Franchising: One of the Most Effective Growth Levers
- Amaury Marescaux
- 2 days ago
- 3 min read
INSIGHT - The subject became inevitable following the recent Franchise Expo in Paris. Especially since this Thursday, April 2nd, the Gondola Foodservice Congress brings together the leaders of Lunch Garden, Foodmaker, and Fritàpapa, all driven by development through a network of franchisees.
In Belgium, the segments with the highest number of franchisees remain the classic Burger-Pizza duo, with the ranking dominated by McDonald's, Burger King, Quick, Pizza Hut, and Domino’s. For a long time, franchising was perceived essentially as a synonym for American fast food. These chains are significantly more productive per unit than independent operators.
Independent QSRs (Quick Service Restaurants) may be ten times more numerous (9,962 vs. 1,038), but they are highly fragmented and individually generate little revenue (~€1 billion in aggregate). This highlights the power of standardized processes and the marketing of major brands.
Nevertheless, we are seeing new local rising stars such as FritàPapa and Belchicken. This also extends to healthy fast food: Foodmaker and Exki. The franchise model is even reaching established concepts like Lunch Garden, "the brasserie for all Belgians," and Le Pain Quotidien, the bakery-restaurant concept. These "fast-casual" or "fast-good" chains could easily gain market share by bringing more structure.
Franchising Asserts Itself in the Belgian Restaurant Industry
Franchising is progressively becoming a central strategic lever for the growth of restaurant chains, whether they are positioned in Quick Service Restaurants (QSR), fast-casual, or even certain formats closer to full-service dining.
This evolution responds to a double economic imperative. On one hand, brands seek to accelerate their territorial expansion in a context of increased competition. On the other hand, they must deal with an increasingly demanding operational environment: rising labor costs, raw material inflation, and growing investments in technology and digitalization.
A Lever for Expansion Beyond the Core Market
In this context, franchising allows for the combination of a brand's power and a centralized system with the entrepreneurial commitment of local operators. Several sector analyses, notably those from McKinsey, Bain, or the Belgian Franchise Federation, emphasize that this model is currently one of the most effective levers for rapidly deploying a restaurant network while limiting capital intensity for the brand.
McKinsey adds that franchising is a powerful tool for expanding beyond the core market but warns that rapid expansion with inconsistent partners can lower revenue per outlet and increase closures. Bain, for its part, shows that a franchised network does not automatically create value if real estate development is not finely managed: too many poorly calibrated openings end up cannibalizing the network.
A Combination of Standardization and Local Roots
Franchising also allows for the combination of two logics that are often difficult to reconcile. On one side, the franchisor guarantees strong standardization: recipes, restaurant design, operational procedures, and technological tools. This ensures a consistent customer experience from one point of sale to another.
On the other side, the franchisee provides in-depth knowledge of the local market. As an independent entrepreneur, they are directly exposed to the economic performance of their restaurant and often possess a finer understanding of the catchment area, consumption habits, or local real estate dynamics. Above all, the franchisee is often a local entrepreneur who leverages their network and regional knowledge to make the restaurant thrive.
Economies of Scale in Purchasing and Marketing
Franchising also allows for the pooling of several key functions. Brands can negotiate large purchase volumes from food or equipment suppliers. They also centralize marketing investments and technological tools, including digital ordering platforms, loyalty programs, or management systems. These economies of scale are particularly important in a sector where margins remain relatively tight.
A Partial Loss of Operational Control
In a franchised network, restaurants are operated by independent entrepreneurs. The franchisor, therefore, does not directly control all daily operations. Even with strict procedures and regular audits, quality can vary between establishments. In the restaurant industry, where the customer experience relies on very precise operational execution, this variability constitutes a real risk.
Increased Complexity in Network Management
The more a franchised network grows, the more complex its management becomes. The franchisor must provide training, operational support, quality supervision, and relationship management with franchisees. Disagreements may arise over necessary investments, renovations, marketing strategies, or supply conditions.
Sharing Economic Value
Unlike company-owned restaurants, a portion of the profit generated by a franchised outlet naturally goes to the franchisee. The franchisor must therefore balance two goals: maximizing the unit profitability of restaurants and accelerating network growth. Overly rapid development can lead to cannibalization between restaurants and a decline in the network's average performance.
