The following is a guest post written by Alicia Chandler, president of Indianapolis-based First Franchise Capital Corporation (FFCC), a First Financial Bank company.
These are uncertain times: Tariffs, interest rates and trade deals dominate headlines.
But uncertainty is always present. Business owners who continue to move forward with their plans and make decisions, despite uncertainty, are the most successful. For franchisees, that means looking for opportunities to reduce costs, increase traffic and build or purchase new stores. Here are the steps franchisees can take to improve their profitability and how they can finance those initiatives.
Keep moving
Competitors are always on the move. Remaining static will put a business owner behind.
Savvy business owners make contingency plans based on possible scenarios, then move ahead with their plans for growing their businesses. This approach means being nimble and ready to adapt to new circumstances.
Opportunities for profit growth
Franchised businesses often work on narrow margins, and there are several ways to improve the bottom line:
- Do more with fewer people — The mean hourly wage for fast food and counter service workers increased by 29.5% from 2019 to 2023 and is continuing to rise on a nominal basis. In Washington state, it’s now $22.10, according to ZipRecruiter. With so much wage pressure, franchisees are looking for ways to do more with fewer staff. Enter technology. Automated food preparation devices, such as Miso’s Flippy Fry Station, can drive costs savings and revenue increases while freeing up labor to be used elsewhere.
- Use AI to predict customer demand — Quick-service restaurants are a gold mine of data that franchisees are learning to harness. AI can take data from a store’s point of sale system, combine it with information about local activities, weather and other factors, and make informed predictions of customer orders. With this information, store operators can tailor their product orders to match predicted demand, reducing both excess inventory and stock outs.
- Remodel to promote drive-thru and carryout — It’s no secret that, since the pandemic, the percentage of QSR revenue from dine-in customers has fallen, while drive-thru and carryout has increased. A remodeling project that makes better use of the store’s footprint — less real estate devoted to dine-in and more to two-lane drive-thrus — can capitalize on that trend and improve an operation’s overall profitability.
- Be creative with local promotions — With most franchises, menu changes and major marketing efforts are controlled by the franchisor, but the local franchisee can still find ways to drive traffic through creative promotions.
For example, tying in promo offers with “Day/Month of” holidays such as Happy Cat Month (September) can bring in more traffic. For promos to be effective, it’s important to publicize them through a lighthearted, approachable social media presence that encourages engagement.
Financing growth initiatives
Investing in new equipment, AI-driven systems, or remodeling projects often requires a loan, as does buying or building another property. It’s important to recognize there are differences among lenders before choosing a financing partner. It’s also smart to know about recent changes to the Small Business Administration loan program.
As of June 1, 2025, the Small Business Administration tightened its restrictions on loans. For example, borrowers must now bring 10% cash to the deal, and franchised businesses must be on an approved list to qualify for SBA funding. The new standard operating procedures also put new restrictions on seller financing, which may discourage some franchisees who plan to use a seller-held note as a source of continuing income after the sale.
Conventional lenders, especially those with experience lending in the franchise space, can be much more flexible with deal structures and collateral requirements, compared to the SBA. They can offer working capital loans and acquisition loans with a wide range of terms to meet a buyer’s needs.
Looking ahead
Uncertain times don’t call for panic. They call for nimble thinking, the ability to plan for change, and being aware of what’s happening in one’s industry. They can also provide new opportunities for growth for those business owners confident enough to seize the uncertainty and move ahead.
Look for acquisition opportunities — some franchisees may not want to deal with the uncertainties of today’s economy and may want to sell. A franchise owner in a position to expand may find good opportunities for an acquisition in this market.
