Seniors Helping Seniors currently has 10 master franchise agreements in the U.S. Its plan for 2010 is to bring on two more master licenses, bringing the total up to 12, which will cover a little more than half of the U.S. Yocom eventually plans to bring out additional offerings to his senior market, something that he thinks will be easier to do with master franchises than with an organization of single-unit owners. "By having the master license organization and structure in place, we are going to be positioned to introduce other products and services very efficiently, effectively, and economically."
Tutor Doctor of Toronto, Ont., takes a different tack. The educational franchise chain prefers that franchisees become actively involved in their communities, which can limit opportunities for multi-unit operations. However, says President Frank Milner, about 30 percent of Tutor Doctor franchisees do have more than one territory. "We're cautious about it, meaning we want to make sure we have the right franchisee," he explains.
Most multi-territory operators in the Tutor Doctor chain start with a single territory and expand. The company does, however, sometimes grant more than one territory to the same franchisee from the start. So far, no franchisee has had more than two territories. The policy doesn't appear to be appreciably limiting Tutor Doctor's growth. From 120 franchised territories now, Milner expects to expand to 250 or more by 2011.
Some franchise organizations choose not to favor multi-or single unit operators. 1-800-GOT-JUNK?, a franchiser of clutter-removal services based in Vancouver, B.C., tries to capitalize on the appeal of both options. "It is a franchise that offers flexibility," says Jaime Ayres, franchise development manager. "If you wanted to use it as an investment and have somebody oversee it, you have the option. If you want to be an owner-operator, it gives them the flexibility to do that as well."
1-800-GOT-JUNK? bases much of its appeal to consumers on bringing professionalism to the junk-hauling businesses. It also stresses its environmentally friendly approach, setting a standard of recycling a sizeable majority of the discards it removes from homes and businesses.
The ideal franchisee for 1-800-GOT-JUNK? does not need hauling or environmental expertise, however. Ayres says the company first looks for sales and marketing skills: Owners focus on getting customers and do not do any junk removal themselves.
Potential customers are segmented into geographic territories of 62,500 populations. This means a multi-unit operator can operate several territories, usually in a single major metropolitan area, or he/she can operate a region consisting of multiple markets each with territories. "The service area is really depending on the population," Ayres says.
Today, 1-800-GOT-JUNK? has blanketed nearly all of the major metropolitan areas in the U.S. and Canada with approximately 200 franchisees. Now the company is focusing on international expansion. It hopes to add operations in Adelaide, Canberra, and Perth to its existing Australian franchisees. "After 2010 we hopefully will be recruiting in Auckland," Ayres says. "For 2011 we're focusing on the United Kingdom."
Another big initiative for 2010 is the development of a new model suitable for smaller metropolitan areas. "That would be hands-on, owner-operator, involved day to day," Ayres says. These owners even may be going out with the trucks, picking up junk themselves, but the lower-cost approach would open up a number of new territories in North America and elsewhere.
These different approaches to franchising open up the business to a number of different types of entrepreneurs. And, according to Francine Lafontaine, a professor who has taught the economics of franchising at the University of Michigan's Ross School of Business, the relative appeal of each model is so evenly balanced -- at least in the perception of the industry -- that it's not clear whether multi-unit or single-unit franchising will establish dominance and whether one will become more popular than the other.
"My first answer is we don't really know," she says about trends toward multi-or single-unit models. The reason for Lafontaine's lack of certainty is the lack of objective industry-wide data. Government record-keepers don't track much information on franchising, she says, so what is available tends to come from industry groups that may have agendas.
But when you look back, some trends do become clear. "My other answer is that I do know in earlier times in the history of franchising there was a lot of multi-unit ownership and a lot of big territories," she says. In more recent times, there has been a shift toward having more owner-operators. Given that shift, Lafontaine thinks that things might have gone back toward multi-unit operations. "Some companies still continue to think about single units and sequentially growing franchises," she says. "But there are a number of companies that are trying to grow through big territories as a way of growing fast."
Undoubtedly, granting master licenses and area development multi-unit franchises can help a young and growth-minded franchising organization harness the power of others to assist in driving expansion. However, franchising consultant Schroeter says that another force -- consolidation and the growth of ever-larger business empires -- may be driving increasing emphasis on multiunit franchising.
Having fewer owners reduces the complexity of running a franchising system, she notes, and allows franchisers to be more selective about franchisees, and pick those who are more committed and capable of sticking to the format and system. As franchise systems get bigger, she sees franchisees getting bigger, too, especially in the number of units each owner has. "The future of franchising will focus on consolidation," she says, "and move more aggressively toward multiple-unit ownership."
