To Keep Stores Fresh, This Franchise Looks Within…

Recently The Melting Pot noticed that a few of its franchisees were looking to sell. This was curious; not only does everyone (arguably) love fondue, but also the 42-year-old Tampa-based franchise prides itself on a loyal base of longtime owners without a lot of resales. Upon investigation, it turned out the franchisees weren’t unhappy; they just wanted to retire or move on to the next phase of their lives. That was its own kind of problem.

Related: The 6 Most Common Franchisor Mistakes

“When you don’t want to own much longer, and your head and your heart aren’t in the game, it can affect the business,” says Dan Stone, the chief business and people development officer at Front Burner, The Melting Pot’s management company. So to breathe new life into its franchise base, the company launched a program called Path to Grow. It helps franchisees find buyers by tapping into The Melting Pot’s stable of operators and managers. If both the location and the new franchisee are approved by The Melting Pot, the company will even act as lender to the new owner. Win-win.

The program, now two years old, has already turned two employees — a former server and manager in Spokane and an area manager in South Carolina — into franchisees. More are in the works, says Stone.

How has Path to Grow been received internally?
The program has energized several people within our system, because what was a pipe dream for some is now within reach. Once you have a couple of case studies and it’s proven, that’s when the momentum and the excitement start to build.

Former empoyees Kim and Hollis Silva are now franchisees.

Have there been any challenges?
Some of the franchisees trying to sell think their business is worth more than what the numbers say on paper. That’s a hurdle. And while some of the existing owners have embraced the program and promote it to their managers, others are more protective. They don’t want to lose their managers, so they aren’t going out of their way to make them aware of the program. But I get it; a great manager is hard to replace.

Related: A Modest Proposal to Franchisors

So why would anyone willingly surrender their own talent?
Ultimately most of our franchisees know that without a pathway for talented managers that have been with them for a while, they will eventually lose them. So they would rather see them in the system achieving their dreams than with a competing brand.

Do all your locations around the world qualify for the program?
We have to assess each situation on a case-by-case basis. We’re not going to provide funding for a location that’s wholly overpriced. That’s not setting up the new buyer for success. While we can be much more flexible than a typical underwriter, we still want to make smart decisions and have a justification behind the sales price. We want everybody to win.

Related: Franchise Your Business in 7 Steps

Maybe you’re starting an industry trend. What do other franchisors need to know about starting a similar program?
One, look at what your objectives are and tailor the program to meet them. For us, this wasn’t about providing financing for new construction. This was about casting a wider net to existing owners who wanted to sell. It wasn’t because they didn’t love the brand; it was a by-product of age. Two, make the program as simple as possible in terms of how to communicate, and structure it so it has a broader appeal. And three, just because you are the franchisor, you are still acting as a lender. You still need to do your due diligence.

Nina Zipkin

Nina Zipkin is a staff writer at Entrepreneur.com. She frequently covers media, tech, startups, culture and workplace trends.

Read more