Building Your Management Layer: When to Hire Your First GM

Every franchisee who successfully scales beyond one unit points to the same inflection point: the day they hired their first real General Manager. Not a shift lead with a fancy title. Not an assistant manager who still needs constant direction. A true GM — someone who owns the operation and runs it like it is their business.

This hire is terrifying. It is expensive. It requires you to trust a stranger with the asset you have spent years building. Most franchisees delay it far too long, staying trapped in operator mode because they cannot stomach the risk or the cost.

But here is the math that matters: you cannot open Unit 2 while you are still running Unit 1. The GM hire is not an expense — it is the purchase price of your freedom and your future growth.

The Timing Question

When should you hire a GM? There are two schools of thought:

The Conservative Approach: Wait until the unit is profitable enough to absorb the salary without stress. Typically this means 18-24 months of operation, with stable revenue and proven unit economics. You hire from a position of strength.

The Aggressive Approach: Hire before you think you are ready — sometimes as early as Month 6-9. Accept that you are trading short-term profit for long-term scale. You hire to create capacity for growth.

Both approaches can work. The wrong approach is waiting until you are burned out, your marriage is suffering, and you hate the business you built. By then, you are hiring from desperation, and desperate hires rarely work out.

The signals that you are ready:

• You have documented systems for every major process — opening, closing, inventory, hiring, customer complaints
• Your revenue is predictable enough to forecast GM salary as a percentage of sales
• You have at least one strong shift lead who could be promoted or who can support a new GM
• You are turning down growth opportunities because you have no bandwidth
• Your presence is no longer improving operations — you are just maintaining them

The last point is crucial. Early on, your presence adds value. You catch problems, coach employees, optimize processes. But there comes a point where you are just... there. The business would run the same whether you showed up or not. That is the moment you are ready.

The Profile: What to Look For

A GM is not a senior hourly employee. It is a fundamentally different role — someone who thinks like an owner, takes initiative without permission, and feels personal accountability for results.

Non-Negotiable Traits

Ownership Mentality: They treat the business as if their name is on the lease. They turn off lights, negotiate with vendors, stay late when needed — not because you told them to, but because waste offends them personally.

Problem-Solving Independence: When something breaks, they fix it. When a customer escalates, they handle it. When an employee no-shows, they cover or find coverage. They do not call you with problems — they call you with solutions they have already implemented.

Team Leadership: The staff respects them. Not fears them — respects them. They can hire, train, coach, and when necessary, terminate. They build culture, not just enforce rules.

Numerical Fluency: They understand that labor cost is not just a schedule — it is a percentage of revenue that determines profitability. They can read a P&L, spot variances, and take corrective action without being told.

Where to Find Them

Promote from within: Your best shift lead already knows your systems, your team, and your standards. The risk is lower because you have seen them perform. The challenge is whether they can make the mental leap from peer to boss.

Hire from competitors: A GM from another franchise location in your brand already knows the playbook. A GM from a competitor in the same industry knows the operational rhythms. Either can hit the ground running.

Hire from adjacent industries: Restaurant GM moving to retail. Retail GM moving to service. The operational skills transfer even if the specifics differ. These candidates often bring fresh perspectives.

Hire from corporate refugees: Mid-level managers from corporate jobs sometimes want to run something tangible. They bring process discipline and professional experience. The risk is culture shock — they may struggle with the scrappiness required in a small business.

The Compensation Structure

GM compensation must align their interests with yours. A flat salary creates an employee. A performance-based structure creates a partner.

Base Salary

Market rates vary by geography and industry, but expect $45,000-$65,000 base for a single-unit GM in most markets. Urban and high-cost areas run higher. Rural areas run lower. The base should be enough to live on — you do not want a GM who is financially stressed and cutting corners to make rent.

Performance Bonus

Layer a quarterly or annual bonus tied to metrics you care about:

• Revenue targets: Hit $X in quarterly sales, earn Y% bonus
• Profit targets: Maintain Z% EBITDA margin, earn bonus (this aligns them with cost control)
• Operational metrics: Customer satisfaction scores, health inspection results, employee retention

A well-structured bonus can add $10,000-$20,000 to annual compensation, bringing total comp to $55,000-$85,000. This is real money for the GM — enough to motivate behavior change.

Equity or Profit Sharing (Advanced)

For GMs you want to retain long-term — especially if you are building toward multi-unit — consider phantom equity or profit-sharing arrangements. "You will receive 5% of the profit from this location as long as you are the GM" creates true partnership. It also creates golden handcuffs that make it expensive for competitors to poach your best people.

This is not appropriate for every GM or every situation. But for the right person managing your flagship location while you focus on expansion, it can be the structure that makes everything work.

The Transition Process

You cannot hand someone the keys and disappear. The transition from owner-operated to GM-operated requires a deliberate handoff over 60-90 days.

Weeks 1-2: Shadow and Learn

The GM shadows you through every aspect of the operation. They watch how you open, close, handle rushes, deal with vendors, run team meetings, process payroll. They ask questions constantly. You narrate your decision-making process out loud.

By the end of Week 2, they should understand what the job looks like — even if they cannot do it all yet.

Weeks 3-4: Supervised Execution

The GM starts doing the work while you watch. They run the shift. They make the calls. They handle the problems. You are present but not intervening unless something is about to go seriously wrong.

This is hard. You will want to jump in. Resist. Let them struggle. Let them make small mistakes. The learning only happens when they own the outcome.

Weeks 5-8: Decreasing Presence

Start removing yourself from the schedule. Week 5, you are there four days. Week 6, three days. Week 7, two days. Week 8, one day plus on-call availability.

Each week, debrief with the GM. What went well? What was hard? What questions came up? Where did they feel unsure? Fill the gaps with additional training, documentation, or decision-making frameworks.

Weeks 9-12: Arms-Length Oversight

You are no longer on-site regularly. You check in via daily reports, weekly P&L reviews, and periodic surprise visits. The GM is running the show. Your job is to monitor, coach, and course-correct — not to operate.

If the GM is constantly calling you for guidance, something went wrong in the earlier phases. Either the documentation is incomplete, the training was insufficient, or you hired the wrong person.

The Failure Modes

GM hires fail for predictable reasons. Know them so you can avoid them:

You hired a shift lead, not a GM. They are great at tasks but cannot think strategically. They wait for instructions instead of taking initiative. This is a profile mismatch, not a performance issue. Cut your losses early.

You did not actually let go. You say you want a GM, but you still make every decision. You undermine their authority in front of staff. You second-guess their calls. The GM learns that their judgment does not matter, so they stop using it. This is your failure, not theirs.

You skipped the documentation. The GM does not have systems to follow because you never wrote them down. They are reverse-engineering your tacit knowledge through trial and error. Of course the results are inconsistent.

The economics do not work. You hired a GM before the unit could support the cost. Now you are stressed about payroll every month, which makes you micromanage, which makes the GM disengage. Timing matters.

Culture mismatch. The GM is competent but does not fit your values. Maybe they are too aggressive with staff. Maybe they cut corners you would not cut. Skills can be taught. Values cannot. Do not ignore the mismatch hoping it resolves.

The Math That Justifies the Hire

A GM costs $55,000-$85,000 fully loaded. That feels like a lot — until you run the alternative math:

Your time value: If you could be developing Unit 2 instead of operating Unit 1, what is that worth? A second unit generating $100,000 in EBITDA is worth $50,000+ to you in Year 1 alone — and compounds forever after.

Operational improvement: A good GM often improves margins. They are focused full-time on the operation while you were distracted by everything else. A 2-point improvement in labor cost on $800,000 revenue is $16,000 in annual savings — real money toward the GM salary.

Exit value: A business with professional management sells for a higher multiple than an owner-dependent operation. The GM hire can add 0.5-1x EBITDA to your exit valuation. On a $150,000 EBITDA unit, that is $75,000-$150,000 in additional enterprise value.

The GM is not a cost. It is an investment in scale, freedom, and exit value. The only question is whether you are ready to make it work.

"The first GM hire is the scariest. It is also the most important. Every unit you open after that becomes possible because you proved — to yourself — that the business can run without you."