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Multi-unit franchises currently own 53 percent of the 450,000 franchise units in the U.S., according to FranData. Plus, they make up 76.5 percent of franchised restaurants. Over the past decade this has become the new norm. Why is this the case? Several factors have come into play account for this shift:
1. Large franchisees are more stable and less affected by slow economic cycles. During the Great Recession, small franchise operators who owned one or two units struggled more than larger franchisees, who have greater volume and are often invested in more than one brand.
2. Multi-unit franchisees have more resources to facilitate rapid expansion. Large franchisees have strong relationships with realtors and vendors, paving the way for unit development. For emerging brands, such as the fast-casual sector, speed of expansion is key.
3. Multi-unit franchisees are easier to manage. Franchises rely on consistency when executing operations over a large number of units. Franchises have the systems, tools and technology that allow them to manage 300 franchisees with the same amount of energy it takes to manage 50 franchisees.
4. Muti-unit franchisees are more experienced and know how to grow. They know the game. They also have more cohesive marketing strategies than small franchisees. It’s also easier for corporate staff to improve efficiency and responsiveness when they don’t have to spent their time coaching and educating multiple inexperienced franchisees.
Read the full article at Entrepreneur.com.
“Once in the minority, multi-unit franchisees control more than 75 percent of franchised restaurants.”