Multi-Brands Zees On The Rise

Area Developer:

During the past 20 years, we have witnessed a generation of multiunit franchise operators grow up. Today there are more than 40,000 of them.

A parallel development is that, increasingly, franchisors are selling only multiple-unit packages. This is true for mature systems such as Dunkin’ Donuts as well as for a growing number of new brands that have chosen to start out by selling area development agreements. As a result, multiunit operators today control more than 150,000 units.

A trend that is less clear is the growing number of multiunit operators who own units across brands. The numbers are difficult to ascertain. Our database shows more than 12 percent of multiunit operators have more than one brand. However, we know this is understated.

While there are several reasons for this, the main one is that franchisees often use a different corporate entity when they take on another brand. It is hard to connect the new entity to the existing one for the same franchisee. Further, the ownership may have some, but not all, of the same people involved.

Nevertheless, we believe that the number of multi-brand franchisees may be between 15 and 20 percent of the 40,000-plus multiunit operators. Our data show that it is a growing trend.

Why is this happening?