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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

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.

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.”

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.

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.

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Rising Star

Featuring chef-created, made-to-order hot wraps, grilled cheesesteaks, healthy bowls, and a full, scratch-made breakfast menu, Great Wraps Grill is “uniquely positioned at the intersection of health and flavor,” says Spencer Reid, vice president of sales and development for the 65-unit chain.

Reid adds that the Atlanta-based enterprise, which had an AUV of $531,000 last year, has more than 20 years of proven success, operational simplicity, no direct segment competitor, and franchise support that has been lauded by the Franchise Business Review, an industry market research firm. Even more, the chain recently launched a new restaurant prototype to capitalize on nontraditional opportunities, such as airports, malls, and hospitals.

Though fast-casual pizza chains have become an undeniably competitive part of the quick-service landscape, Donatos Pizza looms as the category’s hip forefather. For decades, the Columbus, Ohio–based concept has been dishing up customized pizzas in as little as seven minutes.

Donatos’ thin-crust pizzas feature the chain’s own special sauce, smoked Provolone, and fresh vegetables placed on top of the cheese for an intense roasting flavor.

“We’ve got a credible product, which is the most important starting point,” says Tom Pendrey, Donatos’ chief operating officer.

Of course, an AUV of just over $1 million, a number that rivals many of its pizza-peddling peers, doesn’t hurt, nor does the 152-unit chain’s buttoned-up operations perfected over 50 years. Donatos’ proprietary “Ready for Revenue” system, for instance, delivers comprehensive forecasts that help operators eliminate bottlenecks in production and improve kitchen efficiencies, speed of service, labor deployment, and, ultimately, profitability. The chain also has self-developed accuracy systems that boast 95 percent accuracy on orders.

“Our franchise partners are buying a system that works,” Pendrey says.

It’s that proven system, Pendrey adds, that caught McDonald’s eye in 1999. After four years under the Golden Arches’ ownership, however, Donatos founder Jim Grote repurchased the company in 2003.

“[McDonald’s] saw in us then what so many see in us today: a differentiated restaurant concept that performs day in and day out at an optimal level,” Pendrey says.

While Donatos began franchising in the 1990s, company leadership has only recently begun championing its marketplace niche and franchising potential. For the initial franchise free of $30,000, Donatos provides a 20-year agreement with no renewal fee, while its marketing fee sits at 1 percent and the corporate office also provides each franchisee free access to marketing software and the company’s digital ordering system.

“We’re a quiet and humble company, but more and more of late, we’re talking about what makes Donatos different,” Pendrey says. “As a result, we’re seeing a lift in our business and rising above the rest of the industry.”

Today, he adds, Donatos is committed to growth, eager to enter markets throughout the country, and energized by the possibilities.

“There’s a lot of people who still don’t know about Donatos, so there’s a lot of great, new experiences we can give to further build our fan base,” Pendrey says.

Culinary-driven Newk’s features scratch-made lunch and dinner dishes—sandwiches, salads, pizza, soup, and mac and cheese among them—crafted in an open kitchen.

While Newk’s corporate office owns and operates about 15 percent of Newk’s existing restaurant count, Chris Cheek, chief development officer for the Mississippi-based concept, says that number will approach 20 percent by the end of this year. It’s a sign of the confidence Newk’s leadership holds in the 81-unit chain, which recorded AUV of $2.4 million in 2014 and boasts a sales-to-investment ratio above the two-to-one threshold.

“We believe there is no better place to invest than in building more Newk’s,” Cheek says.

In the last six years, Fuzzy’s Taco Shop has grown from a single franchised unit in Arlington, Texas, into an enterprise with 79 stores spread across 10 states. With systemwide sales accelerating toward $100 million, the chain recorded AUV of $1.24 million in 2014.

While Fuzzy’s senior vice president of franchise Paul Rickels says the Texas-based brand is passionate about consistent presentation before the guest, it affords franchisees freedom in site selection and significant front-of-the-house flexibility. Some units, for instance, serve margaritas and beer, while others have a full bar to boost overall revenue.

“We want each [Fuzzy’s] location to be unique to that guest base,” Rickels says.

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Powerbroker

Crossing the 400-store plateau in 2014, Tropical Smoothie Café has emerged as a major player on the national scene with units now peppered across 38 states. The majority of the chain’s growth is being driven by existing franchisees, which, CEO Mike Rotondo says, “shows we are on the right track.” The brand expects to open its 500th store later this year.

With a balanced business model that represents a 50/50 split between sales of food such as tacos and flatbreads and high-margin smoothies, Tropical Smoothie saw comp sales growth of 11 percent last year and AUV topped $526,000, the highest in the company’s 17-year history.

The recipe for success at McAlister’s Deli is a simple one: Combine Southern hospitality with generous portions of sandwiches, soups, spuds, and sweet tea.

McAlister’s president Carin Stutz identifies three key points of differentiation for the Georgia-based brand: service and hospitality that is high-tech and high-touch; a diverse, high-quality menu that helps the chain overcome veto votes; and its famous sweet tea, an in-demand product with a fanatical following.

“I love what we can offer our franchisees,” says Stutz, a quick-service industry veteran who came to McAlister’s in 2014 after executive stints with Cosi, Brinker International, Applebee’s, and Wendy’s.

Despite serving a broad and diverse menu, Stutz says, McAlister’s franchisees enjoy operational simplicity, as the chain eschews fryers and grills and forgoes breakfast and late-night hours. But don’t mistake simple operations for simple returns. AUV in the 337-unit system sits at $1.5 million, while the chain’s top 25 percent of restaurants report AUV near $2.4 million. Meanwhile, by the close of 2014, McAlister’s had rattled off 13 consecutive quarters of same-store sales growth, a trend that continued into the opening quarter of 2015 as well.

Stutz says McAlister’s “owns the lunch daypart,” while the dinner daypart, which today represents about 30 percent of sales, continues to escalate.

“We see the opportunity to grow our dinner business even more, while we believe catering can also be an additional growth driver, as well,” Stutz says.

Now under Focus Brands’ umbrella, McAlister’s has the resources—principally the ramped-up buying power and supply chain leverage of the Focus family—to propel its national expansion, she says. Up first: heightened development in adjacent markets throughout the Midwest and West.

“We’re a chain that’s been a Southern favorite for a long time, and we’re taking something well done in the South and Southeast and bringing it to the next level,” Stutz says.

Though McAlister’s just finished its 25th year, Stutz says the concept still feels young and fresh, debuting new products and routinely investing in a rich dining room experience and the generous portions that curry favor with diners.

“Our franchisees feel great security in knowing this brand has a track record, but continues to innovate to ensure relevancy with today’s guests,” she says. “We’re ready for this and excited about what the future holds.”

Charleys, which rebranded from Charley’s Grilled Subs to the Charleys Philly Steaks moniker in 2012 to spotlight its core menu offering, has been growing its domestic unit count at a 10 percent annual clip over the last decade. The Ohio-based chain, which can also be found in 20 countries around the globe, now claims 447 U.S. restaurants.

Peddling fresh-grilled Philly cheesesteaks alongside gourmet fries and real fruit lemonade, the concept’s menu is streamlined to focus on what it does well, Charleys vice president of marketing Kris Miotke says. “We aren’t trying to be something we are not,” Miotke says.

That self-awareness sparked double-digit same-store sales growth in 2014 and AUV of $606,000.

Capitalizing on the growing interest in Southern comfort foods, Dickey’s closed 2014 with 470 stores and AUV of nearly $766,000. The Dallas-based concept has added about 100 new locations each year since 2011 as part of a deliberate growth strategy focused on driving quality.

“We build new locations, wow new guests, and find efficiencies that make our expansion authentic,” says Trinity Hall, Dickey’s senior vice president of development.

Dickey’s offers its franchisees five revenue streams—dine-in, catering, retail items, holiday meals, and carryout—and extensive corporate support highlighted by a four-week Barbecue University training program that prepares its partners to operate a successful Dickey’s eatery.