45 Years in Franchise Development Taught Me This…

Article by Tony Padulo, Arthur Murray Dance Studios

Franchise development often has a comfort problem.

Not the comfort of a business performing – that’s excellent. I mean the comfort of a system that stopped asking hard questions because the old answers still seem to be working. That kind of comfort hides inside steady pipelines, familiar franchisee profiles and development conversations that feel productive but aren’t moving the brand forward.

Over more than 45 years in franchise development – working with brands including Dunkin’, BP Oil, Brightstar Care, Goddard Systems and School of Rock, among others – the franchise systems I’ve watched have challenges rarely struggled because they were bad businesses. They stalled because they were slow to recognize that the marketplace had shifted while they were busy executing a playbook that no longer quite fit.

When asked how a legacy franchisor stays relevant in a market full of options, my answer is… don’t avoid the hard questions.

The signals many systems miss

Strategy doesn’t break at once. It erodes over time.

The early indicators rarely feel urgent. A slower close rate, candidates asking questions that didn’t come up five years ago and franchisees expanding in unpredicted ways. Each one gets rationalized individually, and by the time the pattern is obvious, the system is already behind.

Those rationalizations, stacked on top of each other, are exactly what delayed development evolution looks like. The cleaner analysis is to ask whether your current strategy was designed for the operators you want to attract today, or for the ones you were attracting a decade ago. If it’s the latter, you’re falling behind.

Legacy creates strengths – operational depth, a proven model and franchisee networks built over decades. It can also mean that the infrastructure around development is oriented more toward the past than the present. Recognizing that distinction is where evolution begins.

Growth as a portfolio – not a funnel

The traditional development model treats growth as a single pipeline – attract, qualify, award, train and open. That model still works. In most mature systems, though, it’s no longer sufficient on its own.

The brands growing with intention treat development as a portfolio. They’re identifying which existing franchisees have the capacity and discipline to expand, while building pathways for outside candidates who bring different professional backgrounds and expertise.

Additionally, in industries where independent operators represent a meaningful share of the market, they’re having conversations with those owners about what a franchise system can provide that independent ownership can’t.

At Arthur Murray, we recently opened franchise development to qualified candidates from outside the system for the first time in the brand’s history. It was a deliberate decision, and the right one. Keeping development closed to existing owners and their teams made sense for a long time. At this point in the brand’s history, it limited growth opportunity.

We’re also focused on independent operators, which is underutilized across the industry. Owners who have built successful local businesses already understand their market, their customer and what success requires. What they frequently lack is infrastructure, brand power and the peer network a franchise system provides. The conversion conversation isn’t about rescuing a struggling business – it’s about what becomes possible with better support.

Not every system can pursue all growth paths at once, but every system should be honest about which ones it’s working, which it’s ignoring and what that might be costing.

Your best expansion partner isn’t always your best operator

One of the most consequential mistakes in franchise development is conflating high performance at a single unit with readiness to grow.

A franchisee who runs an excellent single location may have built something that works because of their personal involvement, local relationships or hands-on management. That’s worth celebrating – it’s just not always scalable. Awarding additional locations without a deeper look at how the first one operates can be a mistake for everyone involved.

Franchisees who expand successfully tend to have built businesses that run on process and team rather than on their constant presence. Their results are replicable because they aren’t dependent on the owner. That distinction matters a great deal at scale.

Beyond operations, look at alignment. Is this franchisee invested in the evolution of the brand – or primarily focused on their own unit? Both are understandable motivations, but they produce very different expansion partners.

What makes a new franchisee the right fit

Development teams spend a lot of time on qualification – financials, business and industry experience, etc. These filters matter, but they’re not really a fit assessment.

Fit is about how a candidate relates to the operating model. How do they respond to structure? Are they comfortable working within a defined system, or do they instinctively want to adapt everything? Do they understand what the brand is trying to deliver for its customers, and do they genuinely want to deliver that?

Misaligned franchisees almost always reveal themselves during validation and discovery, but only if the franchisor is asking the right questions and listening honestly. When a pipeline is slow and a territory is sitting open, there’s real pressure to keep moving. Awarding for the wrong reasons almost always costs more than waiting for the right candidate.

The better a system articulates what it truly requires – operationally and culturally – the more accurately candidates can self-assess. That self-selection reduces poor matches and produces stronger long-term franchisor and franchisee relationships.

What a successful franchisee looks like

Revenue matters. However, if it’s the only metric a system tracks, it’s missing some of the most important things happening across the brand.

The franchisees who add the most value over time contribute beyond their own locations. They maintain brand standards under pressure instead of cutting corners. They invest in their teams, so their businesses don’t collapse when a key person leaves. They engage in system-level conversations rather than waiting for direction.

In mature systems, these operators often play an informal leadership role – helping test new initiatives, modeling peak performance and reinforcing to newer franchisees that the system’s standards are worth following. That’s a very different kind of ROI than unit revenue, but it’s just as important to sustained growth.

Systems that invest in these operators – through acknowledgment, development support and genuine influence – retain and replicate them. The ones that don’t eventually watch them disengage.

Protect the core and evolve around it

Every franchise system has a core – the product or service it was built to deliver, the customer experience that defines the brand and the operating principles that make it work at scale. That core should be protected.

What evolution touches is everything around it – how growth happens, who is best positioned to carry the brand forward, how the system recruits and develops franchisees and how it stays compelling in a marketplace that keeps changing.

For legacy brands, this balance is the real challenge. Too much rigidity and the system becomes irrelevant. Too much change and it loses its identity. The brands that get it right stay clear about which parts of the model are sacred, and which are simply how things have always been done.

The brands still standing – and growing – after 50, 75, 100 years didn’t survive by staying comfortable. They survived by knowing which questions to keep asking.

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