How to Build a Portfolio of 20 Franchise Locations | Michael Horowitz Interview

Franchisor Dynamics

Navigating the dynamics between franchisees and franchisors involves understanding the balance of control and expectations. Michael Horowitz highlights that while franchisees manage hiring, training, and pricing, they must adhere to franchisor standards for menus and procedures 1. This relationship can be both restrictive and relieving, as it removes certain operational burdens. He explains, "If you want to tinker with menus and run experiments, franchises are not for you" 1. Each franchisor seeks different qualities in franchisees, from Chick-fil-A's focus on personal involvement to Pizza Hut's need for financial acumen 2.

   

Brand Selection

Choosing the right franchise brand requires strategic consideration of market opportunities and personal preferences. Michael emphasizes the importance of starting with the brand, as franchisors need to approve potential franchisees before any acquisition 3. He notes, "You have to start with the brand. It's not worth your time to find a franchise deal from a willing seller and then show up on the franchisor's doorstep" 3. The selection process involves evaluating industry trends, such as the growth of Quick Service Restaurants (QSRs) due to their resilience in economic downturns 4.

   

Development Agreements

Development agreements are crucial for franchise growth, as they signal a commitment to expanding the brand. Michael explains that franchisors expect franchisees to contribute to growth, often requiring agreements to open additional units 5. He shares his experience with Wingstop, where a development agreement was essential to securing the acquisition of seven restaurants 6. "If you're not showing up on their doorstep saying, 'we want to grow,' your odds of them being interested plummet," he states 5. These agreements ensure mutual benefit and long-term success for both parties.