What about the challenges of moving from a small-picture mentality to a big-picture mentality? If an owner can’t maximize his success on a smaller scale, he will never be able to maximize his success in a bigger scale. Successful people do what unsuccessful people won’t. Investing properly in key professionals, research, marketing, and real estate is not only critical, but oftentimes is the difference between brands that achieve success and those that do not. It doesn’t have to be choosing between growing successfully in concentric circles or growing unsuccessfully across the country. With the right people and the right strategy, you can grow nationwide very successfully. Just look at Starbucks, Outback Steakhouse, Panera Bread, and Chipotle. They all grew quickly, but still focused on unit-level execution. In my opinion, the first key professional I would hire in an expanding concept is a seasoned real-estate professional with experience working with concepts in your segment and someone that is very systems/ research/data driven when it comes to analyzing real estate. Great real-estate professionals will land more and better locations faster, giving an emerging chain a huge advantage. Great locations need less marketing support and produce higher volumes, which psychologically keep everyone more focused on the customer.

How many different business models are there for franchising? The three most common franchise models that come to mind are variations of single unit/owner operator, multi-unit operations, and master franchising. Single unit is for someone looking to buy themselves a job. Multi-unit is for those trying to build wealth through building a multi-unit business. Masters are for those that want to take on more responsibility for franchise sales, training, and support in order to enjoy a portion of the franchise fees and royalties for sub-franchisees in their territory.

What makes the U.S. marketplace and economy ideal for franchising success? The entrepreneurial spirit, access to capital, and consumers with an appetite for better experiences.

What other world economies are suitable for franchising success? Europe and Canada have a fair amount of franchising, but typically are owner-operated as opposed to larger multi-unit franchisees. The Middle East has lots of multi-unit and master franchises. Asia and India have a huge opportunity, but the deals tend to be joint ventures, which makes the barriers of entry more difficult for emerging concepts. But for those with the capital and right connections, the populations of Asia and India are in the billions!

How is growing a restaurant concept different than growing other service businesses? Each day, the world’s 7 billion people wake up hungry, and that is never going to change. We know that every day people will wake up and have to eat. If their tires are wearing a little thin but the money is tight, that car is going to roll a few more miles. But if someone is hungry, they are going to eat right away.

Are there any similarities? Food concepts are always compared to non-food concepts on the basis of unit economics, unit-level business proposition, systems, and support. There are some franchisees that do not want to deal with food preparation, and other franchisees that would only consider a foodservice franchise, and usually the reasons make no sense.

Is there a difference in growing a national brand versus a regional one? It’s a trade-off. National brands have more name recognition, but oftentimes less opportunity for expansion, whereas emerging brands have plenty of opportunity for expansion, but less marketing depth. Many national brands have an old and stale image in the mind of consumers and can be easily out-positioned by a fresh new brand.

What are the keys to marketing brands successfully? In the context of growing with an emerging brand, make sure you pick real estate very carefully, pick your concept leaders even more carefully, and put all your energy into driving trial. No one wants to execute on four-walls and local-store marketing, but that is all that a new concept in a new market should be focusing on. They have to rely on unit-level execution to condition customers’ behaviors.

What, in your opinion, will be the state of franchising in the next five to ten years? The spirit of franchising is even greater now than it was 13 years ago. There are more organized competitors now, the costs are greater, and the margin for error is smaller, so it is more important than ever to have strong unit economics and strong unit-level execution. Baby Boomers are driving consumption and lots of the growth today is supporting the Baby Boomers. Once that consumption trails off, there should be over-supply; problems will arise for those operating at less-than-optimal levels.

What’s next for Fransmart? Our database of prospective franchisees around the world is growing like crazy, so the future is very bright for us. We want to keep working with smart people, bringing in great brands, and we want to keep improving the brands we have. Fransmart will continue to develop as an international player and maximize opportunities we have to team up with private equity groups, so stay tuned! End