Nomura-Instinet analyst Mark Kalinowski, based on a recent survey of 31 McDonald's U.S. franchisees with 243 stores, expects a 0.8 percent year-over-year sales increase, the most optimistic among sell-side analysts, who on average expect a decline of 1.1 percent. Their accuracy will be put to the test on Tuesday, when McDonald's will announce its first quarter results.
The Golden Corral franchisee in Poughkeepsie, New York, which was terminated by corporate less than two months after its opening on January 27, is under investigation by the state Department of Labor. A local news journal reports that employees are complaining that they haven't been paid what they are owed in wages.
Owning franchised restaurants and independent ones may seem mutually exclusive, but that's not necessarily true. Franchisees can use the experience and earnings from years with an established franchisor to conceive and establish independent brands.
Fast growth in locations isn't the most important facet in a franchise brand's health and prosperity. Many a franchisor has run into problems when expanding nationally, one example of which many of us saw in The Founder, the recent movie bio-pic of Ray Kroc, who brought McDonald's from a handful of locations to a worldwide giant. The original McDonald's brothers found problems in expanding via franchising, and later Kroc also ran into serious difficulties, causing him to make major adjustments.
Franchise pros, most of them franchisees, comment on doing business in this 15-panel slideshow. The operations run a wide gamut from beef jerky, frozen treat, hamburger, janitorial service, pizza and more.
Arby's CEO Paul Brown was recently interviewed by Nations Restauant News, upon their release of 2016 same store sales gains (plus 3.6%), an overall rise of AUV to $1.1 million (plus 40% from 2010) and an increase in unit counts in 2016 (60).
Planet Fitness CEO Chris Rondeau, a walking advertisement for the benefits of his company's gyms, says 90 percent of new locations are opened by existing franchisees who are very good operators of multiple locations. The company will continue to rely on them, expecting to open about 200 locations a year, including some in Canada as well as in the U.S., he states.