What is Single-Unit Ownership?
The simplest and most common type of franchise is a single-unit franchisee. Many franchises and franchisees start this way in order to build their futures one brick at a time. A single-unit franchise is an agreement in which the franchisor grants the franchisee the rights to open and operate one franchise unit. One unit to one franchisee commonly represents owner-operated models. However, many times after the franchisee opened their single unit and is prospering, it may become negotiated with the franchisor for them to have the possibility of opening other units over time.
Advantages of Single-Unit Ownership
Advantages of single-unit ownership include:
- Lower entry costs and ongoing ownership expenses for franchisee
- Lower risk for the franchisor and the franchisee
- Higher success rate
- Greater control over operations and customer service (as opposed to the same franchisee managing multiple locations)
- Allows franchisee to concentrate efforts on a single location
Disadvantages of Single-Unit Ownership
Disadvantages of single-unit ownership include:
- Heightened responsibility on franchisee for success
- Limited growth potential
While the list of disadvantages may be small, the limited growth potential is a big one for franchisees looking to scale their profits and reach. From a franchisor’s perspective, it’s also not the most efficient way to scale.
