By: Bruce Evans, Vice President of Franchise Development
There are two approaches to multi-unit growth within a franchise system: signing on experienced entrepreneurs for a multi-unit development agreement, or signing on franchise partners who are new to business ownership for a single unit and helping them expand along the way.
It’s always beneficial to an organization when you bring in an experienced franchise partner who already utilizes a multi-unit operating system – maybe even with multiple brands. They have an extensive knowledge of franchise operations they can draw on to put the right people in place, develop quickly and get to a point of brand recognition faster.
On the flipside, new single-unit owners who grow over time have the opportunity to put a face to their business as they expand within their community and build a culture around the brand. As they develop within their territory, they also have the time to get up to speed and fully understand the business, which makes for an improved guest experience.
Either way, multi-unit growth is key to building a successful, profitable franchise system. So, how do you make sure your concept is prepared for multi-unit growth?
Ensure Your Concept is Scalable
If you want to encourage multi-unit investment, it is critical that you build a concept and system that is easily scalable. At Capriotti’s, we provide an entrepreneurial game plan for our franchise partners and our operations are simple to scale, which encourages development.
Our franchise partners typically follow the path of:
- Opening their first restaurant and learning the ins and outs of operating the business
- Identifying people internally who can develop and grow into managers and ultimately run that store
- Moving on to store number two and doing the same thing there before proceeding to store number three
By the time our franchise partners get to their third store, they are at a point of profitability that allows them to pull themselves out of the day-to-day operations and oversee their shops. This gives them more time to focus on developing more restaurants.
Provide Systems, Processes and Support that Encourage Growth
Ideally, your franchise partners will start growing once they’re able to get their arms around the business, really understand the inside of the four walls and execute it well. In order to get to that point, it takes established systems, processes and a robust support system.
The support structure at Capriotti’s is strong and we are able to spend a lot of time supporting our franchise partners because all of our processes and systems are built for someone who’s never done anything like this before. So our processes are very educational and systematic, which helps our franchise partners learn about the business and sets them up for continued growth.
Localize Store Locations, Build Brand Awareness and Grow Outward
Even in large cities and territories, it helps to start developing in a small, localized area and then expand outward in concentric circles. By starting in a localized area, franchise partners can create synergies, optimize marketing expenditures and build brand awareness. Building brand awareness through multi-unit developments not only attracts customers, but also new franchisees who can further expand your system.
When a restaurant first opens, the reach of that store is about five miles. But, the reach begins to contract the longer the location is open. Over time, the real reach of that shop is about two or three miles. So opening stores near one another in a local market raises the average unit volume of those stores by increasing the number of marketing impressions and more effectively using advertising spend. Once brand awareness and brand loyalty are built in a highly localized market, franchise partners can then begin extending further.
With a sound strategy for development and scalable, effective systems and processes, you can encourage multi-unit development and build your franchise system.