Ready to take your franchise business to the next level? If you’ve mastered the operation of your first location, expansion is a great way to keep the momentum going. However, it’s not always that simple. Especially if you’re in a prime market, Franchisors may prefer awarding additional locations to current Multi-Unit Franchisees. So, how can you jumpstart your franchise growth path? Learn even key tips and how BoeFly can help expedite the process.
Reasons to become a Multi-Unit Operator
According to FRANdata, 54% of those currently in a franchised system are Multi-Unit Operators. And it’s easy to see why.
- Increasing your wealth. The obvious reason to become a Multi-Unit Franchisee is to multiply your opportunities to build wealth. If you’re succesesful, more locations mean more profit.
- Diversifying your assets. By spreading your financial investment across multiple locations, you can better protect your assets. Even if one location faces challenges, you can still rely on your other locations.
- Moving into an oversight role. With multiple locations, you will likely have the chance to step away from the day-to-day business management tasks that are common for a Single-Unit Operator. Enjoy more flexibility in an oversight role, dealing with the big picture of your business.
- Appealing to Franchisors. Franchisors often prefer Multi-Unit Owners for several reasons. Having multiple units typically means you have a proven record of operations, executing brand standards as well as a higher profitability. As a result, it’s usually easier to get more units once you’ve become a Multi-Unit Franchisee.
How to become a Multi-Unit Operator
Securing approval and funding for additional locations is often key to becoming a Multi-Unit Operator. This process looks different for everyone, but there are some things you can do to improve your chances and accelerate your timeline. Brooke Ingram helps both single-unit and multi-unit operators acquire franchise financing in her role as Senior Director of Funding Services at BoeFly. She shared the following tips for improving your chance for securing funding:
- Maintain adequate liquidity. Funding your first location entirely with cash may leave you with limited liquidity for expansion, making it more difficult to manage the financial demands of a second location. It’s wise to plan ahead and ensure you have enough financial flexibility to accommodate the liquidity needs of your future units.
- Ensure the stability and profitability of your existing unit(s). If your first location is unable to cover its existing debts, you will have a hard time securing a business loan for expansion. Lenders prioritize financial stability, so it’s important to ensure your existing units are stable and profitable.
- Don’t mix personal and business loans. Relying on personal loans for business expenses can decrease your chances of obtaining a business loan. The lack of separation makes it difficult for lenders to evaluate your business’s financial performance and credit worthiness. This complication may result in delays during the loan approval process and potentially lead to a denial of your loan application.
- Assess your collateral. Inadequate collateral can hinder your chances of obtaining financing, as lenders require collateral to minimize risk. Collateral may include personal or business real estate, business assets, machinery or equipment, or a certificate of deposit (CD).
- Maintain good credit history. A history of late payments, defaults or a low credit score will make it more challenging to secure financing. Make your payments on time and consult a financial expert for ways to improve your credit score if necessary. This applies to personal credit as well as business credit. Both are important.
- Research conventional loans. As a Single-Unit Franchisee, you likely used an SBA loan, which is a great choice for competitive interest rates, longer repayment terms and lower down-payment requirements. However, they have a maximum cap of $5 million under the 7(a) program. When you start expanding, you may need to shift to a conventional business loan, which typically requiresa stronger loan package, including additional liquidity and strong cash flow from existing units.
- Partner with BoeFly. There are a lot of financial considerations when it comes to expanding your franchise. BoeFly works with franchise owners like you every day and has over a decade of experience in this sector. Our financial experts can help prepare and secure funding for your additional locations.
How BoeFly can help you become a Multi-Unit Operator
Get matched with the right lender for your additional locations. BoeFly makes it easy with a one-step application and end-to-end support. Experts like Brooke helped hundreds of franchise owners reach their goals, including Shawn McMaster from Tint World:
“BoeFly delivered great support, and I’d recommend BoeFly to anyFranchisee who wants financing.”
To speak with a BoeFly representative about your financing options, simply fill out this form.
