Pros and cons of the growing multi-unit franchising modelMulti-unit franchising is becoming a growing trend globally and in South Africa, meaning a single franchisee owns more than one outlet in different geographies. This ownership model challenges the traditional paradigm of a single-unit franchisee that we are most accustomed to. ©Brandon Alms via 123RF Riaan Fouche, chief operating officer (COO) franchise at FNB Business says, “Multi-unit franchisees are a major trend in South Africa and more franchisors are giving first preferences to existing franchisees due to proven success and understanding of the franchisor's brand. This enables the franchisor to grow their footprint in partnership with a franchisee while mitigating the level of risk associated with opening up a new outlet.” Fouche shares five advantages and disadvantages of a multi-unit franchisee: Advantages1. Diversify income: Having more than one source of revenue as a business improves cash flow and the lifeblood of a business. Disadvantages1. Brand limitations: Some franchisors will not allow a franchisee to own other brands especially if it is a direct competitor. “In this tough economy, franchisees are advised to consider multi-unit franchisee as a viable alternative in diversifying profit margins. However, they need to weigh the pros and cons of taking more outlets,” concludes Fouche. |