💰 Potential Impact of Tariffs on Franchises

How will tariffs reshape the franchising landscape?

Author

Chris Wright
February 06, 2025

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📉 How Tariffs Will Hit Franchises

While tariffs against Mexico and Canada have been deferred, a new 10% tariff will affect Chinese imports starting this week. This hike and any future increases in tariffs will affect a wide range of goods and potentially pressure franchisee’s bottomline

Key Highlights:

  • Many businesses including franchises source supplies, from agricultural goods to electronics, from China, Mexico, and Canada

  • Franchise systems will need to be nimble and adjust their model to maintain franchisee relations, customer service quality, and profit margins

  • Trade policy uncertainty will complicate long term planning, potentially affecting expansion, investment, and hiring.

👉️ Why It Matters:

As new tariffs on imports are implemented, cost pressures may affect business profits. Both franchisors and franchisees need to stay abreast of trade policy changes and work hard to mitigate the impact to their business model.

Growing from one store to many isn't just about having more keys on your ring. Here's what successful franchisees learned about scaling up.

Key Highlights:

  • Fast growth + no internal promotions = high manager turnover (that's what A&W's owner learned the hard way).

  • The hardest part? Letting go. One owner's rule: if someone can do it 80% as good as you, hand it over.

  • Going multi-state is a whole different game - dealing with different rules and keeping quality consistent.

  • 28-year franchise veteran with 77 units says the "bigger picture" mindset is crucial for growth.

👉️ Why It Matters:

Multi-unit ownership isn't just single-unit ownership multiplied - it's a fundamentally different business model. While many franchisees start as hands-on operators doing everything from baking to bookkeeping, successful scaling requires a mindset shift. The most successful operators learned to trust their teams, invest in systems, and focus on strategic growth rather than daily operations.

🎯 Ready to Franchise?

Most business owners dream of expansion but fear losing control. Franchising offers a proven path to scale without losing your brand's soul.

Key Highlights:

  • One profitable location and teachable systems are all you need to start franchising.

  • With 10 franchises at 5% royalty, you could generate $500,000 in annual royalties.

  • You'll need about $100,000 to launch your franchise. That would pay for legal and marketing the first year.

👉️ Why It Matters:

While franchising isn't the only path to growth, it offers unique advantages over traditional expansion. The franchise model lets you scale your brand without managing every location's daily operations. With U.S. franchises expected to add 15,000 new units in 2025, the opportunity is real. But success requires careful planning, strong systems, and the right mindset about control versus growth.

🍺 Small-Town Entrepreneur Builds Franchise Empire

Meet the franchise owner who's proving small towns are where the big opportunities hide.

Key Highlights:

  • Dee Wells started as a 15-year-old carhop, converted a gas station into a hybrid A&W restaurant for her first location, and now owns six A&W locations across small-town America.

  • Her growth hack? Converting failed restaurants instead of building new ones—her latest was an old Hardee's.

  • She faced fierce local resistance but won towns over with a community focus and root beer float diplomacy.

  • Now, she's building a family franchise legacy: her daughter owns three Culver's, and Dee is targeting 10 A&Ws before semi-retirement.

👉️ Why It Matters:

Contrary to the common franchisee focus on large cities, Wells' success proves smaller towns can be viable locations for major brands. As chains struggle to find growth in saturated urban markets, Wells' success shows there's gold in those small-town streets - if you know how to become part of the community.

✂️ Snippets

Levine Leichtman Capital Partners acquires Synergy HomeCare, betting big on the growing in-home care market. With 240 franchisees across 42 states, the company represents a strategic play in an expanding healthcare services sector. (Source: Franchise Times)

Slim Chickens charts aggressive growth trajectory, achieving 70 percent restaurant expansion in three years through strategic blend of technology, quality food, and robust franchisee support. The brand's approach combines AI-driven operations with Southern hospitality, positioning it as a leading player in the competitive quick-service restaurant market. (Source: QSR Magazine)

Nozzleman Pizza secures breakthrough Walmart partnership, planning 300 nationwide locations with celebrity investor Snooki. The franchise offers unique community-focused model targeting first responders and everyday consumers. (Source: Franchise Times)

Franchise Times honors 12 standout players transforming franchise landscape, with highlights including Blackstone's Tropical Smoothie acquisition and K9 Resorts' $10 million strategic investment. The annual awards recognize most innovative merger and acquisition strategies driving franchise growth. (Source: Franchise Times)