In franchising, growth is often celebrated as proof of success. Unit counts rise. New brands are acquired. Press releases multiply. From the outside, it can look like momentum.
But recent events in the restaurant industry highlight an uncomfortable truth: rapid growth driven by heavy leverage can create fragile systems—and franchisees are often the ones left exposed when things break.
In several high-profile cases across the restaurant sector, private equity–backed franchisors pursued aggressive expansion strategies funded by complex debt structures. On paper, these roll-ups promised scale, efficiency, and brand power.
In practice, many produced:
Heavy corporate debt obligations
Declining same-store sales
Reduced reinvestment in brand and support
Friction between franchisor needs and franchisee realities
When debt service becomes the priority, alignment suffers. Marketing funds, vendor rebates, and operational support—resources franchisees depend on—can become pressure points instead of protections.
The lesson is not that all private equity ownership is bad. The lesson is that capital structure matters, and incentives matter even more.
Franchisees invest their savings, take on personal guarantees, and commit years of their lives to a brand. Their success depends on:
Stable leadership
Predictable systems
Responsible financial stewardship at the franchisor level
When a franchisor is overleveraged, franchisees inherit risks they did not create and cannot control. They may still be required to pay royalties and brand fees even as the underlying system weakens.
That’s not partnership. That’s misalignment.
When evaluating a franchise opportunity, the most important question is not:
“How fast is this brand growing?”
It’s:
“How does this franchisor make money—and are their incentives aligned with mine?”
Healthy franchisors tend to share common traits:
Growth paced by operational readiness, not financial engineering
Capital structures that allow reinvestment, not just debt service
Transparency around marketing funds and vendor economics
A track record of supporting unit-level profitability, not just unit count
Growth should be a byproduct of franchisee success—not a substitute for it.
At Himes Breakfast House, our philosophy is simple: if franchisees win, the brand wins.
That belief shows up in how we operate:
We prioritize unit-level economics over headline growth
We keep startup and ongoing costs disciplined and manageable
We focus on building strong operators, not just adding locations
We grow deliberately, with long-term sustainability in mind
We are not interested in scaling at the expense of stability. Our responsibility is to protect the system, the brand, and—most importantly—the people who invest in it.
Franchising works when interests are aligned:
Franchisees succeed because the system works
The franchisor succeeds because franchisees succeed
Excessive leverage breaks that alignment. Responsible growth reinforces it.
Choosing a franchisor is not just choosing a brand—it’s choosing a financial philosophy, a leadership mindset, and a long-term partner.
If you’re evaluating franchise opportunities, look beyond growth charts and acquisition headlines. Ask how the system is funded, how decisions are made, and whose success truly comes first.
At Himes, that answer is clear: our franchisees are the business.