5 Guys Burgers And Fries is one of the fastest-growing franchises in America. In a market of intensive competition and huge cost-cutting, this burger franchise is expanding across America by doing the opposite. They provide customers with top of the line food with the freshest ingredients. People sometimes wrongly believe that franchising is simply a slave to convenience and the bottom line. 5 Guys And Burgers and Fries have come along to disprove that.
Business founder Jerry Murrell recently sat down and explained how he got a start in the burger game as well as speaking about his experiences as a franchisor. It’s one of the best reads on franchising that we’ve encountered in a long time. Murrell speaks in the first person, and as such, the article becomes a primer on how to run your own thriving franchise on your own terms.
There are some great nuggets here; consider, for instance, that 5 Guys specifically try to source Idaho potatoes from above the 42nd parallel for their French fries. Apparently the potatoes that take longest to grow, taste the best, and they grow longest in northern Idaho. Is that commitment to taste or what?
Most interesting to readers of this blog are Murrell’s thoughts on franchising. He has a unique relationship with his franchisees, to say the least, but he seems to really committed to openness. He meets his independent franchisee committiee every quarter and has never had any legal difficulties with his franchisees. We’ve included some of Murrell’s thoughts on franchising below, but we’d recommend reading the entire article.
My kids wanted to franchise from the start, because we couldn't get the money to expand on our own. Opening a store costs $300,000 to $400,000. Banks won't help. They thought we were crazy going up against Burger King, McDonald's.
I was dead set against franchising. I didn't think we'd be able to control the quality. That worried the heck out of me. They pulled me into it kicking and screaming. At that point, we had five stores in the northern Virginia region.
When we started to sell franchises in 2002, Virginia went in three days. We accept only financially sound franchisees who can weather the storms without the help of banks.
We make 6 percent of sales on the franchises. All franchises work the same way: People say they want to sell your product. So you give them a Franchise Development Agreement that explains all the ways we can beat them down. I don't know if I would ever sign it. We can get out of the deal a million ways, but they are stuck.
Still, we have never had a franchisee go legal on us. I think that's because we have an independent franchise committee that meets once a quarter. People said, "Don't do it! They'll form a union!" But we thought, If someone comes in with a wacky idea, instead of the Murrells putting it down, the other franchisees would say, "That's a dumb idea."