Burger King’s franchise plan targets local owners

Jeremy Klein started working as a Taco Bell crew member when he was 15 years old. Over the decades since then, he has risen through the ranks in the restaurant industry, rising to director of franchises for Burger King North America.

He recently found himself on the other side of the aisle as one of the burger chain’s new franchisees after acquiring 16 stores in the Salt Lake City area in February.

Klein is among the new owners betting on Burger King’s comeback in the United States. The burger chain plans to sell about 200 of its restaurants to franchisees by the end of the year as part of a broader refranchising plan, and buyers like Klein will be integral to the plan.

Starting in late 2022, Burger King has embarked on a turnaround strategy focused on revamping its marketing, improving food quality, and renovating its restaurants. The comeback is already starting to bear fruit. Burger King recently overtook Wendy’s in system sales to become the second largest hamburger chain in the United States.

To accelerate the modernization of our parent company, Burger King Restaurants. restaurant brand international acquired Carroll’s Restaurant Group, the chain’s largest U.S. franchisee, in 2024 for about $1 billion. The Carroll’s deal added 1,023 company-owned restaurants to the 175 Restaurant Brands already owned at the time, the majority of which had been acquired during Burger King’s bankruptcy sale of struggling franchisees prior to its restructuring.

The restaurant brand always planned to sell most of these restaurants back to smaller, local franchisees. Burger King ultimately hopes to have about 300 company-operated restaurants. Franchisees will operate the remaining 6,000+ stores in the United States.

In other words, Burger King’s future rests in the hands of its franchisees, as declining traffic, rising inflation and high interest rates make running a restaurant a difficult proposition.

“Franchise agreements are for 20 years. The average age of marriage in the United States is 8.2 people, so we have to get it right,” Burger King U.S. president Tom Curtis told CNBC.

Last year, the restaurant brand’s stock rose about 6%, boosted by strong international growth and green shoots for Burger King’s return to the United States. For comparison, rival McDonald’s stock has fallen 23% over the same period, but the company’s market capitalization is still more than six times that of the restaurant brand. In its most recent quarter, Burger King reported an 8.5% increase in domestic same-store sales, while McDonald’s U.S. same-store sales rose just 0.8%.

Refranchising Burger King restaurants could further boost the restaurant brand’s stock price.

Selling a store generates cash for the company. It also results in an asset-light model, which typically increases revenue for the chain and its parent company. And most importantly, franchisee-operated stores typically report better results than corporate-operated stores because franchisees are personally invested in their success.

“Getting these stores into better hands is an important part of the turnaround,” said TD Cowen analyst Andrew Charles.

More sales means more cash available to invest in your restaurant.

To be sure, it may take a while for investors to see the fruits of refranchising. The chain is prioritizing smaller operators as it begins selling off company-owned stores, a shift from an era when large, private-equity-backed franchisees like Carroll’s were favored.

Once the deal with Carol’s is completed in 2024, Restaurant Brands announced it will refranchise these restaurants over the next seven years.

Burger King originally aimed to franchise about 300 stores this year, but Curtis now expects to sell only about 200 locations in 2026.

One bottleneck slowing down this process is Burger King’s efforts to ensure prospective franchisees are a good fit for the chain.

When Klein was still director of franchises for Burger King North America, his responsibilities included marketing the company’s restaurants. It wasn’t always an easy task.

“We’ve been trying to sell these restaurants here in Salt Lake City for two years, and we haven’t been able to find anyone to buy them, but we saw potential,” Klein said.

In February, it acquired the same 16 stores formerly owned by Meridian Restaurants Unlimited. Meridian was at one time one of Burger King’s largest franchisees in the U.S., with more than 120 locations in nine states, before filing for Chapter 11 bankruptcy in 2023.

Klein’s isn’t the only Burger King franchisee born out of the company’s chain. Curtis said some employees at sister chain Tim Hortons have also signed term sheets.

To run the new franchise, Klein relocated from Miami to Salt Lake City. Local operations are another part of Burger King’s franchise strategy.

“We seek franchisees who live and work in the communities we serve,” Curtis said.

Proximity means that the operator frequently visits the restaurant. In addition, complaints are likely to come from neighbors and acquaintances, and they will be responsible for any problems at the restaurant.

This franchise policy will likely mean that Burger King will have fewer operators backed by private equity firms. For more than a decade, PE firms have been acquiring multi-location franchisees and adding locations by acquiring small-owner restaurants and selling the businesses at higher valuations.

“I’d say it’s less today than it’s been in years, and it’s probably going to be even less in the future,” Curtis said. “…It needs to be a great story of a company with great capital in the business and good operators who have a long-term outlook rather than a five-year plan.”

For other restaurant chains, private equity franchisees are often attractive because of their access to capital, especially in today’s high interest rate environment. But Burger King is focused on ensuring its franchisees are skilled managers and setting them up for financial success, Curtis said. For example, the Crown Your Career program helps restaurant leaders and managers obtain funding and financing to purchase their own Burger King restaurants.

Curtis would know what makes a good franchisee. He was also a former franchisee.

Years before joining Burger King, he worked in franchise restaurants for about 20 years. domino pizza. He then joined the pizza chain’s management team and worked with then-CEO Patrick Doyle to lead the revival of Domino’s Pizza, which remains one of the greatest corporate turnarounds. Mr. Doyle has been executive chairman of the restaurant brand since late 2022.

Under Mr. Doyle’s leadership, Domino’s improved its pizza recipes and released an advertising campaign comparing old pizza dough to cardboard. The management team secretly focused on the profitability of franchised stores.

Burger King has adopted a similar tactic, focusing on operator profits to give franchisees the peace of mind to reinvest in their restaurants.

“Everything we do is focused on profitability for our franchisees,” Klein said. “It’s not just about driving top-line sales. It’s not just about driving top-line traffic. It’s not just about being able to get a huge number of reports on the street.”

Todd Jackson, Thomas Crowson, and Colby Kaminar were impressed with Burger King’s management team and their vision for the chain. They acquired 20 Burger King stores in Florida in July 2025. As CKJ Management, they already had nearly 20 years of experience as franchisees of Newk’s Eatery, a fast-casual chain in the South.

The business partners were even more excited to learn from Newk’s employees how involved the franchisor’s due diligence was after the sale was completed.

“We found out that Burger King came to our restaurant and interviewed the general manager and wanted to know, ‘Are the owners in the restaurant? Do we know who they are and how involved they are?'” Clawson said.

Of course, not all refranchised locations will be Burger King franchised locations for the first time.

Kevin Haas just celebrated his 40th anniversary as a Burger King franchise in June. A few months later, Haas and his wife purchased three more restaurants, formerly Carroll’s, bringing K&JK Enterprises’ total footprint to 15 locations. Haas said Burger King’s recent success gave it the financial means to make the acquisition.

As Burger King looks to rebuild its U.S. operations, the chain’s new franchisees are also trying to improve the restaurants’ own performance.

First-time franchisee Brian Orlando, a former executive in the consumer goods industry, said he is focused on improving the culture of the recently acquired Delaware restaurant. For example, while his younger employees are often reluctant to offer Burger King’s signature paper crowns to customers, Orlando enforces demands on Burger King to do so and embrace a “performance of hospitality.”

Orlando is also participating in a pilot for franchisees to take all customer complaint calls via cell phone. (Earlier this year, Burger King advertised a phone number where people could text or call Curtis to share feedback.)

For CKJ Management, the culture change meant rebuilding the restaurant team from the top down and convincing employees to believe in the Burger King brand.

“Our market is up 21% year over year, which is really exciting,” Clawson said. “But I think the most exciting thing is that we’ve seen a 16% increase in traffic. That’s what’s important to us. You can raise prices and increase your average check, but you can’t fake traffic.”

In Salt Lake City, Klein is investing in restaurant facilities to help employees “feel like they’re part of something bigger than just a fast-food job,” he said. Klein added that customer complaints have decreased dramatically since he took over the restaurant eight months ago.

Franchisees are hopeful that renovating their stores will further increase sales. CKJ will need to renovate seven of its 20 restaurants to match Burger King’s latest design standards.

Orlando will soon break ground on the only renovation, but the rest of his restaurant was recently installed with Burger King’s current logo.

These renovation plans are just a small part of Burger King’s overall business. The restaurant brand wants 85% to 90% of the chain’s domestic restaurants to be “modern” by the end of 2028. The company has committed more than $1 billion to modernizing its restaurants, primarily through renovations, but also equipment, technology and building enhancements.