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    Is Franchising the Right Growth Strategy?

  • There’s no master blueprint for scaling a restaurant, but deciding whether or not to franchise is a good starting place.

    Velvet Taco
    For some brands, like Velvet Taco, higher financial returns and cohesive operations make corporate growth a better choice.

    To franchise or not to franchise—it’s a question facing any restaurant owner with growth in mind. Just as would-be operators must consider each franchise opportunity on a case-by-case basis, so too must founders tailor their expansion strategies specifically to their concepts. Franchising can accelerate growth, bringing a small, regional chain to new markets across the country. These operating partners not only have local knowledge, but many also boast business experience that can help a fledgling brand spread its wings.

    At the same time, franchising does entail a loss of control. When properly executed, it invites more stakeholders (franchisees) into the decision-making process, which can alter the original vision of the founders. Similarly, once franchise growth ramps up, it becomes harder to slow down should the brand wish to course-correct or reassess its goals.

    Here three operators—one that franchised from the start, one that stuck with corporate growth, and a third that changed its tack—offer their take on the age-old debate.

    Kevin Hsu / Cofounder & Managing Director, Pokéworks

    When we founded Pokéworks, our ambition was to bring poke to the mainland starting with our first location in New York City. New York City had shown us a lot of love, and so did the media. We continued our push into other cities, such as the Bay Area; Irvine, California; Seattle; and Chicago. As we continue to grow, we met some really passionate restaurateurs and franchisees that wanted to partner with us in our expansion.

    One benefit of franchising versus corporate growth is the diversity of great partnerships we are able to build with other passionate and entrepreneurially driven franchisees. In 2017, we started building our franchise operations, and ever since we have been able to bring Pokéworks to more markets than we would have been able to solely with the corporate growth path. With our franchisee partners, we are able to focus more on delivering the best experience and poke to our customers.

    The key about whether you should consider franchising, in my opinion, is to answer a fundamental question: Do you believe in your brand/concept enough that you would continue to invest in it yourself and also your family and close friends? Once you cross that threshold, you’ll have to find strong franchisees to partner with to help you prove it out in the beginning and onward. The rest is to stay focused on supporting your franchisees as if they’re one of your own stores.

    Clay Dover / President, Velvet Taco

    Velvet Taco is a nontraditional, chef-driven concept that is unique and edgy. We take great pride in our tacos, service, and ambiance overall and felt that we needed to have control of these elements as we grow across the U.S. through company-owned restaurants. As part of the long-term growth strategy, franchising was discussed and the decision was made to grow one successful restaurant at a time with our own resources.

    Obviously one of the benefits of corporate growth is higher financial returns for successfully operated restaurants. Growing internally also allows us to develop and cultivate the culture needed. Corporate growth ensures cohesive communication, rollout, and follow-up across the system, and we control the pace completely.

    The decision should be made early in the strategic planning of your brand. It is one of, if not the, most important decisions to make for a restaurant concept. Franchising allows growth into multiple markets with lower levels of capital at a faster pace, and for some concepts, that may be a primary strategic objective. It is an important decision that has to be discussed and debated. Once aligned, stick to your plan.

    André Vener / Cofounder & Partner, Dog Haus

    Initially, we were afraid we couldn’t keep the quality and culture intact, but we found ways to maintain our quality and standards through passing our culture to new franchisees. We also realized franchising was a way to share what we do and share our food with a lot more people. It offers scalability and a way to partner with people. Franchising is how we could most immediately share our food with a larger audience.

    To put it simply, do you want to work with other people? You have to be willing to work with 25-plus other entrepreneurs and take on partners who may or may not be more experienced. You have to be willing to tell them how it’s done. Also, before thinking of franchising, you should have around three to four locations and consider whether your concept can go into different markets and still be successful.