Multi-Unit Franchising on the Rise

In the past, franchises may have owned one or two franchises of a popular business. Nowadays, companies are owning dozens, hundreds, and even thousands of businesses. There are currently more than 420,000 franchised units owned by 234,000 franchisees. This means multi-unit operators are shaping the future of franchising, controlling more than 50% of all franchised units in the United States.

The number of franchisees who are multi-unit operators with more than 50 units has surged by more than 112% since 2019. Certain categories of the market are showing even higher concentrations. Multi-unit operators dominate 82% of quick service restaurants (QSRs), 72% of sit-down restaurants, and 71.5% of beauty-related franchises across the United States. In 2024, large multi-unit ownership is expected to continue to grow rapidly.

One main thing driving this trend is that the lending community has a positive perception of multi-unit franchise operators. There have been significant changes in the eligibility for Small Business Administration (SBA) loans. Also, repayments and refinancing out of SBA loans reduce the amount of capital an SBA department has to lend. These factors are pushing lenders to target high-quality borrowers.

Another prominent trend is larger multi-unit owners acquiring brands outside of their typical industry. For example, seasoned QSR franchisees, which tend to gravitate toward brands such as Papa Johns and Qdoba Mexican Grill, are focusing on franchise agreement with GLO30, which is a skincare franchise concept. Among Dunkin’ franchisees, 14% own another franchise brand, ranging from oil change concepts to optometry and health clinics. So multi-unit franchise operators are being more versatile in expanding their offerings.

In addition, multi-unit franchisees are looking at alternative strategies to fuel growth, which means looking at locations such as airports and travel centers. Nontraditional locations present new opportunities for franchisees, allowing them to cater to emerging trends and consumer preferences. It also allows them to operate with lower overhead costs, promoting efficiencies. Franchisees from well-known brands, such as McDonald’s, Arby’s, and Wendy’s are successfully expanding their footprints this way.

Currently, the top company for franchises is Flynn Group, with 2,709 units. Flynn Group owns franchises such as Pizza Hut, Applebee’s, Taco Bell, Wendy’s, and Arby’s. Next is Sun Holdings, with 1,755 units. The company owns franchises such as Arby’s, Burger King, Popeyes, Applebee’s, and Papa Johns. The Dhanani Group is at #3 on the list, with 1,493 franchises. The company owns popular franchises such as Burger King, Popeyes, Pizza Hut, and Baskin-Robbins.

Learn More About Franchises

Franchises are a great way to own businesses without having to deal with all the work involved in the beginning stages. Once you can successfully operate several franchises, having hundreds or thousands may seem like a piece of cake.

Orlando franchise lawyer B.F. Godfrey from Godfrey Legal can help you understand the ins and outs of owning a franchise. We can guide you through all the state and federal laws involved and help you avoid common mistakes. Call (407) 890-0023 or fill out the online form to schedule a consultation.

Source:

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