What the Numbers Say About Growing Your Culver’s Franchise
Authored by: Kim Wegner — Partner, CPA, CVA, CGMA | Date Published: June 04, 2026
The first location feels like a test. The second feels like proof. By the time a third or fourth is on the table, something shifts inside the decision itself. The operational rhythm is there. The team is trained. The community has embraced the restaurant. So now what?
This is the crossroads that many franchise owners do not openly discuss. The question is not whether the brand has momentum, because the numbers say it does. The real question is whether the financial foundation is ready to carry the weight of what comes next.
The Culver’s franchise has grown to over 1,000 locations and continues to add 50-60 new restaurants each year. Average unit volumes reached $4.2 million in a recent reporting period, up from $3.79 million the prior year. For anyone thinking seriously about franchise ownership, those numbers matter, but they only tell part of the story.
I have worked with many franchise owners at exactly this point in their journey, and what separates the ones who scale well from those who overextend almost always comes down to three things: cash position, tax planning, and entity structure.
What Can Your Cash Position Tell You Right Now?
Before a single site agreement is signed, your balance sheet will tell you more than any excitement about a new market ever will. The franchise cost of opening a new location can range from roughly $2.3 million to over $5.7 million, and that range widens depending on real estate, construction timelines, and equipment decisions.
Cash flow from your existing location or locations needs to be reviewed with honest eyes. Ask yourself:
- What does your net operating income look like after debt service on your current locations?
- Do you have reserve funds that would survive a slower-than-expected ramp-up period at a new location?
- Are you managing seasonality and labor costs in a way that leaves room for capital accumulation?
Most operators who run into trouble during expansion were actually profitable before they expanded. The issue was not revenue; it was the timing of cash outflows against the expectations they had built in their heads. A cash flow projection that accounts for pre-opening costs, ramp period, and ongoing royalty obligations gives you an honest picture before you commit.
This is where a financial partner who knows franchised restaurants, not just restaurants in general, makes a real difference.
How Does Expansion Change What You Owe in Taxes?
This conversation starts earlier than most franchise owners expect. When you are operating in one location, the tax decisions you made at the start may have been perfectly appropriate. When you are planning a second or third, those same decisions can quietly start costing you.
Here is what changes at the multi-unit level:
- Depreciation strategy becomes more meaningful. A cost segregation study can identify assets that qualify for accelerated depreciation, allowing you to move deductions into the year those assets are placed in service rather than spreading them across several years. The benefits of that timing can be significant for a growing operator.
- Multi-state obligations may come into play if you are expanding into a new state, bringing licensing, payroll tax registration, and income apportionment into the picture.
Choosing the right pass-through structure and aggregating qualified business income across entities can significantly affect annual tax liability for multi-unit operators. The decisions you make now create a foundation that either supports or limits what you can do later.
Are You Outgrowing Your Entity Structure?
Entity structure is one of the most overlooked pieces of the expansion conversation. Most franchisees form a single LLC when they open their first location and never revisit that decision. For a single-unit operator, that can work fine. A multi-unit portfolio often creates unnecessary exposure and missed planning opportunities.
When you get into the right multi-unit multi-entity environment there are other complications to consider.
One area that often catches multi-unit owners off guard is the controlled group rules. When you own more than 80% of multiple entities, the IRS treats them as a single taxpayer for certain thresholds and benefits. That means deductions such as Section 179, which might have applied separately to each location, now have to be shared across the group as a whole. Tax credits, retirement plan limits, and other benefits follow the same logic. Family ownership adds another layer, since a stake held by a spouse or child can be counted as yours under constructive ownership rules, pulling entities into a controlled group that may not look connected on paper. Missing this detail is one of the more costly surprises a multi-unit operator can run into.
What Does the Brand's Growth Trajectory Mean for You?
The brand’s expansion has been intentional rather than aggressive. Craig Culver said it plainly in a Restaurant Dive interview: “Do we want to grow? Yes, but I’m not here to see how fast we can get to 2,000 or 3,000. I want to do it the right way.” That standard applies at the franchisee level, too. “The last thing we want to do is get somebody in business that isn’t going to succeed at it.” That means the people competing for new territory agreements are serious, well-capitalized operators.
Where Should You Start If You Are Considering Your Next Location?
Understanding what the franchise requirements look like on paper is only the starting point. The owners who handle expansion well do not wait until the opportunity is right in front of them to start preparing. They build the financial foundation in advance so that when the moment comes, they can move with confidence rather than scrambling.
Here is what that preparation looks like in practice:
- Review your current cash flow model with someone who understands franchise-specific cost structures, including royalty stacks, pre-opening periods, and ramp timelines.
- Revisit your entity structure before signing any new agreements, and understand which changes would create a better foundation going forward.
- Make sure your depreciation strategy for existing assets is working in your favor and that you are not missing deductions that could fund your next down payment.
- Build a multi-state tax picture if expansion would cross state lines, since the compliance requirements and tax obligations vary.
Growth decisions made from a place of financial clarity tend to hold up. The ones made from enthusiasm alone tend to teach expensive lessons. I have worked with many Culver’s franchise owners on these exact questions about expansion and scaling, and the conversations that go well are almost always those that happen before the opportunity arrives. If the next location is on your radar, I would be glad to take a look at where things stand today.