The 1,000 Restaurant Giant That Makes Its Owners Work

By Tam Goldsmith

Culver’s has passed 1,000 restaurants while still expecting its franchise owners to work full time in the business.

Culver’s has grown beyond 1,000 restaurants while holding onto a rule that feels increasingly unusual in modern franchising. Its franchise owners are expected to work full time in the business, and prospective owners spend five days in uniform before the company decides whether to approve them.

Having enough money to buy a Culver’s franchise does not mean Culver’s will sell you one. The Wisconsin restaurant chain requires prospective franchisees to have at least $500,000 in liquid assets, rising to $750,000 for candidates planning to own the real estate, building and equipment. Financial qualification is only the beginning.

Candidates also spend five days working inside a Culver’s restaurant during Discovery Week. They put on the uniform, experience the operation and get a much clearer idea of what ownership will involve. Culver’s gets something equally useful: several days to decide whether the person with the money is somebody it wants representing the brand.

That becomes particularly interesting when you consider the size of the business. Culver’s now has more than 1,000 restaurants across 26 states, yet it still expects its owner operators to remain actively involved in day to day operations. At a time when franchising is attracting larger investors and increasingly sophisticated multi unit groups, Culver’s has continued to grow with the owner remarkably close to the restaurant.

Buying a Culver’s Means Operating One

Craig and Lea Culver opened the first restaurant with Craig’s parents in Sauk City, Wisconsin, in 1984. The first successful franchise followed in Baraboo in 1990. More than three decades later, the company remains unusually clear about the role it expects a franchise owner to play.

An owner operator must hold at least 50 percent of the restaurant business, or at least 25 percent of both the business and its real estate. Culver’s also expects that owner to work full time in daily operations, which makes this a difficult franchise to approach as a passive restaurant investment.

There is practical sense behind that requirement. Restaurants rarely lose customers because of one spectacular mistake. Standards usually deteriorate through ordinary things such as slower service, inconsistent food, poor scheduling or a strong manager leaving. Those problems can affect customers and margins long before they become obvious in a monthly report.

Keeping an owner close to the operation does not guarantee a successful restaurant, but it does give that person a better chance of seeing problems while they are still manageable. Culver’s has chosen to build that proximity into its franchise model.

Five Days in Uniform Tells Culver’s Something Money Cannot

Plenty of franchisors require operational training. What makes Culver’s Discovery Week interesting is that it takes place before final approval.

A financially qualified candidate still has to experience the daily reality of the restaurant. That creates an obvious filter. Someone who dislikes the idea of spending five days working in uniform is unlikely to enjoy a franchise model that expects full time involvement after opening.

For Culver’s, finding that out early makes sense. A franchise agreement can create a relationship lasting many years, and an unsuitable operator can consume management time, hurt restaurant performance and damage customer experience. The initial franchise fee matters far less than choosing somebody capable of operating the business well over the life of the agreement.

That becomes harder as a franchise system grows. Culver’s management cannot personally watch what happens in more than 1,000 restaurants. Franchisees and their managers therefore carry much of the responsibility for protecting standards at restaurant level.

Some Future Franchisees Are Already Working There

The owner operator requirement creates a recruitment challenge. Culver’s needs people who understand restaurants, want to work in the business and can ultimately meet the financial requirements of ownership.

Its Franchise Mentoring Program helps create that pipeline from within the system. Successful general managers can work towards ownership with support from established franchisees. More than 200 Culver’s owner operators have come through the programme, with some subsequently becoming multi unit owners.

There is a lot to like about that approach. An experienced Culver’s manager already understands busy shifts, staffing pressures, food preparation, service standards and the small operational problems that can damage a restaurant. Ownership adds financial responsibility to experience that has already been earned.

It also gives restaurant employees something unusually tangible to work towards. The next Culver’s franchisee does not necessarily have to arrive from outside the system with a large cheque. Some can start behind the counter, learn the business and eventually become owners themselves.

One Thousand Restaurants Changes the Argument

Large multi unit franchisees have become an important part of modern franchising for good reason. Experienced groups can build professional management teams, spread overhead across numerous locations and provide franchisors with partners capable of investing substantial amounts of capital. Culver’s has multi unit owners of its own, so its approach is not an argument against that model.

The difference is that Culver’s has not treated growth as a reason to disconnect ownership from operations. The system has crossed 1,000 restaurants while maintaining meaningful ownership requirements and expecting active involvement from its franchisees.

That gives other franchisors something worth considering when approving their next generation of owners. A candidate with greater financial resources may be able to develop several locations quickly. An experienced operator may bring a deeper understanding of what makes an individual restaurant work. The strongest franchise systems will find ways to combine capital with operating ability rather than assuming one can replace the other.

Culver’s has spent decades favouring people prepared to learn and operate the business. Its first 1,000 restaurants suggest that being demanding about who becomes a franchisee has not stood in the way of growth.

What We Can Learn From This

Franchisors should decide what they expect from an owner before increasing the pace of franchise recruitment. Culver’s gives operating ability considerable weight and supports that approach by creating a route for experienced managers to become franchisees themselves. Brands do not need to require every franchisee to work full time inside a location, but there is value in ensuring owners understand the businesses their capital is funding. Culver’s has shown that demanding more from prospective franchisees can coexist with significant scale, while giving employees a credible route into business ownership.

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