⚠️ Franchising Faces Headwinds?

Multiple economic and operational headwinds converge to create unprecedented challenges for franchising sector

Author

Chris Wright
July 03, 2025

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🎗️ From Cancer Diagnosis to Franchise Success

Ryan Clark transformed a Stage 3 cancer diagnosis at age 37 into the catalyst for building a thriving Code Ninjas franchise operation in Northeast Florida. His journey from military and corporate careers to multi-unit franchise ownership illustrates how personal adversity can fuel business success when combined with purpose-driven entrepreneurship.

Key Highlights:

  • Cancer was a catalyst that turned franchise ownership from an income opportunity into a mission-driven business focused on teaching children coding skills and building confidence

  • Active ownership approach treating the franchise like a startup despite having a proven system, emphasizing daily ground-level involvement and community trust-building

  • Values-based hiring prioritizing integrity, kindness, and grit over experience alone, recognizing that technical skills can be taught, but character cannot

  • Clark maintained a long-term perspective throughout treatment and recovery, focusing on strategic decisions rather than short-term challenges

👉️ Why It Matters:

Clark's story shows that successful franchising requires more than following a proven system—it demands personal investment, community engagement, and alignment between business model and personal values. His experience shows how life-changing events can actually strengthen business focus and decision-making, particularly when the franchise serves a meaningful community purpose beyond profit generation.

💰 Power Couple Builds Multi-Brand Empire Through Strategic Diversification

Prince George's County couple Alesha and David Magby have built an impressive franchise portfolio since 2018, now operating four Tropical Smoothie Café locations and one Phenix Salon Suites across Washington, D.C., and Maryland. Their latest expansion includes development deals with Einstein Bros. Bagels and Jersey Mike's, demonstrating the power of strategic multi-brand franchising.

Key Highlights

  • Five franchises in five years across multiple brands, with their newest Tropical Smoothie Café opening in 2023 across from their alma mater, Morgan State University

  • Diverse funding strategy including commercial lenders, local grants, and state funds specifically for small businesses, avoiding traditional banks that weren't franchise-friendly

  • Values-driven brand selection focusing on businesses that align with their lifestyle (healthy options) and values (empowering other entrepreneurs)

  • Strategic expansion approach bringing Einstein Bros. Bagels back to Prince George's County while adding Jersey Mike's based on their family's longtime loyalty to the brand

👉️ Why It Matters:

The Magbys represent the new generation of sophisticated multi-unit operators who understand that successful franchise portfolios require more than just financial resources. Their approach of choosing complementary brands, securing diverse funding sources, and maintaining founder relationships demonstrates how modern franchisees can build sustainable, profitable enterprises while creating community impact and generational wealth.

🎯 Franchise Industry Reality Check

The franchise industry is facing unprecedented challenges midway through 2025, according to franchise expert Joel Labava, known as "The Franchise King." In a candid assessment, Labava rates the current state of franchising at just 6 out of 10, citing multiple economic and operational headwinds affecting the sector.

Key Highlights:

  • Tariff uncertainty is creating massive planning challenges for franchisors, with rates fluctuating from 10% to 150% daily, making equipment sourcing and inventory management nearly impossible

  • Stock market volatility is discouraging career changers from using 401k funds or savings to invest in franchises, traditionally a key funding source for new franchisees

  • With financing tightening and market dynamics shifting, buyers need to dig deeper—stress-testing financials, analyzing market saturation, and ensuring long-term viability before signing on

  • AI and Google algorithm changes are reducing web traffic to franchise portals by pushing traditional franchise websites lower in search results as consumers increasingly use AI for franchise research

👉️ Why It Matters:

This honest industry assessment reveals that franchising faces systemic challenges beyond typical economic cycles. The combination of policy uncertainty, technological disruption, and financial market stress is creating a perfect storm that's reducing lead flow and franchise sales across the board. However, Labava notes opportunities exist for buyers willing to purchase existing franchises at potentially lower prices, and emphasizes that with economic stabilization, the industry could rebound quickly.

🏨 Travel Industry Embraces "Togethering" Trend as Local Ownership Drives Growth

Short-term rental operator Casago is revolutionizing the vacation rental industry through a franchise-first model that emphasizes local ownership and "togethering"—intimate shared experiences that hotels can't replicate. Following a recent merger positioning it among the largest STR operators with over $2 billion in annual reservation revenue, Casago is betting on decentralization over consolidation.

Key Highlights:

  • Franchise decentralization strategy assigns local franchisees to own and operate properties in specific markets, ensuring community knowledge and accountability rather than centralized management

  • "Togethering" focus targeting families and groups seeking shared experiences, supported by Mintel research showing 40% of Gen Z and Millennial travelers prefer STRs over hotels

  • Technology-enhanced hospitality using AI to streamline back-end operations while freeing staff to create personal touches like handwritten notes and customized experiences

  • Regulation-friendly approach embracing fair regulation to professionalize the industry and eliminate bad actors

👉️ Why It Matters:

Casago's model represents a significant shift from the typical consolidation strategy in hospitality, proving that hyper-local ownership can scale effectively. As the STR market matures with slowing supply growth (5.2% in 2024 vs. 18% in 2022), the emphasis on local expertise and personalized service could become the key differentiator for franchise operators in an increasingly competitive landscape.

✂️ Snippets

🥢 Hawkers Asian Street Food Boosted By Private Equity Investment

The Orlando-based Asian street food franchise received investment from Savory Fund to accelerate expansion of its 15 company-owned locations across 7 states, with data showing Asian cuisine growing at 12% annually compared to traditional foods at just 1-2%. (Source: Forbes)

🎤 How I Built a Multi-Unit Franchise Operation Without Leaving My Day Job

Business speaker Scott Greenberg successfully operated top-performing Edible Arrangements franchises while maintaining his full-time speaking career, using remote management systems, strategic hiring, and data-driven oversight to build one of California's highest-volume locations. (Source: Entrepreneur)

📞 Answering Service Care Unveils the Power of Accents

A nationwide survey found 88% of Americans experience frustration from accent-related miscommunication, while 35% feel less stressed hearing familiar regional voices, with Southern accents ranking highest for friendliness at 37%. (Source: FranchiseWire)

🚁 Drone Delivery Takes Flight in QSR Operations

DoorDash and Flytrex launched a major drone delivery program in Dallas-Fort Worth serving 100,000+ residents and dozens of restaurants including Papa Johns, potentially streamlining franchise operations and reducing delivery costs for franchisees. (Source: 1851 Franchise)