expert advice: Edward (Ned) Levitt | Partner | Dickinson Wright LLP Toronto, Canada
Multi-Unit Franchising
Multi-unit franchising has been around almost as long as franchising itself. Today, this type of franchise model is commonplace and may, in the future, eclipse the traditional “ma and pa” unit franchise approach to growing a franchise system.
of units can vary from a small handful to
A multi-unit franchise occurs where one franchisee owns and operates a number of units in a franchise system. The number
single franchisee the right to open several
18 canadian franchise magazine
hundreds and some multi-unit franchisees are even public companies. In the early years of the evolution of business format franchising as we know it today, the classic model was the sale of one unit to a single franchisee. It was rare for franchisees to own more than one unit and rarer still for a franchisor to grant to a franchised units, in a given territory, over a specified period of time.
The growing popularity of multi-unit franchising is partly attributable to the economies of scale for the franchisee, which allows the sharing of costs over a number of units including administration, labour, inventory, management and local advertising. For the franchisor, it is easier and more cost effective to manage a franchise system with fewer, more business savvy, better resourced franchisees, but with the same number or more units. Multi-unit franchising reduces the franchisor’s cost of marketing their franchises, assisting in
