Mark Vandegrift
Welcome to the latest episode of the FranSimple Podcast, the podcast designed to make the concepts of franchising simple. I'm your host, Mark Vandegrift, and with me today is the president of FranSource, an all-time guru in franchising, and my franchise broski, Steve Vandegrift. Steve, welcome.

Steve Vandegrift 
Thanks, Mark. Always great to be here.

Mark Vandegrift 
Good. Well, today we're going to talk a little bit about what makes a great franchiser. But before we jump into that, why don't you give us a quick overview of maybe something in the franchise industry going on right now? What are you seeing?

Steve Vandegrift 
Sure. Well, actually, the IFA's franchising economic outlook report came out here recently, the 2026 version, and it definitely shows franchising's alive and well. The number of franchise units are expected to grow this year from approximately eight hundred and thirty-two thousand five hundred to eight hundred and forty-five thousand units, which is an increase of one point five percent. In terms of employment, the employment is expected to increase this year by more than 150,000 jobs to nearly 8.9 million. It's an increase of 1.8%. And then franchise output is expected to rise from a little over 907 billion to 921 billion. Here again, an increase of 1.6%. And then finally, total franchise, domestic, gross domestic product is estimated to grow by 1.8% from 550 billion approximately to 558.4 billion, which is massive. And what's especially interesting is that we're seeing growth across a variety of sectors, including home services, health and wellness, quick service restaurants, senior care, business services. But growth also creates competition, as we know. So the brands that are winning right now. They're the ones with strong leadership, strong systems in place, and franchisees who quite truthfully are engaged operators.

Mark Vandegrift 
Very cool. That's a great update. A lot of stuff going on in the market then, huh?

Steve Vandegrift 
There is

Mark Vandegrift 
Good. Well, you know, a lot of times when we think about analyzing a franchise system, franchise concept, we think about the you know what kind of makes a great franchisee or what makes a great operating system, what makes a great marketing system, et cetera, et cetera. One of the things that isn't always evaluated is the fact that there are certain franchisors that are great, some that are good and some that are not so great, right? So we get kind of all levels in that.

Steve Vandegrift 
Yes.

Mark Vandegrift 
And I don't know that a franchisor who would approach you would come to you and go, Hmm, I wonder if I'll be a great franchisor. They just automatically kind of hop into the process and they're stuck on the systematic part of it where I need to work with you, Steve. I need an operations manual. I need to work with you know Innis Maggiore on their marketing. I need to work on this, this, and this. What they don't always think about is what's going to make me a great leader, what's going to make me a great franchisor?

Steve Vandegrift 
So true.

Mark Vandegrift
So when you think about that, because you've dealt with hundreds of franchisors, what separates a great franchisor from let's just say an average one?

Steve Vandegrift 
And that's a great question. I would say two of the biggest are really leadership and clarity of vision. You know, great franchisors, they know exactly where the brand is going. They communicate that consistently across the network, which is so critical. So a franchise's job, I'd like to say, is not just to sell franchises, it's to build strong systems that help franchisees be successful. Ultimately, the strongest brands, I feel, provide ongoing support, training, operational guidance, and marketing assistance that really help create a partnership mindset.

Mark Vandegrift 
Okay. Well, you know, you use the words partnership and we like to think of a franchisor and a franchisee in a partnership. What does a good franchisee support actually look like in practice?

Steve Vandegrift 
Well, obviously it really starts with onboarding and robust training, but it definitely doesn't stop or should not stop there. Strong franchisors, they're accessible, they provide coaching, advice, robust systems, marketing resources, and operational improvements over time. So they adjust. Franchisees want to feel like they're part of something bigger. They're not just paying royalty fees and feeling like an island out in the middle of the ocean. So communication and responsiveness on the part of the franchisor it matters a great deal in any successful franchise system.

Mark Vandegrift 
Yeah, and I think one of the other words that pops into my head is adaptability, right? that seems to be something that when you think system, adaptability isn't necessarily in line with that. We think I'm gonna get a system, people are gonna apply it, done deal, right? But adaptability is really critical. What do you think in terms of like maybe a scale or criticality of a franchisor having adaptability as maybe a key attribute or a key personality trait.

Steve Vandegrift 
I really believe it's critical because you know you look at it, consumer behavior changes, technology changes fast. The franchisors that resist that, they're oftentimes going to struggle. And we're seeing more brands nowadays embrace AI tools, automation, customer engagement software, and data-driven operations. So franchisors who innovate while maintaining consistency, and that's the critical aspect, they're positioning themselves extremely well for long-term growth they adapted the market.

Mark Vandegrift 
Speaking of adaptability, what about the human factor? So to me, the adaptability and maybe what was in my head, seeing the inner relations as a franchisor begins to interview people, do discovery days, all that type of thing, it feels like adaptability is almost more not so much innovation or technology. That's kind of built in, right? So to your point, you have to be working through that. I think the adaptability that was in my head in asking that question had a little bit more to do with the human component and the personalities that you had, and also the ideas that they bring to the table. So maybe speak to that a little bit and where you've seen franchisors that are great in that area kind of shine, and maybe where the average or not so good ones have difficulty with the way that they're interacting with the franchisees.

Steve Vandegrift
And ultimately it's on both sides of that equation. You know, we like to tell our clients that you need to qualify, qualify, qualify. They need to have the same values, the outlook, the passion. At the end of the day, it's a combination of the two. The franchisee also needs to constantly qualify the franchise concepts that they're looking at. And I like to say it really all comes down to transparency. Trust is really foundational in franchising. It's such a critical component. And so great franchise oars, they're realistic and transparent about startup costs, timelines, operational challenges that they know exist, and franchisee expectations, setting the expectations. So I believe the best or the healthiest franchise systems, they avoid overselling. They focus on the relationship side as well, that ultimately will last the long term. Rather than just quick franchise sales. So it does relate to both the franchise E and Franchise Ore, but we're talking more on the franchise or side now.

Mark Vandegrift 
Yeah, like I guess when you run into a maybe a difficult employee, right? you can you can let's say move them along in their career, right? franchise the franchising concept is more of a it's it's a kind of a marriage almost. It's much more difficult to maybe let go of a franchisee.

Steve Vandegrift 
It is.

Mark Vandegrift 
And so the franchisor has to live with whoever they bring aboard. So is there some component of this filtering process that's going on? You talk about transparency, you brought that up. And that's really important up front, especially up front. But there always seems like it's an employee employer relationship, almost like I can't trust anything the employer says, or that, you know, my boss is always wrong. And the franchisee almost carries that into the relationship with the franchisor and so there's a level of trust that needs established that maybe isn't inherent in that relationship. Do you see that franchisors that understand that dynamic do a little bit better in franchising versus those that are kind of digging in their heels and clenching their fists and saying, I'm not going to change. This is my system.

Steve Vandegrift 
Yes, I mean there obviously there's an expectation that the franchisee will be heard. The franchise or will listen, whether it's ideas, concerns, etc. While at the same time, I think the franchisee has to realize that not every idea they have is is going to fit the brand. It it's just something that it's not going to be a consistent operation or a consistent menu or consistent service, et cetera. So definitely having that faith and that confidence that whether you're on the franchise or franchisee side, that the other party is going to be reasonable and understand that relationship. And you talk about it being a marriage. Sometimes franchise oars feel like it's a parent-child relationship. and and that's that's not a good situation there. ultimately there has to be that respect on both sides of the party, a willingness to communicate well, et cetera, and not just looking at data points or does this person meet the financial metrics, et cetera. But what's their personality like? Do they have, as I mentioned, the same values as the franchise or and the existing operators? And so you don't want to, you don't want to bring someone into a system that you just even sometimes have a gut instinct, they're not going to be a good fit. But at the end of the day, both parties in this equation, they also need to be transparent, as I mentioned. They have to be willing to share maybe some tough things that they don't necessarily feel comfortable sharing. Franchising is like any other business, any other organization. Typically franchisors are spending 80% of their time on 20% of the franchisees. And you really want to get to a point where you're bringing in people that you're not having. If you have that, let's say you suspect that that could be the situation, then it's best to let them move on to another opportunity. And same thing with the franchisee. If they feel like they're do dealing with a franchise or that's overbearing, etc., it's just no matter how good that opportunity looks, it's probably best in the long run that they look for a different franchise concept.

Mark Vandegrift 
Gotcha. So in the process of growing from let's say a startup franchise, okay, you maybe have two, three locations. you've dealt with employees, you understand that relationship, and now you're growing as a franchise or you might have 10 locations, you're doing the 80 20 rule right now. But you get to a size where 12, 13, 14, 15 kind of stipulates that you begin to morph away from the day-to-day, meaning maybe not as much doing the franchise sales or the franchisee relationship. what does that look like? Is that a tough transition for a lot of franchise ours? And is 12, 13, 14, 15 where that typically happens? Or do you see it gets up to upwards of twenty, twenty five before that migration starts?

Steve Vandegrift 
Well, and that that's a great question. I mean, franchise oars, y typically the clients we work with, they have at least two or three people in their organization, usually including the owner or owners that are gonna initially wear a lot of hats. But as I always explain to them, you know, they ask, Well, what number do I need to start looking for this position, that position? What's the first position that I'm gonna look for, et cetera? And I always explain to them that first of all, you need to see where you're most comfortable, where you feel you excel. And so franchise sales is an example. It takes an immense amount of time. And so if the franchise or is the type that's, I want to really focus on the training, the support, all of the other components, then they're going to look to to bring in a franchise development manager, a VP of franchising sooner than they might bring in a trainer as an example. Now, as you scale, you can imagine that's where you start going from five to fifteen to thirty, that's when you really need to start looking at those other components. So franchise operations, franchise training and support. Those are certainly positions. There's people that have been in those fields many, many years. And the franchise owner might decide, you know what, I'm excelling at the sales process. I really like being involved in that process. And so they'll gravitate towards bringing in trainers if they're not grooming them from the inside that is also what many of our clients will do, is they have a few really good managers, one or two excel. And so they'll start bringing them into certain franchise operations support training aspects of that relationship. And so it varies greatly by by client. And most of our clients recognize right at the very beginning that they can only wear so many hats for so long. And then they have to make that transition, whether it's internally or externally bringing in someone to assume those responsibilities. And that makes for a very nice, robust franchise system and operation for the franchise org.

Mark Vandegrift 
Let's go down the, I guess, the topic of transparency a little bit more. You brought that up earlier, and that's always a good word, especially in this day and age. We have a lot of generations that value transparency. give us maybe a bullet list of the things that you think a franchisee would appreciate the most from a transparency standpoint with the franchise orb. You know, there's certain financials that can't be shared when it comes to their own organization. But certainly you mentioned sharing financial performance and all of that at the right time based on the franchise rules. What during a relationship, like let's say you have five franchisees and then 10 and then 15, what kind of transparency do you think those franchisees are looking for in regard to say other franchisees, or is it kind of critical that confidentiality sta, you know, there's a a line there. Give us a sense to find maybe transparency in the ongoing relationship.

Steve Vandegrift 
Well, you talk you really need to talk about communication. And so great franchise oars, they do have robust communication programs with franchisees. It might be a monthly owner's call or a manager's call, et cetera. And yes, there's confidentiality involved. You certainly don't want to call out Bill Smith because he's doing a terrible job. But sharing metrics are so important and k KPIs with your franchisees so they understand, recognizing those franchisees that are excelling. Which encourages maybe underperforming franchisees to kind of sit up and take notice. You know, they want to be like that top performer. And so again, it all comes back to that transparency, which is effectuated through communication. So being willing to share the good, the great, the bad, and the ugly with the franchise network so that they feel that they're getting honest feedback from the franchise or. I think that in its simplistic form is what creates that successful franchise network. Who trust the franchise or where it does feel like a partnership. And that's why we often refer to franchisees as franchise partners. not franchisees, not franchise owners, but franchise partners, because franchise oars should really strive to have that partnership relationship with their franchisees.

Mark Vandegrift 
We used to do a franchise summit with our franchisees back in the day. Do you recommend that sort of gathering or do you recommend a monthly Zoom call? What what would you recommend or does it change or is it different by different franchise concepts?

Steve Vandegrift 
Well, it ultimately, you know, annual franchise conferences, et cetera, can be wonderful. You're probably not gonna do that with two or three franchisees or even five franchisees. But ultimately that gives the franchisees a an opportunity to meet face to face. They develop relationships, peer collaboration, you know, they gravitate towards different franchisees, they carry on those relationships. But that that can also be effectuated initially through, as I said regular communication with the franchise network. So a monthly, certainly a best practice, I believe, would maybe a monthly conference, web meetings with with your franchisees, whether it's two or whether it's 22. again, you're going to be rolling out hopefully you're keeping them oppressed of any, let's say you're a restaurant, limited time offers you're rolling out, et cetera. So there's a lot of information that can be communicated through those regular meetings with your owners and it again makes them feel like they're part of a greater whole. They're not out there, as I said, in the middle of an island all by themselves. And so communication is critical. The transparency that comes from that communication, whether it's operational issues, concerns, etc., you really want to create an environment where both sides feel very comfortable sharing their thoughts with the other, not necessarily in a combative way and again, great franchise oars, they communicate very effectively and their franchise partners feel like they care, genuinely care about their success.

Mark Vandegrift 
Good. Let's say I call in and I say, hey, I'd like to set up my business as a franchise. And one of my questions to you would be, what do I need to do to evaluate whether I'd be a good franchise or? What advice would you give someone considering becoming a franchisor?

Steve Vandegrift 
Well, I would say ask yourself a number of questions. You know, ultimately, am I committed first and foremost to fully assisting and supporting franchisees? And do I understand what that really looks like? And certainly we provide a guidance and input to our prospective clients as well as our as our clients. But before becoming a franchise or it's important to decide, yes, I am committed. We have prospective clients that come to us, they've been successful for 10, 20, 30 years. They operate multiple locations. And they literally will say, I just so look forward to the opportunity to help other people achieve the success I've achieved in this type of business. and and another one would be: Am I willing to fully commit the time, the effort, the resources to ensure that my business system is truly duplicable? Because franchisees are buying franchises because they want that learning curve. They don't want to have to figure everything out. And so you really need to ensure that you do have a duplicatable system. another one would be am I prepared to lead a network of franchisees that may differ greatly in their personalities. So in other words, can I adapt to different personalities? another huge one here we're talking about communication, but do I communicate well? Because effective communication is obviously critical at the franchise or level. And then we could do a whole podcast on this, but I will throw this one out. and we mentioned qualify, but am I truly willing to qualify prospective franchisees? It's important to understand that the strongest franchise relationships happen when both sides are aligned in terms of their values, their expectations, et cetera.

Mark Vandegrift 
Very good. Well, let's wrap up today's session. If you had one thing, I always do this to you, if you had one thing that you want listeners to take away today, and we're talking to franchisors, what's that one key point from today's conversation that you would want a franchise or a prospective franchise or to walk away with?

Steve Vandegrift 
Well, I would simply say successful franchising, it's it isn't just about the brands. As we've we shared on this episode, it's also about the people. So strong systems matter, but the real success stories come from franchisors and franchisees who trust each other. They communicate well and they stay committed to continuous, let's say, evaluation and improvement.

Mark Vandegrift 
Very good. Well, those are great insights, Steve. Thanks again for joining us and for sharing your expertise. Let's wrap up today's episode of FranSimple. Thanks for everyone joining us. And as always, please like, share, subscribe, shout it from a mountaintop, tell your friends about our podcast, the one that makes the concept the concepts of franchising simple. And until next episode, may your business expand through the power of franchising.