As you’re investigating franchise ownership, you’ll need to make a number of important decisions. Some of these will involve questions about you personally: for instance, what kind of owner do you want to be, and what type of franchise suits your leadership style? Both these questions connect with a third one: do you prefer single-unit franchise ownership, or do you want to be a multi-unit owner?
In my previous posts on ownership types and leadership styles, I touched on this question briefly. Now it’s time to dig a little deeper. If you’re still on the fence about single-unit vs. multi-unit franchise ownership, the next couple of posts are for you. I’ll go into more detail about the pros and cons of each option, so you can make a more informed decision about what’s right for you. This week, we’ll look at single-unit franchise ownership.
The Pros of Single-Unit Franchise Ownership
Less Overhead
Single-unit franchise ownership comes with lower costs all around. Up front, you’ll pay a lower franchise fee, and the startup process will be more affordable. Your ongoing expenses–rent or mortgage, utilities, payroll, taxes, and more–will be lower, too.
Simplicity
When you own just one franchise unit, everything is simpler. You have one location, one set of employees and vendors, one set of financials, and one customer base. It’s much easier to keep all the details straight, and the decision-making process is more straightforward. Work-life balance is also easier with just one business to manage: you’ll have more predictability in your routine and can keep everything closer to home if needed. Especially for first-time entrepreneurs, this simplicity can make franchise ownership more doable.
More Involvement
Single-unit franchise ownership allows you to become deeply involved in the business. It’s ideal for an owner-operator, someone who wants to understand the business inside and out. Without other locations competing for your attention, you can gain a deep understanding of operations, your customer base, and your product. You can also gain a deeper understanding of your employees–important if you want to be a mentoring boss.
More Options
Every industry and franchise type has single-unit options. You can choose from any economic sector, and you’ll have both work-from-home and brick-and-mortar options. In addition, single-unit franchise ownership is suited to any ownership style: hands-on or hands-off, owner-operator or executive owner.
If you have just one unit, it will also be easier to train a successor. That means you can more easily start as an owner-operator, then shift to executive ownership with an employee manager, or even retire and pass the business down to the next generation.
The Cons of Single-Unit Franchise Ownership
Limited Opportunity
Though single-unit franchise ownership comes with lower overhead, your income is likely to be lower, too. A single business can only grow so big. You’ll eventually reach a point where you can’t serve more customers without adding territory or another location. If you’re planning to be a single-unit owner, try to find out where other single-unit franchises in your network or industry have plateaued. That will help you decide if the income potential in a single unit is enough for you. But, generally speaking, if wealth-building is one of your main reasons for becoming a franchise owner, single-unit ownership is probably not the best choice for you.
Less Clout
If you’re a single-unit owner in a network where many other owners have multiple units, you’ll rank near the bottom of the hierarchy. Many franchisors have tiers of support, access, and rewards that depend on the size of your business or revenue. Owning just one unit may mean that you don’t qualify for marketing dollars, financial incentives, special events, or other perks.
No Backups
Anything from a burst pipe to a tornado to a pandemic can add to your costs or even shut down your business. If you’re a single-unit owner, you have no backup when that happens. Single-unit ownership may still be the best choice for you, but make sure you’re prepared. Every business owner should carry insurance and have a rainy-day fund, but these cushions are especially important for single-unit owners. And don’t forget to set up a personal emergency fund to cover lost income, and encourage your employees to do the same.
If you’re still unsure whether to become a single- or multi-unit franchise owner, come back in a couple of weeks to learn more about the pros and cons of multi-unit ownership. And book a call with me–I’ll be happy to help you talk through the options!
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