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Franchisors Slashing Franchise Fees

As the country’s economic troubles grind on, we are seeing franchisors getting more inventive to attract new talent. In many cases, this means dramatically slashing franchise fees.

Leading the way with this movement is the diner franchise Huddle House. Late last week, Reuters released a fascinating interview with Huddle House vice president of development Thomas Flaherty, who had worked at Papa’s John and is now leading the franchising charge at Huddle House. The diner franchise is so driven to broaden their franchise network, they have cut franchisee fees by 80% and waived royalties for 5 months.

"We have a lot of folks that are contemplating retiring or have retired from a corporate job. They're looking to invest. We also get existing restaurateurs from other concepts," Flaherty said.

Huddle House is looking to expand rapidly by adding 30 new units this year. This comes on the back of the 20 units they opened last year. For a company seeking profits via growth, expanded franchising is a must. Flaherty doesn’t mind taking a bit of a hit on the franchise fee because it allows him to intensify his envisioned roll-out. Most interestingly, he sees this as a most ideal time to launch franchise expansion.

“There's probably not been in modern history a better time to get land than now; so many vacant spaces across the country.”

That’s the kind of optimism we like to hear. We hope other franchisors follow suit to get those hungry entrepreneurs into the franchising system as quickly as possible.

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