Tag: franchise success

The Economics of Franchising: Why Franchisor and Franchisee Plans Must Be One

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Franchising, at its core, is a shared economic relationship. Yet far too often, franchisors approach business planning as if the franchisor and franchisee exist in separate financial universes. The franchisor prepares a corporate business plan focused on growth, infrastructure, and enterprise value, while franchisee economics are relegated to disclosure documents, spreadsheets, or conversations that occur later in the development process. This fragmented approach creates blind spots that can undermine even the strongest brands. A truly comprehensive franchise business plan must integrate both the franchisor’s business model and the franchisee’s operating reality into a single, cohesive framework.

The most effective way to understand this integration is to recognize that the franchisor’s financial performance and the franchisee’s financial performance are not parallel stories. They are chapters in the same book. The franchisor’s audited financial statements demonstrate fiscal responsibility, operational discipline, and sustainability at the corporate level. The Item 19 Financial Performance Representation, when properly constructed, reflects the real-world economics of the franchisee experience. When these two are developed independently, inconsistencies emerge. When they are developed together, they reinforce one another and tell a unified story about how the brand actually works.

An integrated business plan forces franchisors to confront the fundamental question at the heart of franchising: how does every participant in the system win over time. It requires modeling not just how the franchisor generates revenue, but how franchisees generate sufficient profitability to justify their investment, reinvest in their businesses, and remain committed brand ambassadors. It requires understanding how royalties, marketing fund contributions, supply chain requirements, technology fees, and other system costs affect unit-level performance, especially during the critical early years of operation when cash flow is most fragile.

Too many franchise systems are built on optimistic assumptions that hold up on paper but fail under operational pressure. A comprehensive plan replaces assumptions with discipline. It evaluates startup costs realistically, not aspirationally. It accounts for working capital needs, labor volatility, seasonality, local marketing effectiveness, and the time it takes for a unit to reach operational maturity. At the same time, it examines whether the franchisor’s revenue model can truly support the level of training, field support, marketing leadership, compliance oversight, and innovation the brand promises. When these elements are modeled together, weaknesses surface early, when they can still be corrected.

This level of integration has a direct impact on strategic decision-making. Growth initiatives are no longer driven solely by top-line franchisor revenue or unit count milestones. They are tested against their impact on franchisee unit economics and system-wide sustainability. Decisions about new technology platforms, menu expansions, required vendors, or marketing programs are evaluated through a broader lens that considers both cost and value creation across the system. This discipline protects franchisee profitability while strengthening the franchisor’s long-term credibility.

An integrated business plan also changes the dynamic of franchise development. Sophisticated franchise candidates increasingly expect transparency and alignment. They want to understand how the franchisor makes money, how franchisees make money, and whether those incentives are aligned or in conflict. When a franchisor can demonstrate that its corporate financial success is directly tied to franchisee performance, it elevates the conversation from sales to partnership. This attracts stronger operators, reduces churn, and leads to healthier multi-unit growth driven by existing franchisees rather than constant replacement of underperforming locations.

From a leadership perspective, this approach creates internal clarity. Management teams gain a more accurate understanding of how fast the system can grow without compromising support quality. They can better anticipate staffing needs, capital requirements, and operational bottlenecks. The business plan becomes a living tool rather than a static document, guiding decisions across development, operations, marketing, and finance. This is especially critical as brands evolve from founder-led organizations into more complex enterprises with multiple layers of leadership and external stakeholders.

Equally important is the cultural impact of integrated planning. When franchisors demonstrate that franchisee economics are not an afterthought but a core pillar of the brand’s strategy, it sets expectations throughout the organization. Field teams, support staff, and executives operate with a shared understanding that franchisee success is not just desirable but essential. This mindset influences everything from how policies are written to how conflicts are resolved and how innovation is introduced. It fosters trust, and trust is one of the most powerful accelerators of system-wide performance.

A comprehensive business plan that integrates franchisor and franchisee realities also strengthens the brand’s position with lenders, investors, and professional advisors. It signals maturity and reduces perceived risk. It shows that leadership understands the full economic ecosystem of the brand and is actively managing it. For emerging franchisors, this can be the difference between controlled, sustainable growth and expansion that outpaces the system’s ability to support itself.

Ultimately, franchising is not about selling the right to use a name or system. It is about building a repeatable, scalable model that works in the real world, across diverse markets, and over long periods of time. A franchisor who invests in a fully integrated business plan is not simply preparing for growth. They are designing a brand that respects the capital, effort, and trust franchisees bring to the table. They are aligning incentives, reducing friction, and creating a foundation for shared success.

In a marketplace where franchise candidates are more informed and competition for quality operators is intense, this level of planning is no longer optional. It is a defining characteristic of serious franchise brands. A franchisor’s business plan should not just explain how the company grows. It should demonstrate how the entire system thrives. When the franchisor’s audited financial strength and the franchisee’s operating performance are viewed as parts of a single strategy, the result is not just better planning. It is a stronger, more resilient franchise brand built to last.

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

Acceler8Success America is a comprehensive business advisory and coaching platform dedicated to helping entrepreneurs, small business owners, and franchise professionals achieve The American Dream Accelerated.

Through a combination of strategic consulting, results-focused coaching, and empowering content, Acceler8Success America provides the tools, insights, and guidance needed to start, grow, and scale successfully in today’s fast-paced world.

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.

Learn more at Acceler8SuccessAmerica.com

Planning Is Leadership: An Awakening for Franchisors Entering a New Year

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The arrival of a new year has a way of demanding attention. Calendars reset. Forecasts are refreshed. Decks are rebuilt. Yet for franchisors, the turning of the year should be less about routine planning and more about an awakening. A moment of deliberate pause. A recognition that planning is not an administrative exercise, but a responsibility that shapes livelihoods, investments, and trust across an entire system.

Too often, planning begins with ambition before it begins with truth. Growth targets are set before lessons are absorbed. Initiatives are launched before friction is understood. A more grounded approach starts by asking harder questions. What did we believe a year ago that turned out not to be true? Where did we underestimate the strain on franchisees? Where did we mistake activity for progress? This kind of reflection can feel uncomfortable, but without it, planning becomes performance rather than preparation.

An awakened planning process forces leadership to slow down long enough to listen. Not just to reports and dashboards, but to the lived experience of those inside the system. Operations teams feel the pressure points first. Support teams hear the frustration before it shows up in metrics. Development sees the hesitations of prospects long before deals stall. Finance understands the limits of what can be sustained. When these voices are invited into the planning room, the plan gains depth, not complexity.

Franchisees must be more than an audience for the plan; they must be part of its formation. They are not theoretical operators. They are the ones hiring in tight labor markets, managing rising costs, responding to customer expectations that shift faster than brand standards can be rewritten. Their perspective grounds planning in reality. Inclusion here is not symbolic. It is strategic. A plan shaped with franchisee input is more likely to be executed with discipline, because it reflects conditions as they truly exist, not as leadership wishes them to be.

Awakened planning also expands the definition of stakeholder. Suppliers are not line items. Vendors are not interchangeable. Professional service providers are not merely outsourced functions. These partners operate at the edges of the system, often seeing disruption before it reaches the core. Ignoring their insights narrows vision. Inviting them into the conversation strengthens resilience. When partners understand where the brand is headed, they are better positioned to support, innovate, and adapt alongside it.

Then there is the customer, the most powerful stakeholder and the one most often spoken for rather than listened to. Customers rarely articulate strategy, but their behavior speaks volumes. What they buy, what they ignore, what they complain about, and what they praise all reveal the truth of the brand promise. Planning that fails to confront this reality risks internal alignment while drifting further from the market. An awakened franchisor treats customer insight not as a marketing input, but as a strategic compass.

Benchmarks, when viewed through this lens, become more than numbers. They become signals. Same-store sales, profitability, retention, operational consistency, and brand engagement all tell a story about the health of the system. Setting these benchmarks requires restraint and courage. Inflated targets may inspire briefly, but they corrode credibility over time. Realistic benchmarks, transparently chosen, create momentum because they are believed.

It is also worth acknowledging a quiet truth many leaders carry into the new year. Planning does not always happen on schedule. January arrives, the pace accelerates, and suddenly it feels as though the moment has passed. It has not. It is never too late to plan. In fact, planning in January, even when you feel behind, is often more honest than planning months earlier. Real conditions are visible. Early data is already emerging. The urgency sharpens focus. A delayed plan is far more powerful than no plan at all, and a reset done with clarity can still shape the remaining eleven months in meaningful ways.

Yet even the most thoughtful plan is only a starting point. The year ahead will not unfold as predicted. It never does. Monitoring the plan requires humility and discipline. Regular, structured reviews force leadership to confront what is working and what is not. Quarterly conversations are not about defending decisions made months earlier; they are about recalibrating with clarity. The strongest organizations do not cling to tactics out of pride. They adjust early, decisively, and with intention.

Change, however, must be anchored. Goals represent commitment. Tactics represent movement. When conditions shift, movement may change, but commitment should not. This distinction matters. Franchisees lose confidence when goals feel disposable. They gain confidence when leadership explains how and why the path is evolving while the destination remains steady.

Communication becomes the connective tissue of the entire process. Silence breeds speculation. Overly polished updates breed skepticism. What builds trust is consistent, honest communication about progress, setbacks, and decisions. When franchisors communicate openly, they invite the system into shared accountability. The plan stops belonging to corporate and starts belonging to the brand.

Planning for a new year, at its highest level, is an act of stewardship. It acknowledges that franchising is not just a growth model, but a relationship model. Every decision echoes across operators, partners, employees, and customers. An awakened approach to planning respects that weight. It resists shortcuts. It values inclusion over illusion. It recognizes that certainty is rare, but clarity is attainable.

The challenge now is not to admire the idea of planning, but to confront it. Not to ask whether a plan exists, but whether it is alive. Is your plan grounded in truth or propped up by optimism? Have you invited the voices that will be most affected by it, or only those who will approve it? Do your franchisees understand the plan well enough to defend it, execute it, and believe in it? Are you reviewing it with discipline, or only revisiting it when results disappoint?

If you find yourself already in January and behind, the challenge is sharper still. Pause anyway. Gather the right people. Ask the uncomfortable questions. Build the plan you wish you had started earlier. Then commit to managing it relentlessly for the rest of the year. The cost of delayed planning is real, but the cost of avoiding it is far greater.

The call to action is simple, but not easy. Treat planning as leadership, not logistics. Make it inclusive, measurable, and visible. Revisit it often. Communicate it clearly. Adjust without abandoning it. Because in franchising, the future is rarely decided by the strength of the idea, but by the discipline of the plan and the courage to lead it forward, together.

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

Acceler8Success America is a comprehensive business advisory and coaching platform dedicated to helping entrepreneurs, small business owners, and franchise professionals achieve The American Dream Accelerated.

Through a combination of strategic consulting, results-focused coaching, and empowering content, Acceler8Success America provides the tools, insights, and guidance needed to start, grow, and scale successfully in today’s fast-paced world.

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.

Learn more at Acceler8SuccessAmerica.com

The Franchise ROI Crisis: How Did We Get Here and How Do We Fix It?

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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

Acceler8Success America is a comprehensive business advisory and coaching platform dedicated to helping entrepreneurs, small business owners, and franchise professionals achieve The American Dream Accelerated.

Through a combination of strategic consulting, results-focused coaching, and empowering content, Acceler8Success America provides the tools, insights, and guidance needed to start, grow, and scale successfully in today’s fast-paced world.

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.

Learn more at Acceler8SuccessAmerica.com

8 Key Focus Areas of Successful Franchise Leadership

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From professional athletes to high-tech programmers, every career requires different talents. However, what makes a career as a leader of a franchise system different are skills that do not have to be acquired through rigorous training or years of schooling.

Instead, success in franchise leadership can come to anyone who is determined, dedicated and willing to invest in their personal development—and will pay off tremendously by developing a network of franchisees who respect your leadership traits. Below are key focus areas for individuals to become successful brand executives and great well-respected leaders:

  1. Consistency: As the franchisor, your franchisees will be looking up to you. Being consistent and following through on your word will let them know that they have a leader they can count on.
  2. Planning: Your franchisees are invested in the business, so it’s natural that they will want to know where it is headed and the steps necessary to get there.
  3. Communications: Make certain to share your vision with franchisees as well as with your team in an open, transparent manner to ensure confidence at all levels.
  4. Support: As a franchisor, everyone in the organization is your team member—meaning you have a vital role as a pillar of support and encouragement.
  5. Positivity: Focus on creating a positive space for your franchisees. This will help strengthen your bond and let them know you have their back.
  6. Respect: Every franchisee makes mistakes—it’s just a part of the business. Making sure your franchisees know you still respect them even when they slip up will go a long way. The same will be true for franchisor mistakes, but only if earned through mutual respect.
  7. Face Time: You can’t be expected to visit every franchise location every day. However, the occasional impromptu visit will help you learn more about the day-to-day operations and struggles of each individual location—and let them know you’re invested in solving their problems.
  8. Passion: Franchising means getting to work with talented, passionate colleagues who love what they do. Believe in the brand and believe in your franchisees—your passion will shine through and inspire them, as well.

Strengthen Franchise Relationships by Saying “Thank You”​

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To celebrate Franchisees, I cite the lyrics to the Alabama hit song, “Forty Hour Week”. It’s my way of expressing gratitude for the many, many franchisees and their employees that do their parts every day to make, not only their franchise brands run each and every day, but also our great country. We often take so much for granted when things run smoothly, almost seamlessly. Of course, during COVID there were challenges, but many franchisees did what they had to do, and persevered.

And then, it hit me as I reread the last verse of the song…

There are people in this country who work hard every day. Not for fame or fortune do they strive. But the fruits of their labor are worth more than their pay. And it’s time a few of them were recognized.

Wow, how could I miss something that should be standing out front and center? Is it obvious? Do you see it yet?

Okay, let me make it easier to spot. In the verse above, change “people” to “franchisees” – Ah, there it is! There are franchisees in this country…

At times, there is some discourse (maybe more than we’ll admit) today around the franchise relationship and it really doesn’t need to be the case if the focus is clearly on relationship basics, and that starts with appreciation. Remember, many franchise organizations refer to their system as a family. Isn’t being family enough to expect appreciation?

Think about when a franchisee signs their franchise agreement and remits the franchise fee – they’re quickly told, “thank you” and they’re even recognized in the brand’s newsletter and also in press releases announcing them as a new franchisee. Yes, that’s awesome.

Now, ask yourself, is that the last time franchisees are actually thanked or recognized? Most likely that is often the case. But I’m not just referring to systemwide accolades. I’m talking about someone from the brand’s leadership team picking up the phone for a quick call or planning to visit when in the franchisee’s area. Or at the very least sending a hand-written note just to say, “thank you” and that they’re appreciated for their investment in the brand, for how they represent the brand, and for how they’re committed to protecting the brand.

So, why not jumpstart an improvement in your franchise brand’s culture by starting with “thank you” as the norm, rather than as the exception?

There are franchisees in this country who work hard every day. Not for fame or fortune do they strive. But the fruits of their labor are worth more than their pay. And it’s time a few of them were recognized.

Developing and Cultivating the Right Culture

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Recently, in a discussion about organizational culture, the exchange was quite robust and included the following statement from a CEO participant who stated, “The challenge becomes determining where and when things might be out of alignment. So, developing the methodology about how to realign must be developed and committed to early on.”

To the CEO’s point, the development and management of organizational culture is much like that of developing and cultivating a brand…

It must be planned.

It must be nurtured.

It must be allowed to grow.

It must be invested in.

It must be protected.

It must be promoted.

It must be cherished.

It must be the center of the universe.

I believe it’s relatively easy to determine when and where things are out of alignment in a franchise organization – disgruntled franchisees, refusal of franchisees to develop additional locations and instead are investing in other brands, frequent franchisor employee turnover… just to name a few that would be very apparent. Obviously, these are the results of, but not the root of the problem that may have caused things to move out of alignment. Mostly the problems occur (and fester) due to poor communications and lack of transparency between franchisor and franchisees. Inconsistent messaging adds fuel to the fire. Basically, similar problems to a marriage or other types of relationships that fail.

As for methodology to realign, that takes full commitment and focus from all parties to the relationship. However, in a franchise relationship it takes the franchisor to take the bull by the horns and lead the charge. The franchisor must spearhead the initiative to create open, honest, transparent communications, and especially through difficult scenarios. Franchisees have made a significant investment in the brand, and they must be kept aware of the good, bad AND ugly. Two precarious points include: How much is too much? Do franchisees need to know everything? Getting back to square one, a benchmark of sorts is critical as emotions running high will dictate more rather than less. Actions must speak louder than words!

At workshops and seminars, as well as within coaching and consulting projects, I talk a great deal about creating and delivering positively memorable experiences at all times. I believe it applies to the franchise relationship as much as it applies to customers & clients. I won’t get too deep here as this past week I shared my thoughts on the topic in this newsletter and in the past in the IFA’s Franchising World magazine. Instead, I will share my thoughts on a guideline that will help monitor the experience factor in any transaction or relationship. This guideline is what I refer to as, “The Emotion Circle”.

The Emotion Circle

There are seven key steps within the circle. Think in terms of a clock with the top being the starting point. This is where the relationship begins. Once something occurs that doesn’t meet expectations the first reaction is surprise. From there, emotions may escalate to the next steps of disappointment and doubt. Or it may not escalate but another “incident” will definitely move the needle along. Sometimes, even an unaddressed issue will move it.

Of course, it is inevitable things happen, and expectations aren’t met or even understood. This is why proactive, open, transparent communications are paramount. If the issues are discussed openly and frankly in a respectful way, the needle can be moved back to the 12 o’clock position with minimal or no chance of fueling a fire. We must keep the emotions within the blue section of the circle. This is key!

However, if issues are not addressed in a timely and respectful manner the fire burns rapidly and on occasion to the point where it flares up and / or quickly burns out of control. And, just like wildfires in the forest, these fires can and will jump across roads from house to house and community to community with devastating results.

If not brought under control in a swift manner, the next emotions are often expressed in rapid order through the pink sections and into the red circle. These include frustration, anger, hostility and yes, remorse (think “buyer’s remorse). Ultimately, the end result is broken trust and as we know, trust is the backbone of ANY relationship. Moving back from the pink section is extremely difficult, but not impossible. However, once emotions escalate into the red section, the possibility of salvaging the relationship is almost impossible. Trust will need to be earned back without any assumption on the part of the offending party that it will.

In order for realignment to occur throughout the emotion circle, issues must be addressed expeditiously. It’s paramount that trust be rebuilt before further escalation of emotions. It’s certainly not easy – but it can and must be done. However, it does take huge, ongoing commitment to be established, to remain in place, and to be built upon.

An important question to ask yourself or of an organization’s leadership – Are we truly committed to our relationships? If the answer is not a resounding yes, rest assured trouble is on the horizon. As such, it’s essential to find out the reason(s) and immediately take action to correct. The foundation of developing and curating the right culture depends on it.

3 Key Questions to Consider Before Becoming a Franchisee

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The dream of owning your own business is alive and well for most Americans. The only problem is that many people don’t know where to start on the journey to becoming self-sufficient. There are a million different options, but first and foremost each potential entrepreneur must decide if he or she wants to become a franchisee or start a business independently.

Each route has its benefits; therefore, it’s critical to take the time to consider both options before making a decision. What it initially comes down to is asking yourself the following questions:

1. Do you understand every aspect of the business or do you thrive in one area?

When starting a business from scratch, entrepreneurs should be well versed in every single element of the enterprise. They need to create systems and procedures and test whether these work for that particular business. This process of ironing out the details deters some from choosing to own an independent business but excites and challenges others.

Conversely someone who buys a franchise knows that someone else has already done the “dirty work” and found the most effective systems for that particular business. A franchisee must simply thrive at correctly running the system while adding their own personal management touch.  

2. Are you an expert at making a name for yourself or would you like to be associated with an already strong brand?

When purchasing a franchise, you are also inheriting the reputation of that brand. For example, if you open your own Dunkin’ Donuts shop, you will encounter customers who already recognize the pink and orange logo. Many people will know whether they like the brand and will expect speedy service providing them doughnuts and steaming hot coffee.

On the other hand, those starting a business from scratch have a chance to create a unique brand identity. But consumer trust and awareness don’t come easily; they need to be earned through time, consistency and excellence.

3. Are you the kind of person who likes to go it alone or do you appreciate a sense of community?

Owning a business — whether it’s a franchise or not — can be risky. Some people prefer to be self-reliant and want to manage potential problems using past experiences and premonitions as guides. An entrepreneur must solve the issues that arise.

Others prefer enlisting the support and help of others to ensure that their business runs smoothly. A franchisee has many built-in allies, including the franchisor and other franchisees within the system.

The most important factor for success is making sure that problems are identified, and steps are taken in the right direction.

Is Franchising the Right Way to Grow Your Restaurant Business… or Any Business, for That Matter?

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This past January I presented a webinar for RestaurantOwner.com about the ins and outs of franchising a restaurant business. Special attention was also placed on preparing to franchise and how doing so could significantly improve the business itself and provide a road map for multi-unit operations – even without actually proceeding into franchising.

Well, the response after the event was quite robust and led to us performing a number of franchise feasibility studies for independent restaurant owners in various markets across the country. Our recommendations were split on whether to franchise or stay the course as an independent operation. In the coming months, we’ll be able to see how our recommendations play out. In the meantime, interest remains high, not only for restaurants but also non-foodservice operations across a multitude of industries and industry segments exploring franchising as an expansion or growth strategy.

RSG_Logo_Rev3.pngLast month, in Restaurant Startup & Growth magazine, a RestaurantOwner.com publication, appeared an article by the RS&G staff, taking a deep dive into my webinar and philosophy about franchising a business. The article started out…

Some of the most successful brands – in any sector – are franchises. In the restaurant business, they are household names. For many independent operators, franchising their concept is the so-called “Big Hairy Audacious Goal”. Before you take that leap, there are a lot of small and critical steps to consider.

The rest of the article, Baby Steps – Is Franchising the Right Way to Grow Your Restaurant Business? may be read on pages 42-47 by clicking HERE.

Do Transitioning Corporate Executives [Really] Make Good Franchisees?

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This question was discussed on Linkedin approximately a year and a half ago and there were some interesting responses. However, the further we drift from the onslaught of transitioning executives caused by the 2008-2012 economic downturn, maybe we should now pose a different question… How have franchisors fared since awarding focusing on transitioning executives?

We often look at franchise success as up to the franchisor, i.e. it’s the franchisor’s job to be sure franchisees succeed. But of course, we know that not all franchisees, including transitioning executives, are created equal. Some are better than others! People in transition may, in fact, not make very good decisions – maybe they may panic and jump into a franchise too quickly and they don’t do all the homework that’s necessary or possibly don’t ask all the right questions. Some actually have limited skill set to their former job.

It would be interesting for franchisors to reveal how “transitioning executives” have fared, though that’s probably asking a bit too much. Because again, even if the transitioning executives have failed, it doesn’t mean the franchise system is bad. Maybe the system is just not right for certain individuals?

It really doesn’t matter whether a candidate is a transitioning executive or an immigrant national or even a mom exploring business ownership instead of returning to the workforce. What matters is how well prepared a candidate is for franchising (and business ownership) and whether or not the candidate is a right-fit for a particular franchise, and the franchise for him or her. Because we also know that all candidates are not created equal. Nor are franchisors! It’s all the more reason to identify and develop ideal candidate profiles, and keep in mind, there may be several.

Any thoughts?

Controlled Growth Key to Success for New Franchise Concepts!

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Working with entrepreneurs exploring franchising as a business expansion strategy, I’m often asked the question, “How does a new franchise company sell franchises without brand recognition?” Here are my thoughts…

Initially, the founder is the brand. It’s his or her passion for the business. It’s how he or she treats customers and employees alike. It’s how the business is promoted within the local market. Not just through typical advertising efforts, but through solid grassroots, organic efforts.

The initial franchise candidates are actually the “low hanging fruit” of the original business. These are the customers that inquire whether or not the business is a franchise and how they can learn more about owning their own. Most are interested because the business appears to be thriving and they’ve seen the owner (founder) time and again, always smiling and shaking hands. Public Relations efforts should ensure this occurs.

They admire the owner a great deal and will base their decision to open a franchise location, on the potential of establishing a relationship with the owner. They’ll compare the opportunity to other franchises and justify to themselves that they’re in on a ground floor opportunity with a direct line to the founder. As such, they feel their probability of success is greater because their location will be in the home office city and if they need help, they could easily approach the founder and the home office because of the proximity to their franchise location.

Ideally, the next few franchisees will also be in the same market as the original business and the first franchise location. It’s prudent to only expand locally until critical mass is established in the market, ad cooperative is developed and support systems are perfected. Now the concept is ready to expand outside the initial market.

However, it is often financial suicide to entertain requests from candidates all over the country. Instead, development efforts should be concentrated on one or two cities relatively close to home office city. For instance, if original business and home office is in Houston, the natural progression would be to promote the opportunity next in San Antonio/Austin and Dallas/Fort Worth areas.

As these markets start to become established with franchise locations, it’s advisable to promote the concept in another two or three areas. Maybe, explore another “hub” and “spoke” scenario. Let’s say, Atlanta as the next hub.

Expansion efforts should be the same as they were in Houston and expansion out of that market shouldn’t occur until Atlanta has a critical mass. Then, when that occurs, the opportunity could be promoted close by in Nashville and Charlotte. Now, you see the spokes of national expansion beginning to form.

While this is going on, maybe inquiries start coming in from the San Francisco area. So, the next phase of expansion might be in the Bay Area. The Bay Area becomes another hub, and once developed, the franchise opportunity could be promoted up the road in Portland and to the East in Sacramento and the process continues.

It’s all about controlled growth and the founder exhibiting tremendous restraint in expanding too fast and in areas far away from his core group and subsequent hubs to be able to provide ample support, create ad cooperatives and build the brand geographically. Chances of franchise success are far greater at all levels of the franchise organization within the parameters of a controlled plan of development.

So, to answer the often-asked question directly, I suggest everyone in the system having a clear understanding of the founder’s vision and if it includes anything but a controlled development plan with his or her firm commitment to actively participate in the franchise sales process, the chances of selling the first ten to twenty franchises will be a frustrating, monumental task that most likely will fail miserably.