Chapter 5
Multi-Unit Franchising
Aim Objectives Learning outcomes
The aim of this chapter is The objectives of this At the end of this chapter, you
to: chapter are to: will be able to:
• Understand the meaning
• Explain multiunit • Describe methodology
of multiunit franchise
franchising of multiunit franchising • Enlist advantages and
• Elucidate single unit • Explain multiunit disadvantages of multiunit
franchising versus franchising phenomenon franchising
multiunit franchising • Elucidate benefits of • Identify the importance of
• Enlist the characteristics multiunit franchising training in multiunit
of multiunit franchising franchising
What is Multi Unit Franchising ?
Two distinct forms of franchising with a specific purpose
are used by franchisors.
Franchising is distinguished into two forms:
Product franchising and
Business format franchising.
Single Unit Franchising versus
Multi Unit Franchising
Benefits of Multi Unit Franchising
Multi-unit franchising implies the creation of two or more
franchise locations either within a given territory, or through
multiple territories.
Some investors choose to diversify their portfolio and invest in
multiple brands however there are many advantages to developing
a single brand within multiple territories.
Multiple units offer both greater returns and opportunities for
overall growth of the franchise business.
Multi-facets of Multiunit
Franchising
For
Expansion of
franchisees, business with
who want to In simple words, the
the same brand
own more than concept of multi-
is considered
single outlet unit franchising preferable as
can achieve business is the both the
newer heights opening of more franchisor and
through multi- than one outlet of a franchisee
unit brand by a may have
franchising. franchisee. developed good
relations.
Positive aspects of investing in a multiunit
franchise
Accelerates profits
Stronger relations
Cost- effective in advertising and marketing
Rotation of Experienced Staff
Management of time
Question:
When is a multi unit franchise
better than a single unit
franchise?
Advantages of Multiunit Franchising
Franchisee has been through this before and is much more ready
for most of the surprises with the new store expansions.
Franchisee have a much better feel for how to market and grow
your business.
Economies of scale (i.e. marketing and inventory purchasing) start
to work in its favor.
Training of new employees is more honed in.
Franchisee is treated with more respect from the franchisor
Disadvantages of Multiunit Franchising
Cash flow can initially become more of a critical
issue.
Franchisee can no longer have the time to
devote to any one unit or store.
Personnel issues and risks magnify.
Risk/Reward comes into play more strongly.
Methodology of Multiunit Franchising
Master Sub
Franchising Franchising
Methodology of Multiunit Franchising
The master franchisee relationship is defined as a right to solicit
prospective franchisees and to provide training and other services
to franchisees in exchange for a percentage of the initial fees and
royalties paid by the franchisee to the franchisor.
Master In a master franchise relationship the individual has the right to
develop, own, and operate franchise facilities within the territory,
Franchising as well as to seek other franchisees that may operate individual
units.
Probably the major use for the master franchisee arrangement is
when the franchisor enters foreign countries and seeks out
individuals or corporations to serve as master franchisees for the
entire country.
Question:
Master Vs. Area or Multiple
Franchise Units
Question:
What does a master
franchisor do?
Question:
How to become a master
franchisee?
Question:
What Does a Master
Franchisee Do in Their Day-
to-Day?
Methodology of Multiunit Franchising
One of the main purposes of any training program
is to prepare individuals to perform and handle
the functions for which they are responsible.
Sub There are very few positions in any organization
Franchising that does not require some form of training. It is
indeed a rare individual who completely
understands an organization and their function in
that organization when they start.
Question:
Should I become a
multi-unit franchise
owner?
Examples of Master Franchising
Any Questions ?
Christian Jay R. Vitug
References:
https://drive.google.com/file/d/1hfTx7fB_fDnf6oNPAiitUZG2LKESD3-f/view
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