What Type of Franchise Partner is Best for Your Brand?

Tampa, Florida–based Checkers/Rally’s is known for its accessible and flexible franchise opportunities. Among them is the ability for franchisees to own and operate other restaurant brands should they so desire.

For senior vice president and chief development officer Jennifer Durham, this flexible approach comes down to a desire to get the right people, even if that means sharing them with other, noncompeting brands. “We’re all looking for the best franchisees that run the best restaurant operations. So if you can’t beat them, join them, is my thinking, because there aren’t that many people who can do it really well,” she says.

Durham sees advantages to bringing multi-concept franchisees into the system. It helps operators in small markets that can’t support another Checkers/Rally’s without risking cannibalization. It promotes open communication and trust because Checkers/Rally’s franchisees are free to discuss signing onto other brands with corporate, which will in turn offer advice. It keeps the industry honest and focused on good relationships.

“Competing as brands for that really great operational talent as franchisees makes us all better,” Durham says. “It causes us all to up our game to make sure we’re offering the right programs and support to make our franchisees successful.”

Patrick Sugrue, CEO of Saladworks, also sees upsides to working with both single- and multi-concept franchisees. Because they are more likely to focus on a specific geographic area, multi-concept owners understand the area’s real estate and know the optimal sites. They have community connections in legal, accounting, banking, and other industries. They also bring a fresh perspective.

“They’ll have things they do really well and share them with us. We get good ideas through cross-pollinating with other concepts,” he says.

For Potbelly vice president of franchise development Peter Ortiz, working with multiunit franchisees is an important part of risk reduction and successful growth. Since Ortiz joined the Chicago-based sandwich concept last year, it has begun working with only groups that own multiple franchises in one or more segments.

“The goal with franchisees is to reduce their risk as much as possible. When you bring a multiunit, multi-segment group in, they’re diversified, they’re knowledgeable, they have the infrastructure, and they understand the real estate and construction side, which reduces the cost of opening so the return on investment is much faster,” Ortiz says.

Saladworks / © Dominic Episcopo Photography

"This is not a throw-some-money-at-it kind of business. This is an active owner-operator business that really works and nurtures the market, the people, and the brand in that city." — Patrick Sugrue, CEO of Saladworks.

Working with franchisees that only operate one brand has advantages as well, Durham says. Because there are no split interests or goals, it can be easier for franchisees to manage their time and activities. If the market allows, they can saturate a particular geographic region with one brand. “Organizing and focusing your intentions allows you to deeper penetrate a particular brand and get fully vested in it,” she says.

Saladworks looks for a mix of multi- and single-concept franchisees who are active in their communities, have connections to the chamber of commerce, and are proud to become known as “Mr. or Mrs. Saladworks,” Sugrue says. “The determining factor for us is the idea of hustle. This is not a throw-some-money-at-it kind of business. This is an active owner-operator business that really works and nurtures the market, the people, and the brand in that city.” For Saladworks, those factors are more important than how many concepts someone owns.

Kona Ice also prizes the active, passionate, teachable owner-operator above all else. But founder and CEO Tony Lamb generally wants those people to only own Kona Ice mobile units.

He worries that multi-concept operators will be too distant to give customers the proper attention they deserve. “We had some experiences with multi-[concept] franchisees early on, and they were divided with their time and energy, and it didn’t feel like they ever really married Kona. Our owners are in their businesses every single day, giving it 100 percent,” Lamb says.

Though return on investment is high due to a successful growth model and a $100,000 buy-in, Lamb doesn’t want franchisees who are obsessed with financials.

He acknowledges that Kona Ice’s comparatively simple business model, which doesn’t require brick-and-mortar investments, helps him maintain his philosophy. It also helps him take on franchisees without restaurant experience, which other concepts might consider a risky move. People without a foodservice background can learn the Kona Ice business more easily than a brick-and-mortar one.

“It’s a difficult business to train in. [People with restaurant experience] understand labor costs, food costs. Things like that take many years to learn,” Potbelly’s Ortiz says. “I’ll look for groups who have this experience and are looking to round out their portfolio with a sandwich concept.”

If an interested party came from another industry, Ortiz would allow them to present an application so long as they would agree to hire a company-approved operating partner to guarantee full investment.

Sometimes compromise and flexibility are necessary to finding the perfect fit. “We really want a love of healthy food, an experience in restaurants, and a deep experience managing people and customers,” Sugrue says. “If you’ve got two out of three of those, you’re going to do well.”

When a brand has determined what it wants, what it can compromise on, and what won’t work, finding the right franchisee becomes substantially easier. “Differences can be subtle, but they’re important,” Durham says. “When there is a good fit, a really good match, brands explode—in a good way.”