Hi, Jack, I’m doing great. Thanks, how are you?

I am great. I’m enjoying these conversations with all of our Thought Leader Award winners. What do you see happening as far as growth in franchising? What are you talking to everybody about these days?

Well, I mean, there’s lots of wide-ranging conversations that we’re having, and I think it depends on the stage of the franchisor and what their challenges are. But I think what I’d like to actually share is a little story from last night. I was putting my son to bed. He’s six and a half years old. He’s very inquisitive. He always wants me to tell him about my day. So he started asking me, what did you do today? Then he followed up with, mom, what’s the fastest growing franchise? I shrieked. I was like, oh my gosh. First of all, that’s an excellent question.

He should have a podcast. I think we need to get him rolling here.

I was like, why did you even think to ask you that question? He got very shy. I said, well, actually, Kyra, that question is probably one of the most frequently asked questions I get, but it’s not a simple question because, and I was like, it’s actually a great math question because is it total number of new businesses opened, or is it total net growth, or is it percentage growth? Then we talked about McDonald’s having thousands of locations, them opening up a 100 locations is no big deal. But a franchise that has 50 locations and they add 50 locations, and he goes, that’s 100 percent growth. I said, bam, we got it. He said, well, what’s the answer after we did all this math conversation? I said, I will get that answer to you tomorrow. When I looked, I asked my research team just to produce the latest set of brands based on fastest growing, just sheer number of units opened, and then fastest growing based on total net locations. What I found interesting is that they’re not the same list. So the brands that are adding hundreds of units a year, aren’t necessarily growing the greatest net number of locations. When I look at the brands that have the greatest net locations, they’re across industries and they’re across franchise growth models. So the top brand is a master franchise model. There’s another brand that’s just organic, one by one, kind of multi-unit. They have, I think, over 550 franchisees. And then others are going through what I would call a consolidation. So one of the things that I’m seeing significantly across what I would say larger brands, is this desire to consolidate into fewer franchisees.

Same number of locations or growing number of locations. But with fewer franchisees.

But with fewer franchise partners. Now, that can only happen once a brand hits scale. So one brand that comes to mind is Wingstop. So I looked at the franchise. So one of the things that FranData does, we like to call ourselves Franchisee Investigators. We want to figure out who the franchisees are, what do they own and what brands do they own. So Wingstop, this just blew my mind. I looked at this, 11 franchisees, 11 franchisees own half of all Wingstop locations.

Wow. That’s pretty influential if you’re a franchisee and you’re one of 11 who owns half of that large system. Because again, this isn’t a system with 72 units.

And oh, by the way, they own lots of other brands too.

Yeah.

So the reason behind that, I think there’s a couple of drivers. So I think that this is happening across industries. I looked at authority brands. This one blew my mind. Are you ready for this? Hold on. Hold on. Hold on. I don’t remember it off the top of my head. Authority brands. I looked at three of their, I’m sorry, five of their franchise systems. And of the five franchise systems, 46% of the close to 1200 territories are owned by 20 franchisees. 30 franchisees are multi branded within the authority brand.

Within the platform, mm-hmm.

Right, like this is, so once brands hit some level of scale, consolidation starts to happen. And that’s being driven both by external forces and internal forces. The external forces are things like, oh, well, there’s aging owners. So, you know, you’ve got people who wanna exit and you start to see financial players come in because they see established business where they can then maybe go buy some others and consolidate. The other thing that you see is there’s just simply economic pressure. So, you’ve got smaller franchisees who aren’t as prepared to weather the storms or it’s an opportunity to try and take existing franchisees who aren’t doing as well, who might be tired, and to reward development rights to someone who has capital to really take the brand and expand it in a more substantive way or just faster and with more kind of foundational support.

And that’s even a better story to tell too, right? Like, there’s got to be this improved validation when you have a handful of franchisees really want to buy up other franchisees. If I’m a candidate, that’s what I want to hear, that, oh, right, like, oh, I want to be in that position someday myself.

Absolutely. It’s a huge validation. There’s two ways to look at it. One way is the franchise system is so successful that people want to gain as much market share as they can within that brand, for sure. I think the third part, the internal part from the franchisor perspective is just the simplicity of, I have fewer people to deal with, you know? I mean, like, how many marriages do you want to have in that?

Right. And you can actually decrease the size of your corporate staff if you are dealing with, you know, a third as many franchisees at some point.

Yeah, I would say that you probably need to have, I think there’s a trade-off. You actually need to have more sophisticated support, right? Like, I remember talking to a very experienced franchisee here in the DC market. Love this guy. He was a multi-branded, non-traditional area rep. And he was with Blimpies, one of his brands. And he’s like, they hired some dude right out of college to tell me how to market my business. So, like, when you’re dealing with that caliber of franchisee, franchisees still want support, but they want it to be real support. So you have to have someone who actually is a much, I’d say a more expensive talent to really move the needle. Yeah.

And just looking at it from the marketing view, which is all I do all day long, is look at everything from the marketing view. I want that bigger multi-unit owner who’s probably going to have their own marketing people, tools, process, and oh, by the way, a big budget in place rather than dealing with, you know, 300 individual franchisees who I have to remind them every month that you need to do some marketing. So, yeah, I think it might not make the corporate office smaller, but maybe higher level, more strategic, higher caliber, like you said, I think that’s real growth. I mean, that’s where I think that’s what every CEO wants to get to.

And it’s, I would say once someone knows how to open stores too, then they’re setting up that particular location for better success. You know, when we’ve talked to brands and franchisees, when you open, you got to open big, right? And you can’t cheap out, you can’t, you know, that’s not the time. And so your more sophisticated franchisees have been through that drill, seen that story. And so they’re going to do it the right way to make, especially if they’re a brand that’s planning, planting flags in new territories.

Yeah. So first of all, thank you to your son for asking that initial question to get us rolling today. If he comes up with anything about EBDOT, I will be even more amazed. So I can only imagine some of the terms he hears in your household.

Well, that’s what I love about kids. You don’t know what they actually are paying attention to.

Yeah. Yeah.

And I’m like, he didn’t just make that up. And when my daughter, my daughter called me in, she’s three and a half, she asked me to come put her to bed. She’s like, what did Conrad ask you? And I said, he asked me, what’s the fastest growing franchise? And she’s like, what’s that?

So she’s lagging a little bit behind, but give it three more years and she’ll be asking those same questions too. Probably even less time because she’s following the leader.

Oh, true.

Yeah, yeah.

Totally.

So two years she’ll be pressing you for end of day storytelling time.

Yes.

Well, it is fascinating what you’re seeing as far as the consolidation and what we really consider to be the leading franchises right now. Is there a sector within Franchising that we’re all watching the world of chicken exploding? Are there other sectors that you’re watching right now that we’re going to be talking about more in the next four or five years? Anything really kind of jump out at you when you’re looking at the numbers right now?

Well, I could tell you what… So, what I always see in Franchising when I look at my new Franchise report is I always see what’s the new thing. It doesn’t really mean it’s like the thing that we’re going to be like, oh, that’s amazing, but it’s kind of like when we see one hot chicken, now we see a hundred. Oh, by the way, they all have the same AUVs, which is kind of mind-blowing. There was one quarter in our new concept report where there were three hot chicken brands. That’s a lot for just new brands. Anyway, hair extensions, that’s a new thing that we’ve seen a whole bunch add to our database. There’s been a bunch of Pilates, given Club Pilates are run for their money. A lot of a bunch of Pilates brands. I would say that the things that I’m more interested in is the new ideas. There’s a slightly different take on what we’ve seen before. So like chicken, hot chicken, the fact that it’s hot is the different part. So any little twist on what has historically been, right? So I had a call with a coffee concept today. They’re doing phenomenally well. So the drink category is absolutely where it’s at. I haven’t been in Dunkin Donuts in forever, I went to Dunkin Donuts, I was like, what is this? This is not a coffee concept, this is a drink concept. The number of drinks they have on their digital screens, like it was an indication of drinks are hot. But we’ve seen some interesting brands like in the medical space, manufacturing. So those are the things that catch my attention more.

Yeah, the things that aren’t sandwiches, smoothies, coffee, French fries.

I’m totally cool with French fries, but if it were French fries on top of, I don’t know, an ice cream.

You heard it here first, everybody. The old French fry ice cream coming your way. Someone will try that at some point, I’m sure. I’m going to guess Wendy’s is going to try that out with its frosty and French fries.

So, yeah, let’s be honest, we do that anyway.

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So I haven’t actually said this to anybody. It’s been more in my head. I think that we’ve been talking forever about, consumers can get information wherever they want, in franchise development or in franchising overall. But I think with the advent of AI, the need to put out as much content as possible to try and be the thought leader, right? I read, I think you’re the one who recommended the book by, I don’t remember what, Dan Monahan wrote a book about the AI search. Then all sorts of people who are talking about how does AI find you and recommend you to someone. And so I think that that means the bars are kind of off. So anybody who previously might have said like, maybe I shouldn’t share that, like that’s something that I’m going to share just only with a few people. I think that means that people are going to be talking about anything and everything just to get attention. And that could be very damaging to brands and to franchising because, you know, I get emails from people who are talking about challenges that they’re having in their franchise. And our company does, just the nature of we rate brands, you know, we have banks as customers and we write articles about them. And so I think that kind of information is going to be more and more and more public. And that could be a reputational risk that is more outsized than people might be thinking about.

Yeah, more public and privacy is just out the door. There is no more privacy. I keep thinking about all of the people who are uploading all of their private documents, legal documents, everything into ChatGPT and everything else. And it’s like, you really want to share that. You really want to share that with a database that a billion people are accessing right now. I’m sure nothing can go wrong. So yeah, I agree. Once it’s out there, it’s out there. And then sort of the AI flywheel effect is happening, where if you put something out there enough, AI will now say that that is the truth. And it won’t matter to you or me if it’s really true or not. But if AI is saying it, then that’s what everyone will believe and listen to. So yeah, it’s, I don’t know, we’re in an interesting time right now. We’re still in, someone described AI as we’re kind of in the, if AI was a cell phone, we’re still in the flip phone stages, right? We’re still in the early days and I don’t know where it’s going to go. I do too.

I want to stay in flip phone. I don’t want to do anything more.

Can we go back to flip phones or how about this? Can we go back to a day where you didn’t have to have a phone on you when you left the house? Imagine those days, right?

You had the big one that like would get charged up in the back of your trunk.

Yeah, the bag phone. Sure. Yeah. Yeah, or the big brick. Yeah, it’s interesting where you’re going with that AI conversation too, as I’m on LinkedIn all day long as I’m sure you are, and I’m sure 95 percent of our listeners are on there all day long too. Just the change I’ve seen in LinkedIn in the past couple of years, going from people I know sharing things that maybe I find interesting, maybe I don’t, but I can make that decision, to now it’s people I don’t know who are sharing chapter and verse, really long AI created posts that someone thinks I have interest in, but I don’t.

Here’s what I do find that interesting. Some people are very personal, and I feel like there is a personal piece to it. You go to a conference, you talk about what you learn, who you saw, that’s personal and business. But then there seems to be a lot more personal. Whereas, what I’m understanding is if you’re using AI from a market, like a branding and marketing perspective, as well as networking, that it really needs to be more like information driven. So like I have a personal goal that I gave to my company. I’m doing a LinkedIn post per week.

One a week?

Yes.

Okay.

The slog, that’s like unique content. That really is something that people would find interesting. Not just like…

I’m at the airport again going to the whatever show.

Yeah. Yeah. Exactly. So that kind of content is actually very intensive to like, it takes hours to make sure that I’m saying something interesting.

Yeah. Yeah. I struggle with that side of it myself. That’s why you see a lot of my posts are, I’m at the airport again going to the whatever show. But I mean, I’ve talked about this…

Good people want to know where you’re going.

Yeah, kinda. But I’ve shared this many times, like a couple of columns I write that, you know, need to be 800 words. I struggle for two weeks with that, to come up with 800 words of something interesting. Now, podcasting, turn on the microphone and we can go all day. But to actually put down in words what some of my friends seem to be able to just do like that without using AI, that’s a struggle for myself and a lot of people. So good on you for making that goal. And that’s kind of back to the Thought Leadership Awards. I think that’s one of the things that has made people want to follow what you’re talking about is you are out there consistently. And there’s part of consistency that I think a lot of people are kind of jumping past. They think, you know, well, I created this one wonderful thing. How come I don’t have all of the accolades yet?

Well, it’s hard. But you know what? I do find it interesting. So there’s always been, I think I have the benefit of, I’ve been in Franchising for 26 years. So sometimes I’ve had so many conversations. So like my next, my next post that I’m going to do at some point, I haven’t have to like fully, fully articulate it and put some numbers to it. Is I’ve always been asked like, okay, do development agreements ever get fulfilled? Do they ever really get fulfilled? And so I had this thought one day, I was like, does it matter? Does it truly matter if development agreements ever get fulfilled? And the answer is likely, well, it depends. The math for some brands might suggest, it pays for itself in a few years because you’ve locked up your territory. So anyway, from the benefit of all these years, there’s all these things that people have asked or we’ve had conversations about that you kind of think and like, hmm, let’s think about this slightly differently.

Yeah, I feel the same way about franchise development, marketing and sales. If your lead generation is working at 100%, you should put yourself out of a job, right? You should sell out every territory. And I don’t know of anyone, well, maybe a couple of people, but I don’t really know of too many brands that are 100% saturated. So I guess nothing’s perfect. But yeah, I’ve always thought about that. If you’re really banging away on all cylinders, you might be putting yourself out of work at some point.

Well, so the good news is, because there is a brand, who I talked about to talk to recently, who is basically sold out. And they still have a development team, because they still have transfers.

Yeah, yeah.

They still have, so they’re still, because I was like, what do you do all day long?

We count the money, that’s what we do. We count those dollars coming in from all of those fees. You’ve been in Franchising for 26 years. Tell me about that briefly. And that’s been with FranData for most of that time, right?

The whole time.

You’ve been with FranData since the 1900s.

Let’s look at it that way.

As my daughter would say, that happened in the 1900s.

True.

What do you see? And we won’t go all the way back, but let’s go back a decade or so. What’s your favorite thing that’s happened in the past decade or so in Franchising that maybe just wasn’t really working for you in the earlier days, but now it’s really made your career, your company, your brand and your clients, really working well that you just love?

Well, I think the difference is Franchising is ubiquitous now. I just drove past a strip center in New Jersey when I was visiting my family, and it was a 100% Franchise Strip Center.

Nice.

I’m like, so that is significant. The fact that my neighbor up the street is a neighborly franchisee, the neighbor down the street is a signed franchisee. Like that’s, you know, that is. And so I think like the whole ecosystem, I say it’s like grown up, it’s matured. So you’ve got enough people who are, you know, second generation franchise people or second generation franchise supplier people, you know, that the, the, in some respects, it’s created more competition for everyone. It’s created more service categories. And so I think the, the ecosystem means there’s more franchises, there’s more franchisees. So, so, so there’s a lot more attraction. So we get a lot of suppliers who call us and they’re like, all of a sudden franchising is important. We’re talking about major corporations, major corporations who all of a sudden wake up and they’re like, gosh, franchising’s everywhere. We should probably pay attention to this and understand it. So I have large corporations who subscribe to my entire franchisee database because they don’t know how to crack the code on who are these people and how do I actually sell to them. Because they’re all trying to sell to like, you know, corporate McDonald’s or corporate Burger King or whoever. And they realize, well, wait a second, these franchisees, they’re really influential. And sometimes there’s not that many, you know, Panera Bread. There’s only 27 franchisees owning over a thousand locations. Like this is, these people are important. And even if you’re trying to sell to the franchisor, like getting them and their opinions and their pain points and is just as important to selling to the franchise, it can be more important than selling to the franchisor.

Oh yeah, that’s where the money is in a lot of systems, you know, especially if you have a service for those folks. And back to your initial point about the consolidation, you’re going to have more brands that look like Panera, where there’s only a couple of dozen franchisees with thousands of locations across the country. So yeah, selling and doing business and partnering with people at that level, I think we’re just scratching the surface there. As far as suppliers and vendors and things like that, I think we’re, you know, until now, it’s been, you know, local marketing or, right, you know, local yellow page ads, which turned into local Facebook ads, which turned into local something. But yeah, that could be the next huge area of growth, even from the supplier standpoint.

So you know what, there was one time a franchisor was telling me, a development person was telling me, he was trying to sell territory for his brand development agreement, I think it was in the national market. And he had a lot of franchisees were like, oh, no thanks, because they knew who the franchisee who had bought the competitor brand. And basically these franchisees were saying like, that franchisee is so strong, I don’t really want to go head to head with them. Because of the network, the supplier relationships, like the whole thing. And that was the first time I thought to myself, okay, do franchise marketers, does it matter who your business competition is, right? So like, everyone talks about Flynn. You know, I remember talking to someone from Wendy’s, he said like Flynn was a great addition, right? So obviously, that must mean he runs like his, his operations team run great stores, right? So if you knew that Flynn was owning the competition around your location, do you market differently? Or I don’t know, what, what would you change to, you know, to, to how would you change your approach, I guess?

Yeah, I would just love to be in that situation that Flynn is in where I’m living rent free in all of the competitors’ heads, that they’re actually going to market different because of my name, right? That’s, that’s, that’s true success. That’s, that’s, that’s, but what you don’t know, too, is if you don’t really know who that competitor in the market is, they could be good. They could be better than Flynn for all we know. So I don’t know. Sometimes I think marketers even on that local level get so, get so bogged down with competition. They stop thinking about what do we do better than anybody else? And let’s focus on that, which is my number one rule of marketing. Let’s, let’s talk about us and not worry about what, you know, the empire is doing over there. But, but yeah, if you’ve got everybody on the run before they even start, that’s a success story in the making. Well, Edith, I want to thank you for, first of all, joining me today, but also just all of the good stuff you’re putting out there. I’m thrilled to hear that you’ve given yourself this task of, of, you know, a new LinkedIn article every week, you know, something, something real and something that everyone can follow along with on LinkedIn. Is there anywhere else that the people should be connecting with you, website, other types of content, anything like that, that you’re sharing that you wanted to throw out there today?

So, frandata.com is our website and FranData also does have a LinkedIn page and otherwise just connect with us over the phone. We’re very much a people business. I’m on a Teams call basically all day long and we like to share and learn information. And so I’d say that’s a great way to connect with us too.

All right, we will call you on that flip phone. Edith, thank you so much for being here and I will see you at a franchise event in the very near future.

Can’t wait.

Thanks again to Edith Wiseman for joining us today. And thanks to our sponsors, Pilot, AnswerConnect and Thunderly. And thanks to you for listening, telling a friend about us and staying connected on the Social Geek. Radio Network.