Franchise Development Leaders: Ryan Rao of Apex Franchise Development Group

Ryan Rao has spent the entirety of his career in the franchising space, which, when you consider he’s just 28 years old, makes his position as principal at boutique franchise consultancy Apex Franchise Development Group* that much more impressive. Rao handles franchise development for Apex’s partner brands, who typically have between one and 10 retail locations at the time the partnership begins. 

Rao is charged with evaluating a given concept’s economic model, the overall growth of the sector they’re in, the scalability of the concept and any competitive advantage they’ve created to determine if the concept is viable for the franchise model. Apex began its business by partnering with multiple concepts at once but has since transitioned more into an equity partnership model, with the majority of its resources currently being funneled into VIO Med Spa, an age-defying medical spa concept in the beauty and wellness space.

1851: How did you first get into franchising?

Rao: Right out of college, my father and a mentor of mine, Ryan Rose, became franchisees of a concept before acquiring three more locations. Not long after, Rose became CEO of the franchisor and then, acquired the franchisor thereafter. Out of school, I began working for him in franchise sales for that brand, and from there, my career continued to evolve in the franchising space. 

1851: What do you love about the industry?

Rao: It’s the people you meet. Franchisees all come from various backgrounds and geographies, yet once you come together as a franchisee-franchisor partnership, you’re working toward a common goal of collectively achieving something special. In the case of VIO Med Spa, we’re driven to help men and women of all ages look beautiful and feel confident in their own skin. I love helping guests achieve their beautification goals and making a difference in their lives. 

When you’re involved in a purpose-driven cause, it truly is your ‘why.’ That’s one of the things I love about franchising—when it’s done well, that purpose can be exponentially grown throughout the country rather than in just one market.

1851: What do you wish that you could change about the industry?

Rao: The stigma of franchising. Sometimes, it gets a bad reputation because of the lack of education in the market about what franchising truly is; franchising is a collection of independently owned businesses operating under the same trade name across the country. Those independently owned businesses are entrepreneurs and small business owners just like local mom-and-pop businesses are. 

People put a stigma on supporting national brands and enterprises across the country, but truly, you’re supporting your community, a local business owner and their employees—a brand isn’t only a multinational corporation.

1851: What is the biggest challenge franchisors are currently facing in franchise development and what are you doing to overcome it? 

Rao: The biggest challenge is that the amount of franchisees entering the market isn’t growing at the same rate as the amount franchisors are entering, so there’s a bit of inequity in the supply and demand equilibrium.

At VIO Med Spa, we have an equity partner that is one of the founders of Orangetheory Fitness, so he has tremendous credibility and overall relationships with highly successful franchisees across the country. As a result, we rely mostly on our personal network and reputations of our leaders to work with individuals involved with similar concepts to what we’re offering. If you don’t have those relationships, it’s difficult to get the engine moving because of the current landscape of the industry.

1851: What do you think the biggest trend in franchise development will be in 2020?

Rao: From a development standpoint, I think you’re going to see two things continue to happen. The first is the intentional targeting of candidates that have the wherewithal to develop a market as opposed to selling a single location to someone with fewer resources. 

The other is the trend toward further consolidation. There’s a lot of development groups who are becoming more like private equity firms as they acquire more early-stage franchisors and help support growth from both a capital and human capital standpoint. I think we’ll see more of that because the skills, expertise and overall relationships that franchising offers once they’re mastered are transferrable to different verticals, because franchising is a business of its own. 

1851: What makes a great franchisee?

Rao: First and foremost, they have to have passion for what they’re doing and similar core values and purpose to what the brand offers. If there’s a common philosophy or thought process or way of doing business that doesn’t align well with the business and they see it as a way to make money, I don’t think that will be a good fit.

1851: What's the No. 1 thing that sells franchises?

Rao: Validation. Any sales representative can create a story and deliver the overall sales pitch of the brand, but if a prospect speaks to a franchisee of the concept with a different perspective, that will always outweigh whatever the franchise sales guy says. It’s the most critical element to successfully develop a franchise brand.