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Wobbly economic times have many multi-unit franchisees hyperfocused on their P&Ls as they look for ways to protect their bottom lines.
In the wake of tariffs and the conflict in Iran, the costs of everything from groceries to diesel fuel must be factored into budgetary and pricing decisions. In addition, operators are adjusting to climbing real estate prices and rising borrowing costs.
All of that is happening while consumer sentiment is dropping. According to the University of Michigan’s Surveys of Consumers, the index of consumer sentiment dropped from 55.2 in July to 51.7 in August. In August 2025, the index was at 58.2.
While the specifics might differ, conditions are reminding some of the difficulties caused by Covid-19. Daniel Moos, the founder of Cobblestone Group in Louisiana, a multi-brand operator with more than 100 locations, tore up his business plan a couple of years after coming out of the pandemic.
“We underestimated how long interest rates would remain high,” he says.
He made a similar mistake when projecting how long inflation would continue driving up prices. When combined with political uncertainty, questions about the positive and negative impacts of technology, and an uncertain job market, operators have reasons to be wary.
“I would tell you, five years ago, pre-Covid, we would wait out the storms,” Moos says. “We quit waiting for it to get better and became proactive.”
Those who successfully navigated past challenging periods say that steps taken now can help franchisees weather the difficulties while also setting their businesses up for future growth. We asked several franchise owners for ideas that provide them with breathing room and propel their businesses forward.
Questions remain about the full impact of AI on businesses as the fast-changing technology continues to develop, but those diving in are discovering tangible benefits. Some franchisors are rolling out brand-specific AI to franchisees, and other owners are buying it from independent vendors.
Moos, whose company operates The UPS Store, Batteries Plus, and Techy locations, was surprised that AI could help him find locations for new stores. He has a real estate background but appreciates AI for making it easier to keep up with these fast-moving times.
“We used to ask the Wendy’s people where we should put a Wendy’s store, and they said look for a McDonald’s and go close to them. That was the business model,” says Moos, a former passive investor in Wendy’s.
He began using AI about 18 months ago, and he’s learned that well-designed AI tools can provide answers that affect the bottom line. “Today, with laser accuracy, we can pick a location and go from a 50-50 chance that the store is going to be successful to a 90-10 chance,” Moos says.
AI is helping John Hotchkiss’ company, DHC of San Antonio, drive down waste and improve efficiency at 43 Little Caesars, Dave’s Hot Chicken, and Firehouse Subs locations from Texas to Tennessee.
Hotchkiss’ team tested a vendor’s AI system and then rolled it out fully in September. It aggregates information from all the company’s software packages into a single overwatch platform, giving DHC and its store managers real-time, individual location insights into controllables. In addition, AI helps track daily food scheduling, labor needs, and local weather.
“It will tell every manager, ‘It’s supposed to rain today. Sales typically drop during rain, so you should trim down labor today,’” he says.
AI also provides reports on real-time points of sale, accounting, and online reviews to help monitor company reputation and customer satisfaction.
“It is interactive for the store managers, and we get a higher-level report that tells us where we need to focus for the week or the day as far as controlling what we can control. It is a monthly subscription per location, but so far, it pays for itself,” Hotchkiss says.
For owners not using AI, there are still paper-and-pen ways of accomplishing some of the same goals. Moos says one of the first things Cobblestone did under its new plan was review its P&L statements and create a comprehensive list of ways to cut costs. That meant scrutinizing even small expenses, including making sure store managers turned down the air conditioning before closing each night.
To reduce his business’ overhead, Moos took an aggressive approach with property rent.
“We gave landlords two or three options,” he says. “If you like the location, you negotiate with the landlord and say, ‘I like the location, but let’s talk about extending the lease in return for some help to get through this economic crisis. It’s quid pro quo. I’ll stay but help me through this next year or two.’”
“I can tell you nine out of 10 times,” he continues, “the landlord has cooperated. Even if it’s a 90-day rent reduction. And I have had some situations where the landlord cut rent for a year but added a year at the back end.”
If the landlord refuses, there are other steps to take.
“If you’ve done everything you can on the controllable items and done everything you can to get foot traffic in and it is the location, you have to figure out how to bite the bullet and work your way out of that lease and get into a better location,” he says.
Moos recommended consistently building and maintaining relationships with bankers and landlords because having a tough conversation is easier when both parties know each other.
Moos also cut costs and improved store profitability by negotiating to close locations in oversaturated markets. He suggested working with other franchisees, including competitors, and franchisors to get through difficult economic times. It could be worth approaching other operators to see “if we could put our locations together, would it benefit us? And what would be the outcome of that?” he says.
Shutting down a location might not sound like an appealing option, but it’s a tactic that keeps long-term goals active during short-term pain.
“In Aurora, Colorado, we had a UPS Store for over a decade, and our lease was coming up for renewal,” he says. There were three stores in town, but it made economic and demographic sense for one to go away. Moos negotiated an agreement and closed his store. In return, he got a share of sales from his competitor for a period.
Moos also negotiated to reduce his Batteries Plus footprint in Las Vegas from eight stores to five, cutting expenses and improving profitability.
“None of them was making money,” he says. “Now, we have five, and all of them are profitable.”
Working with franchisors on such deals can be tricky. Long-term relationships smooth the process when it comes to asking for help, negotiating strategic closures, or pitching new ideas. “You have to sit down and say, ‘What is best for the brand?’” Moos says.
He is also pioneering a shared-space concept in Albertson’s grocery stores for his Techy locations, which offer repairs of phones and electronics. The locations give him guaranteed foot traffic. Techy is beginning to sell electronics and accessories to bolster operator income. That would not be allowed in a partner store that already sells those items.
“It’s the first one. It’s hard to say if it’s going to be successful or not,” Moos says.
It opened in August. He says he will know within a year if the business delivers a return on investment.
“If it goes well, I think it will be a nice model to expand to other grocery stores,” he says.
Tough times for smaller operators can create opportunities for a well-run multi-unit business that has the flexibility to move quickly.
Jeff Burroughs, who with his wife, Robyn Hanson, owns multiple Sports Clips and Rita’s Italian Ice shops in Maryland and adjacent states, returned from a trip to South Carolina in early September with a newly purchased portable Rita’s catering trailer.
“There was an opportunity to grab it when somebody was not doing so well,” he says.
The tight economy can pressure an owner of a single or maybe a couple of locations because they do not have the economy of scale to help them handle the economic squeeze. For larger operators with deep pockets, this could be a time for bargain hunting. When opportunities pop up, such as an operator ready to retire, Burroughs says it’s crucial to be ready to move.
“It is not a time to put the parking brake on; it’s time to go,” he says.
He has three Rita’s stores and three trailers, including the one he recently purchased. The trailers add flexibility and position him to adjust to what he sees as changing customer demand. He can go to customers at weddings, outdoor events, and a nearby air base.
“Right now, it is all about customer service and convenience,” he says. “People are wanting you to come to them.”
Diversifying brands can also add strength to a franchisee’s portfolio. Burroughs concentrated initially on a service brand, Sports Clips, and bought into Rita’s after finding out about the company at the Multi-Unit Franchising Conference. “It opened our eyes about not being one-dimensional,” he says.
Acquisitions can be about more than growing holdings. They can serve a second purpose: a money-making flip. Burroughs first tried flipping during the pandemic, picking up stores that were going to close. He paid bargain prices, brought the stores up to speed, and sold them at discounted rates.
“I thought, I’ll make a little bit of money and move on. I did a couple of those in Covid. It worked well for us and for the franchisee,” Burroughs says.
He has owned as many as 31 Sports Clips but now has 20.
Like Moos and Hotchkiss, he has shaved costs, including trimming his labor needs, to prevent price increases to customers who are already experiencing ballooning prices across the board.
“So many people are getting caught up in, ‘We have to raise prices to make a profit,’ and they are not looking at the back side of the business,” he says.
Operators need to know their numbers to understand what dominoes might fall after raising prices. He noted that every time the price of a haircut goes up, there is a 7% drop in customers.
As for Rita’s, “It’s really hard to continue to raise your price on a cup of Italian ice that a kid wants to buy,” he says. Parents may start to look for cheaper options, depressing the customer base.
Burroughs sees maintaining relationships as a natural part of running a business through good times and bad. He got word of the Rita’s trailer from the Rita’s community and moved fast to close the deal. Maintaining the same high-level contact with other businesses that support franchises is also important. If a business owner is only paying the monthly rent and not communicating with the landlord, then the operator does not have as much leverage when asking for help or better terms, he says.
“Your landlord, your bank, your franchisor—it is all about relationships with those folks. As we have all seen, times will go up and down. But relationships can stay steady and can help you overcome some of the down periods,” Burroughs says.
Another option to strengthen locations is to give store managers more skin in the game. Hotchkiss says his company tries to make its restaurant managers feel like owners. If they make their weekly numbers, DHC pays them a bonus.
“And we profit share with overall profitability of stores,” says Hotchkiss, adding that DHC also rewards managers for high customer reviews.
That helps prevent turnover and keeps high performers in a circle of employees. “It just goes back to the basics of running restaurants, getting back to the fundamentals of controlling what you can control and incentivizing managers to watch those things. So far, it’s working,” he says.
Moos looks for committed managers and offers them complete or part ownership. His company helps with the financing. “Several have done quite well for themselves,” he says, adding that none have gone out of business.
These are uncertain economic times with undeniable headwinds, and operators should not be sitting on their hands. If changes are needed, now is the time to make them, Moos says.
“Right now, from what I see in the last two or three years, don’t wait. Don’t hope and pray,” says Moos, reminding operators that bad situations don’t fix themselves.
Challenging economic conditions can force franchisees to play defense, but experienced multi-unit operators are protecting their businesses by cutting costs, renegotiating leases and debt, and shedding underperforming units. They stay alert for opportunities to acquire locations, secure better real estate, or add brands. Here are steps to consider: