How FSC’s Operator-First Approach to Franchising Is Winning with the Local Market

Before joining FSC Franchise Co., Chief Operating Officer Scott SirLouis spent years working his way up in restaurants, eventually owning five locations of his own — an experience that included both success and hard lessons. That background now influences how FSC approaches franchise support across brands like Beef ‘O’ Brady’s and The Brass Tap.

“I created my own concept … made a whole lot of mistakes, and learned an awful lot about being an entrepreneur and both the power and the risks of owning your own business,” SirLouis said during a recent webinar with 1851 Publisher Nick Powills.

After selling two locations and closing three others, SirLouis moved into corporate leadership roles, overseeing hundreds of locations before joining FSC eight years ago. Today, he leads development, operations, IT and training, giving him a broad view of what franchisees need to succeed — and where independent operators often struggle.

“I think I bring kind of a unique perspective to the franchisor in that I was an entrepreneur and I owned my own business, and I think that gives me insights into the life and what’s important to franchisees,” he said. 

Reflecting on his own journey, SirLouis said many of the challenges he faced came down to growing too fast and lacking the infrastructure to support that growth.

“I exited the business because at some point I made a series of mistakes that the business wasn’t going to survive,” he said.

That perspective informs how FSC positions its value to franchisees, particularly around royalties and ongoing support. Rather than viewing royalties as a fee for brand use alone, SirLouis emphasized the tangible benefits that come with scale, including purchasing power, IT infrastructure and operational support that independent operators typically can’t access on their own.

“It is easy every month, when you just see the royalty bill come in, to think about what am I getting,” SirLouis said.

FSC oversees multiple restaurant brands across the country and also operates 28 corporate locations, giving its leadership firsthand insight into how new initiatives affect day-to-day profitability.

Ultimately, SirLouis said FSC views franchising as a long-term partnership built on shared accountability, not a transactional sale. His own experience — including what went wrong early in his career — continues to shape how FSC works with franchisees today.

A transcript of the webinar titled “Winning the Local Market: Building a Multi-Unit Legacy with Beef ’O’ Brady’s* and The Brass Tap” has been provided below. It has been edited for brevity, clarity and style.

Nick Powills: How did you accidentally fall into franchising? What’s your franchise backstory?

Scott SirLouis: I’ve been in restaurants my entire life, from washing dishes and working my way up. When I was young, I created my own concept, built five locations, made a lot of mistakes and learned a lot about being an entrepreneur — and both the power and the risks of owning your own business. I got out of that, sold those and went into the corporate world. I ran upward of 250 corporate locations and another 100 franchise locations at one brand. Then I came to FSC.

I’ve been at FSC for eight years. I run the development department, the operations department, IT and the training department. So I have a lot of experience in restaurants, and I think I bring a unique perspective to the franchisor because I was an entrepreneur and owned my own business. That gives me insights into what’s important to franchisees.

Powills: What I heard in that is, one, you know what it feels like to invest your life savings into something and take a risk for the reward on the other side. Two, to operate five units on your own, you have to figure out systems and processes because you can’t be at all five restaurants at the same time.

And the last thing I heard — there are plenty of other directions we can go — is that you did exit. You were able to sell off an asset at the end, which is basically what a franchisee is going to want to go through.

How much of those three things do you cross-apply to the way you’re talking to someone who might be becoming an operator for the first time in their career, after washing dishes at the start of their career?

SirLouis: All three of them is the short answer. On the first, I understand what it’s like to have your life savings tied up in things. In the beginning, the business was struggling. I remember days when I had young children and my wife would call me and say, “How are sales at lunch? I need to go to the grocery store.” I get what it’s like. Thankfully, we didn’t stay in that state for very long.

On the third thing, I’ll be honest: I exited the business because at some point I made a series of mistakes and the business wasn’t going to survive. That came from expanding too quickly, not being disciplined around real estate selection, not spending enough time on day-to-day marketing and really understanding the power of top-line sales and how that cures everything. So while I did sell at some point — I sold two of them — I closed three of the five locations as well.

It was a roller coaster, but I think it gives me, as you say, a unique lens into what will help an entrepreneur at the franchise level be successful and, more importantly, what success and support we as the franchisor can give to a franchisee to make sure they’re not duplicating some of the mistakes I made early in my career.

Powills: Your story is similar to so many other people who got into the restaurant business outside of franchising. There’s a big dream, and there’s tremendous affinity that comes with opening a business where you’re a hero in your community. But when you do it independently, especially if you’re bootstrapping early on, you don’t have this plethora of resources that offset some of the gaps you have to figure out as an entrepreneur.

And then I think about exits. If you’re attached to a franchise system where you’re able to grow properly, and they’re responsible back to you and saying, “Here’s how we continue to grow the portfolio properly,” then you do have an asset that is exitable because it is attached to a brand.

When I’m hearing your story, it’s like, well, this is exactly why franchising. And the other comment I’m going to make is I think about the term royalty. I hate the word royalty because I think it turns into a hurdle in the buying process. Why do I have to pay the franchisor X? You should be paying the franchisor probably five times that for the amount of resources they’re able to give you that offsets what it would have been like if you did it independently. Talk to any responses you have to those comments.

SirLouis: Let’s talk about support, because I agree. With the benefit of hindsight, if I had been part of a franchise system, I would probably still own. That leads into what we do at FSC to provide support.

I have these conversations with both existing and prospective franchisees because it is easy every month, when you see the royalty bill come in, to think, What am I getting? When you talk through what you do get — at FSC, we’re a large franchise organization and we’re multi-brand — you get the benefit of scale in purchasing, IT support, real estate support and marketing.

A quick example: I have a franchisee who was coming up for renewal. They’d been in the system for 10 years. They have a very successful location. He and his wife asked, “We’re thinking about whether we renew or whether we branch out and do this on our own,” because they’d been doing it 10 years. They felt like they knew how to run a restaurant in Fort Bar.

I said, “Yeah, you do. Absolutely. And some of that is a benefit you gain from being part of FSC. But let’s talk about some of the concrete things you get for your royalties.”

One of the first things we did was pull all of his purchases for the past 12 months from our primary broadline supplier, Cisco, and what he spent. Then we went back to Cisco and said, “Give us the street price on all of these items.” The difference was amazing. It was about an 18 percent reduction just in food products coming in the back door.

When you look at that and the dollar amount associated with it versus what he had paid in royalties, it was a really short conversation. He said, “OK, I get it. Where do I sign?” And he re-upped for another 10 years.

If you look at IT, we have an entire IT department at FSC that does all of the OS programming, all the menu items, all the recipes, all the modifiers and all the integrations with third-party delivery services — integrations into the Cisco. If orders are coming in electronically into whatever system they’re using for accounting or back office, all of that goes through our IT department.

We have a help desk that’s manned through the ticket system and through an 800 number. Those are the types of resources that a small franchise — or no franchise — you just don’t get. The amount of work that goes into supporting a POS system is immense. That’s ongoing. It’s not just the right to use the brand name and the brand recognition. It’s the support we give franchisees.

Powills: Is it a best-kept secret with Beef or Brass that there is this infrastructure behind it? Do people really understand the depth of what you’re buying into when you become a franchisee?

SirLouis: One of the things we’ve realized over the past couple of years is we could do a better job making sure people understand that Beef ’O’ Brady’s and The Brass Tap are part of a larger organization. We don’t necessarily have the penetration in any market for people to realize we’re a large chain. In some ways, that’s a very good thing.

On The Brass Tap side, we want our restaurants and bars to feel like a neighborhood place, to be embedded in the neighborhood. People feel like it’s their Brass Tap. That gives the benefit from the consumer standpoint of feeling like you’re supporting a local business.

At the same time, for the franchisee, we do have support that comes with being part of FSC that gives you purchasing, IT and marketing — all the stuff we’ve been talking about.

I also think that while we’re a large organization and we give that level of support, we’re not so large that it’s impersonal. My personal cell phone is out. Every franchisee has it. They call me, and I get calls regularly. I got one this morning on something.

Our senior leadership is not so far removed from franchisees that it feels remote and impersonal. My CEO is out today on a market tour with our chief marketing officer. They’re on the East Coast of Florida visiting individual franchisees, meeting with them in their stores, talking about the business — what they can do better, what we can do better, where we’re going as a brand.

We’re large enough to give the support you would expect from a business of scale, but we’re not so large that you don’t get that personal touch. We think franchising is a business built on relationships. There has to be a trust level between franchisee and franchisor that we share common goals. FSC is in a sweet spot to deliver both — scale and personal relationships.

Powills: Step to the side or step backward. Give the state of the business on the brands we’re talking about so that if someone’s watching this, they can understand what channel they’d be interested in going down.

SirLouis: Let me give you a quick 30-second pitch on each brand. Beef ’O’ Brady’s is a 40-year-old legacy brand. There’s power in being 40 years old. It’s sustainable and has longevity.

We have 125 locations spread over 15 states, primarily in the Southeast. It’s built on family and community. We tend to do very well in small towns and suburban neighborhoods where we’re embedded in the community.

All of our locations, whether owner-operated or multi-unit, give back to that community. We partner with local schools and local organizations to make sure people see us as your neighborhood Beef ’O’ Brady’s.

That brand is growing. We’ll open nine locations this year. We have 25 in the pipeline. Momentum continues to grow as people see the success we’ve had in recent openings over the past few years.

On The Brass Tap side, it’s more of an upscale sports bar concept. We tend to do well in more affluent suburban markets. But again, we are also local. The Brass Tap was originally built on craft beer, although that’s not central to the brand as it was 10 years ago.

Craft beer is still a big part of the brand. If we have 45 or 50 taps in one of our bars, we expect half of those to be local. We work with franchisees to identify local breweries and build partnerships with those breweries.

When consumers come in, they feel like this is truly part of my community and I’m supporting a local business. We’ll open 15 Brass Taps this year, and we’ve got 85 in the pipeline. We’re scattered over about 17 states with The Brass Tap. So there’s still plenty of opportunity to grow around the nation.

Powills: Do you have any operators that own both?

SirLouis: We do. This year, we will open our first co-branded location in the Dallas market. We have a franchisee there with a 10-unit agreement with Beef ’O’ Brady’s, and he’s currently already operating five Brass Taps.

There’s some overlap between the consumer. There’s also a distinction: The Brass Tap is a little more upscale and a little more adult. Beef ’O’ Brady’s is a little more family, a little more middle market and a little more value-oriented.

Powills: How do these units perform? Everybody watching can say, “How much can I make?” That’s limited in disclosures, but how would you answer that?

SirLouis: Our top quartiles in The Brass Tap are averaging about $2.1 million on a buildout of somewhere between $800,000 and $1.2 million. Our top quartile on the Beef ’O’ Brady’s side is averaging $2.4 million with very similar-size buildouts. The sales-to-investment ratio is attractive.

On profitability, The Brass Tap is about 50 percent alcohol and 50 percent food sales, so margins tend to be very strong. We run between a 53 percent and 55 percent prime cost, which is your cost of goods and your labor combined. That is attractive across the industry.

Beef ’O’ Brady’s runs slightly higher, 55 percent to 58 percent, but still attractive. Because Beef ’O’ Brady’s typically goes into smaller towns or suburban neighborhoods, we tend to see lower rents. Rent factor on the Beef ’O’ Brady’s side is anywhere from 4 percent to 8 percent. The Brass Tap rent factors can get into the 6 percent to 10 percent range, but it probably averages around 8 percent.

If you take rent factors below 10 percent and prime cost well below 60 percent — sometimes even below 55 percent — that tends to drive attractive margins on the bottom line.

Powills: Put that back on the support infrastructure, too, because when you’re part of a larger organization, you have people looking at the finances and saying, How do we build businesses that can be sustainable and profitable? All of those things have been engineered.

Now you have a system of information you can access to say, This is the best practice. When you’re looking at site selection all the way down to prime costs, there’s a roadmap to follow versus trying to figure it out on your own.

Out of curiosity, I break it into three categories: location, operations and brand. The brand was the same in both places, but location and operations had drastic differences in delivery, including if I walk in there with the owner of the business.

When you break that down, how do you weigh location, operations and brand, and how important are those to top-line revenue?

SirLouis: You’re spot on. That’s the way we look at potential success as well. I’ll start with brand. We’ve got 15 Brass Taps and 125 Beef ’O’ Brady’s. We know the brand works. Beef ’O’ Brady’s has been around for 40 years. The Brass Tap has been around since 2012.

On location, that’s one place where we can give a lot of support. Choosing sites is not an exact science, but we’ve tried to make it as much of an exact science as we can. We have data-driven site analytics models that use demographics, traffic patterns and cell phone data to see where people are going to and coming from.

We make that available and work with prospective franchisees before they pick a site, because picking the location is probably the second most important decision in any franchising process.

The most important decision is the selection of the franchisee. The level of engagement is critically important. We have owner-operators and multi-unit operators. The key to success, whether you run the store yourself or pay somebody to run it, is how engaged you are.

Even multi-unit operators aren’t closing the restaurant on a Friday night at midnight, but they have managers to do that. They’re engaging with those managers regularly. They’re paying attention to guest reviews and profit-and-loss statements. They’re looking at purchases and schedules on a weekly basis.

More than anything, franchisees who are 100 percent committed and engaged in driving sales are the ones who will be successful. Are they picking the right team to deliver the hospitality and operations? Are they engaging with local stores?

In the order of importance, we can help with the other pieces, but the most important thing is franchisees who are truly engaged in their business and looking to build something of long-term value.

Powills: Another comment — and this is me as a consumer — there’s a big player in the space. Their logo is yellow. We stopped ordering from them third-party delivery because the order was wrong every single time.

Now I look at site selection, and they’re moving more toward a semi-absentee or absentee model. So there is no one there who really cares about what’s leaving the restaurant. As a consumer, quality is declining and the experience is declining.

I’ve been seeing this at all of their locations. In my opinion, that opens up the opportunity for the brand that was steady and stable throughout this. Then you hear about the openings you have happening on both brands in the next 12 months and what’s on the horizon. It feels like they left a gap for another player to come in.

As long as that owner-operator cares about staff and customers — and, in turn, the community — those brands have an opening to do some interesting things. Thoughts on that?

SirLouis: I agree. When I talk to prospective franchisees, one of the things they’ll ask about is site selection. What types of locations do we look for?

The difference between our competitors and Beef ’O’ Brady’s is you may see one competitor in a big 5,000-square-foot freestanding building on the outskirts of a major regional shopping center. We don’t want to be there.

We see the most success when you’re in the neighborhood, typically a grocery-anchored plaza where you, as a resident, are in that plaza regularly. When my kids were younger, I felt like I was at the grocery store down the street every day.

Those are the types of retail centers we want because it’s embedded in the neighborhood. When there’s an owner-operator running that, it lends itself to that person knowing the people who are coming in on a regular basis.

We do a lot of consumer research every year. As a large franchisor, we have the resources to do market research to understand our position with competitors.

One area where we consistently outperform the casual-dining average is frequency of visit. It’s an immense difference. The average guest is coming into Beef ’O’ Brady’s sometimes as much as three times a month.

People view us as their neighborhood place to get a quick bite on a Tuesday night after picking up the kids from soccer practice, or to go in on a Friday night when there’s a game on.

They go in not just because of food, atmosphere and hospitality, but because they know the owner and the bartender. They probably know two other tables in there because that’s the type of place Beef ’O’ Brady’s is. It’s what’s allowed the brand to be successful for the past 40 years.

Powills: I’m sure you’re able to take those behavior insights. The frequency is insane. I had clients who were like, “We’re lucky to get our guests back once every 13 months.” So the fact that they’re coming that frequently means there’s something special about this.

Now you’re able to take this and say the progression outside of the community sports restaurant is this upscale opportunity in Brass Tap. Another benefit of the FSC holding is that you’re able to say, What is the magic here, and how do we take that to this next level of customer?

So I’m sure that’s transitioning over to The Brass Tap as well, right?

SirLouis: Absolutely. On the Brass Tap side, because we’re in more upscale neighborhoods, Brass Tap is a social gathering. You go into our restaurants and bars and you’ll see large community tables because people come in in groups.

We lean into that and provide support for franchisees to execute those types of things. It starts with sports and what’s on TV. There will always be watch parties for games.

We had a huge day last night with the College Football National Championship. People came in in groups. We set up with local alumni associations so we are the official Ohio State watch party location for Prosper, Texas.

But it goes beyond sports. We give people unique reasons to come in. We do bourbon tastings where you pre-sell tickets and bring in an expert from a liquor distributor. Everyone tastes three, four or five different bourbons, and there’s light food for people to snack on. It’s educational.

We do the same with tequila tastings or wine tastings. But it’s not just alcohol. One of our most successful promotions was hosting Bachelor watch parties in our restaurants and bars.

It was amazing. We promoted on social media and we were packed on a Monday night with women coming in, watching The Bachelor in large groups and having a great time.

It’s not just about going out for a meal, having a beer or watching a game. We give people reasons to come in and socialize, gather together, be part of the neighborhood, be part of the community and enjoy each other in our restaurant and bar.

Powills: It feels like community and relationship continue to appear in the foundation of these businesses. How do you translate that over to the franchise community?

SirLouis: We view franchising as fundamentally being about relationships. There are franchise consultants. Everyone has franchise consultants. But our franchise consultants build relationships with their partners.

There are personal cell phones. We have everybody’s personal emails and cell phones, and they have ours. If there’s a question, no matter how big or small, we provide answers and support in multiple ways.

I tell prospective franchisees, your franchise consultant is your lifeline. They’re the person you call for anything big or small. It could be Friday night and the power just went out — what do I do? We’re there on an emergency basis.

We’re also there to work with franchisees on things like: How do I grow sales? How do I write a local sales and marketing program? How do I keep up with these events that we provide materials for?

Every year, we have a franchise convention where we get together for three or four days with franchisees. It’s educational, relational and social.

We do a trade show to show off new things coming to some of our vendors. That helps build relationships as well.

Senior executives get out into the field. I toured the Orlando market last week. My CEO is out on the East Coast of Florida this week. I’m going to Dallas. I’ll be in Sacramento on Thursday and Friday.

We’re out meeting with franchisees, getting to know them and helping them understand they’re part of a group of people who are there to support them.

Powills: Just a bullet point because this is in some of our pre-read notes. You guys operate restaurants as well?

SirLouis: We do. Our leadership — our CEO in particular — feels strongly that as a franchise, it’s critical that you have skin in the game. We operate 28 corporate locations across both brands.

It’s multifold in what that does for us. One, it gives us the opportunity to test new initiatives, new products, new solutions, new marketing campaigns and new menu items. We test everything in corporate stores, but it doesn’t get to the franchise community until we’ve vetted it and worked out anything that could go wrong. It’s polished by the time it hits the franchise community.

Second, it gives us perspective into profitability as much as driving sales. A common issue I hear is, “All my franchisor cares about is driving sales because they’re tied to royalties. They don’t care whether it hurts my profitability.”

Because we operate stores, we have sensitivity to profitability. We can’t run a promotion that hurts profitability in the franchise system because it will hurt us as much or more than anybody else. That gives us a leg up over competitors.

Powills: When you think back on opening these five restaurants, knowing what you know now, would you have done it differently?

SirLouis: There are a million little things I would have done differently. I’m a lot older and more experienced. We’ve learned over the course of 34 years. I don’t think that’s a fair thought.

But more than anything, I would have partnered with a franchise. Partnering with an established franchise takes the risk down on one of the three legs of that triangle you talked about. I probably would have done that, knowing what I know today.

Powills: In closing, if someone is watching this, are there any final things you want them to know about either brand? What should they take away from our conversation?

SirLouis: The last thing I’ll leave with is I’ll correct one thing you said. I don’t do what I do — or what the people that work with me do — as selling Beef ’O’ Brady’s or The Brass Tap. This is a significant investment.

You’re going to invest upward of a million dollars or more, sign a franchise agreement and sign a lease. The amount of time you need to put into it — it’s not like selling a used car.

What we try to do is understand whether there is an opportunity to partner together. When a franchisee comes into our system, we view it as a partnership. It’s a 10-year — at least, hopefully longer — relationship. We work together on a daily basis, and our success is tied to each other.

Whether you’re talking to FSC or anybody else, if you’re considering a dream of entrepreneurship, don’t view it as you’re being sold. Think of it as making a determination about whether this is a great partnership. Is there a culture fit? Is there a brand fit? Do I like the people I’m going to be working with for the next 10 years? Do I see myself in a relationship with these people for a long time?

Powills: I’m going to leave it at this. There’s a page on your website that shows the team. If someone said, “Nick, what is the favorite website landing page that you’ve ever seen?” that comes in a very short list. You see this experience from other brands so that you, as a franchisee, get to benefit from all of those learnings. It’s such a cool page, so I would encourage you to look at that.

Watch the webinar above or on YouTube.