Franchise Development Leaders: Valerie McCartney of Broken Yolk Cafe

Valerie McCartney has worked in franchise development since the early ‘90s for national brands such as Pizza Hut, El Pollo Loco and Johnny Rocket’s. In 2009, at the height of the recession, McCartney found herself developing Broken Yolk Cafe’s first franchise as a favor to the owner, whom she had befriended as a patron of the restaurant for several years. 

Through a business lens, though, McCartney saw Broken Yolk Cafe as an experienced operator and a quality, profitable business that was eager for expansion in the midst of a struggling economy. As the economy began to recover, McCartney facilitated what would eventually turn into a national franchising program. Broken Yolk has grown to 15 locations in San Diego County and 34 locations nationwide, with 10 more in development.

1851 caught up with McCartney to dig into her transparency-driven business perspective and what makes a great franchisee. 

1851: How did you first get into franchising? 

McCartney: I’ve been in franchise development since the early ‘90s. Prior to that, I was in the packaged goods business with PepsiCo and Nestle. I was with PepsiCo for 12 years, and during that time, the company owned KFC, Pizza Hut and Taco Bell. I spent four years on the Pizza Hut side doing franchise development and after another 8 years with PepsiCo, I became the Director of Franchise Sales and Development for El Pollo Loco. 

When I came to Broken Yolk, I was originally planning to just help my friends get a few stores built. I was laid off from a senior development position at the height of the recession and the opportunity just came along. I had been going into Broken Yolk for a number of years myself and the owner became a friend of mine. I had some time on my hands, so I figured I would help him get franchising started the right way. When the economy started to pick back up, I realized I was having a lot more fun working with an emerging brand than I had before with larger brands.

From a franchise development standpoint, Broken Yolk boasts high AUVs, generating $1.96 million on an average nine-hour day. We attract a lot of traditional QSR franchisees who often deal with long hours and lower AUVs. It works out really nicely for people looking for portfolio diversification. 

1851: What do you love about the industry? 

McCartney: I love building things. I think franchising is a great system for people to build a business. I look at franchising and see two primary draws: One is for first-time operators who are looking to get out of their day jobs; the other is additional multi-unit opportunities for people who have made a career in the franchising industry. It serves entry-level brands that take in first-time franchisees to provide a growth vehicle for people that are looking to diversify. From a franchisor's perspective, I think it is fantastic that people who are good-quality operators have a chance to grow their business. 

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

McCartney: I honestly wish there were more uniformity and transparency in how facts and figures are represented. Prospective buyers could more readily get the information that they need to do their due diligence if they were presented with clear, standardized figures for unit-level economics.

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

McCartney: I’m going to speak specifically on the restaurant side and within the multi-unit operator space. Occupancy costs are rising with rent and wage increases. Particularly in California, the increase in the minimum wage is painful for operators, but that’s not specific to franchising. 

One of the challenges in franchising is that good marketing can sell an underprepared franchise. It can be difficult, especially for entry-level franchisees, to know they are making a sound decision when they invest in something. 

We’re a pretty full-disclosure brand. We put anything that we can in our Item 19, and when I get a qualified franchise candidate, we provide a spreadsheet with every single franchisee in our system complete with contact and background information. This empowers franchise prospects to not only get answers that they need, but to know exactly who to call to get them. Giving context allows prospects to tailor questions to each person, whether they are talking to a seasoned multi-unit operator or just getting started. 

Experienced operators are usually savvy enough to know that there is no such thing as a perfect site, franchisor or franchisee, but pushing transparency frankly works to our benefit, evidenced by a closure rate of about 85%.

I give our candidates every opportunity to say no, and for that reason, they usually don’t. 

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

McCartney: I think we are going to continue to see new concepts of all sorts entering the franchise industry, for better or for worse. Many of them will continue to come in the childcare, pet care and senior care industries. I believe we will also see more fast casuals emerge. 

1851: What makes a great franchisee? 

McCartney: Someone that understands they joined a system because they wanted to follow a system as opposed to constant reinvention. You have to be entrepreneurial, but not so entrepreneurial that you’re unwilling to follow a set of established guidelines. The best franchisees are those that are involved in their business, and that typically comes through being invested in their communities. That doesn’t necessarily mean they’re working behind the scenes every single day, but I believe in people who don’t treat it like a passive income strain. 

Once you grow within a certain concept, you can either take that concept into another geography or diversify with a new concept in the same geography. I like operators who diversify with multiple concepts within one geography because they are poised to have more community involvement and better oversight. 

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

McCartney: The easiest way to sell a franchise is a charismatic salesperson. The best way to sell a franchise is through proven business models and strong economics. The problem is that there are so many brands that open and within the first six months, they elect to get into franchising. 

To me, six months is not enough. I encourage owners and operators of new businesses to figure out their model and become profitable first. If the first store isn’t making money, there is no ethical business in trying to franchise it. Once you have a profitable franchise, all you need to sell it is transparency.