🧠 The Smart Franchise Buyer's Guide

Insights from selling 100+ franchises

Author

Chris Wright
March 13, 2025

Welcome to Franzy Five, the 5-minute weekly summary of franchise news đź‘‹.

At Franzy, we match aspiring owners with their ideal franchises through personalized recommendations and transparent metrics. Think match-making, but for your business future. Our platform shows you opportunities you'll actually care about, complete with the numbers that matter.

🤔 "What I Wish Every Franchisee Knew Before Buying" - Insights From Our CEO

Franzy's CEO, Alex Smereczniak, shares crucial insights from his experience selling over 100 franchise units. With franchising boasting an impressive 85% five-year success rate (nearly double that of independent businesses), asking the right questions before purchasing can make the difference between thriving and merely surviving in this trillion-dollar industry.

Key Highlights:

  • Clarify your motivation first—franchising requires commitment and isn't a passive investment, despite its more predictable path compared to starting from scratch

  • Assess your risk tolerance to determine if you should pursue emerging concepts with favorable terms or established brands with proven stability

  • Consider both upfront costs and operational expenses when evaluating affordability, exploring options like ROBS, SBA loans, and traditional financing

  • Match your operational strengths to franchise selection—sales leaders often excel in B2B services, while those with military backgrounds typically succeed in technical franchises

  • Determine how much you value community impact, as franchises create jobs and can provide essential services in underserved neighborhoods

👉️ Why It Matters:

Franchisees who perform thorough self-reflection before purchasing tend to ramp up faster and achieve profitability sooner. The U.S. franchising market is projected to hit $1 trillion by 2030 and currently represents 6% of GDP—making it a significant but often overlooked path to entrepreneurship that rewards thoughtful preparation.

📦 Franchise Operations Face Tariff Challenges

The new 25% tariffs on Canadian and Mexican imports (with 10% on Chinese goods) are sending ripples through franchise systems nationwide. While Chipotle expects a cost bump from pricier Mexican avocados and Tim Hortons scrambles to find new suppliers, the effects extend far beyond restaurant ingredients.

Key Highlights:

  • Restaurant chains face a double hit - more expensive ingredients (particularly from Mexico's $40.5B agricultural exports) and costlier equipment (with the U.S. importing $120B in electronics and $81B in machinery from China annually)

  • Fitness franchises will pay more for steel and aluminum exercise equipment as tariffs on these materials increase to 25%

  • Auto franchises received temporary relief with a one-month exemption, but Wells Fargo warns billions in additional costs are coming if full tariffs take effect

  • Multiple overlapping tariffs create compounding effects – some Chinese imports now face cumulative 35% duties when different tariff programs stack

👉️ Why It Matters:

Franchisors are already implementing strategic responses: diversifying suppliers to tariff-free regions, locking in long-term contracts before further hikes, emphasizing locally-sourced alternatives, and renegotiating supply agreements with dynamic pricing provisions. For franchisees, understanding these proactive measures could mean the difference between absorbing costs like Chipotle or being forced to pass them to increasingly price-sensitive consumers.

đź”’ Essential Cybersecurity Steps for 2025

With cyberattacks against small businesses surging by 150% over the past two years, franchise systems face unprecedented digital risks.

Key Highlights:

  • The statistics are alarming: 73% of U.S. small business owners reported cyberattacks in 2023, with recovery costs ranging from $825 to nearly $654,000 per incident—enough to force 60% of affected businesses to close within six months.

  • Recovery from cyberattacks takes an average of 279 days, with costs between $15,000-$25,000—not including the damage to customer trust experienced by 32% of attacked businesses

  • Despite heightened risks, typical small businesses invest less than $500 annually on cybersecurity, creating significant vulnerabilities across franchise systems

  • Companies should conduct self-assessments across five critical areas: staff training, security safeguards, software patches/updates, vendor security profiles, and business continuity planning

👉️ Why It Matters:

For franchise systems, cybersecurity isn't just an IT concern but an existential business risk. Implementing proactive measures now—from regular staff training to multi-factor authentication and business continuity planning—can mean the difference between quick recovery and permanent closure when (not if) an attack occurs.

đź’° Tiny Marketing Budget? No Problem

While big corporations can throw millions at national ad campaigns, small franchises are finding creative ways to maximize minimal marketing budgets. These strategic approaches are helping the underdogs compete effectively.

Key Highlights:

  • Word-of-mouth marketing, with referrals and rewards, turns happy customers into brand fans.

  • Strategic partnerships create mutual benefits, like shipping franchises collaborating with local colleges to provide student discounts while gaining valuable campus visibility

  • Instead of big ad spends, small franchises build credibility by sharing expert advice (nutrition, meal plans, etc.) through content marketing

  • Connecting with the community through events and charities can be more impactful than traditional ads

  • The secret weapon for small franchises? Killer service and being part of the community

👉️ Why It Matters:

For resource-constrained franchisees, these approaches aren’t just cost-effective alternatives—they often create stronger customer relationships than traditional advertising could. Focus on your community, not ads, and you’ll build a strong business even if you don’t have a huge marketing budget.

✂️ Snippets

Daisy, Hagan Kappler’s (ex-Threshold Brands CEO) tech install company, just got $15M in Series C funding—that’s $35M total and a 115% jump in value. The company already has 15 locations, with 30 more planned this year. In the fast-growing smart home biz, Kappler aims for 250–500 spots and a billion-dollar valuation in 5 years. (Source: Franchise Times)

Mike’s Hot Honey’s blowing up because everyone’s into spicy food now—it’s predicted to be the hottest menu item for years to come. This Brooklyn condiment went from pizza topping to teaming up with Dunkin’ and CPK, plus they solved a problem with a new cap that reduces waste by a quarter. (Source: QSR Magazine)

Franchise expert William Powell warns against the 80% failure rate. His advice? Study successful franchises, keep the brand consistent, don’t overextend yourself, and wisely invest in customer-facing equipment. Powell thinks you should look at brands using trendy self-serve bars and automated pour systems; it’s better for customers and easier to run. (Source: FranchiseWire)

Fibrenew's comprehensive white paper traces franchising's evolution from ancient commerce to today's AI-integrated powerhouse projected to add 20,000+ units and 210,000 jobs in 2025 alone. The franchise model's resilience stems from continuous adaptation—from Singer's 1850s system to McDonald's standardization revolution to today's focus on sustainability and digital integration. (Source: FranchiseWire)