing the multi-unit model over the master franchise model. This is especially true in places where hands-on management leads to better results. Problems in past master franchise setups have made franchisors more cautious.

Edward Levitt, a partner at U.S. law firm Dickinson Wright, explains that giving one master franchisee control over a whole country or large region can be risky. If problems arise, it’s hard to fix them when only one person is in charge. With multiple multi-unit franchisees, it’s easier to adjust and fill gaps if one area isn’t doing well.

Financial Incentives Support Business Goals

Another reason for the shift toward multi-unit franchising is cost. It can be expensive to train and support new franchisees. Choosing to work with one group that runs several units instead of training five separate individuals can be more efficient.

Bill Edwards, CEO of Edwards Global Services, points out that franchisors must support each franchisee, whether they have one unit or ten. Since the support required is the same, it makes more sense to back a franchisee who can manage several units.

Rise of Multi-Unit, Multi-Brand Operators

Alongside multi-unit franchising, there is also a rise in multi-unit, multi-brand operators (MUMBOs). These franchisees manage several brands across different locations. This trend, already common in the U.S., often starts with one food brand and expands into others, such as burgers, chicken, or seafood.

The benefit is clear: economies of scale. These operators build a team, find reliable vendors, and secure real estate. Once this foundation is in place, they can apply it to other brands. Franchisors like this because these operators already understand how franchising works and have proven they can handle growth.

Even with this growth, single-unit, master, and area development deals still play a big role in franchising. Multi-unit franchising isn’t a one-size-fits-all solution. Each brand must decide what works best for them.

Levitt notes that master franchising can sometimes be simpler, requiring only one agreement. But managing many smaller multi-unit territories might mean more effort and coordination. For example, in a country like England, you could have just four franchisees or as many as 20 depending on how the areas are divided.

Will Multi-Unit Franchising Replace Family-Owned Locations?

With all the talk about growth and expansion, it’s easy to forget about traditional family-run franchises. These are the classic single-location businesses passed down from one generation to the next.

Thankfully, these businesses still have a place. Bill Edwards explains that single-unit franchises are more likely to be found in smaller towns, while multi-units are better suited to big cities. There is still value in small businesses run with care and commitment, and they remain an important part of the franchise world.

Seven Things to Think About Before Expanding

1. Finances:
   You need to ask whether the bank will lend you money to grow. Can you keep your current locations running while expanding? These are basic but very important questions.
2. Resources:
   When adding more units, your current ones still need to perform well. You must build a trusted team who can handle operations so you can focus on growth. Delegating is key.
3. Performance Drop:
   Often, a franchise’s first location may dip in performance when attention shifts to a new one. If this drop is too big, it can hurt the business. Try to keep it to around 10 percent, and use staff rewards or incentives to keep motivation high.
4. Skills and Leadership:
   One of the hardest things for some franchisees is letting go of control. Success depends on letting your staff take responsibility and make good decisions on their own.
5. Franchisor Relationship:
   A strong relationship based on trust is essential. But even with trust, communication is key. Franchisees must share updates, successes, and challenges clearly with their franchisors.
6. Growth Potential:
   Don’t expand just for the sake of it. Check if the market can support more units and if there’s demand for your product or service. Bigger isn’t always better.
7. Operations and Support:
   Besides hiring staff to serve customers, you also need a solid support team—like admin staff and loss prevention. But be careful not to over-hire and strain your cash flow.

How Franchisors Benefit from Multi-Unit Models

1. Consistency Across Locations:
   Franchisors prefer working with franchisees who already understand their systems. Multi-unit franchisees usually follow a consistent approach, which helps maintain the brand’s quality. Some franchisors also offer development incentives, such as exclusive rights to certain areas or lower royalty fees, to encourage multi-unit growth.
2. Faster Expansion:
   With trusted franchisees in place, franchisors can grow a region without having to find and train new people every time. This saves time and effort and lets the franchisor focus on other parts of the business. Also, using the same vendors for construction and setup makes each new location easier to open.

As franchisees open their fourth or fifth unit, the entire process becomes smoother. Fewer third parties means things stay on track, and everyone involved can work more efficiently.