July 23, 2021

Restaurant Biz Online Quotes Michael Joblove on Companies Turning to Franchising for Growth

1 min

On July 23, 2021, Restaurant Biz Online quoted Michael Joblove on the demand of using franchises as a business model.  According to the article, more companies are turning to franchising for growth instead of financing. Companies see potential in the business model of franchising to speed development while avoiding additional risk. As a result, restaurant companies that are eager to expand are opting to start franchising.

This year, restaurants are projected to account for more than a quarter of all franchise establishments. Restaurants love the franchising option because it is a method of financing growth that spreads the risk among a larger group of entities.  

Franchising finances growth by putting responsibility for obtaining new unit financing into the hands of a group of smaller investors, who finance, build, and operate the units and pay a percentage of their sales for the right to do so.

"You're growing a brand with other people's capital," said Joblove. "You hand off the brand to small business owners who decide who to hire, how much to pay them, and all that. You significantly reduce your overhead."