The franchise industry is a fast-moving landscape where some brands expand rapidly while others struggle to gain traction. The key question is “why does one brand skyrocket while a similar concept remains stagnant?” In a recent Entrepreneur article, five standout franchise systems were highlighted for their impressive growth: Zoom Room, Superior Fence & Rail, Mister Sparky, One Hour Heating & Air Conditioning, and Benjamin Franklin Plumbing.
As a franchise CFO, I wanted to examine these brands through a financial and strategic lens. What specific strategies have fueled their expansion, and how can emerging franchisors replicate their success in an affordable manner?
Introduction to the Franchise Industry
The franchise industry is a rapidly growing sector that offers entrepreneurs the opportunity to own and operate a business using a proven business model. With a projected total franchise output of over $800 billion, the franchise industry is a significant contributor to the national economy. Franchising employment is also expected to increase, with over 8 million people employed in the industry. The franchise industry encompasses various sectors, including retail food, personal services, and business services, providing a wide range of opportunities for entrepreneurs to invest in a franchise.
Franchising offers a unique blend of independence and support. Entrepreneurs can leverage the established brand, operational systems, and marketing strategies of a franchisor while maintaining the autonomy of running their own business. This combination makes franchising an attractive option for those looking to minimize the risks associated with starting a new business from scratch.
Moreover, the franchise industry is known for its resilience. Even in times of economic uncertainty, franchises often perform well due to their established business models and strong brand recognition. This stability makes franchising a smart investment for entrepreneurs looking to secure their financial future.
The Growing Franchise Market
Franchising continues to see steady growth. In 2024 alone, the U.S. is expected to add 15,000 new franchise units, bringing the total to 821,000 nationwide. While the industry as a whole is projected to grow by 1.9%, emerging franchisors often experience significantly higher expansion rates. These brands attract early-stage franchisees eager to invest in promising new opportunities, making it crucial to understand what separates high-growth franchises from the rest.
Tailored support and expertise provided to clients can help them navigate the complexities of franchising, ensuring they make informed decisions and optimize their operations effectively.
I’ve analyzed the financial and strategic moves that have propelled these five brands forward.
Building a Strong Foundation
Building a strong foundation is crucial for emerging franchisors to succeed in the franchising world. A well-structured franchise development program can help franchisors create a solid business model, develop effective marketing and operations strategies, and establish a strong franchise system. A comprehensive franchise disclosure document and franchise agreement are essential components of a franchise system, providing transparency and protection for both franchisors and franchisees.
Investing in training programs and coaching is another critical aspect of building a strong foundation. These programs equip franchisees with the necessary skills and knowledge to operate a successful franchise establishment. From understanding the brand’s core values to mastering day-to-day operations, comprehensive training ensures that franchisees are well-prepared to meet the challenges of running a business.
Additionally, a robust support system is vital. This includes ongoing operational guidance, marketing assistance, and access to resources that help franchisees navigate the complexities of the business. By creating a supportive environment, franchisors can foster a culture of continuous improvement and innovation, which is essential for long-term success.
The 4 Key Factors Driving Franchise Growth
1. Proven Business Models That Scale
Successful franchises refine their business models over time, ensuring profitability and efficiency. They don’t just work in one location; they prove they can succeed across different markets. Experienced developers assist franchisors by providing guidance and support in creating franchise agreements, marketing strategies, and overall operational plans that ensure the successful replication of a business model. Franchisees want to see that a concept isn’t just a local success story—it’s a replicable system with real scalability.
Take Superior Fence & Rail’s system-wide growth as an example:
- 2019: $17.1M
- 2020: $23.2M
- 2021: $55.7M
- 2022: $106.9M
- 2023: $188.5M
Rather than focusing on the numbers, look at the trend. The steady increase in revenue highlights how the brand has refined its model, marketing, and operations, making it an attractive and sustainable investment for franchisees.
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2. Enforced Systemwide Marketing Commitment
Most franchise agreements include a required marketing spend—but many emerging franchisors fail to enforce it. This is a major mistake. Both unit-level growth and overall system expansion are heavily influenced by aggressive, consistent marketing efforts.
One Hour Heating & Air Conditioning mandates that franchisees allocate 8-12% of gross revenue to local advertising and promotion. This ensures that each location actively drives customer acquisition rather than relying solely on national branding. The result? A predictable pipeline of new customers and steady revenue growth.
Additionally, the most successful franchises invest in pre-opening marketing support, including lead generation strategies, SEO-optimized websites, and comprehensive brand-building campaigns. The brands highlighted in this analysis all require substantial marketing investments, reinforcing a commitment to growth and visibility at every franchise location. Business-friendly policies, such as lower costs of living and favorable economic initiatives, also contribute to rapid franchising growth, particularly in regions like the Southeast and Southwest.
3. Strong Unit Economics
Attractive unit economics—profitable locations with predictable returns—are non-negotiable for sustainable franchise growth. Without strong financial performance at the unit level, scaling a brand becomes nearly impossible.
Regions with a lower cost of living and business-friendly policies, particularly in the Southeast and Southwest, are fostering rapid franchising growth due to favorable economic conditions.
For example, Superior Fence & Rail’s franchisees see impressive revenue numbers:
- Top third: Median revenue of $5.34M
- Bottom third: Median revenue of $1.14M
- Startup investment: $130,500 – $206,800
These figures demonstrate a solid return on investment, with scalable, recurring revenue from fence maintenance and repair. Likewise, Zoom Room, a pet training franchise, benefits from a high customer retention rate (87%) and a Net Promoter Score of 90. Their customers return again and again, with lifetime spending up to 100x the initial acquisition cost.
Emerging franchisors should take note: A high-retention, recurring revenue model drastically improves long-term profitability.
Ready to learn more about Financial Management for Franchisees? Discover why GAAP compliance is crucial for franchisors and ensure you stay informed in the franchise industry. Read more here.
4. Smart Use of Capital and Financing Strategies
Franchising isn’t just about making money—it’s about having the capital to grow. Underfunded brands struggle to expand. However, strategic capital deployment can bridge this gap.
Top-performing franchises offer creative financing solutions, including franchise fee financing, conversion incentives, and growth rewards for existing franchisees.
- Benjamin Franklin Plumbing & One Hour Heating & Air Conditioning offer franchisees the ability to finance up to 75% of their initial franchise fee. This is repaid over 36 months at 12% interest.
- Conversion incentives allow existing businesses to switch to a franchise brand with reduced or deferred franchise fees, with performance-based loan forgiveness.
- Multi-unit incentives provide discounts for existing franchisees who expand, reducing franchise fees by up to 30%.
Beyond financial strategies, robust support systems are crucial for franchisee success. These systems include:Beyond financial strategies, robust support systems are crucial for franchisee success. These systems include:
- Comprehensive Training: Equipping franchisees with the skills and knowledge necessary to manage and grow their business efficiently.
- Marketing Assistance: Providing franchisees with effective promotional tools and strategies to reach their target audience and increase brand visibility.
- Operational Guidance: Offering ongoing support in daily operations to ensure franchisees can navigate challenges and maintain high standards.
By lowering the barrier to entry and making growth financially viable, alongside offering essential support systems, these brands create a scalable, profitable system that attracts serious investors.
Driving Franchise Sales
Driving franchise sales is a critical component of franchise development. A well-designed franchise sales program can help franchisors attract and retain high-quality franchisees, increasing the overall success of the franchise system. Franchise sales involve identifying potential franchisees, providing them with the necessary information and support, and guiding them through the franchise purchasing process.
Effective marketing strategies play a pivotal role in driving franchise sales. Utilizing social media marketing, targeted advertising, and SEO-optimized content can help franchisors reach a wider audience and generate leads. By showcasing the benefits of the franchise system and highlighting success stories, franchisors can build credibility and attract prospective franchisees.
Building strong relationships with franchisees is equally important. Providing ongoing support, regular communication, and opportunities for feedback can help franchisors maintain a positive relationship with their franchisees. This not only enhances franchisee satisfaction but also encourages them to become brand ambassadors, further driving franchise sales and growth.
Why Franchise Growth Remains a Smart Move in Uncertain Economic Times
In times of economic uncertainty, businesses often seek stable paths for expansion. Franchise growth emerges as a compelling option for several reasons. Current trends in franchise growth highlight economic factors and industry forecasts that suggest continued expansion and success in the franchise market, contributing to the stability of the franchise model.
Strategic Expansion: Franchising allows businesses to scale quickly and efficiently by leveraging the resources of local operators. This means less capital outlay and risk compared to opening company-owned outlets.
Harnessing Technology: Advances in technology continue to play a crucial role. For example, by utilizing data analytics, franchises can make informed decisions that enhance performance across different locations. Additionally, digital tools facilitate streamlined operations and improve customer experiences, leading to consistent growth.
Continuous Improvement: The franchise model inherently supports constant enhancement. With regular feedback from franchisees and customers, businesses can swiftly adapt to market changes and improve their offerings.
Broader Reach with Less Risk: Expanding through franchising allows businesses to tap into new markets with less financial risk. Franchisees bring local market knowledge that helps the brand establish a strong foothold quickly and adapt to regional nuances.
Shared Success: Finally, the symbiotic relationship between franchisors and franchisees fosters a shared ambition for success. When franchisees thrive, the overarching brand benefits, creating a win-win situation that sustains growth even in challenging times.
In conclusion, franchise growth is a powerful strategy for scaling businesses, offering a combination of strategic expansion, technological leverage, and a culture of continuous improvement—making it particularly attractive when navigating economic uncertainties.
Lessons from Zoom Room: Carving Out a Profitable Niche
Zoom Room’s success highlights the power of a strong niche. Instead of trying to compete with big-box pet stores, they focus exclusively on premium dog training services, positioning themselves as the go-to brand for engaged pet owners.
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What Emerging Franchisors Can Learn:
- Recurring revenue is key – Membership-based models create predictable cash flow and strong customer retention.
- Specialization leads to pricing power – By catering to a high-demand, underserved market, Zoom Room can charge premium prices without competing on cost.
- Operational efficiency improves margins – Franchisees don’t need to manage large inventories, reducing overhead and maximizing profitability.
Emerging franchisors should aim to identify a niche with a loyal customer base, strong brand differentiation, and the potential for recurring revenue.
Authority Brands: Leveraging Private Equity for Scalable Growth
Brands like One Hour Heating & Air and Benjamin Franklin Plumbing benefit from being part of Authority Brands, a private equity-backed franchise group that provides shared infrastructure and resources. This allows for:
- Centralized marketing and technology support
- Economies of scale in purchasing and operations
- Faster expansion through conversion franchise programs
Several decades of experience in the franchising industry have shown that leveraging such shared resources and infrastructure significantly contributes to successful growth strategies.
While private equity isn’t necessary for every franchise, emerging franchisors should consider partnerships, strategic investors, or franchise development consultants to accelerate growth.
Operational Support and Coaching
Operational support and coaching are essential components of a successful franchise system. Franchisors must provide their franchisees with the necessary tools, resources, and guidance to operate a successful franchise establishment. This includes ongoing training and coaching, as well as access to operational support systems and technology.
By investing in operational support and coaching, franchisors can help their franchisees overcome common challenges, such as managing labor costs and improving customer satisfaction. Regular training sessions, webinars, and one-on-one coaching can equip franchisees with the skills needed to navigate the complexities of running a business.
A strong operational support system can also help franchisors identify and address potential issues before they become major problems. This proactive approach reduces the risk of franchise failure and ensures that franchisees can maintain high standards of operation. By fostering a culture of continuous improvement, franchisors can create a resilient and successful franchise system.
Navigating Regulatory Considerations
Navigating regulatory considerations is a critical component of franchise development. Franchisors must comply with a range of federal and state regulations, including the Franchise Rule, which requires franchisors to provide prospective franchisees with a franchise disclosure document. This document outlines essential information about the franchise system, helping prospective franchisees make informed decisions.
Franchisors must also comply with state and local regulations, such as business licensing and zoning requirements. These regulations can vary significantly from one location to another, making it essential for franchisors to stay informed and ensure compliance.
Working with experienced franchise consultants and attorneys can help franchisors navigate the complex regulatory landscape. These professionals can provide valuable guidance on legal requirements, helping franchisors avoid potential pitfalls and reduce the risk of legal action. A well-structured franchise agreement and franchise disclosure document can also help protect franchisors and franchisees from potential disputes and liabilities, ensuring a smooth and successful franchise operation.
Final Thoughts: Scaling Like the Best
The franchise brands seeing the most success today have one thing in common: They are intentional about growth. They enforce marketing requirements, prioritize unit profitability, leverage creative financing, and operate within strong, scalable business models. Emerging franchisors should take these lessons to heart. Scaling isn’t about luck—it’s about strategy. By focusing on proven systems, aggressive marketing, strong unit economics, and efficient capital use, your brand can follow in the footsteps of the best in the industry.
Strategic plans for the year ahead are crucial for franchise growth. By setting clear goals for the year ahead, franchises can enhance guest experiences, expand their location count, and strengthen community connections, contributing to their long-term vision.
To truly harness the power of franchise growth, small businesses need to explore the key factors driving success across the board:
- Unlock Proven Strategies: Learn from successful franchises that have mastered customer retention and streamlined their operations. These strategies are blueprints for scaling efficiently.
- Toolkit for Action: Equip your business with actionable steps that enhance customer engagement and operational efficiency. Implementing these steps can transform your business into a robust franchise model.
- Adopt a Growth Mindset: Cultivate a culture of continuous improvement. Smaller studios, for example, can scale operations by fostering innovation and flexibility within their teams.
- Overcome Challenges with Strategic Insight: Embrace problem-solving techniques that have propelled successful franchises forward. Identifying and addressing potential obstacles early on ensures smoother scalability.
By integrating these comprehensive strategies with a disciplined approach to capital and marketing, small businesses can not only grow but thrive in the competitive franchise landscape.
Moreover, economic uncertainty is a reality that every business must face. Franchises that focus on continuous improvement and adaptability are better positioned to weather economic challenges. By creating a resilient business model that anticipates changes and pivots as needed, franchises can maintain momentum and expand their reach.
Whether you’re considering franchising your business or investing in one, understanding these key elements will position you for success. By combining intentional growth strategies with a focus on technology and adaptability, your franchise can not only survive but thrive in the ever-evolving market.
Want An Expert on Your Side?
Looking for guidance on scaling your franchise? As a CFO specializing in emerging brands, I help franchisors develop financial strategies that drive long-term, sustainable growth. Book a free consultation call today and let’s talk.
