Multi-Unit Or Multi-Concept Franchising?

Franchise Trade:

Question: 3 friends and I have decided to pool our investment dollars and buy some franchises. Our backgrounds are financial, sales, and business administration. We have investigated several different franchise opportunities and have enough money to either buy 6 to 10 locations from a single franchise or 1 to 2 locations from 3 different franchises. Our question: Is it better to own several units of one franchise or to own 1 or 2 of several franchises?

Answer: You may find that some of the franchisors you are considering will not allow you, under their standard agreements, to own or operate other businesses while you are a franchisee of their system. Many will not offer to sell you a franchise if they know in advance that your full attention, at least in the beginning will not be focused on their brand, especially if your team is going to be working on several new concepts at the same time. Make certain that all of the options you expect to have actually exist.

Putting that all aside, it sounds as though you have put together a formidable management team. Unfortunately there is no “right” or single answer to your question. There are pros and cons to each option and you are going to have to make some trade offs in making your decision.

Many franchisors offer an area development plan to those potential franchisees who are willing to commit to opening a specified number of units within a defined territory and in accordance with an agreed upon schedule. They often provide several benefits in exchange for the franchisee’s commitment. Typically, these incentives include some of the following…