The most successful franchises and how they got there
For aspiring franchise owners, there’s nothing like a success story to instill faith and inspire you as you embark on your own investment journey. Some of the stories of America’s top franchises are familiar. No. 1 McDonald’s even had a movie made about its transition from neighborhood burger joint to global franchising behemoth. Unsurprisingly, fast food dominates the list of the top franchisors. We like to eat, and we like convenience. The tales of how those companies got to the top might inspire you to greater heights.
The story of brothers Maurice “Mac” and Richard “Dick” MacDonald pioneering the “Speedee Service System” that formed the basis of fast food and how Ray Kroc spearheaded the effort to make McDonald’s a standardized global franchise is chronicled in the 2016 film “The Founder.” The systems were so successful that McDonald’s became perhaps the most recognizable piece of Americana. Locations became so ubiquitous and such a symbol of globalization and capitalism that they spawned Thomas Friedman’s “Golden Arches Theory of Conflict Prevention,” that no two countries with a McDonald’s in them would go to war. That’s since been disproven, partially because there are nearly 40,000 McDonald’s restaurants in more than 100 countries.
Harland Sanders worked a number of jobs before he began serving chicken with his own “secret recipe” at the gas station he ran in North Corbin, Ky. He was fired from a job selling life insurance, and his legal career ended when he got in a brawl with his own client in court. But that chicken was delicious enough to earn him commendation as a Kentucky colonel by the governor and to sell his first Kentucky Fried Chicken franchise in 1952. Sanders traveled the country in search of potential franchisees, building to more than 600 locations before selling in 1964 at age 73. He spent a good deal of his remaining years popping unannounced into KFCs and denouncing them if he didn’t like the food.
Today there are nearly 7,500 hotels in 131 countries. In 1927, there was a root beer stand in Washington, DC, that J. Willard and Alice Marriott opened to provide refreshment during the humid summers. That soon became a chain of successful restaurants, and the serially entrepreneurial Marriotts opened their first hotel in 1957. Ever innovating, the company was the first hotel chain to offer online reservations in 1995, and it now operates 30 brands worldwide, from luxury to long stay.
The 1950s were a wonderful time for fast food franchises. More and more families could afford cars, and road trips were becoming a popular American pastime. In 1958, brothers and college students Dan and Frank Carney opened a pizza shop in Wichita, Kan. Unsurprisingly, college students loved pizza so much the Carneys had expanded to six restaurants within a year and began franchising in 1959. While the number of dine-in Pizza Huts has decreased over the years, delivery has more than made up for it, and the chain has multiple store formats, with some focusing on dine-in, others delivery and carryout.
Founders Keith Kramer and Matthew Burns opened “Insta-Burger King” in Jacksonville, Fla., in 1953 using their “Insta-Broiler” oven for that flamed-grilled goodness. Franchisees James McLamore and David Edgerton bought the founders out in 1959, renaming the company and expanding to over 250 locations before themselves selling to Pillsbury. A succession of ownership groups has had varying degrees of success since, and today almost all of the 12,000 locations are owned by private franchisees.
The Domino’s story again begins with enterprising brothers. Except in this one, one brother was more committed to the enterprise than the other. James and Tom Monaghan bought the existing DomiNick’s pizza shop in Ypsilanti, Mich., from Dominick DiVarti in 1961. James didn’t want to quit his full-time job as the business grew and so traded his half to Tom for the Volkswagen Beetle they’d been using for deliveries. Tom expanded and rebranded to Domino’s at an employee’s suggestion. He sold the first franchise in 1967 and sold his share in the company in 1993 for about $1 billion.
William Rosenberg started out selling food to hungry factory and construction workers. He quickly realized they really liked coffee and donuts, so he opened Open Kettle restaurant in 1948, specializing in just those items. Two years later, he changed the name to Dunkin’ Donuts. Five years after that, he started selling franchises. Like so many on this list, the brand has altered its name and menu over the years. Though it still sells a lot of donuts, the company has de-emphasized that part of the name to focus on beverages and more breakfast selection.
“Pete’s Super Submarines” opened in Bridgeport, Conn., in 1965 as a vehicle for Fred DeLuca—who borrowed $1,000 from his friend Peter Buck to start the business—to pay for medical school. The next year the subs were so popular the friends were franchising. They changed the name in 1968, the first overseas franchise opened in 1984 in Bahrain, and today there are more than 41,000 franchises worldwide, making Subway the world’s largest restaurant operator.