Multi-unit franchising gains momentum, faces operational hurdles
Franchisees diversify portfolios, but face challenges in brand consistency.
The franchise industry is witnessing a shift towards multi-unit ownership, according to Jaffrey Ali, Chief Product Officer at FranConnect. This trend is fueled not only by brands seeking expansion but also by franchisees broadening their portfolios across multiple brands and concepts.
"We believe this is going to continue," Ali noted, highlighting the industry's move towards experienced operators who aim to diversify their investments and leverage their operational expertise.
However, expanding into multiple locations comes with its own set of challenges. Ali pointed out three key issues faced by franchise owners: maintaining brand consistency, ensuring operational efficiency, and managing communication between franchisors and franchisees.
"As you expand locations, especially through multi-unit franchising, the communication between franchisors and franchisees becomes really critical and fundamental to the success of the brand," he emphasised. With networks growing, it becomes increasingly difficult to maintain visibility into individual unit performance and compliance.
Adding to these operational challenges, evolving regulations are also impacting the franchise landscape. "Increasing regulations and stricter enforcement of existing regulations are placing a heavier burden on franchise owners and brands to ensure compliance across various areas, including labour laws, food safety, and financial reporting," Ali said.
In response, FranConnect has enhanced its compliance management tools, which assist franchisors and franchisees in staying ahead of regulatory requirements. The platform now includes features for tracking audits, managing documentation, and generating compliance reports, thereby reducing the administrative burden on franchise owners and minimising the risk of non-compliance.
Ali cited that increased use of data analytics for informed decision-making, the adoption of mobile apps for improved operational efficiency, and cloud-based systems are improving collaboration between franchisors and franchisees. "This technology-driven approach is enabling franchises to operate more efficiently, scale more quickly, and adapt to changing market conditions with greater agility," Ali explained.
