Franchising Focus

Important Trends in Multi-Unit Franchising – Legal and Structural Issues

by Stephen Giles

Franchisors need to develop a multi-unit model. There are fewer available franchisees, it is costly to find them and the market is very competitive. Similarly unit franchisee quality in Australia is questionable as a consequence of essentially full employment and high middle management salaries. So systems that rely on network expansion via new single unit franchisees will struggle to expand as quickly as systems that can expand via the multi-unit model.

There are other economies in terms of the multi-unit model, such as savings on recruitment and training costs, lower initial support requirements. However the current unit franchise model cannot just be replicated, and often needs major change. Systems that rely on the franchisee working long front line hours in the business need to work on improved margins and systems. And the workable multi-unit model may need 3 units or