Food Franchising Back on the Front Burner

Franchise consultants with iFranchise Group, a leading Franchise consulting firm based in the Chicago area, recently cited several market factors and franchisor success stories that point to a strong improvement in the overall health of the Restaurant Franchising sector. 

Since the recession began, the tight credit market and lack of financing options had affected most franchises, and hampered their ability to sell and open additional locations. Recent improved access to capital and other factors are helping franchisors, especially those in foodservice, get back on track.

“While we are still in a tight credit market, franchise financing is much better than it has been over the last two years,” states Mark Siebert, CEO of iFranchise Group. “Franchisees are finding it easier to get the funding they need to open units, and we’re seeing more restaurant franchisors hit, and even exceed, their franchise growth goals as a result.”

Improved credit availability is not the only factor that is helping restaurant franchising climb out of the recent recessionary period. Current labor and real estate conditions, while challenging for individuals and property owners, are actually favorable for franchise systems looking to expand.

Continues Siebert, “The availability of quality labor is unlike what we’ve seen in just about any other period. There are more qualified workers out there looking for employment, and employers are able to hire them less expensively than before.”

In addition to advantageous labor and wage conditions for employers, franchise systems are also benefitting from an increased availability of prime restaurant locations, and the fact that landlords are more willing to negotiate lease terms than they had been in the past.

“The recession caused a high number of restaurants to shutter,” adds Siebert. “This in turn has opened up the market of desirable locations. Faced with vacant properties in their portfolios, owners and landlords are cutting deals and offering incentives that are simply unprecedented. There hasn’t ever been a better time for a franchise restaurant owner to be able to get favorable terms on space and lease options.”

Given the shift in market conditions facing restaurant franchises, iFranchise Group franchise consultants and executives point to a number of their young foodservice franchise clients that have seen dramatic sales and expansion in recent months:

• How Do You Roll?, an Austin, Texas-based alternative sushi bar, is experiencing rapid growth. The chain, founded in 2009 and first franchised in 2010, has over 65 Franchises contracted to open in Texas, Florida, and California over the next eight years, including 10 slated to open in 2011 alone.
• Newk’s Express Café, with the original founders of McAlister’s Deli at its helm, has sold 70 franchises since the beginning of 2010, with 115 overall in development and plans to continue on an aggressive growth track in the months and years ahead.
• Fuzzy’s Taco Shop, another Texas-based fast casual dining chain which features a Baja-style Mexican food menu with a cult-like customer following, has sold 130 franchises with very limited franchise marketing efforts.
• Hot Head Burritos, an Ohio-based concept founded by a Subway franchisee which started franchising in 2010, will have 28 locations open by year end and 50 in some stage of development.

Siebert concludes, “All signs point to an ongoing period of healthy growth in restaurant franchising. For restaurant franchisors that have a compelling brand and a concept that is working in ‘the new economy,’ there is a booming market for franchise sales.”

About iFranchise Group
iFranchise Group is a leading franchise consulting firm that offers the skills of the nation's top professionals in franchise strategic planning, operations training and documentation, franchise marketing and sales, advertising fund management, franchise recruitment, and development of Internet-based applications for emerging and established franchise companies worldwide.