Adding locations is supposed to buy leverage. The data says otherwise. In the International Franchise Association's 2024 Annual Franchisee Survey of more than 1,400 operators, as reported by Entrepreneur, 79% of franchisees with one to five locations reported lower earnings from cost increases. Among operators running twenty or more units, that figure rose to 90%. The pressure often gets worse with scale, not better.

This guide covers what the brand dictates versus what a multi-unit franchise operator actually chooses, where open-category spend fragments across locations in any vertical, and how to get purchasing visibility without an ERP.

Key takeaways

• Cost pressure may worsen as unit count grows, and hits hardest at twenty-plus locations.
• The franchisor locks whatever is tied to the product and the brand. Everything operational is the operator's to choose, which makes it the easiest place to add controls.
• Open-category spend fragments the same way in every vertical, whether the locations are gyms, medspas, hotels, stores, or restaurants. Only the names change.
• Reconciling after the invoice isn't control. Moving approval before the order is, and it doesn't require an ERP.
• Units can't be benchmarked against each other until every entity codes the same expense the same way.

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Why scale doesn't automatically buy leverage

Every location added brings its own suppliers, approval habits, and way of coding an invoice. Volume only becomes leverage when multi-location purchasing controls point those locations at the same vendors and the same prices. Without that, a twenty-unit operator isn't one big buyer. It's twenty small ones wearing the same logo.

The segment is large and getting larger. FRANdata's 2018 counts put 43,212 multi-unit operators in control of 223,213 franchised units. FRANdata's 2026 outlook reports 19.3% of franchisees now controlling 58.8% of all franchised locations. That means more locations sit inside operators large enough for scattered buying to cost real money, and small enough that nobody has been given the job of standardizing it. Growth alone won't lower costs. Buying the same things the same way at every location will.

What the brand controls and what operators choose

The line between what a brand controls and what the operators can choose for their location is drawn in a document every franchisee already has. Item 8 of the Franchise Disclosure Document discloses which goods must come from approved suppliers, whether the franchisor issues specifications, and whether it earns revenue, rebates, or markups on those purchases, codified at 16 CFR 436.5(h).

Most systems include a formal process to request an alternative supplier for a spec'd item. In practice, it often stalls because the burden of proof sits with the franchisee. Read Item 8 as two lists: what the brand decides, and what the operator decides.

The locked side is negotiated for the franchisee, and the operator can't change it. The open side is where the visibility disappears, and it's where savings reach the operator directly rather than through a dividend cycle.

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What the open categories look like across verticals

The ownership model creates the same problem in every industry. What changes is which categories are locked and where the open spend piles up.

Two patterns hold across all eight verticals. The open column fills with low-price consumables reordered constantly, or the spend that often doesn't trigger a review. And the more locations an operator runs, the more vendors that column collects.

How to control purchasing across locations without an ERP

The problem is a split between who pays and who buys. Above-store shared services handle accounts payable, payroll, and HR, so the bills land at head office. The ordering stays at each location, where a general manager buys from whichever vendor is convenient, usually on a corporate credit card. Head office then pays invoices from vendors it never approved, at prices nobody negotiated, coded three different ways, and by the time a controller sees them at close, every decision that mattered has been made.

None of the fixes require an enterprise system. Phased beats comprehensive: see the spend, standardize what gets bought, then set approvals and budgets on top, the same order established spend management best practices follow. Six controls do the work.

1. Treat the open categories as one budget, not twelve local ones

The first step is a number: how many different vendors are the locations using across the open categories? Use the split above to draw the line, then count. That doesn't have to mean a manual invoice audit, since card statements and an AP export by vendor give a workable first count in an afternoon. These are ordinary operating supplies, the kind a manager buys from Amazon or Staples on a Tuesday afternoon, and they rarely cross the threshold that triggers a review, which is how full spend visibility slips away one purchase at a time.

In practice: a twelve-unit fitness operator counts 61 distinct vendors across janitorial, restroom, and MRO, and finds four locations buying the same disinfectant at three different prices.

2. Build one shared catalog for the open categories

Build one list per open category, using the vendors and rates the operator already negotiated, and have every location order from it. Nobody has to remember the policy, because the only items on the list are the approved ones. Leave the locked categories out, since the franchisor negotiated those already. Any vendor that ships physical operating supplies and invoices in US dollars can go on the list. That's broad enough to cover a gym's chemical supplier and a hotel's HVAC parts distributor. The operator's suppliers stay the operator's suppliers.

In practice: every location, medspa or QSR, opens the same list of approved chemicals, paper, and PPE at the same price, instead of each location solving it separately.

3. Move approval before the order rather than after the invoice

What a controller does at close is reporting. The money is spent, the vendor chosen, the price set, and the only decision left is which account to put it in. Pre-invoice spend control moves that decision to the moment the order is placed, while the vendor and the price are still open. The franchise-specific difficulty is distance: budget context sits above the store, urgency is standing in the building, and the rule has to serve both without a phone call.

In practice: a general manager reorders cleaning supplies at the negotiated price without submitting anything, because the list and the limit already decided the question.

4. Route by spend threshold to eliminate approval bottlenecks

A threshold matrix decides who signs off at what amount, so routine purchases clear at the unit and only exceptions climb. Without one, either everything reaches the owner or nothing does.

Treat these figures as an example, not a recommendation, and set the real breakpoints against actual spend distribution. If 90% of a location's orders fall under $300, a $500 bottom tier clears everything and the matrix does not work.

In practice: for a car wash operator with a $250 site limit, a $180 towel and microfiber restock clears on the spot, while a $6,000 pump repair requires finance review and director sign-off.

5. Standardize the chart of accounts across entities

Multi-unit franchisees often hold each location or region in a separate legal entity, so consolidated reporting works best when those entities share one account structure. Standardizing it looks like three concrete things: one agreed account for each expense type, a location and entity tag on every purchase, and one owner of the list so new accounts get added in a single place rather than location by location.

The structure holds when the coding happens at the point of purchase. GL code automation attaches the account and the location the moment an order is placed, so consolidation becomes a report to run rather than a reconciliation to perform. Operators running two brands add a second layer, since each system brings its own approved vendors, and a shared account structure is what keeps the two comparable.

In practice: three locations that each booked the same facility service to a different account now post it to one, and the operator can add the three together and rank them in the same month.

6. Benchmark unit against unit every month

Comparing one location against another is the most useful thing a franchisee can do with this data, and the first five controls exist to make it possible. Divide open-category spend by transaction count or square footage, then rank the locations. The ones at the top of the list are the ones to ask about, and the answer is usually one of three things: the location is buying off the list, it's paying a different price for the same item, or its coding has drifted since standardization. Each has an obvious fix.

In practice: a fifteen-unit operator sees one location running 12% higher than its peers, which was invisible while the numbers were incomparable.

Ebook

The Procurement Strategy Playbook for Modern Businesses

Want to know more about strategic buying? Read our Procurement Strategy Playbook for even more valuable insights.

Download the guide

The importance of reducing costs

Multi-unit franchising runs on thin margins in every vertical, which is what makes small purchasing gains matter. Restaurants publish the clearest figures: quick-service and fast-casual operators run net margins of roughly 6% to 9%, full-service closer to 3% to 5%, with prime cost consuming 55% to 65% of every sales dollar.

At a 6% to 9% net margin, cutting controllable supply cost by one percentage point of sales adds roughly 11% to 17% to a quick-service location's net profit, and most of that comes from categories the brand never negotiated. Full-service operators run thinner, so the same point is worth more to them. Other verticals carry different cost structures, but the arithmetic holds: the thinner the margin, the more a point of supply cost is worth. Multiply by unit count.

How Order.co helps multi-unit franchisees

The operators who got control worked on the side of the ledger the brand never touched. They counted the vendors sitting in the open categories, pointed every location at the same list and the same rates, moved approval ahead of the order, and standardized coding so the numbers could finally be compared. Order.co gives above-store finance teams and unit managers a single platform to buy open-category supplies fast while keeping spend inside pre-set boundaries. Here's how the platform maps to each control above:

• Custom catalogs with pre-approved products and pricing. Build location- or role-specific catalogs that list only the janitorial, restroom, office, MRO, and safety items each location is cleared to buy, at rates the operator already negotiated. Unit managers shop from a single catalog instead of searching the open web, so every purchase is compliant by default.
• Spend limits, budgets, and approval workflows. Set per-buyer, per-location, or per-category spending ceilings that clear routine purchases instantly. Only exceptions route above the store for review, which keeps locations moving while finance holds the line on policy.
• Automated GL coding and cost-center tagging. Every purchase is coded to the correct general ledger account and legal entity at the moment it's placed, not reconstructed weeks later. Line-item-level tagging feeds clean data straight into the accounting system and speeds month-end close.
• AI-powered strategic sourcing. Order.co's sourcing AI scans the vendor network to find better pricing on the products locations already buy, delivering an average of 5% savings on purchases without requiring a manual comparison at each site.
• Consolidated billing across locations and entities. Order.co pays the vendors and bills the operator back on one consolidated invoice, which can arrive as a single document or split per location, so above-store AP handles one bill instead of hundreds.
• Multi-location and multi-entity support. Every location buys from shared catalogs while finance sees consolidated, real-time spend data broken down by location, category, and vendor. Location-level budgets prevent overspending at any single site without slowing purchasing at the others.
• ERP and accounting integrations. Native connections to NetSuite, QuickBooks, Sage Intacct, Workday, and more automatically push GL-coded spend data into the financial system, removing duplicate manual entry between purchasing, AP, and accounting.

Order.co covers the operating supplies on the open side of the ledger, while the locked categories stay with the franchisor's program. Want to see how these controls work across a portfolio of locations? Schedule a demo.

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