Why franchise conferences need to stop celebrating franchise sales and start focusing on sustainability

By Michael H. Seid, CFE

There’s a ritual performed at nearly every major franchise conference in this country which has become so ingrained that most attendees no longer notice it. Accolades are given for unit growth; keynote speakers celebrate system expansion; breakout sessions teach lead generation and franchise sales conversion; and brokers and FSOs talk about how essential their services are. The relentlessly happy presenters include futurists, people with lifecycle achievements, authors without any connection to the dynamics of franchising, and “intellectual networkers” (a term I stole from Sam Ballas) with entertaining personalities whose knowledge and experience, alas, is so narrow and theoretical that their lectures have little to no application to the real world. Everyone flies home from the conference feeling good after seeing old friends and congratulating themselves on a productive few days.

The research we hear at these conferences tells us that franchisees are happy and that franchising is growing in the number of locations, the number of franchisees, the number of workers, and the positive impact it is having on the economy.

But are franchising conferences keeping pace with the issues that we really need to address? Study results often look rosy when you don’t include the systems that have failed and gone out of business.

While Conferences Trumpet Growth, More Franchisors are Failing

Franchising conferences rarely if ever discuss the franchise systems that are closing dining rooms in strip malls in Ohio or handing back keys in suburban Atlanta. But a forensic analysis about those franchisors and franchisees who filed for Chapter 11 in industries and markets that were celebrated as untapped opportunities just eighteen months ago is what we need to understand today — because the number of troubled franchise systemsis increasing.

The executives whose brands are failing are usually not in attendance at these conferences, and if they are, they understandably don’t speak about their problems. But we should not ignore that many of the franchise executives having problems today were celebrated at last year’s conferences, when their franchise systems were growing. The problems that are starting to surface in many franchise systems should be hard for any of us to ignore.

Some of franchising’s problems are addressed in franchise publications or on social media, but there is a long list of issues that we do not analyze, discuss, or learn enough about at conferences. There is a lot we can learn from many of the brands that got into trouble or have failed outright. For example:

• Friendly’s – a casual dining institution with decades of franchise history – entered Chapter 11 for the second time in 2020, not because the pandemic created weakness, but because it exposed years of deteriorating unit economics, shrinking relevance, documented customer experience failures, a system that had been contracting long before the crisis arrived, and leadership weakness and operational failures that management could not reverse. Friendly’s has declined from more than 700 locations at its peak to approximately 87 U.S. restaurants as of 2026.
• Quiznos – a dramatic, well-documented franchise collapse – was once the second-largest sandwich chain in the United States with nearly 5,000 locations at its peak. It collapsed from the inside out, with a high unit development cost and franchisees driven into insolvency by a supply chain model that extracted margin from operators until the system has fewer than 150 units remaining in the United States today.
• Subway – the system celebrated for years as proof that franchising’s growth ceiling was limitless (at one point operating more domestic units than McDonald’s) spent nearly a decade in systematic contraction, closing thousands of locations while attempting to reposition the brand before its sale to Roark Capital in 2023. The lesson from Subway is not that the system eventually stabilized under new ownership, but that it is a franchise network that expanded to approximately 27,000 U.S. locations at its peak and ultimately could not sustainably support the scale it developed. It also taught us that an addiction to discounting and a menu so complicated that even frequent customers have difficulty ordering is not a model for success. Today the system operates approximately 19,500–20,000 U.S. locations – a net loss of roughly 7,000 domestic units from its peak.
• FAT Brands – a multi-brand restaurant franchise platform facing significant financial distress, restructuring pressure, and sustained investor scrutiny – aggressively acquired underperforming franchise systems over the past several years. Its portfolio included Fatburger, Round Table Pizza, Johnny Rockets, Marble Slab Creamery, Twin Peaks, Fazoli’s, Ponderosa and Bonanza Steakhouses, Hot Dog on a Stick, and others. The acquisition strategy layered substantial debt onto brands that were already carrying stressed franchisee economics. The debt levels it carried have drawn sustained scrutiny from analysts and investors, and the resulting operational and financial pressures on franchisee unit economics compounded across the portfolio.

Other notable – but only top of mind – examples include:

• Baskin-Robbins — significant domestic contraction from roughly 2,500 to under 2,000 U.S. locations.
• Boston Market – near-total system collapse from hundreds of locations to only a handful remaining, illustrating how deteriorating unit economics, weak management, and operational failures can bring down even a well-known brand.
• Buca di Beppo – filed for bankruptcy protection.
• Burger Fi — went public via SPAC, acquired Anthony’s Coal Fired Pizza, then filed for Chapter 11 in 2024.
• Checkers / Rally’s — unit contraction, went private, franchisee stress documented.
• Cold Stone Creamery — substantial domestic contraction.
• Cosi — confused consumer offering, weak system management and effectively collapsed as a franchise system.
• Denny’s — sustained domestic unit decline over several years while trying to refranchise.
• Fazoli’s —unit contraction in core Midwest markets; limited brand awareness outside regional footprint.
• Gold’s Gym — closed hundreds of locations and filed bankruptcy 2020.
• Häagen-Dazs shops — substantial domestic contraction.
• Hot Dog on a Stick —mall-dependent with significant unit contraction as mall food court traffic declined.
• Jack in the Box – announced significant closure plans tied to portfolio rationalization and restaurant performance standards, demonstrating that sustainable franchising requires ongoing discipline in unit-level economic evaluation.
• Johnny Rockets — heavy mall and entertainment venue dependence.
• Krystal — bankruptcy filing, significant unit loss, regional concentration risk.
• Marble Slab Creamery —unit contraction; competing in a category with significant consumer headwinds.
• Menchie’s / Orange Leaf / Red Mango – the self-serve frozen yogurt category provides one of franchising’s most instructive cautionary tales about format risk. Hundreds of franchise operators opened locations during the froyo boom of the late 2000s and early 2010s, many encouraged by franchisors whose FDDs projected unit economics that depended on consumer enthusiasm no one could guarantee would last. When the format fell out of favor – and it fell fast – franchisees were left holding long-term leases on a concept with insufficient customer traffic to support the investment.
• Perkins — multiple bankruptcy filings, sustained unit loss.
• Pizza Hut – large franchisee bankruptcies and closure waves illustrate how aggressive development targets and weak unit economics can undermine system stability even within established, globally recognized brands.
• Ponderosa / Bonanza Steakhouses — Legacy casual dining brands with significant unit loss over decades.
• Round Table Pizza — sustained unit contraction in its core Western U.S. markets.
• Rubio’s Coastal Grill – collapsed from a high of approximately 180 locations before filing for Chapter 11 in 2024 and closing the majority of its restaurants.
• Saladworks – filed for Chapter 11 bankruptcy in 2020 after years of unit contraction in its core mid-Atlantic markets. The brand changed ownership multiple times, and each transition was accompanied by optimism about rebranding and reinvestment that franchisees on the ground rarely experienced.
• Sbarro — multiple bankruptcies, significant unit loss, heavily dependent on mall food courts.
• Souper Salad – a regional buffet-style chain that never found a path to sustainable unit economics outside its core Texas markets, and whose contraction illustrates the danger of a franchise model built around a format – the all-you-can-eat buffet – that was already losing consumer relevance before the pandemic accelerated its decline.
• Steak ‘n Shake — converted hundreds of corporate units to franchise as a survival strategy after sustained losses.
• TGI Fridays – once operating nearly 900 domestic locations at its peak, the system had already contracted sharply before its final collapse. It declined from approximately 234 domestic locations to approximately 164 in less than twelve months, before filing for bankruptcy in November 2024.
• Tijuana Flats – overexpanded, struggled operationally, filed for bankruptcy.
• Wendy’s – recent closure initiatives targeting underperforming restaurants highlight the importance of sustainable unit economics and the consequences of allowing marginal locations to persist within a system.

The list above is not even comprehensive to the expanse of the problems we see. With the growth of private equity platform companies that prioritize rapid expansion, debt loading, and short-term profit extraction over long-term operator sustainability, a study on their impact on franchisee health is long overdue.

Compounding operational and brand performance issues, the regulatory and legislative environment is tightening around franchise systems — scrutinizing the adequacy of financial performance representations, disclosure failures, territorial violations, misrepresentations about system performance, and the risks and activities of third-party sellers (brokers and FSOs).

The plaintiffs’ bar has also taken notice, with vicarious liability litigation accelerating. Courts are examining the differences between brand standards and a franchisor’s operational control and whether that creates joint employment liability, and whether the franchise relationship itself needs to be redefined. These are not hypothetical threats — they are active dockets.

Franchising’s addiction to celebrating unit count at conferences is both a cultural problem and an existential one because any franchise system that sells more than it can sustain is not a growing company, but a company that has borrowed against a future that it may never attain or be able to sustain.

What Conference Agendas Tell Us About Franchising Industry Priorities

I want to be precise, because I have deep respect for what the IFA Annual Convention, Restaurant Franchising and Innovation Summit, Franchise Leadership and Development Conference, Multi-Unit Franchise Conference, Emerging Franchisor Conference, and the dozens of regional franchise events accomplish. They convene smart people, create connections, and surface ideas. These are not small things, and it is a reason why MSA sponsors and regularly speaks at many of these conferences.

But scan the agendas over the past several years, and you will find an unmistakable pattern:

• The sales track is thick with sessions on lead generation, closing approaches, franchise development strategies, and conversion optimization. These sessions are oversubscribed, often standing room only.
• The legal track addresses regulatory compliance as a risk management exercise and rarely if ever glances at the fundamental question about whether the franchise offering itself was ever a sound investment to begin with.
• The operations track – where it exists – is conspicuously thin and sometimes absent entirely in any sustained examination of franchisee and system economics, fees, supply chain optimization, and whether franchisees are profitable enough to stay in business, reinvest in their units, hire and retain good people, meet the standards the franchisor publishes in its operations manual, and ultimately build the wealth expected when the franchise agreement was signed.

Conference silence on difficult sustainability issues is not an accident. Underperforming franchise systems can often be uncomfortable to discuss in public, and franchisees who were marginally viable at $550,000 in gross sales three years ago may need $680,000 today to hit the same net income —a number no one may be achieving in their market.

When franchise conferences do not focus on the business and sustainability reality and instead focus with an almost celebratory approach on system growth, they create a kind of collective fiction — that if a franchisor can continue to recruit new franchisees, everything must be working fine. Franchisees paying royalties on unprofitable top-line revenue know it’s not, even if the conference program does not say so out loud.

Five Tenets: A set of standards every conference needs to convey

At MSA Worldwide, our framework for evaluating whether a franchise system is built to last has never been complicated. We call them the Five Tenets of Successful Franchising℠, and they are diagnostic, not aspirational. When a franchise system violates even one of them persistently, the consequences eventually become visible in franchisee grievances, in units closing, and in the bankruptcy filings we read about today.

The Five Tenets and what each of them demands:

1. Consistent: The customer experience must be reliably consistent (does not mean identical) across every unit in every market.
2. Sustainable: The franchisee (each targeted class) and the franchisor must be able to make a responsible return on investment. If they cannot, the system fails from the inside out.
3. Replicable: The system must be capable of being taught, trained, and executed by people who are not the founder. Complexity that cannot be transferred is a liability; and,
   The system’s growth needs to translate into economic benefits for the franchisee and potential revenue for the franchisor.
4. Culture: There must be a shared values framework that is lived by the franchisor, embodied in its relationship with franchisees, and visible to the customer.
5. Communication: The franchisor must have the discipline and understanding of how to actively listen and the infrastructure to keep franchisees informed, engaged, and heard – not just told what to do. What is communicated, how it is communicated, the clarity of what is communicated and who is doing the communication is essential in a well-functioning system.

Look at every major franchise failure of the past decade through these five lenses, and you will find the same story told with different brand names. Quiznos could not sustain franchisee unit economics under a supply chain model that extracted margin from operators; TGI Fridays could not replicate a brand experience that consumers remembered fondly across a footprint that had grown beyond the system’s ability to support it; and Subway had a culture defined for so long by internal conflict between franchisees and franchisor that they became an industry cautionary tale studied in business schools. None of these failures are mysteries — they are violations of the Five Tenets.

I am not suggesting that franchise conferences eliminate sales development programming. Far from it — franchise sales is a legitimate discipline and franchisors need to know how to do it well. What I am arguing, with some urgency, is that the ratio between growth programming and sustainability programing is wrong.

If a system cannot sustain the franchisees it has, it does not need better sales techniques or a more aggressive third party seller. It needs to fix what it is selling before it sells more of it — and the conference ecosystem has a responsibility to say so, loudly and consistently, rather than filling three days of programming with growth celebration while the docket of regulatory and litigation enforcement actions grows longer and the list of system contraction and Chapter 11 filings accumulates.

• The franchisor-franchisee relationship is the most interdependent business relationship in commerce. We need to hear more franchisee voices on the main stage, not just in an afternoon breakout session. The franchisee who flagged a systemic operations problem has as much to offer as the franchisor who added 200 units last year.
• Too many conference agendas still fill prime speaking slots with motivational speakers, futurists whose frameworks have no franchise-specific application, and authors whose books were written about industries that bear no resemblance to the franchising relationship. The audience in those rooms is sophisticated. They deserve better than a talking head with a compelling story and no practical knowledge of what it actually takes to build and sustain a franchise system.
• We need to openly discuss – and not as a forensic examination of the legal issues – the decisions that led to system problems, what was done to avoid them, and what was done to fix the problems.
• We also need to rid our conferences of solutions based on the concept of “best practices” and instead focus on “contextual practices” because with 300 separate industries using franchising to expand, the notion of best practices is almost comical in the real world.

I want to be clear that franchising’s current conference programming does provide value. The IFA Annual Convention and Franchise Update programming produce genuinely substantive content on franchisee relations, regulatory compliance, and system health. The FLDC features meaningful discussions about franchisee investment return, and some of the regional associations convene panels that address real operational challenges with real candor.

The problem is not that important programming does not exist — it is that it is not weighted proportionately to what is important and what is needed. Many conference content influencers understand this problem and are working to achieve a balance that reflects the real world of franchising today. We should join with them and insist on more substantive programming, and we should encourage in our certification requirements that franchise development directors learn about unit economics in addition to lead generation. Consider that we mandate a course on franchise sales (Fran-Guard™) to obtain and maintain a CFE, but have no equivalent course mandated on the business side of the ledger.

Franchise conference programming must evolve, because we cannot afford to keep producing events that only help franchisors sell more locations when what is needed is programming to help them build better systems. The next generation of multi-unit operators and emerging franchisors form their understanding of what great franchising requires in the sessions they attend, and in the keynote addresses they hear. If all they hear is that growth is the measure of success, that is what they will focus on to the detriment of sustainability — and preventable franchise failures will continue to grow.

If the issues raised in this article resonate with you – whether you are a franchisor working to strengthen your system, a franchisee trying to understand the economics of your investment, an investor evaluating a brand, or an attorney or advisor navigating a franchise relationship – MSA Worldwide welcomes the conversation. We have spent decades helping franchise systems get the fundamentals right, and we believe the industry is better served by candor than by celebration. Michael Seid can be reached at mseid@msaworldwide.com or by telephone at (860) 523-4257.

Michael H. Seid, CFE, is Managing Director of MSA Worldwide, an IFA Board Member, and an author, educator and frequent speaker on franchising.