The Advantages of Multi-Unit and Multi-Brand Franchising

Over the years, changes in the economic climate have inspired people to go into business for themselves, as the working class becomes more interested in the time, freedom, and financial opportunities available to them. Business ownership continues to grow as people turn to entrepreneurship. This year, 33.3 million businesses in the United States qualify as small businesses, making up 99.9 percent of all U.S. businesses. Since the pandemic, ownership interest has continued to rise, with over five million new business applications filed annually.

Franchising has contributed significantly to the growth of small businesses. Business ownership has afforded people many new opportunities for growth, employing nearly half of the American workforce and representing 43.5 percent of America’s GDP. The restaurant industry was estimated to be valued at $1.51 trillion in 2023; by 2033, the projected valuation is $1.93 trillion.

BRIX Holdings LLC (‘BRIX’), a Dallas-based multi-brand franchising company encompassing renowned food-service chains including Friendly’s, Red Mango, LLC , Orange Leaf Frozen Yogurt , Smoothie Factory + Kitchen, and more, provides diverse small business opportunities for established and beginner franchise owners. Through decades of experience franchising food service brands, the BRIX is continuously growing and evolving, providing new opportunities for entrepreneurial talent to flourish.

While the restaurant and quick-service restaurant (QSR) opportunities continue to expand, franchisees and small business owners are opening themselves up to more possibilities by taking their business portfolios to the next level. Multi-unit and multi-brand ownership (MUMBO) can be advantageous to the growth of a business and afford people the lifestyles they want. For multi-unit and multi-brand owners/operators there are advantages, challenges, and opportunities within the restaurant industry and in franchising with the BRIX brands.

THE ADVANTAGES OF MULTI-UNIT FRANCHISING

Multi-unit franchising is a franchise agreement that allows an owner to operate more than one franchise brand in a specified region. Multi-unit contracts provide certain advantages to business owners that can be beneficial to growth and operations. Some of those advantages include potentially reduced costs from buying in bulk, stronger market presence, operational efficiency, revenue diversification, and stronger relationships with the franchisor.

Owning multiple units allows franchisees to leverage bulk purchasing and centralized management, potentially reducing costs and increasing growth. Multiple units also help enhance brand visibility and market dominance in areas where the agreement is signed. The increase in brand visibility and awareness will help attract customers and deter competition. There is also experience gained from operating one unit that can be applied to more as owners increase their portfolio. Owning multiple units aids efficiency, leading to streamlined operations and better performance across all locations. Multiple units can balance out fluctuations in revenue, as underperformance in one unit is often offset by better performance in another. Additional units can also mean more time spent with BRIX leadership as they help bring the franchisee’s businesses to life. Multi-unit franchisees often receive additional support and favorable terms from franchisors as their investment in the business is recognized as a greater commitment to the brand.

THE ADVANTAGES OF MULTI-BRAND FRANCHISING

Multi-brand franchising is a type of business ownership where franchisees diversify their business portfolio with a variety of differing brands. There are many business types to franchise, so what an owner chooses is entirely up to them. Entrepreneurs diversify their portfolio of brands for a variety of reasons—to access different market segments, engage in various sources of revenue, take advantage of cross-promotion opportunities, mitigate risk, enhance learning and more.

Multi-brand franchising opens franchisees up to market diversification. By operating different brands, franchisees can target various customer segments and reduce dependence on a single brand or market. They’re able to expand their business capabilities, tap into different market trends, and better understand consumer demands. Multi-brand owners can create synergistic marketing strategies that benefit all their brands and can enhance overall sales and brand loyalty. 

Diversifying one’s business portfolio with multiple brands can offset some of the risks that come with changes in the market as well. Individual brands may perform differently based on market conditions. A downturn in one brand can be mitigated by stability or growth in another. Business ownership is a learning experience, and changes to the market and business happen all the time. Managing multiple brands can provide insights into different business models and operational strategies, fostering innovation and business acumen.

THE CHALLENGES OF BEING A MUMBO

Although multi-unit, multi-brand franchising has its advantages and is attractive to many, it’s not for every business owner. As with any business, running multiple businesses is a lot of work because every unit has its individual needs. The choice to add units or diversify one’s business portfolio with different brands comes with its challenges. Managing multiple units or brands requires sophisticated organizational skills, an understanding of robust systems, and efficient processes to handle increased complexity. This type of owner should have extensive experience managing a business, leading a team, and making informed decisions. They should anticipate challenges and capitalize on opportunities to drive organizational growth.

Business ownership is not a cheap investment. The allocation of, and access to, resources should be carefully considered. Potential franchisees must ensure adequate resources (financial, human, operational) are available and be able to effectively distribute them across all units and brands. They must also factor in inflation, labor shortages, and quality control. Ensuring consistency across all units and brands can become a challenge. Maintaining consistent quality and customer experiences across all units and brands is crucial but can be difficult as the business expands. Owners should have a strong business plan and team behind them to ensure uniformity and minimize issues. 

Depending on the brands, multi-brand operators may face conflicts between brands, especially if they compete for the same customer base. Owners should be strategic about the brands they select and how they might affect each other. Each brand likely has different needs, so adhering to diverse regulatory requirements for different brands and locations can be intricate and demanding. Owners should be detail-oriented and have a clear understanding of the requirements and obligations the businesses need.

 WHY CONSIDER MULTI-UNIT AND MULTI-BRAND FRANCHISING?

The franchise model has many benefits and provides resources and tools to those looking to go into business ownership without all the additional work on the backend. Franchisees open and operate their businesses with the support of a franchisor throughout the process. Franchisors provide tools and resources to aid in the growth of the business, and often the owners with multiple units and brands tend to find more favorable experiences.

Multi-unit, multi-brand operators (MUMBO) are generally experienced, have a wealth of knowledge, and a proven track record to grow and scale a business. This typically means less risk for the company investing in the new franchisee. Their experience owning a business also opens them up to faster expansion and the ability to drive accelerated growth and market penetration of the new brands. MUMBO’s business knowledge generally means they require less from franchisors to operate their businesses. While the company provides support to all of its franchisees, these owners usually provide for themselves, optimizing resource allocation. These types of owners/operators are attractive to franchisors. They are more likely to ensure consistent growth and uphold brand standards across multiple locations, making them ideal candidates for stable growth and expansion. Although MUMBOs are especially intriguing to franchisors, being a multi-unit and/or multi-brand owner has its advantages for entrepreneurs and investors to consider. 

MUMBO FRANCHISING WITH THE BRIX BRANDS IN THE RESTAURANT INDUSTRY

Franchisors play a crucial role in the onboarding and ongoing support of franchisees as they become owners of the brands. BRIX prides itself on the comprehensive support provided to franchisees. Their focus on creating and supplying extensive resources and tools for training, marketing, and operations helps facilitate smoother multi-unit and multi-brand management for owners. BRIX has a strong brand portfolio with a track record of turning small or struggling brands into promising industry leaders. BRIX brands offer a diverse portfolio, allowing franchisees to tap into various market segments and customer bases that are right for them and their market.

As consumer habits evolve, so does BRIX. Known for its innovative approach and commitment to growth, BRIX provides franchisees the opportunity to be part of a dynamic network with access to cutting-edge technology and other tools to fuel continued growth in their communities.

Restaurants, full service and quick service, are some of the most popular franchise brands to own. Because food is essential to life, it is a business that people will always use and enjoy. The BRIX portfolio comprises various quick-service and full-service restaurants, like Friendly’s, where entrepreneurs can invest and diversify their portfolios.

QSR franchises are expected to grow 2.5 percent this year; full-service restaurants are also experiencing substantial growth. Generally, the industry segment has strong and consistent demand, offering steady growth potential. Friendly’s, for example, has been a franchise brand for more than 90 years and continues to grow and serve new communities.

Within the food industry, there are also opportunities for cross-brand synergies. Food service brands can benefit from shared supply chains, marketing strategies, and operational practices. Due to food service restaurants having such high importance to consumers, brand loyalty is an added value. The more a customer resonates with a brand, the greater the potential for repeat business and growth. These brands also become a huge part of the local community. Owning multiple units or brands in the food service sector can establish a strong community presence, fostering customer trust and loyalty.

EXPANDING YOUR BUSINESS OPTIONS 

Multi-unit and multi-brand franchising offers significant advantages, such as economies of scale, market diversification, and operational efficiency. However, they also come with challenges like complex management and quality control. By carefully considering capital requirements, operational capacity, and market conditions, franchise owners and investors can successfully navigate these challenges and achieve substantial business growth.

If you’re interested in learning more about franchising with Friendly’s, visit our franchise website here.

For more information about BRIX Holdings and the other BRIX brands, visit our website here.

Contributions by Luke B. Mandola, Jr., VP of Franchise Sales and Development, seasoned restaurant executive.

For additional franchise support, contact Luke B. Mandola, Jr. at [email protected]