By Don Tarinelli, Franchise FastLane

In today’s franchise development landscape, the road to ownership looks different than it did even a few years ago.

The biggest shift has affected access to capital, with banks becoming increasingly cautious, making it harder for prospective franchisees to secure funding — especially first-time entrepreneurs without extensive business portfolios. Add in today’s historically high interest rates, and even strong candidates often find themselves facing financing gaps they didn’t anticipate.

Beyond lending, restaurant franchise owners are challenged with development costs that are squeezing margins on all sides. Real estate remains scarce and expensive, construction timelines are long and often unpredictable, and equipment costs are continuing to rise. Global instability, from tariffs to supply chain uncertainty, adds another layer of complexity. Additionally, labor presents its own hurdles, with high wages and ongoing shortages impacting both initial staffing plans and long-term scalability.

The result is a franchise development climate where strong brands and great operators still thrive, but not without smart strategy and proactive solutions. For franchisors and franchisees alike, understanding the current challenges is the first step toward overcoming them.

Lending Challenges & High Interest Rates

With lenders tightening their standards and interest rates remaining elevated, brands are expanding their lending networks and offering guidance through third-party funding advisors or in-house financial support teams. As a prospective franchisee, it’s wise to explore alternative lending options early, such as SBA loans, ROBS (Rollover for Business Startups), 401K loans, HELOC (home equity line of credit), or equipment leasing, to diversify your funding sources. Strengthening your personal credit profile and presenting a detailed business plan tailored to the chosen franchise brand can also go a long way in securing more favorable loan terms.

Rising Real Estate Costs & Scarcity

In order to combat the real estate crunch, franchisors are moving toward and favoring flexible formats, second-generation locations, and smaller footprints to help reduce upfront costs and speed up openings. As a franchisee, be sure to align yourself with a local commercial real estate broker who understands your brand’s criteria and your market. Be open to alternative site types that still deliver strong foot traffic and evaluate those locations with a long-term lens rather than chasing peak rents.

Construction & Equipment Inflation

To combat rising buildout costs, many brands are simplifying designs and standardizing vendor relationships to lock in better pricing. Franchisees should take advantage of established vendor partnerships and growth-based development incentives, and seek transparency from their franchisor on expected cost ranges. Additionally, franchisees should consider phased buildouts or equipment financing programs that allow them to spread costs over time, reducing the financial burden during the critical start-up period.

Global Instability & External Pressures

Franchisors are responding to unpredictable global forces, such as tariffs and supply chain delays, by working closely with vendors and maintaining operational flexibility. Prospective franchisees can benefit by asking franchisors specific questions about how they’ve mitigated recent disruptions. During onboarding, build a buffer into your project timelines and budgets to accommodate delays, and stay nimble with local sourcing options where appropriate.

Labor Costs & Staffing Shortages

With staffing challenges persisting, franchisors are leveraging tech, refining training systems, and simplifying operations to reduce labor dependency. Franchisees can prepare by identifying strong local hiring channels early–like community job boards, local colleges, or workforce programs–and by fostering a compelling employer brand in their market. Investing in culture and early team development can reduce turnover and build a reliable, motivated staff from day one.

Why Roadblocks Aren’t Red Lights

Every successful franchisee I’ve worked with didn’t avoid roadblocks; they learned how to navigate through them. At Franchise FastLane, we emphasize to our prospective franchisees that challenges, whether it’s financing hurdles, real estate constraints, or labor shortages, aren’t signs to stop. They’re simply part of the journey, testing your preparation, adaptability, and commitment.

That’s why we focus so heavily on clear communication and brand vetting, making sure our franchisees partner only with the most supportive, well-equipped brands.

Yes, today’s climate is more complex than it was years ago. But the strongest brands are rising to the occasion with smarter systems, more flexible models, and better support than ever. When you align with the right franchisor and commit to doing the due diligence, there’s still incredible opportunity to build a sustainable, rewarding business.

What I wish more prospective franchisees understood early on is this: the best investment you can make is in finding the right funding, site, staffing plan, and long-term goals. Lean into the resources your franchisor provides, ask every question, and take a proactive approach to solving problems before they arise. You don’t need a perfect road, you need the right map, the right brand, and the drive to keep moving forward.

Don Tarinelli is the executive vice president of franchise development at Franchise FastLane. Don brings over 12 years of franchise development expertise to his role where he helps match potential franchisees with the right brands and supports franchisor excellence through strategic guidance every day. For more information about IFA supplier partner Franchise FastLane, please visit franchise.org/suppliers/franchise-fastlane/.