Mike Andes scaled a franchise to over 200 locations by refunding franchise fees at the end, charging flat monthly fees instead of revenue cuts, and letting franchisees leave with their customers. He built it without private equity or debt.
Here's how I built a franchise that has over 200 locations around the world. And I did it without private equity or any debt. First off, the initial franchise fee that owners give to us, they get refunded back to them at the end of their term. Number two, we don't charge any monthly royalties. There's no percentage of revenue that we take. It's a flat monthly fee. It doesn't matter if you make 200,000 in annual revenue or $2 million in annual revenue. We take the same monthly fee, not penalizing you for growth. The third thing we did is with our preferred vendors and all the deals and discounts that we get with other brands, we don't take a middleman cut. So if from steel we get 20% off, we're not going to take 2% at a little commission in between our franchisee and the preferred vendor. The fourth, and probably the biggest thing that we do that is different than any other franchise is we allow franchisees to leave with their customers without any penalty. This is unheard of in the franchise industry. And honestly, it's because of private equity, and they don't want their sticky revenue being in jeopardy, and it hurts their evaluation. But ultimately, we think it's best for the owners.
