Top 10 Franchise Models

2019’s Top 10 Franchise Models

Matt DeCoursey is the author of the best-selling book Million-Dollar Bedroom while Matt Watson is a self-made multi-millionaire. Both of them are successful entrepreneurs and business partners in Full Scale and several other ventures. They also host a widely-followed podcast, the Startup Hustle.

On the 96th episode of the Startup Hustle, we hear from DeCoursey and Darrell Blackburn, Full Scale’s Chief Operating Officer, about the top 10 franchise models, and the factors that one needs to consider when choosing a franchise model.

DeCoursey and Darrell talked about the top 10 franchise models based on the 2019 Franchise 500 Ranking of Entrepreneur Magazine. The online article listed the top 500 franchises so they focused their discussion on the top 10 models.

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The Top 10 Franchise Models

  • McDonald’s – Businessman Ray Kroc was responsible for the company’s worldwide expansion reach through franchising. McDonald’s is found in 120 countries with 35,085 franchised locations worldwide. DeCoursey said that McDonald’s is very successful because they have a solid business, and they’ve evolved and changed over time. They have changed their offerings; they have changed their marketing approach, and they continually change the restaurant experiences of their customers.
  • Dunkin – Dunkin stores are found in 32 countries and as of 2019, there are 3,452 franchise locations outside the U.S. and 9,419 U.S. franchises. In the podcast, Darrel said they’re no longer called as Dunkin Donuts because they shifted their focus on their liquid beverages such as coffee, which is the most popular beverage in the world.
  • Sonic Drive-In – As of 2018, Sonic Drive-In has 3,365 franchise drive-in restaurants located throughout the U.S. They were ahead of their competitors in developing retail software such as an app where you can order ahead of time. Sonic is also known for its aggressive marketing in advertisements such as placing TV commercials in places where they don’t have any branches.
  • Taco Bell – They specialize in a variety of Mexican inspired foods such as burritos, tacos, nachos, and quesadillas. As of 2018, Taco Bell has 7,072 restaurants worldwide with more than 93% of them owned and operated by independent franchisees and licensees. They’re focused now on serving the urban markets and plan to open 1,000 restaurants by 2022.
  • UPS Store – They provide packaging, shipping, copy and print services, mailbox services, computer time rentals, and other small business services. As of 2018, the company has 4,720 franchise locations in the U.S., and 351 locations in Canada.
  • Culver’s – The restaurant chain operates mostly in the Midwestern United States, and as of 2018, it has 661 franchises mostly located in the Midwest. In the podcast, DeCoursey noted that among the top 10 franchise models, Culver’s has the highest franchise investment at $2 million to $4.7 million.
  • Planet Fitness – Even if Planet Fitness has one of the priciest franchise investments at $4.2 million, they’re one of the largest fitness club franchises with 1,506 franchises in the U.S., 34 foreign franchises, and 12 million members as of 2018.
  • Great Clips – With over 4,100 franchise locations across the U.S. and Canada, Great Clips is ideal for franchisees because they only need a franchise investment of $137,000 to $258,00, and no hair salon experience is required from the franchisee.
  • Jersey Mike’s Subs – One of the fastest growing submarine sandwich chains with 1,441 franchise locations across the U.S., and plans to open 2,000 new locations by 2020.
  • 7-Eleven – The largest convenience store chain with over 66,000 locations worldwide. Among the top 10 franchise models, 7-Eleven has the lowest initial franchise investment at $47,000, but it can also go as high as $1.2 million.
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Factors to Consider When Choosing a Franchise Model
In the podcast, DeCoursey and Darrel discussed the factors that one needs to consider in choosing a franchise model. They are:

  • Franchise fee and other costs – It’s not just the franchise fee that is taken into account in the franchise investment. There are other costs involved such as rent, real estate, leasehold improvements, utility deposits, insurance supplies, equipment, training, signage, furniture, inventory software, other dues, royalty fees, and a lot more.
  • Brand knowledge – Brand recognition is important because the franchisee will no longer spend much to market a brand that is well-known. Customers patronize a brand that is already known for its reputation, quality, and customer satisfaction.
  • Franchisor support – A franchisee must consider the type of support they will get from the franchisor such as support for training, marketing, operations, infrastructure, and employee recruitment. The franchisee must specify in the franchise agreement the types of support to be given by the franchisor.
Startup Hustle, A Podcast by Matt Watson and Matt DeCoursey

Listen to Episode 96 of the Startup Hustle Podcast – Top 10 Franchise Models

Here is the transcript from Episode 96 of the Startup Hustle Podcast – Top 10 Franchise Models

Matt DeCoursey:And we’re back. Another episode of Startup Hustle. Matt DeCoursey here with Darrell Blackburn who will be sitting in for Matt Watson. Hi Darrell.
Darrell Blackburn:Hey Matt.
Matt DeCoursey:Well, I’ve got some stuff to talk about today. I think we’re going to talk about franchise models and then the top 10 franchise models that are out there. I think an interesting question that people have asked me over the years related to franchise is are franchise owners entrepreneurs? The answer is absolutely.
Darrell Blackburn:Of course.
Matt DeCoursey:Franchise model is a road often traveled.
Darrell Blackburn:Yeah. It’s just a different path.
Matt DeCoursey:Yeah and it’s actually, in most cases, it can be a very reliable path.
Darrell Blackburn:Yeah. It can take a lot of the guesswork out, which is nice.
Matt DeCoursey:It comes with an owner’s manual.
Darrell Blackburn:It does.
Matt DeCoursey:Unlike many of the startups that you and I’ve worked on, but that’s part of what we’re gonna talk about today and franchise model’s really good for a lot of people. There’s a lot of pluses that come with it, but there’s also a lot of things to consider because as the world of commerce and business have grown, so have the total number of franchise models that you can choose from.
Darrell Blackburn:Correct.
Matt DeCoursey:Yes. So, oh wow. Where to start? So, there’s a lot of things that we’re going to talk about. Entrepreneur Magazine has the list of the top 500 franchises. We are not going to talk about all 500. So, we went with the top 10.
Darrell Blackburn:Much appreciated.
Matt DeCoursey:Yeah, no doubt. That would take forever and in a lot of those too, when you get down in that number 400 to 500, you’re like, “Wow, this has four total.”
Darrell Blackburn:Yeah, it gets scarce.
Matt DeCoursey:It gets pretty thin, but when you get to the top, some of these and we’ll declare disclose later what they are, but I mean, they have tens of thousands of units. So, well you and I, we went to the same business school at one point. They were big advocates of the franchise.
Darrell Blackburn:Sure.
Matt DeCoursey:What were some of the reasons why?
Darrell Blackburn:So, I think it’s back to the blueprint. There’s a blueprint. It’s turnkey. It’s very easy that someone has already carved out a path of success and they’re giving you the blueprint to follow and succeed. So, all of the difficulty and the money spent and the time spent learning your path to success is already carved out.
Matt DeCoursey:And they’re also giving you a lot of the support. You’re just becoming another thing going down their assembly line.
Darrell Blackburn:Correct.
Matt DeCoursey:You talk about, at least the bigger box franchises, they’re going to do your ad copy for you. They do the promotion, they’re dealing with national advertising and they’re giving you print and stuff that you need on local levels and those are things that, well, right before we did this, I was literally writing up a business development outline and proposal for a new client and it’s because that business is not a franchise. They do not have a creative department. They do not have a marketing department. They do not have video production. They did not have all this different stuff that we just happen to have. So, you look at how long some of that can take and I tell people, you look at a full scale, we often refer to some of the parts of it is we have a business in a box because you can lean on it, even though we deal with full time services in most cases, we do have a team of people that do some hourly stuff and that’s more of a service to our clients because you can spend more time trying to find a graphic designer to do an ad lay out for you then the amount of time they’ll spend actually doing it when you find them.
Darrell Blackburn:Or you can spend weeks on an hour long project just trying to get it all set up.
Matt DeCoursey:So, before we get into what the top 10 franchise models are, there’s some things that are considered in the Entrepreneur Magazine. Once again, this isn’t our top 10. This is theirs, but they’re way more credible than we are when it comes to determining these things, but some of the things that are taken into consideration are also things that you need to look out for any franchise model and the first is the cost and the fees. So, what’s a franchise fee?
Darrell Blackburn:Yeah, so I think that’s the natural place to start. As we touched on, there are a lot of pros to the franchise model. Well, there are some cons. It is difficult and expensive to get a franchise.
Matt DeCoursey:Well, they’re running the on you too. They’re going to a percentage of everything you sell and they’re like the mob.
Darrell Blackburn:Their rates might be as high as the mob.
Matt DeCoursey:Well, in some cases they are, but they’re coming, they’re going to get paid, they’re coming to collect.
Darrell Blackburn:And you just have to be extremely liquid and have to have a whole lot of assets to be able to even play this game.
Matt DeCoursey:And the reason for that is the franchise itself, they want to make sure of a couple of things. Well, they don’t want you to fail. They don’t want you to be broke two months into it. They also want to make sure that they get paid and they really want to really separate-
Darrell Blackburn:The pretenders. I mean, for a lack of better words. Yeah. I mean-
Matt DeCoursey:I was going to say posers, but-
Darrell Blackburn:Sure. I mean, as you say, they’re going to throw their full support behind you from a national and a local standpoint. So, they want to make sure that they have the right people in place to succeed and so, they are going to immediately weed out the people that they don’t think can play in that game. Now, they’re going to miss some along the way, but it’s an effective way to limit that pool of people that are actively getting into their franchise model.
Matt DeCoursey:So, some of the things under costs and fees that will come up, there’s the franchise fee. So, you’re going to pay, well usually a onetime amount. It’s your club membership and those can be a lot too. I mean, they could be half a million dollars just for that and then you’re going to have to, you can consider the total investment you’re going to make because you’re probably going to have to build something out or do something. You look at McDonald’s or something. You just don’t buy a building that’s already ready. It’s like, “Hey, this is already a McDonald’s.”
Darrell Blackburn:I mean, there’s a million things and you can always look at this. This is always listed in the franchise disclosure document. So, just a couple of those things. You have to look at the total investment. It’s not just the franchise fee, what goes into it? So, there’s the franchise fee. There’s rent, real estate, lease hold improvements, utility deposits, insurance supplies, equipment, training, signage, furniture, inventory software, other dues, royalty fees, different subscriptions that you might need. Legal, payroll.
Matt DeCoursey:I quit. I’m out.
Darrell Blackburn:So, you have to do your due diligence to make sure that you fully understand the total investment of this thing. It’s not just you buy into the franchise and hey, you’re up and running. There are a lot of other things and many more that I didn’t get into.
Matt DeCoursey:The big franchises though have people that work with you to do some of that and you talk about the franchise disclosure documents. Well, one of the things we’re also going to disclose in there is that royalty and fees. So, like I said, if you sell a dollar worth of something and they’re going to come take anywhere from one to 10% of it. It depends on what it is. So, some of the other things that, well, if you’re trying to choose a franchise, it’s very easy to find information about the size and growth, the number of open and operating units, the growth rate and then the closure rate. One of the things that in back at the good old Kelley School of Business that they really used to drive home was the rate of failure for franchises is remarkably lower than alternate stuff, things that are non-franchise and that’s because it does come with an owner’s manual. I think another reason for that though is franchises do a pretty good job of making sure that people are fiscally solvent.
Darrell Blackburn:Well, it’s that and typically with a large franchise, there’s a lot of brand knowledge already. So, you’re not building your brand along the way. People already know who you are. So, some of that challenge is taken down tenfold.
Matt DeCoursey:So, other things to consider are things like support. What amount of training are they going to want to give you? A lot of these franchises are going to require that you go somewhere and you’ll be there for a week and you’re going to be in somewhere Minnesota or whatever and they’re going to literally have a sample restaurant or whatever it is. You’re going to go through all the training, you’re going to do that and the likelihood as well is you’re going to have to send other people to.
Darrell Blackburn:Yeah, I mean you talk about a week, I’ve seen them six months. They can get way up there and very and intense. So, you need to do your research to see what commitment that is going to require.
Matt DeCoursey:Right and other things too are considering the marketing support, the operation support and those are things some companies, franchises or even manufacturers in some regards are going to have a lot of marketing material that you can just slap your logo on and there’s something to be said about that because that stuff is not always cheap to make. Operation support, well man, that’s clutch. That’s another thing too is if we just start Matt and Darrell ‘s Burger Shack and then all of a sudden the grill stops working. We don’t have someone to call. What do we do if? And one of the things, you talk about a franchise versus a clean fresh from scratch startup, in the startup version, everything you do the very first time is your first instance of protocol for that and we went through that with the ticket company.
We were like, “Okay,” remember when we first got our point of sale? And we were like, “Okay, we sold something. Now what do we do?” And we’re sitting there trying to figure out going, “Oh man.” It took two hours to fulfill one order, which later took two seconds because we automated it.
Darrell Blackburn:It’s very much walking around a dark cluttered room for the first time feeling everything out, but you have to run into it the first time too.
Matt DeCoursey:So, other things to consider related to support for a franchise model or the actual franchise infrastructure itself. How many people do they have to do it? Some of these smaller franchises that have three or four locations and that’s it. They don’t have a whole lot. Some places that are really big are going to literally have regional, maybe even local. I don’t know about McDonald’s here in Kansas City, but I guarantee there’s someone that works for McDonald’s that’s here in Kansas City.
Darrell Blackburn:They might have too much.
Matt DeCoursey:Yeah. Well and with that, what oversights going to come with it? Because I’ll tell you what, they do not mess around when it comes to you not doing things exactly the way they want to do it and some of these places too, for example, if you own a McDonald’s, they’re just going to call you up and tell you that they have a new type of frozen blah, blah, blah and you got to buy a $30,000 machine to start it. Now, they’re probably also going to advertise about it in the Superbowl and get some people thirsty for it, but at the same time you got to be ready for that and that’s where financing availability comes in.
Some of these franchise models are going to, well they might let you franchise a lot of the setup or the equipment or certain other things and then the last thing to really look at is things involving litigation. Are they currently being sued? And the bigger the franchise, the bigger of a sample size you have an opportunity to talk to current operators. Some people are in franchise models that are terrible and they aren’t going to say good stuff.
Darrell Blackburn:Yeah, I think that’s a really good point.
Matt DeCoursey:You aren’t going to have to try real hard to get them to tell you that it sucks.
Darrell Blackburn:People are always willing to talk about the bad reviews.
Matt DeCoursey:Yeah and also I mean, I think if you had just dumped your life savings into something and you weren’t happy about it, you might feel a little bit of responsibility when it comes to maybe preventing someone else from doing that.
Darrell Blackburn:Sure.
Matt DeCoursey:So, now next one considering franchise models and also weighted into the top 10 list we’ll get into are things like brand strength. Clearly we’ve used McDonald’s as an example. McDonald’s is, I mean, okay. If I said, “What’s the first franchise that came to mind?” What would you say?
Darrell Blackburn:It would probably either be McDonald’s or Subway.
Matt DeCoursey:Sure and so, that’s brand recognition. The good part with that is if you open one, well you don’t have to do a whole lot. People recognize those golden arches and they’re going to show up and they know what you serve and they know how much it usually costs and blah, blah, blah and they know what to basically what to expect. So, some of the things you can use to check that out are going to be things like maybe their social media, what their presence is.
You know who’s on social media that I absolutely love? Have you ever seen Wendy’s Twitter?
Darrell Blackburn:I’m over it.
Matt DeCoursey:I haven’t really followed it, but you clearly have because-
Darrell Blackburn:It’s jumped the shark for me.
Matt DeCoursey:Is it over? Is it not good anymore?
Darrell Blackburn:No. It’s just too much. It was good when they just dabbled and now it’s all they go for.
Matt DeCoursey:Okay. They used to actually, Wendy’s was really funny because people would be like, they’d make a comment, something dumb. It was almost something dumb, but they weren’t afraid to chastise someone.
Darrell Blackburn:Yeah, they would go at people and other brands.
Matt DeCoursey:It was pretty funny. So, I mean, well let’s get into this list because I think some people listening are probably curious. What are some of these top 10 franchises? And we’re going to go from 10 to one because we want to build up some suspense here-
Darrell Blackburn:Do we have the drum roll on cue?
Matt DeCoursey:There you go. That’s all you get. 7-Eleven. Number 10. 7-Eleven’s everywhere man. 67000 units worldwide. They have nine times as many units as their closest competitor and I mean, that says a lot. With that, it’s going to cost you, wow. What a wide range of opening. So, it could cost you anywhere from 47,000 to $1.2 million to open. That’s got to be directly related to how big it is and then-
Darrell Blackburn:The location. Yeah.
Matt DeCoursey:I mean, if you’re trying to open the 7-Eleven in Manhattan as opposed to Manhattan, Kansas, you’re going to see a big difference and it’s probably related to the labor and things. It’s probably just more about the real estate. So, 7-Eleven man. It’s everywhere. They are literally, we were talking about this yesterday with another guest, with Luke Einsel of Thirsty Coconut who had purchased a bunch of frozen drink machines from 7-Eleven who was liquidating them for some reason and they were all over Mexico. Watson was talking about being in 7-Eleven when he was in Singapore. It’s everywhere.
Okay. Number nine, Jersey Mike’s. I’ve eaten there. 1,483 units to date. Says it’s one of the fastest growing sandwich chains in the US and across all of them, they have over a billion dollars in revenue and they’re on track to have 2000 stores by 2020. That’s a lot. That’s a lot of growth. You think people are stepping away from Subway?
Darrell Blackburn:I don’t know.
Matt DeCoursey:Jared probably didn’t help that. Man. So, yeah, so anyway, Jersey Mike’s will cost you anywhere from 178 grand, three quarters of $1 million. Once again, I got to feel that’s related to location and size. I like Jersey Mike’s. I think they make pretty good food.
Darrell Blackburn:I’ve actually never eaten there.
Matt DeCoursey:You haven’t?
Darrell Blackburn:No. I’ve wanted to for three years and I’ve never taken the time to do it.
Matt DeCoursey:There are, by the time this year’s over, you will have nearly 2000 options of where you can.
Darrell Blackburn:There you go.
Matt DeCoursey:I used to eat at one in Indianapolis when I lived there a lot and I haven’t, I don’t even know where one is here.
Darrell Blackburn:I think that’s the one I drive by for three years. Always promising myself I would go in and I never did.
Matt DeCoursey:We’d stop and pick them up. So, okay. Number eight, Great Clips, 4,500 locations. It’s funny, I actually at one point looked at the feasibility of opening a Great Clips.
Darrell Blackburn:I remember.
Matt DeCoursey:Yeah. A Great Clips, Sport Clips, something like that. Fantastic Sams, any of those things, but you know why? Haircuts are recession proof. I mean, people get a haircut. It’s just a staple product. People get haircuts.
Darrell Blackburn:Yeah. There’s also some simplicity too. You’re offering a fixed service where there’s not sandwich inventory and things that you have to track at all times. It’s a little bit different in that regard.
Matt DeCoursey:Well and it’s also cheap to open them. So, you can open a Great Clips for 136K to 258K. That’s pretty lightweight when it comes to that. Now, one thing we didn’t talk about, this actually, some of these franchises are going to be regionally protected though. We might not even be able to open a Great Clips in Kansas City.
Darrell Blackburn:There are so many already, yeah-
Matt DeCoursey:But someone might already have the rights to do that and that’s also why these franchises from the top down want to see people that have deep pockets because once they get that movement, they can open 10 other stores. I mean, it’s repeatable. So, okay, number seven, Planet Fitness opened their first franchise in 2003. They have 1600 gyms. Now man, this is actually the priciest one yet basically a million to 4.2 million to open. Once again, I’m guessing that that swing has to do with obviously the bigger the gym, the more equipment.
Darrell Blackburn:Yeah, I was going to say, you’ve got a lot of heavy equipment purchases up front with the gym. So, that makes sense.
Matt DeCoursey:And then the equipment that goes in it too is a different and higher quality making it more expensive because it’s got to be-
Darrell Blackburn:Planet Fitness’s are huge. I don’t think I’ve ever been in a small one.
Matt DeCoursey:I’ve never been in one, but I mean, yeah, it’s a big gym.
Darrell Blackburn:Yeah. A lot of furniture and equipment.
Matt DeCoursey:They’ve had a pretty healthy year over year revenue increase. It says 40% since 2018. Last year they were number 21 on the last. Wow. Dude, they got 12 million members.
Darrell Blackburn:Capitalizing on that health kick that’s going on right now. It’s very trendy to be back in the gym, eating healthy. So-
Matt DeCoursey:I don’t feel that ever really went away.
Darrell Blackburn:You don’t think so?
Matt DeCoursey:No. I just think we have new ways to frame it. I think we just have more ways for people to blab about it online or something or there’s just more Planet Fitness’s everywhere. What’s the one you go to? You don’t go to Planet-
Darrell Blackburn:I go to Anytime Fitness, which is another huge franchise.
Matt DeCoursey:Right. Okay, so 12 million members. What is that? 20 bucks a month?
Darrell Blackburn:Planet Fitness has bearing memberships, but they started at 10 a month. So, it depends if you want their massage chairs and their tanning beds and-
Matt DeCoursey:But dude, if you have 12 million members and at 10 bucks a piece, that’s $120 million a month. That’s a lot of revenue.
Darrell Blackburn:Yup and if half of those people actually use their membership, they wouldn’t be able to support it.
Matt DeCoursey:Do you think they care?
Darrell Blackburn:No, they need them to not be there.
Matt DeCoursey:Okay. So, it’s not too crowded?
Darrell Blackburn:If they had 100% usage of their memberships, the gyms would be overrun. They’re counting on the people that pay and never come-
Matt DeCoursey:Join the gym, it’s going to be crowded in January. It’s going to be less crowded in February. It’s going to have tumbleweed rolling through it in March. I got a gym at my house. That’s what I go with.
Darrell Blackburn:It’s a good way to do it.
Matt DeCoursey:Yeah. I’ll sell you a membership there. I’ll give you a good rate. We have dumbbells, cable machines. Yeah. I even have a TV on the wall now that’s way too big. Okay.
Darrell Blackburn:I’m shocked at this.
Matt DeCoursey:The next one.
Darrell Blackburn:I’m about to fall over dead.
Matt DeCoursey:Number six. Culver’s.
Darrell Blackburn:That’s not what I’m shocked about.
Matt DeCoursey:What are you shocked about?
Darrell Blackburn:Look at the fees. 2 million to 4.7 million to open.
Matt DeCoursey:Yeah, it’s once again, probably back to the real estate and the build out. Think about it. You’ve got to take a building and you’ve got to have a drive through in it and then Culver’s has got a lot of frozen stuff, so you probably have to have a lot of freezers and crap like that, right?
Darrell Blackburn:Yeah, ice cream.
Matt DeCoursey:Who knows? I’ve never eaten at Culver’s and I’m a little surprised-
Darrell Blackburn:That’s shockingly high.
Matt DeCoursey:Okay. Number five, the UPS Store. I’m okay with that. I think I get it. That’s 5,000 units to date. 168 to maybe 400K to open. I think this is more of a convenience thing. It makes a lot of sense for UPS to have these stores. I’ve talked to, man, okay. So, when we’re in Indiana, Broad Ripple, the UPS store, we used to go up to that and drop our stuff off. There was a former Colts player that owned it, Roosevelt something.
Darrell Blackburn:Roosevelt Potts.
Matt DeCoursey:Yeah. Was that his last name?
Darrell Blackburn:Yep.
Matt DeCoursey:Really nice guy, but I talked to him about the franchise and I mean, basically what UPS is doing is they’re outsourcing their locational growth. So, they’ll give you and it benefited him for us to drop packages off. At one point, I remember they even offered to come pick them up, but I think the thing, there’s some other things with the UPS Store too. So, you’ve got the wall of the little just mailboxes. They’re 20 bucks a piece.
Darrell Blackburn:Yeah, the PO boxes.
Matt DeCoursey:That’s a little cash cow of a wall. I mean, think about it. You got 200 of them, you’re just going to sort some mail anyway. I mean, at 20 bucks a month, that pays your rent.
Darrell Blackburn:I mean, I also hate to do this. I hate to say this, it kills me, but it’s also capitalizing on a millennial trend. So, I’m from the era. Well, no, the post office isn’t something that I’m just young enough that I didn’t grow up knowing how to mail things through the post office.
Matt DeCoursey:I don’t ever think, “Hey, I’ll go to the post office.” I’m going to FedEx-
Darrell Blackburn:FedEx or UPS. Yeah. So, it’s capitalizing on that. As soon as my age becomes older and becomes the main purchasing power for our economy, that’s definitely something that I can see continue to grow.
Matt DeCoursey:So, the UPS Store’s been on the top 10 list three years in a row.
Darrell Blackburn:I believe it.Taco Bell
Matt DeCoursey:Yeah. All right. Let’s move on. Number four, Taco Bell.
Darrell Blackburn:Great commercials.
Matt DeCoursey:Yeah, but okay, that’s a good point though. You say great commercials. If we opened Matt and Darrell ‘s Taco Shack. We had the burger shack, now we’re going to do the taco shack. Do we fail at Burgers or-
Darrell Blackburn:We’re expanding.
Matt DeCoursey:We’re expanding and we’re growing into tacos?
Darrell Blackburn:If you hit every part of the market, one’s guaranteed to succeed.
Matt DeCoursey:Dude we’re going to take over Kentacohut because they took the hut out of it. So, we’re going have, we’ll have, all right, we’ll get that figured out. We need to serve one other thing, maybe fish because people just love fish in a landlocked state like Kansas, but no, Taco Bell and all right. So, I said, I haven’t seen that little dog for, has it even been around for 10 years? Do they still use the dog?
Darrell Blackburn:No. Those commercials were late ’90s, early 2000’s.
Matt DeCoursey:Right, well then they were pretty fricking good because-
Darrell Blackburn:I remember, I specifically remember that Godzilla movie from ’98, ’99 had the little dog running through the streets.
Matt DeCoursey:So, this is what’s nuts is, think about it. I wonder what the average ticket is at Taco Bell because it’s not going to be high. I mean, you got to be ready to serve a lot of people when you’re at 12 bucks a receipt. How big can your margin really be?
Darrell Blackburn:If that high.
Matt DeCoursey:Yeah. So anyway, Taco Bell, it’s everywhere. 7,000 units. Costs you anywhere from a half a million to 2.6 million to open. They moved up on the list, they were number eight last years. So, says here they’re focused on serving urban markets and they plan to open 1000 new locations by 2022. That’s modest growth at that rate. I mean, so I’m going a little international. Okay. Now number three, this, I got to be honest with you, man. If Culver’s was surprising, that number three, a Sonic Drive-I.
Darrell Blackburn:I don’t believe this.
Matt DeCoursey:But you know what? At the same time, so I actually know a guy that had worked for Sonic and they had developed, they already did develop significant infrastructure. They were one of the first places like this to have an app where you could order ahead of time. Now, McDonald’s is also trying to push that.
Darrell Blackburn:And they’re also killer with their commercials. They’re the kings of-
Matt DeCoursey:The two dude’s.
Darrell Blackburn:They’re the king of advertising and spots. So, in Indie, there’s no Sonic and there are commercials on the TV for Sonic all the time.
Matt DeCoursey:Weird. National. Yeah. So by the way, those two dudes are a huge hit for them. I remember talking to my buddy about it and I asked him about those guys. He said they’re huge. So, now Sonic isn’t a place that I go. I mean, actually I went there with Roy from Healthy Hip Hop about a month ago, but that was really just because I wanted a slush with nerds in it.
Darrell Blackburn:I find it inconvenient that some of them literally don’t have drive through.
Matt DeCoursey:Yeah. Well see, but they don’t like that. So, that’s what they did. They built an app. So, you order it ahead of time, you get there and well, I was with you at McDonald’s and we were like, “Who uses a McDonald’s app?” Well, the people that don’t let go at lunch, I mean there can be a long ass line in some of those places. I like Sonic, but I mean I don’t think I’d open one. It costs you 865K to 3.6 million. The issue I think I have with this is if I was going to open one, I’d be like, “Dude, I’m investing in 1953.” I don’t know. I would question the survivability of Sonic’s over all model, but maybe apparently I’m wrong.
Yeah, maybe. I don’t know. Who knows? I mean, but at the same time, like I said, I went there specifically because the only place I could get a slush was there. I could’ve gotten a shake or something like that, but I didn’t want a shake, I wanted a fucking slush with some nerds in it and that’s what I got. It’s always questionable, man. The way they mix the nerds into the slush.
Darrell Blackburn:I don’t know that trust that.
Matt DeCoursey:I don’t want them all at the bottom. You’ve got to put them on top.
Darrell Blackburn:So, is the slush thick enough that you have to use a spoon or is it a straw?
Matt DeCoursey:It’s a Slush Puppy. That’s why I dig it.
Darrell Blackburn:So, it’s a straw type.
Matt DeCoursey:Yeah.
Darrell Blackburn:So, are you just sucking nerds down your throat and choking the whole time? That seems dangerous.
Matt DeCoursey:Not if you know what you’re doing.
Darrell Blackburn:Oh yeah, there’s skill involved.
Matt DeCoursey:I’ve had a lot of practice with this man. So, number two, Dunkin.
Darrell Blackburn:No surprise.
Matt DeCoursey:Now, Dunkin has 12,740 locations. It’ll cost you 228 grand to 1.7 million to open it and they no longer, they’re just Dunkin. They are no longer Dunkin Donuts.
Darrell Blackburn:Yeah, they did a little bit of a pivot and shifted towards their liquid beverages.
Matt DeCoursey:So, I love Dunkin coffee. I do, I don’t know what they have in their cream, but it’s got something magical in it because anywhere I go, I order black coffee. When I go to Dunkin, I always want the cream in it because it just, I don’t know. It’s cream that is suckled from the sweetest cow ever or something. It’s just-
Darrell Blackburn:They have a bunch of weird regional things like the girl scout cookie flavors. They have all different options.
Matt DeCoursey:I’m not a huge fan of their donuts, man. I’ll be honest, I’m not.
Darrell Blackburn:I’m not either.
Matt DeCoursey:I’m not either. I mean, I think their glazed donuts suck. Honestly, they don’t have any glaze on them. Maybe that’s why people like them. I’m just a fat ass drinking slush with nerds-
Darrell Blackburn:Or maybe that’s why they took donuts outside of their name.
Matt DeCoursey:Could be. Then on the flip side, my daughter loves the Munchkins, the little donut hole things with the jelly in them.
Darrell Blackburn:Yeah. She’s also a kid.
Matt DeCoursey:Yeah, I know. So am I.
Darrell Blackburn:I don’t think they’re picky about their donuts.
Matt DeCoursey:Yeah. So, but yeah, I think the drink thing, I mean coffee’s the most popular drink on the planet.
Darrell Blackburn:That’s not changing any time soon.
Matt DeCoursey:It can also be a high margin, but I think for Dunkin, the thing I could never own one. You talk about, do you want to get up at 4:00 in the morning and make donuts?
Darrell Blackburn:No thanks.
Matt DeCoursey:I’m out. I wouldn’t do it. I couldn’t rely on myself.
Darrell Blackburn:It sounds like your local franchise owner is also not doing that.
Matt DeCoursey:Yeah. Maybe. So, you and I are a decade apart in age. Do you remember it’s time to make the donuts guy?
Darrell Blackburn:Vaguely.
Matt DeCoursey:Okay. So, when I was a kid, that was everywhere. It was the dude and he was waking, it was always different ways he was waking up, he’s driving. It’s time to make the donuts, just this mild mannered dude with a mustache. I can picture him, but so before we go to number one, which if it’s a surprise to you at this point, well fuck it. It’s McDonald’s. Shocker. Hey, McDonald’s runs a solid business and they’ve evolved and changed over time. They have changed their offerings, they have changed their marketing approach and one thing that’s pretty significant is they’ve changed their in restaurant experience. McDonald’s are nicer now-
Darrell Blackburn:They still will always have a broken ice cream machine though.
Matt DeCoursey:Yeah, that’s true. You talk about broken things. That was with the slush, the slush machines seem to be broken a lot. It’s heartbreaking. Yeah, but so McDonald’s has 37406 restaurants. They’re anywhere from 1.0 to 2.2 million to open. It’s the second year in a row they’ve been number one on this list. I mean, and like I said, McDonald’s has been very strong at constant reinvention when it comes to their products. I mean, they’ve attempted to make them healthier and then it’s in some cases too, some of it’s just a change in approach. They’ve also done their, I’m not going to say that McDonald’s is environmentally friendly, but they’re doing things to be a little more responsive to that and not be so wasteful. I mean, they’re probably still just crushing the planet anyway, but overall, have you seen the movie Founder?
Darrell Blackburn:That’s what I was getting ready to bring up. Yeah, it is a fascinating movie about the way that the franchise kicked off, a heartbreaking movie depending on what side of your on.
Matt DeCoursey:Yeah. If you were the McDonald’s guys, but these guy’s didn’t want to take a chance. They were holding that business back and while you talk about getting stuck into a shitty franchise model or fee structure as well, Ray Kroc, which Michael Keaton played was in that. I mean, he was sitting there opening new restaurants hand over fist and was going broke doing it and his change in approach for that has turned McDonald’s into one of, if not the largest owner of commercial real estate. I mean, they own tons of stuff and that’s when you talk about financing.
So, McDonald’s wants you to own the property. They would have probably already bought it and want to lease it back to you or finance it out to you or it’s a smart model. Then at the same time too and also so, that’s something when you go to rent space is don’t be as concerned about your first lease as you should be about your renewal because they got you by the balls or whatever-
Darrell Blackburn:You don’t have a lot of negotiating room there.
Matt DeCoursey:Now all of a sudden, that’s where owning that property or having something, having that control factor means a lot because if you have to go move it. I’ve only seen one McDonald’s go out of business and it was in Indie or at least it was shut for a really long time. It was right there on Benford or whatever, on the way to Broad Ripple before you turn on 62nd street and it was gone. It’s gone now.
Darrell Blackburn:I think it just moved around the road to 71st-
Matt DeCoursey:It might have, but the thing is they appeared to be rebuilding it and then it just, they didn’t finish or they moved it or something, but you rarely if ever see McDonald’s go-
Darrell Blackburn:I was just trying to rack my brain. I have never seen one closed that didn’t pop back up.
Matt DeCoursey:Okay. So, we have ten on here. What would be the one that you would be most likely to open? I’m going Great Clips.
Darrell Blackburn:I mean, that-
Matt DeCoursey:Just man because I don’t have any interest in doing some of these other things. I have no interest in any fast food. So, that takes out McDonald’s, Dunkin, Taco Bell, Sonic, Culver’s-
Darrell Blackburn:I think I’d go with UPS if you’re taking Great Clips.
Matt DeCoursey:I mean, you can take Great Clips too because it’s a franchise. We can open as many of them as we want.
Darrell Blackburn:Maybe.
Matt DeCoursey:Yeah. Well, I mean assuming you can because I’m going to take over wherever I’m at. So, you can just move over one-
Darrell Blackburn:I think I’m still sticking with UPS.
Matt DeCoursey:Why?
Darrell Blackburn:I just like the model. I like the trend. I like the ease of use. I like the way that the market is headed away from the post office. It’s becoming the thing. UPS or FedEx is the way to mail things and I think it’s going to continue to move in that direction.
Matt DeCoursey:Yeah, I mean I picked Great Clips. So, the only other option that I would try, I would consider UPS Store and maybe the gym, maybe Planet Fitness. Although, maybe going back to that, you got to have a lot of people sign up for 10 bucks a month to pay your bills.
Darrell Blackburn:A lot of capital up front too.
Matt DeCoursey:Yeah and I bet they have to finance the crap out of that, but I bet they also have massive buying power. How many treadmills do you think Planet Fitness buys? I’d like to think they have a little bit of-
Darrell Blackburn:I couldn’t even begin to guess.
Matt DeCoursey:I bet they mark them up, but they make money off of it. I bet they leverage that into more profit for them as a franchise unit too. So, I guess, like we said, if you’re interested in opening a franchise, we started up talking about things that you need to consider and take a look at. A quick review on that was cost and fees, the size and growth of the overall franchise itself. The closure rates are important and that’s stuff very, actually Entrepreneur.com. If you guys want to go check this out, go to Entrepreneur.com. They have the Franchise 500 that they do a very good job of profiling this stuff. It’s very easy to look through and it really is helpful in my opinion if you’re thinking about opening, if you really want to open a business and you don’t know what, but you think you want to own a franchise, it’s a good place to go start looking through stuff.
You get a little further down the list and you don’t need $1.8 million to open things, but you’re also going to be talking about a dog walking service or something like that. So, other things to consider related to the brand strength and the financial strength and stability of the franchise itself. Meaning, I mean if you get a little further down the list, I mean, you might be taking a chance on some of these franchise models. Maybe they’re good, maybe they’re not, but you also might be able to get in on the next big thing.
Darrell Blackburn:Yeah and I mean we’re at the top of the list. So, we’re also heavily invested in one or two markets. As you get down further the list, there’s some market analysis that needs to be done too based on the type of service or product that’s being offered.
Matt DeCoursey:And some of the things too outside of the top 10, a lot of them are service-related. I mean, there’s a lot of things that are related to cleaning.
Darrell Blackburn:There’ll be more haircutting places and spas and grooming places-
Matt DeCoursey:Pet services are in there a lot. There’s certain things like temp services. Kelly or whatever. I don’t if Kelly was actually one of them. They might be. Staffing services. There was a lot of things related to sports and fitness, a ton actually. Title Boxing Club or just different types of gyms. Sports Leagues. Some other things too that have stood out to me in the past where a tool companies like Matco, Snap-On and that’s the thing too, Snap-On’s interesting because they look for people that were mechanically inclined and they put them in a truck full of tools and they drive around to job sites and factories and whatever and it’s just easy to buy it and order it when the guy’s right there and you’re like, “Oh man, I really need it but I haven’t had time to go get it,” or they also outfit a lot of industries and stuff like that.
I mean, outside of this top 10 list, what would be a franchise that you would open?
Darrell Blackburn:I like Anytime Fitness. I like their accessibility everywhere. So, as a user of their service, they are everywhere, which is it really appealing. It’s also appealing that they’re open 24/7. They’re also generally smaller, so there’s less equipment overhead of something like a Planet Fitness. So, I think that’s the model I would go with and I’m also a huge fan of people that will pay me every month then not even use anything.
Matt DeCoursey:It’s true. I would actually go with Sports Clips.
Darrell Blackburn:That’s a good one and it has to be growing. I hear they’re popping up everywhere-
Matt DeCoursey:I get my haircut there and I look at it and so, it’s probably, I mean realistically dude, it’s probably not any different than the haircut I get a Great Clips. All they do is they have ESPN on and I actually that they actually put a hot towel on you and wash your hair after and give you a three minute shoulder rub and it’s just, I mean-
Darrell Blackburn:And then they charge you an extra 10 bucks for it-
Matt DeCoursey:It’s 25 bucks and all it takes is a little more time. With that, I hate their booking. As someone who owns a booking platform, my God, you could do so much better and it’s never right. It’ll be like, “Hey, if you want to get your haircut with Morgan, you have a 15 minute wait,” and then I’ll put it in there and I’ll get there 15 minutes later and somehow it’s wrong or they’re not there or something. I’m just like, “God, come on. You can get it together,” but those are the things that are expensive. It’s hard to do. So anyway, well, thanks for sitting here and talking with me about this. I think I’m going to go get busy. I’m going to go open a new business.
Darrell Blackburn:Oh God.
Matt DeCoursey:I’ll see you next time.

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