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    2015 Best Franchise Deals

  • Expanding your franchise portfolio? These 12 brands should be the first you look into.

    Patrick Heagney Photography
    McAlister’s president Carin Stutz says the brand has three key differentiators: a diverse menu, high-quality service, and, of course, sweet tea.

    (Click here to submit your brand for the 2016 Best Franchise Deals!)

    Having spent three decades helping franchisees evaluate prospective investments, Terry Powell has noticed a monumental shift in the industry. The days of franchisees signing on the dotted line with little more than a review of the royalties, franchise fee, and total investment have largely evaporated, Powell says, replaced by a steady collection of astute entrepreneurs bringing a sophisticated, inquisitive perspective to the table.

    “Many of today’s franchisees are looking at a whole list of factors when evaluating a brand, and many are doing this before they even talk to the brand’s development people,” says Powell, who founded The Entrepreneur’s Source consultancy in 1984.

    Today’s franchisees want a company that is responsive to its franchise partners and acts in the brand’s best interests, embracing the fact that franchising needs to be a mutually beneficial relationship. Many are favoring operational simplicity, which eases training and management burdens, and scrutinizing the franchisor’s leadership team, evolution, and scalability.

    “Franchisees want to see the upside,” Powell says.

    Unit economics remain critical, as many prospective franchisees investigate bottom-line earning potential, as well as items like cost of goods, labor efficiency, and supply chain management. Margins, ROI, and payback time stand at the forefront.

    “At the end of the day, we’re in the game to make money, so the financial end of any franchise deal needs to make sense,” says Phil Ratner, a managing partner with California-based Synergy Restaurant Consultants and a former quick-service franchisee.

    Then, of course, there’s the food, which, alongside the service and experience, must be rich and differentiated.

    “There’s a popular saying—‘It’s the food, stupid’—and the successful restaurants have a product that is on trend, delicious, and appealing,” Ratner says.

    Though some franchising candidates favor established concepts with proven track records, and others want to ride a brand’s ascent from regional player to national name, the quick-service landscape features compelling franchise deals. Here are a dozen that we think are worth your attention.


    Hungry Upstart

    Teriyaki Madness

    TOTAL U.S. UNIT COUNT: 18 (18 franchised)

    FRANCHISE FEE: $40,000–$150,000

    TOTAL START-UP COSTS: $255,199–$560,850

    ROYALTY: 6% gross revenues

    RENEWAL FEE: 10% of then-current franchise fee

    MARKETING FEE: 2% gross revenues

    Capitalizing on a still-surging consumer interest in Asian cuisine, Teriyaki Madness’ customizable meals, all-natural chicken, fresh vegetables, and house-made sauces represent an alluring alternative to quick-service staples like burgers, sandwiches, and pizza.

    “People are demanding real food, and the days of boil-in-a-bag meals sold through the drive thru are waning,” says Michael Haith, Teriyaki Madness CEO and chairman. “We’re proud of what we serve, and our franchisees are, too.”

    The 18-unit chain, better known as TMAD to its fans, serves up fresh, flavorful Asian cuisine in a hip, fast-casual atmosphere while offering prospective franchisees a scalable opportunity. Haith, in fact, says the Colorado-based concept, which first opened in Las Vegas 10 years ago, was built “from day one to offer a great value proposition to its franchise partners … and a business model that makes sense.”

    “We have a management team that understands happy franchisees will help TMAD reach its potential,” Haith says.

    Haith says TMAD leadership is “relentlessly focused on franchisee financials.” Total start-up costs top out at around $560,000, while AUV pushed over the $1.1 million mark in 2014, figures that provide TMAD’s franchisees solid ROI and the potential for growth.

    The low investment and high return is something many TMAD franchisees choose to replicate, particularly in light of double-digit same-store sales growth over each of the last four years. Haith says every franchise partner who has been in the system more than one year now has additional units in the company’s development pipeline.

    “That shows people that our system works and that we’re a scalable deal,” Haith says.

    TMAD units range in size from 1,200 to 3,000 square feet, including both traditional and nontraditional spaces, and Haith says the concept’s business model bends to a wide range of opportunities, which helps reject a cookie-cutter look and keeps more money in its franchisees’ pockets.

    “If the economics make sense, let’s get in there, get the store open, and start making money,” he says.

    TMAD’s ability to deliver on-trend, high-quality product in an efficient manner, Haith adds, delivers two important results: value for the customer and profit for the operator.

    “With all we have going for us, we believe we’re a case of right place, right time [for prospective franchisees],” he says.

    Planet Sub

    TOTAL U.S. UNIT COUNT: 37 (20 franchised)

    FRANCHISE FEE: $25,000

    TOTAL START-UP COSTS: $190,000–$350,000

    ROYALTY: 5% net sales

    RENEWAL FEE: $5,000

    MARKETING FEE: 0–3% gross revenues

    An outgrowth of the cult-classic restaurant Yello Sub out of Lawrence, Kansas, Planet Sub has been crafting oven-baked subs for more than 30 years.

    The 37-unit, Kansas City–based chain, which saw its AUV approach $640,000 last year, injects some artisan flair into the quick-service environment, making its own bakery-quality bread; slicing meats, cheese, and veggies on premise; and producing various sauces and spreads from scratch in-house.

    With more than 80 stores in development, Planet Sub director of marketing Trevor Forssell says, the concept was designed to scale at every level, “from our real estate and architectural processes down to even the smallest piece of equipment or sourced material.”

    Fresh to Order

    TOTAL U.S. UNIT COUNT: 15 (8 franchised)

    FRANCHISE FEE: $40,000

    TOTAL START-UP COSTS: $598,000–$863,000

    ROYALTY: 5% net sales

    RENEWAL FEE: 10% of then-current franchise fee

    MARKETING FEE: 4% net sales

    A “fast-fine” pioneer, Fresh to Order delivers a broad menu and diverse flavor profiles, helping to fill rising consumer demand for quality food and affordable price points.

    Fresh to Order CEO Pierre Panos touts the 15-unit chain’s strong metrics, including double-digit comps over the last four years, a 2.5-to-1 sales-to-investment ratio, and AUV approaching $2 million, about 40 percent of which comes from dinner.

    The Atlanta-based brand is on track to have 50 open stores in the next three years and has prime territories available for development. “There’s a long runway ahead of us, and we have few direct competitors,” Panos says.

    Pie Five Pizza Co.

    TOTAL U.S. UNIT COUNT: 54 (30 franchised)

    FRANCHISE FEE: $25,000

    TOTAL START-UP COSTS: $443,500–$479,500

    ROYALTY: 6% net sales

    RENEWAL FEE: 25% of then-current franchise fee

    MARKETING FEE: 2% gross revenues

    The ambitious offspring of the 300-unit Pizza Inn chain, Pie Five continues building a name for itself in the swelling fast-casual, make-your-own pizza category. The 54-unit chain serves up customizable pies in less than 150 seconds, allowing guests to select from four crust choices and 27 meat and veggie toppings.

    CEO Randy Gier says strong financials—led by a two- to two-and-a-half-year cash-on-cash return and consistent double-digit same-store sales growth—fuel the brand’s national drive, which will include opening 450 new restaurants, 100 of them company-owned, over the next five years.

    “We’ll be right there, working side by side with our franchisees, tackling food and labor costs, enhancing service, and supporting each other on the daily business,” Gier says.