In the world of food and beverage, franchising is often seen as the fastest way to scale. For Fruitas founder and CEO Lester Yu, however, the strategy came with pitfalls that threatened the very foundation of his business. While franchising helped Fruitas survive its early years, Yu later admitted it became one of his biggest regrets.
“One of my biggest regrets in my business decisions is when I started franchising,” he said bluntly.
Franchising Out of Necessity
When Fruitas began in 2002, resources were scarce. Expansion required capital, and franchising seemed like the logical solution. “The truth is because we need money,” Yu explained when asked why he franchised in the early years.
Franchising provided quick cash, but it also introduced challenges that Yu didn’t anticipate. By giving up direct control of some outlets, he found himself facing issues of quality, consistency, and alignment with the brand’s vision.
Why Franchising Was Unsustainable
Yu’s criticism of franchising is rooted in his belief that it is not a reliable long-term growth model. “Hindi sustainable business model if you only grow through franchising,” he said.
The problem, he explained, lies in the nature of food and beverage operations. Products need strict quality control, and franchisees often have different priorities or approaches. “We deal with people probably different agenda, different vision, different objective,” Yu observed
Without a single, unified direction, the risk of inconsistency rises. For a brand like Fruitas, which positioned itself as a fresh and trusted choice for consumers, that risk was unacceptable.
Buying Back the Franchises
Instead of letting the problem fester, Yu made the bold decision to buy back almost all of Fruitas’ franchised outlets. “I bought back almost all, except one very good franchisee,” he recalled.
It was a costly move, but it allowed Fruitas to regain full control over its operations. By centralizing management, Yu could ensure that quality standards, customer service, and branding were consistent across every outlet.
This decision reflected the same discipline and sacrifice he practiced in Fruitas’ early years: choosing long-term sustainability over short-term gains.
The Importance of Quality Control
Yu emphasized that the real issue with franchising wasn’t just financial—it was about protecting the brand. “Control quality,” he said, pointing to how franchising made it harder to maintain standards across all locations.
For him, brand trust is built on consistency. If one store delivers poor service or subpar products, the entire brand suffers. By owning and managing the majority of outlets, Fruitas could guarantee that customers received the same experience no matter where they went.
Lessons for Entrepreneurs
Franchising is not inherently bad, but Yu’s story highlights the importance of context. For certain industries, especially those with products that are simple, standardized, and easy to replicate, franchising can work well. But for businesses like Fruitas, where freshness and quality control are critical, the model can create more problems than solutions.
Yu advises entrepreneurs to think carefully before choosing franchising as a growth strategy. Quick capital may be attractive, but it comes at the cost of control. And once that control is lost, brand reputation can suffer.
From Regret to Reinvention
Despite calling franchising one of his biggest regrets, Yu turned the experience into a learning opportunity. By buying back outlets and reasserting control, he repositioned Fruitas for long-term growth.
Today, about 80% of Fruitas stores are company-owned, while only a small percentage remain franchised.
The company now focuses on acquisitions, brand development, and careful expansion—strategies that ensure growth without sacrificing quality.
A Cautionary Tale
Yu’s regret over franchising underscores a broader truth about entrepreneurship: not all growth is good growth. The wrong strategy, even if profitable in the short run, can undermine a company’s future.
As Yu put it, “Hindi sustainable business model if you only grow through franchising”
His decision to shift away from that model may have been difficult, but it allowed Fruitas to become stronger, more consistent, and ultimately more trusted by consumers.
For entrepreneurs, his story is a reminder that success requires more than speed—it requires control, discipline, and a willingness to admit when a decision needs to be reversed.
