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Multi-unit, multi-brand operator (MUMBO) franchising refers to a specific franchising business model. A MUMBO franchisee owns and operates multiple franchise units or locations under more than one franchised brand. Instead of associating with a single franchise concept, they invest in and manage multiple units across various brands. This article will further discuss the MUMBO franchising concept and several factors you should consider before you adopt this business model.
What is MUMBO Franchising?
MUMBO franchisees own more than one unit of a particular franchise brand. Owning multiple units allows them to:
- benefit from economies of scale; and
- share resources and management expertise across their units.
Multi-brand operations also allow MUMBO franchisees to diversify their portfolio, spreading risk and creating growth opportunities in different market segments. They might cater to distinct customer demographics or enter multiple industries across their brands. Such variety reduces the impact of market fluctuations compared to owning a single brand or unit.
Is MUMBO Franchising Right For You?
Deciding whether to become a multi-unit, multi-brand operator is a significant business decision that involves much consideration and strategic planning. The following are several factors a franchisee should consider before pursuing the MUMBO strategy.
1. Your Level of Experience
MUMBO franchisees often own franchise units across various brands within a specific market or industry. If you are considering investing in multiple franchised brands, franchisors typically expect you to have previous franchising and industry experience.
Successful MUMBO franchisees typically possess solid operational and managerial skills. They must effectively oversee and coordinate multiple units, each potentially offering different products or services.
Franchising newcomers tend to start with a single unit. Thus, you do not need to jump into MUMBO franchising as a new franchisee. You can build your portfolio from a single unit in a single brand as your experience and industry expertise develop.
2. Franchise Opportunity Availability
Multi-brand franchisees may select similar opportunities. They might choose complementary brands so their expertise is more easily transferable. Assess the compatibility of the different franchise brands and look for similarities, including:
- target demographics;
- market overlaps; and
- operational parallels.
Conduct thorough market research to understand the demand and competition for each new unit or location and ensure a viable market for each potential franchise.
An important legal consideration is whether your franchise agreement allows you to open similar businesses. Franchisors often include non-compete clauses in the agreement. You should check your existing franchise agreements to review if you can open units under different brands. There may be industry-specific or geographic restrictions. It is worth seeking legal advice if you are contemplating multi-brand franchising to mitigate risk.
If you are a prospective franchisee considering developing a MUMBO portfolio, carefully review all potential franchise agreements. Additionally, ask a franchising lawyer to check the terms to ensure you can reach this goal later in your career.
3. Investment Capability
Assess your financial resources. Owning and operating several units across multiple brands requires significant investment. All franchisees must effectively manage their resources to ensure each unit’s success. You must factor financial considerations into your strategic planning. Building a portfolio across different brands will mean paying fees and royalties to multiple franchisors.
Remember that you must be capable of opening the new units and investing sufficient working capital to develop each one.
Discover the key legal and commercial issues to consider when buying a franchise.
4. Franchisor Relationships
Building positive relationships with multiple franchisors is crucial for MUMBO franchisees. Each franchisor may have different expectations, support structures and business models. Good communication abilities are essential for success.
Also, understand the training and support each franchisor will provide. Determine if the support systems align with your needs, especially when managing diverse brands. Consider aspects such as:
- training programs;
- marketing support; and
- ongoing assistance.
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Key Takeaways
Overall, multi-unit, multi-brand franchising can offer opportunities for business growth and portfolio diversification. But, this model requires careful planning, management, and financial capabilities. Successful MUMBOs often select complementary brands and understand the unique characteristics of each business and market demographic. Experienced franchisees can leverage their skills to create robust and profitable portfolios.
If you are considering becoming a MUMBO franchisee, there are several factors you should think about before you commit:
- your level of franchising and industry experience;
- the availability of opportunities and whether they align with your goals and expertise;
- whether any non-compete clauses prevent you from opening units under other brands;
- whether you can invest the required financial resources; and
- the strength of your relationships with franchisors.
Franchisees should thoroughly research, plan, and consider the unique challenges associated with MUMBO franchising and any new franchise opportunities. Seeking legal advice and guidance from experienced multi-brand operators can provide valuable insights into this model’s suitability.
If you are a prospective franchisee who requires legal advice about multi-unit, multi-brand franchising, our experienced franchise lawyers can assist as part of our LegalVision membership. For a low monthly fee, you will have unlimited access to lawyers to answer your questions and draft and review your documents. Call us today on 0808 196 8584 or visit our membership page.
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