Patience Was Key to This Franchise's Slow Growth Strategy Steady wins the race.
By Tracy Stapp Herold •
This story appears in the March 2017 issue of Entrepreneur. Subscribe »
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On November 8 last year, Freddy's Frozen Custard made its own history. For the first time, the company opened five restaurants across the country in one day, from Orange Park, Fla., to San Marcos, Calif. "It truly was a team effort," says Zach Woodburn, Freddy's director of franchise support. "Everyone in the company wanted to pitch in, including other Freddy's franchisees; several of them extended offers to send team members from their own restaurants to help. That's what makes us Freddy's: We're a family."
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That concept of being a family -- not just a franchise system -- is central to the Freddy's brand, according to Andrew Thengvall, VP of strategic growth. The company even calls its annual convention the Freddy's Family Reunion. Since the restaurant's founding by brothers Bill and Randy Simon and friend Scott Redler in 2002, that family has grown to include 60 employees at the Wichita, Kans., headquarters, and around 55 franchisees with more than 200 locations in 30 states.
Unlike some brands that come out of the gate running, though, Freddy's started slow. It was three years before the company opened its fifth restaurant, and 10 before it reached 50 units. But its growth has been increasing exponentially year after year. That's by design. "We've tried to grow slowly and consistently," says Thengvall, "and to make sure we can support our franchisees as they grow."
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Although the company requires all franchisees to sign area development agreements, Thengvall explains, "we don't ask them to open three or four restaurants a year right away." Instead, they're encouraged to focus on getting their first restaurant running smoothly and take their time finding just the right sites before opening their second and third units. After that, the franchisees have built up the infrastructure and capital necessary to open multiple restaurants on an annual basis.
In 2016, that patient strategy evolved into a company that is now growing at a full sprint. To wit, the Freddy's family opened a total of 59 restaurants last year and has its eyes on opening more than 70 this year.
