Franchising has long been celebrated as one of the most proven pathways to entrepreneurship. For decades, the franchise model balanced opportunity, scalability, and shared success. But today, a growing number of franchisees, franchisors, suppliers, lenders, and industry observers are asking a difficult question: Does modern franchising still work the way it was intended to work? Or has the financial and operational reality of the franchise relationship shifted so dramatically that the model itself needs updating, transforming, or even rethinking entirely?
Margins in many segments are tighter than ever. Buildout costs have climbed from the $250,000–$350,000 range of a decade ago to $500,000–$750,000 or more. Labor costs have risen significantly. Commodities fluctuate at levels that were once considered outliers but now feel permanent. Royalties and required spend commitments often remain fixed regardless of market pressures. And the time to reach ROI, once measured in two to four years for many concepts, now too often stretches into five, six, or even eight years, if it arrives at all. When an owner invests half a million dollars only to generate income that resembles job-level wages, many cannot help but ask whether they purchased a business or simply bought themselves a job. And when the day comes to exit and the resale value barely exceeds depreciated assets plus $25,000 to $30,000, the question becomes even more uncomfortable.
This is not an indictment of franchising. It is a call to confront reality. The franchise model remains powerful when the unit economics support real wealth creation. But when they do not, the system becomes strained. Trust erodes. Misalignment grows. And the relationship that should be mutually beneficial becomes adversarial, defensive, and transactional. The franchise community, franchisors, franchisees, advisors, and suppliers, must decide whether to accept the status quo or rethink the structure in ways that create healthier, more resilient outcomes for everyone involved.
What should be considered? Perhaps the future of franchising requires more than incremental adjustments. Perhaps it requires a reimagining of how risk and reward are shared. Maybe royalties evolve from fixed percentages to performance-based, margin-aware models. Maybe franchisors participate more meaningfully in local profitability rather than simply top-line revenue. Maybe franchisees are offered hybrid structures that lower upfront capital burdens in exchange for shared equity, giving both sides deeper alignment and a shared stake in long-term brand value. Maybe multi-unit pathways become more accessible not through aggressive financing, but through structured internal growth programs that reward operators who consistently perform. Maybe supplier and franchisor rebates, often a sore point for franchisees, are restructured so value flows more transparently and equitably throughout the system. And maybe franchise development itself becomes less about awarding units and more about cultivating entrepreneurs who are prepared for the realities of running high-cost, thin-margin businesses in a competitive and unforgiving market.
There is also space for entirely non-traditional concepts that blend franchising, licensing, partnership, and revenue-sharing arrangements. Models that reduce upfront capital requirements through modular builds, micro-footprints, shared kitchens, or neighborhood partnerships. Models that use technology to reduce labor dependency. Models that allow experienced operators to earn their way into ownership rather than buy their way into it. Models that align franchisor success not simply with brand expansion but with the financial stability of its franchisees.
These ideas are not meant as prescriptive answers. They are starting points. And perhaps the most important question the franchise community must ask is not “What needs to be fixed?” but “What are we willing to change?” Because the market is already changing, consumer behavior is already changing, and the economics of operating a small business—franchised or otherwise—are already changing. The question is whether franchising will evolve proactively or react when forced.
Franchising remains one of the most powerful economic engines in America and around the world. But engines require maintenance. Systems require updates. Relationships require honesty. And business models, even successful ones, eventually require reinvention. The future of franchising will belong to the brands, advisors, franchisees, and leaders who are willing to rethink not just the operational pieces, but the philosophical ones: fairness, alignment, opportunity, accessibility, sustainability, and shared success.
If the franchise community wants a stronger tomorrow, now is the moment for candid conversation. What do you believe needs to change? How do you see the future of franchise relationships? What innovations, structures, or bold ideas would you like to see tested? Whether you are a franchisor, franchisee, supplier, lender, consultant, or industry observer, your perspective matters. Add your voice, your experience, and your vision. This is a dialogue the industry needs—and one only the community itself can lead.
About the Author
Paul Segreto brings over forty years of real-world experience in franchising, restaurants, and small business growth. Recognized as one of the Top 100 Global Franchise and Small Business Influencers, Paul is the driving voice behind Acceler8Success Café, a daily content platform that inspires and informs thousands of entrepreneurs nationwide. A passionate advocate for ethical leadership and sustainable growth, Paul has dedicated his career to helping founders, franchise executives, and entrepreneurial families achieve clarity, balance, and lasting success through purpose-driven action.
About Acceler8Success America
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With deep expertise in entrepreneurship, franchising, restaurants, and small business development, Acceler8Success America bridges experience and innovation, supporting current and aspiring entrepreneurs as they build sustainable businesses and lasting legacies across America.
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