Your Next Franchisee Might Already Work for You

By Sean Goldsmith

Elliott Disner joined Beyond at 16. Nearly two decades later, he is becoming an owner of the business he grew up working in.

Beyond Juicery + Eatery is turning a longtime employee into a franchise owner. It raises a useful question for growing franchisors: are they overlooking people who already know how to run the business?

Franchisors spend a lot of money finding franchisees. They advertise, use brokers, attend exhibitions, chase leads and put candidates through discovery days. Once somebody signs, they spend more money teaching that person how the business works.

Beyond Juicery + Eatery has ended up with a candidate who needed very little introduction to the company. Elliott Disner joined the business at 16 and has spent nearly two decades working across restaurant operations and head office. His experience has included menu development, marketing, restaurant design and construction. He is now becoming a franchisee, with a restaurant planned for West Delray Beach, Florida.

Disner's story is unusual, but the recruitment question behind it should be familiar. Franchise businesses employ people who already understand their customers, operating standards and difficult parts of the job. Very few of those people are ever seriously considered as future franchise owners.

Franchise Recruitment Usually Looks Outside

Most new franchisees have to learn the business quickly. Due diligence gives them a chance to examine the numbers, speak with existing owners and understand the agreement. Training then has to prepare them to operate the business.

An experienced employee arrives with a different set of knowledge. They know what a difficult Saturday looks like, where staffing problems usually occur and which parts of the operating manual work better on paper than they do during a busy shift. They have also had years to watch how head office deals with franchisees when something goes wrong.

None of that makes them automatically suitable for ownership. Running a business with your own money at risk is different from managing one for somebody else. The point is that franchisors may already employ people with much of the operating knowledge they spend months trying to give new franchisees.

Knowing the Business Doesn't Pay the Franchise Fee

Money is where the idea becomes difficult.

Beyond currently estimates the investment for a typical franchise at $328,575 to $649,300 and requires at least $150,000 in liquid capital. An employee can become exceptionally good at running a restaurant without ever accumulating that sort of money.

That creates a familiar problem. A manager might understand staffing, food costs, customers and the daily operation but fail the financial test for ownership. An outside investor can pass that test immediately while knowing almost nothing about the business.

Franchisors should not solve this by lowering financial standards. Putting somebody into a franchise without enough capital is a good way to turn an experienced employee into a struggling business owner. The more useful approach is to identify potential owners earlier, while there is still time for them to understand the financial target and work towards it.

Ownership Can Be Part of Career Planning

Franchise companies already identify employees who could become store managers, area managers and senior executives. There is little reason franchise ownership cannot sit alongside those options.

That could start several years before anybody signs an agreement. A promising manager can be taught more about the P&L, property costs, financing, working capital and the amount of personal money required to buy a franchise. They can also spend time with franchisees and see the parts of ownership that employees do not normally encounter.

Some will decide they would rather remain employees. Others will discover they cannot or do not want to take the financial risk. That is useful information for both sides.

The ones who continue may become strong franchise candidates because the franchisor is no longer starting with a stranger. It is dealing with somebody whose performance, judgement and knowledge of the operation have been visible for years.

Beyond Gets to Find Out Whether It Works

Disner's West Delray Beach restaurant is expected to open this fall and will use an updated store design. Beyond will now get to see whether nearly 20 years inside the company gives him an advantage when the wages, rent and other bills are his responsibility.

His decision is encouraging for the brand. Somebody who has seen the company from several positions has decided to invest his own money in it. That says more than a testimonial from somebody whose experience of the business began during the franchise sales process.

The more important result will come after the restaurant opens. If Disner becomes a successful franchisee, Beyond will have a reason to look more closely at the people already working across its restaurants and head office when it thinks about future owners.

Other franchisors should probably do the same. There is little sense spending heavily to find candidates outside the business without first asking whether somebody capable is already inside it.

What We Can Learn From This

Franchisors should start identifying potential employee-to-owner candidates before they need another franchisee. Give strong employees access to the financial side of the business, explain what ownership actually costs and let them see how franchisees operate. They should still meet the same capital requirements and conduct proper due diligence before investing. If more brands do that work early, some of their best future franchisees may turn out to be people they already employ.

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