Is the Spokane area becoming a new hub for franchise success?

Three companies headquartered in the Inland Northwest are contributing to the notion by transitioning to a franchise business model as a strategic path to brand expansion and market reach.

GoJoe Patrol Franchising LLC, of Spokane Valley, has grown to six locations since landing its first franchisee in 2022; Konala Franchising LLC, of Post Falls, has announced plans to open 1,000 locations in a decade through franchising; and Revival Tea Co. Inc., of Spokane, is exploring an alternative model that will allow the company to retain greater brand control and help reach its goal of opening 50 franchise locations in 10 years.

Common in the U.S for decades, the franchise business model involves a contractual agreement between a franchisor, a company with an established brand, and franchisee, a business that purchases rights to operate as the existing brand. Franchisees typically pay a franchise fee for the right to use the franchisor's brand and systems for a specified number of years and with operational assistance provided by the franchisor. Additionally, franchisors earn a percentage of earnings or royalties of the franchisee's operations for a certain number of years, to be agreed upon contractually by both parties. 

Trace Miller, co-founder of healthy fast food chain Konala, says becoming a franchisor has three main advantages for the company. He contends the concept he's developed will upend the notion that restaurants have a low margin of profitability; he gets to work with other ambitious entrepreneurs; and more communities will be positively impacted with access to healthy fast food options. 

Harry Sladich, CEO of Spokane Valley-based private security company GoJoe Patrol Franchising LLC, says operating as a franchisor is an attractive plan to grow the company's footprint without depleting capital.

"We're going to grow the footprint of GoJoe Patrol without depleting our capital in having to open all these stores ourselves," Sladich says. "We're able to do that by selling franchises, and it's a lot less costly once you get to a certain threshold."

Although initial upfront costs can be expensive, the franchise business model is considered a cost-effective way for rapid brand expansion, says Sladich.

GoJoe Patrol  has grown to six locations, four of which are franchised, he says.

"I just knew that we wanted to grow GoJoe Patrol, and I knew that we didn't have the capital to open a bunch of stores ourselves. A more economical way to grow the brand and the footprint was through franchising," says Sladich. 

Shifting GoJoe Patrol to a franchise model required an upfront investment, though.

"We invested a couple hundred grand into setting up a franchise model to grow this across the nation, instead of going into each of these territories and spending $100,000 to $150,000 to open it up," Sladich says.

A GoJoe Patrol franchise location that opened in Savannah, Georgia, for example, was a fraction of the cost compared to that of opening a corporate-owned location, says Sladich.

Miller, of Konala, says his experience transitioning the fast food restaurant into a franchise model was also an expensive endeavor early on due to high legal expenses and other costly mistakes, including purchasing incorrect kitchen equipment and developing over 23 menu variations and 300 different concept designs.

"In the process of creating Konala, we have spent over $1 million if I include everything from all the mistakes, all of the legal fees, all of the operations manuals, and all of the other help we've had," explains Miller.

Some businesses have opted to work with franchise development companies or consultants to help their companies expand. 

Konala is now working with Fransmart LLC, a franchise development company that has helped 10 franchises grow to over 100 locations, including Five Guys Burgers & Fries and Qdoba Restaurant Corp., as previously reported in the Journal.

Konala recently has inked a franchisee that plans to open five locations in Spokane County. Long term, Konala intends to grow to 1,000 locations in the U.S. in the next 10 years, according to a report by QSR, a restaurant industry magazine publication.

Fransmart is helping Konala reach its expansion goal and avoid making more costly mistakes going forward, says Miller.

Drew Henry, co-founder of Revival Tea Co., is approaching franchise expansion a little differently.

Revival Tea Co. is exploring a joint venture franchise model that Henry says makes the most sense for the company compared to a traditional franchise business model. 

The company also is leaning on the franchise experience of some of its board members and legal experts rather than hire a consultant, Henry explains.

Revival Tea Co.'s joint venture franchise model will function similarly to Starbucks and provide a way to find strategic partners in new markets that the company has no connections to, says Henry.

"(The model) allows for a company like us to maintain more control and reliability across stores," Henry says.

Similar to Starbucks, Revival Tea will give franchisee partners the option to purchase more ownership in the business as time goes on and will have a mix of corporate-owned stores and franchise locations.

Revival Tea Co. currently operates three corporate-owned locations: the Spokane tasting room and the Phoenix Cafe, both of which are located in the same building on different floors, at 415 W. Main, in Spokane; and a Coeur d'Alene tasting room, at 201 N. First.

A fourth location is under development in the Arizona market that is expected to open in 2026 and will function as a model for future expansion.

Franchising challenges

Entrepreneurs also are facing some challenges related to franchising efforts, such as finding the right pace of growth, trusting franchisees and relinquishing control, and complex and expensive legal issues, Sladich says.

Starting as an independent business and moving to a franchise model requires owners to divorce themselves from operational control, adds Sladich, who says investing in legal help to create operations manuals and other franchise-related documents can help clarify what franchisors can focus on, such as brand integrity and standards.

Miller, of Konala, agrees and says he'd make more money and have full control over the stores he owns completely.

"There's risk and there's trust involved," Miller says. "We're going to make mistakes and pick some wrong people but it's totally worth it for the fulfillment and growth we're getting out of working with the amazing ones."

Revival Tea Co. has been challenged with finding the appropriate pace of growth throughout the franchising process, Henry says.

"We grew so quickly our first six years that we really had to kind of take a step back this last year to take two steps forward because we didn't have the infrastructure to continue to bear the weight on our shoulders," Henry says. 

One way Revival Tea Co. scaled back is by moving its manufacturing plant from a facility in Spokane to a plant in Western Washington last year to accommodate bigger purchase orders the company started receiving from vendors. The co-packing facility is operated by a well-known tea maker and Revival Tea board member, James Mackness, who is overseeing quality and consistency of the tea blends.

The move to the co-packing facility is giving Revival more bandwidth to focus on expanding the company's five revenue streams and market reach, Henry says, adding that eventually a new manufacturing facility will open in Spokane.

Small businesses here that take on expansion through franchising are highlighting the entrepreneurial spirit in the Inland Northwest, Sladich contends.

"If you were in Seattle and you tried to do this, good luck trying to meet any of the movers and shakers, but in Spokane, you can meet everybody from the mayor to the president of a bank," says Sladich. "If you're a small business in this environment, you've got so many people cheering you on."