Lost in Translation: How Franchising Is Losing Its Foundation

October 1, 2025 - Edition #1

Franchising is quietly eroding - one relationship, one unqualified sale at a time. Not loudly. Not all at once. But steadily enough that if we don't intervene now, we're going to look down one day soon and realize the structure we thought was solid is irreparably damaged.

I've spent 30 years in this space from every angle: franchisee, franchisor, PE board member, supplier, equity investor, executive coach, and most recently, as the daughter of Founders who sold their franchise business to institutional capital. That aggregate perspective shows me something others aren't seeing: we have a problem.

Approximately 200 institutional capital investors have deployed over $35 billion into the franchise space. That capital came with a new language - one that isn’t translating well with the dialect franchising has spoken for decades. One side speaks in FDDs, FACs, and NPS. The other in IRR, DPI, and LPs. Everyone speaks EBITDA, but that's not enough.

The real issue? Very few people fluently speak both languages. That gap is causing us to miss not just each other's objectives, but the value and insight each party brings to the table.

The Marriage That Needs Counseling

Here's a not-so-secret secret: franchising is relational, not transactional. The franchisor-franchisee relationship is a marriage. And right now, we're having the kind of dysfunction that happens when couples start talking past each other, certain they're the one who's "right."

Franchisors are the structured spouse - meal planning a month ahead, never missing a workout, managing the household calendar like air traffic control at O'Hare. They can be misunderstood as distant or rigid, but they're deeply committed to the relationship's success.

Franchisees are the energetic spouse - boots-on-the-ground, grabbing drive-thru dinner between the office and the Chamber of Commerce meeting. They communicate through stories and lived experiences, adapting the plan on the fly. They can be misunderstood as reactive or too emotional, but they're equally committed.

Supplier partners are the best friends who see the tension before it's spoken, who feel the erosion before it's acknowledged, who hold space and occasionally mediate the silence.

And now? The in-laws have arrived. They show up with a bottle of nice wine, a kiss on the cheek, and LOTS of advice. Sometimes they're supportive, offering wisdom and stability the couple needs. Other times they're intrusive - suggesting the couple live like them, reshaping the marriage from the outside in.

We've reached that point where we're only considering our own needs, not the needs of the whole. It's time to call the marriage counselor.

Four Fundamentals Where Translation Fails

1. A Wholly Different Business Model

The franchise model must be underwritten and treated as what it is: wholly different. Franchisees aren't employees - they're owners and business partners. Unlike employees, franchisees are not obligated to execute strategic initiatives without question. That distinction changes everything. The power of franchising erodes when change is implemented top-down, in Command & Control fashion.

2. Leadership

One of the first things you learn as a franchise leader is that Command & Control doesn't work. The best franchise leaders embrace Leadership by Influence. What does that look like? Inclusion. Knowing that one of the best ways leaders can spend their time is in-market with franchisees. The more changes that happen "at the top"—whether in leadership or equity holders—the more likely the cornerstones erode.

3. Magnitude of Risk

Both franchisees and PE investors know there's investment risk. On the PE side, hundreds of millions can be deployed in a single transaction. On the franchisee side, while the dollar amount may be lower, the overall risk exposure is often exponentially greater.

One party is risking a percentage of a fund made up largely of Other People's Money. Franchisees are rolling their 401(k), pledging the kids' college funds, putting a second mortgage on the house to control their professional future. When we don't acknowledge or value each party's risk, erosion accelerates.

4. Time Horizon

Standard PE hold time: 5 years. Typical franchise agreement: 10-20 years. That mismatched timeline inherently creates tension, misalignment, and missed opportunities. Long-term trust isn't built on a short-term clock.

When this tension manifests, you see franchisee unrest—independent associations forming, lawsuits threatened or filed, satisfaction scores declining. The spouses and in-laws started talking politics and religion at Thanksgiving. Trust is eroding, or already gone.

The Path Forward

I'm presuming no one is intentionally here to cause harm. But each constituency is financially incentivized to achieve their objectives, and those incentives can create a dangerously narrow view. When we can't see the impact of our actions outside our own silo, we amplify the entire family's risk profile.

It's ironic: both franchising and private equity use "playbooks" to execute their business models, yet neither has translated their playbook to reflect the other's language.

We must come together to translate across languages, to foster broader understanding and appreciation for each other's objectives and priorities—before the erosion becomes irreparable.

Why This Matters to Me

I love franchising. More specifically, I love the people who make up the franchise family. In any other industry, you'd call them business acquaintances. Not here. These are friends who've seen me through getting married, having my two sons, exiting the family business. These are the people who lifted me up during the worst six months of my life when my 12-year-old son had a heart attack during Covid.

Have you ever noticed how many wonderful people are in this family? Ever wondered why you see more people hugging at an IFA Convention than at airport baggage claim? Because we are relationship people! We prioritize and value relationships across the entire ecosystem. We totally get that relationship capital is an invaluable asset. We know we don't win if the rest of the family loses.

For years, I addressed new IFA members at the first-day reception. I said the same thing every time: "Franchising is all about relationships. If you don't believe me, don't bother getting to know me or my friends because you won't be here long."

Relationships, values, culture, and trust aren't soft skills. They're the cornerstones of healthy, resilient franchise systems. Strong unit economics are table stakes. Values and culture aren't disposable—they're foundational anchors that keep us steady in the storm.

The First Step

The first step to shoring up the foundation is acknowledging there's work to be done. I once heard: "Businesses advance through a series of difficult conversations."

We must have those difficult conversations. We must start them from a place of mutual respect for what each of us brings to the table. That's how we preserve this unique, impactful, powerful community.

Until next time—Be Smart, Be Wise!

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