Joel Libava
Huddle House franchising is making a big push to attract franchisees who want to build a multi-unit restaurant business.
The 60-year-old breakfast and family dining brand recently announced a new incentive package aimed at qualified franchise operators. And some of the incentives are significant.
The biggest one may be the royalty break.
The Huddle House Franchising Incentives
Franchisees who commit to purchasing three or more restaurants can receive 0% royalties for the first year of every new location.
That can make a meaningful difference during the expensive early stages of opening a restaurant.
New locations have plenty of costs. There is construction. Equipment. Labor. Marketing. And other expenses that can put pressure on cash flow.
Huddle House says the royalty-free period is designed to give franchisees more time to stabilize operations and build sales.
But that’s not the only incentive.
Multi-unit franchisees will also receive reduced franchise fees on additional locations. That lowers some of the upfront costs associated with building a larger portfolio.
But there’s another incentive for franchisees who move quickly.
Operators who open a restaurant at least three months ahead of their contractual opening date can receive an additional three months of royalty abatement.
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In other words, Huddle House is giving franchisees a financial reason to get their restaurants open faster.
That’s important.
The restaurant business is capital-intensive. Getting a location open and generating revenue sooner can matter.
Huddle House is also positioning itself as a flexible franchise opportunity.
The brand says its restaurant formats can work in traditional locations as well as non-traditional venues. Those include colleges, airports, casinos, military bases, and travel plazas.
The timing of the announcement is also noteworthy.
Huddle House says it’s signed more than 120 franchise agreements during the past three years. The company currently has more than 300 locations open and in development nationwide.
Don’t Only Use Incentives as a Reason to Buy or Expand a Franchise
For prospective franchisees, however, incentives should never be the only reason to buy a franchise.
A royalty holiday sounds attractive. So does a discounted franchise fee.
But franchise buyers still need to dig into the Franchise Disclosure Document. They should examine the total investment, operating costs, Item 19 financial performance information, and the experiences of existing franchisees.
The bigger story here is that Huddle House is putting financial incentives behind its expansion strategy.
And for experienced operators looking to build a multi-unit restaurant business, that deserves attention.
Check out the Huddle House franchising website for more information.
(Main image courtesy of the Huddle House website)
About the Author
Joel Libava is The Franchise King® — an independent franchise advisor with 25+ years in the industry, two published books on franchising, and his writing has been featured in The New York Times, Forbes, CNBC, Entrepreneur® Magazine and others. In addition, he wrote exclusively for the U.S. Small Business Administration blog for eight years. He doesn't sell franchises. Instead, Joel helps you figure out if franchise ownership is actually right for you — and if it is, teaches you his powerful, proven-to-work franchise research techniques, so you can make a smart, informed decision on a franchise to own and be your own boss.
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