Frank Cutchall, CEO of Cutchall Management, owns 43 different restaurants including Sonic Drive-Ins, Famous Dave's Barbecues, Paradise Bakeries and Cafes and a Rock Bottom Gold Medal Tap. He is one of the 100 biggest companies in Omaha Nebraska and employs more than 1,800 full- and part-time workers, according to Entrepreneur magazine.
"In the past, franchisors did just look for single-unit operators or concept developers," Cutchall told the magazine. "Now they are beginning to realize that franchise groups can be good partners that understand the business. Franchisors are drawn to me because I've been running franchises successfully for 24 years."
Multi-unit franchising has become so prevalent during the last two decades that it has prompted the development of a magazine and two conferences dedicated to the industry, including one in the International Franchise Association. But why has multi-unit franchising become so popular with both investors and franchisors?
To franchisors, a multi-unit franchisee allows companies to accelerate growth while keeping the number of individuals they must work with to a minimum. These franchisees are already experienced in opening stores and training staff and have a clear track record of success. On top of that, multi-unit franchisees benefit from "economies of scale," the magazine writes.
"There are a lot of efficiencies. From the office aspect, you can use the same accounting staff, the same marketing people, and there's some efficiency in cross-marketing brands," said Cutchall.
However, franchisees should be warned that once they surpass 10 or 20 units, their role within the operation is bound to change. Rather than focusing on a single unit and its revenue, owners must turn their attention to how the entire system is performing and increasing profits across the board.
If a franchisee is interested in becoming a multi-unit owner, they should make sure to fully research their intended franchise. Many franchisors, including Teriyaki Experience, McDonald's and Einstein's Bagels, avoid the "mega-sizing" trend, limiting franchisees to 10 or fewer operations.
"The best results from a consumer standpoint come from franchisees who are there and passionate about what it is they're doing," said Fiorenzo Bresolin, an area developer for Teriyaki Experience. "I used to take my daughters to McDonald's, and I could always tell the difference from one run by someone who owns a single unit versus someone who owned 10 or 15. Of course, there are always exceptions."
The 2011 Multi-Unit Franchising Conference has announced that it will be meeting April 27-29 in Las Vegas. Last year's keynote speaker was legendary football coach Mike Ditka, who discussed the multi-unit franchisee's playbook for success.
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