Multiple unit franchising has the most risk but offers the most reward. In my experience, owning multiple franchise units allows you to harness the true power of franchising. The franchisees I see who are the most successful are all multi-unit owners. Substantial investment is required in order to purchase multiple units and should not be considered unless you have sufficient capital. But owning one franchise unit of system is unlikely to ever make you wealthy and often just results in buying yourself a job. So having the ability to scale your operations is critical if you hope to move past a single unit operation.
Scaling your operations is not easy though. And if you haven’t done it, it is best to find mentors and examples of business people that have been able to scale operations. I recently found an interesting example about a Jimmy John’s franchisee who scaled his operations to 59 locations. Most of the article focused on how the franchisee led and motivated employees. The former teacher has over a thousand employees!
There are also a few other things that stood out to me from the article about this franchisee:
- Follow the franchisor’s example. As the franchisee explained, he followed the franchisor’s example to become more successful. He created a Love, Hugs and Smiles position in his organization. This happened to be a long-time employee who had held almost every position in the organization. But the main role of this employee now is that he provides positive reinforcement to employees. This wasn’t a creation of the franchisee though. He readily admits that the Jimmy John’s franchise founder created the role and he just followed his successful lead.
- Create a transparent organization. The franchisee meets routinely each month with all his managers and most of his assistant managers. They discuss results, go over policy changes, any other changes that may be upcoming and any issues coming up with the franchisor. The managers are also encouraged to discuss how their doing, how their operating the business, and the struggles they are facing. Talking with the other managers enables the organization to challenge and support one another, and also learn from one another.
- Have an abundance attitude, not scarcity. One of the unique perspectives is that the franchisee actually believes that the more he pays to the franchisor, the more the business will take care of him. All too often, franchisees look at franchise fees in a negative way. It’s rare that a franchisee that approaches paying fees in a positive manner or looking at those fees as an investment. The franchisee also sets aside 25% of store profits for bonuses to managers if they meet their goals with food, labor and a couple of other key metrics. And there is no cap on bonuses! This insures that managers are aligned with the business to make it as successful as possible.
I encourage you to read the article to find some tips on how you can successfully scale your franchise operations.