Dog Haus hopes to become a national brand quickly under this new structure. | Photo courtesy of Dog Haus.
Dog Haus CEO Michael Montagano believes traditional franchising comes with an inherent disconnect between franchisee and franchisor.
Fundamentally, the incentives that drive the partnership are misaligned, he argues. Franchisees invest their wealth or leverage debt, sign leases and take on risks with the goal of profitability. Franchisors are focused on collecting royalties on sales, and the decisions made at the corporate level can have a big impact on those franchise operators.
Now, Montagano feels his 60-unit, mostly franchised brand is ready to try something different.
The Pasadena, California-based fast-casual hot dog-and-burger chain this week unveiled a ground-breaking new franchising model that Montagano contends will super-charge Dog Haus’ growth across the country.
The move is designed to attract a host of sophisticated and experienced multi-brand franchisees from successful systems like Dave’s Hot Chicken and Jersey Mike’s, which would be a game changer for a brand largely built so far by a relatively small cadre of 20 franchisees.
Dog Haus is attracting those proven franchisees by offering them an opportunity for more ownership of the business. They will also have a voice on the board and more say in corporate management.
If it goes as planned, Montagano contends the new structure will create a relationship that is “less ‘us and them,’ and just ‘us’ moving forward in lockstep toward a goal of building a really formidable national brand,” he said.
Dog Haus was founded 15 years ago, and has successfully operated, evolved and grown the brand up to this point, said Montagano.
The concept is known for its gourmet dogs, burgers and loaded fries and tots in a biergarten format, with extensive beers and a full bar. It’s a place for gathering to watch a game, feeding the team after soccer or meeting a friend after work, with the vibe of a casual-dining spot but a smaller footprint and leaner labor model.
“The guys have done a fantastic job of putting one foot in front of the other … and building a rock-solid brand,” he said. “Now, we want to grow the business in a way that’s different from what the industry has historically done.”
Here’s how it will work:
Dog Haus currently operates in 12 states, with about a third of units in California. Under the new structure, the U.S. will be carved into 15 territories, each with 100 units.
Each territory will be led by an experienced franchisee who will serve as an area director, a concept borrowed from Jersey Mike’s, Montagano noted.
Those area directors will be responsible for developing a certain percentage of the territory. But they will also serve as master franchisees to recruit new operators, or guide and coach existing franchisees.
“We’ve attracted what I would consider to be some of the greatest operators in the country,” that have dozens, if not hundreds, of restaurants, Montagano said. “Obviously there will be a royalty share, but we’re really empowering them, who are extraordinarily successful operators in their geographic areas, to then help other franchisees grow and develop in that area and be successful as well.”
Of the 15 territories, seven are new regions for Dog Haus. So the area directors will establish beachhead locations to help seed the brand.
And, in a key twist, the area directors will also have an opportunity to buy into the franchisor and become equity holders in the business.
Co-founders Andre Vener, Hagop Giragossian and Quasim Riaz will remain majority owners, however.
“We’re dipping into our earnings by sharing royalty to bring in this level of sophistication regionally into the system to help drive that growth,” said Montagano.
As a group, the area directors will also have a representative with a seat on the board, giving them a say in management and allowing for full transparency at the corporate level.
That’s something that could pay off for franchisees down the road if Dog Haus has an opportunity for a “big liquidity event.”
Montagano pointed to another Southern California-based brand, Dave’s Hot Chicken, which last year was acquired by Roark Capital in a deal valued at about $1 billion.
“When Dave’s Hot Chicken sells for $1 billion, it’s fantastic that it mints 20 millionaires at corporate overnight,” he said. “But what about the franchisees?”
Under this new structure at Dog Haus, franchisees would be in a position to reap some of any windfall that might come down the road—though Montagano said it’s premature to be thinking about that goalpost.
“What we’re really focused on is building stores responsibly, bringing in fantastic operators into the system, providing those operators the support they deserve, as well as the seat at the table that they deserve, and together building a brand that we can all be really proud of,” he said.
In addition, under the new structure two “legendary operators” and longtime franchisees will be joining the executive management team, Montagano said.
The company is not ready to reveal who those key players are, or the area director lineup. That news is coming in the next few weeks, he said.
All existing franchise agreements will be honored and Montagano said those franchisees will still have the councils and other opportunities to participate.
When asked if any smaller operators have objected to the notion of larger, more established franchisees operating in their region, Montagano said no one has expressed concern.
Rather, the smaller operators—some of whom are literally family of the founders—welcome the opportunity to work with and learn from the proven operators, who will serve as “player coaches.”
“That empowers Dog Haus to say, hey, we’re not going to argue about slivers of the pie. We’re going to try to create the pie as big as possible so that everybody can eat,” he said.
Dog Haus, meanwhile, is continuing to lean into social media influencers like TikTok chef Josh Elkin, who has developed menu items for Dog Haus, and boxing icon Jake Paul, who is also a franchisee and “critical thought partner,” Montagano said.
This year, Montagano expects Dog Haus will add about 10 units. But once the new strategy is in place, growth will take off in 2027, 2028 and 2029, he said.
“Then, the numbers will get crazy,” he said.
