Culver’s 2025 data is out 🚨 The midwest burger giant had another big year: • Avg revenue: $4,145,665 (+7.5% YoY) • Avg EBITDA: ~13% (corporate locations) • Grew to 1,041 locations (+44) Only 4 failed franchises in 37 years - one of the steadiest brands out there 💰

I could write a book on emerging franchise development at this point but some quick thoughts: 1) Good concepts don't *need* to use brokers But if they can afford it and want faster growth (that they can support), no reason to not use them. Why? 2) The LTV of a franchisee is incredibly high If a brand has: • $1M AUV • 6% royalty • 10 year franchise agreement That's $600k in lifetime royalty revenue per location. So a 3 unit deal = $1.8M in LTV. Paying a broker ~$50k for acquiring that "customer" isn't crazy, assuming the brand gets them open & operating. The problem is... 3) Most emerging concepts aren't good (There's a reason it's rare to see transparent financials in an FDD). The 3 unit deal that was sold, rarely gets built. The operator stops at 1 because the ROI isn't there to build more. They're stuck in entrepreneur "purgatory". But the broker got paid and is selling the next shiny new concept. 4) The "industry" is a conveyor belt of mediocre concepts There's a bunch of consulting firms "selling the dream" to unsophisticated SMB founders who have an avg at best business. "Pay us $100k-$150k to get you turned into a franchise. We'll connect you with brokers, and you'll have 100 locations open in a few years and sell to PE" The founders have no idea what they're getting into. Some of them even give up big chunks of their royalty streams on day 1. The founders have zero financial plan for how they can support any growth that may occur. This compounds issue #3 - and is far and away the foundation of any problems downstream. Brokers getting paid is sustainable if the brands knew what they were doing / were legit concepts! With all that said... 5) Everything's fine? (if you zoom out) Despite the above, year after year, the stats on franchising are positive: Total franchise locations open, number of jobs created, etc. are always increasing. The pie keeps getting bigger, not smaller. AND every few years there's a break out concept that scales nationally with real staying power. Dave's Hot Chicken, 7 Brew, OrangeTheory, Club Pilates, KidStrong are a few in the last ~15 years. You could argue the lack of regulation/strict oversight is a deliberate feature - It's a GOOD thing concepts don't have to jump through many hoops to try their hand at the franchise lottery. The quality rises to the top quickly - and the failures of the rest are "casualties of entrepreneurship". -- ^I'm not saying I agree with #5...but it's an alternate perspective on the ecosystem that I've thought about. Inviting more regulation and rules can create unintended problems / ripple effects. -- Anyways TLDR - If you're a new brand and you're insecure about sharing financials in the FDD, then please don't franchise. You're delusional to ask people to invest hundreds of thousands $$$ without sharing the potential ROI. And if you're evaluating a franchise concept - talk to every franchisee you can before making a decision. That matters far more than anything else!!

Subway franchisees:

7 Brew just finished testing "ready to drink" coffee in 96 Walmarts - They'll now be expanding to over 4,400 Walmarts across the country. Big win for franchisees - this gives massive brand exposure as they continue to build hundreds more drive-thru locations this year

I really need to start an emerging franchise consulting company: I'll charge $30,000 and tell you not to franchise. So many concepts considering franchising that have zero differentiation and unattractive economics. My company will save you $100k and 2-4 years of your life!

Any franchisees utilize this yet? Will be curious to see what this does to delivery economics over time

Established franchises come with proof of concept, but also systemic risk such as: Your franchisor prioritizes international growth over domestic "maintenance". Much easier to juice your bottom line as a franchisor by opening locations across the world, instead of optimizing performance in a saturated home market. • DQ • KFC • Pizza Hut • Burger King ...franchisees in the U.S. have all been victim to this treatment (amongst other things). The franchisors have done exceptionally well in the last decade relative to the performance of U.S. franchisees Simply a tension in the franchise model that will always exist -- Zors can do well while Zees don't

Restaurants are funny bc most conventional wisdom says it's a terrible business to be in... Yet look at the top 100 largest franchisees and ~95% of them own only restaurant brands. Some structural reasons for that, but end of the day good operators can make a killing

Top defense tech CEO weighing in on the beverage wars...didn't have this on my bingo card 😆 Honestly, Greg's OP makes a valid point - Creating distinct products is better longterm, and nobody has done it better than Taco Bell the last 20 years: • Baja Blast • Doritos Locos Tacos • Crunchwrap Supreme ...just to name a few. That said, McDonald's didn't just launch their lineup over night to chase a fad. They first tested a bunch of drinks via CosMc's, then strategically rolled out beverage ops to franchisees. I'm sure the new energy drinks will slot in nicely and be a win. Also worth mentioning - Taco Bell is currently doing the same strategy as McDonald's with their Liv Mas Cafe concept, so maybe Greg should've kept this one in the drafts folder 😆

The double-edged sword of franchising is you can grow quickly, but once you hit scale, implementing change is a b*tch. Any new strategy or long term plan requires the buy-in of hundreds of franchise owners. Achieving their buy-in and getting them to "trust the process" is a time consuming and bureaucratic process. Now depending on the brand / scenario, there are plenty of examples where franchisees rightly pushed back to a given initiative. But it is undoubtedly far easier to implement change if you own your locations & don't have to convince franchisees to spend money on store level changes. Chili's is only ~8% franchised, so they largely didn't have to deal with this. Franchisee politics is also why Todd Graves stopped franchising Raising Cane's. Rolling out operational improvements was taking far too long...so he bought every store back!

Lot of Burger King victory laps on the timeline.. Reminder in 2025 in the U.S: 🍟 McDonald's did 5x the revenue of BK 🍟 1 McDonald's did ~2.5x the sales of 1 Burger King Great year so far for Burger King...but it's a long way to go before they're in the convo with Mickey D's

First time at Culver’s - vibes are HIGH

Raising Cane’s built an empire around 1 meal - Chicken tenders & fries is the foundation of a concept doing ~$6.6M revenue / store. Cane's wasn't the first (Guthrie's was), but they've proven how far you can take the model. Other concepts are now following their playbook: • Huey Magoo's • Layne's Chicken Fingers • The Coop The latter is founded by a former employee of both Raising Cane's, and Layne's. His name is @eliot_mcdonald, the latest guest on the Empires Pod. He breaks down the different operating models he's seen as an employee at these concepts - And what he's doing at The Coop to build his own chicken tender empire (3 stores open, another 3 being built right now). Give him a follow, and listen to our convo on all pod platforms!

We are cooking at FD Capital 🔥 If you're a multi-unit franchise owner, get in touch with us

This is a breakdown of most of Alsea's locations - Unclear how many Chipotle's they'll build in Mexico, but they'll likely start with tourist destinations. They're also opening the 1st Raising Cane's south of the border later this year ~$5 billion in total rev for Alsea 💰

Fun fact: Chipotle partnered with a company called Alsea to build & operate Chipotles across Mexico. Alsea is also going to operate Raising Cane's in Mexico, with the first opening later this year. Their portfolio spans ~4,800 stores of: • Chili's • Popeyes • Starbucks • Domino's • Burger King • Cheesecake Factory And more across Mexico & Europe