Leonardo Castelo criticizes model sold as insurance, points out risks and reveals new bet on automated operations
Brazilian franchising is experiencing a moment of significant expansion, with revenue exceeding R$300 billion in 2025, but, behind the robust numbers, there is a scenario of increasing pressure on the sector. For Leonardo Castelo, founder of 300 Franchising, there are still distortions that compromise the sustainability of many networks.
In an interview with Jovem Pan Businessthe businessman makes a direct criticism of the discourse that, for years, sold franchises as a safe alternative for generating income. In his opinion, this narrative is at the root of many problems. “Franchising is not a passive investment. It is a business that requires constant operation, management and execution”, he says.
The statement summarizes one of the main mistakes made by those entering the market: the expectation of automatic returns. In practice, it requires daily dedication, management skills and in-depth understanding of the operation.
The gap between expectations and reality quickly appears in the results. Some franchisees do not achieve the projected performance, either due to lack of preparation or because they do not perform what the model requires. The problem, in the executive’s opinion, begins even before the contract is signed.
He argues that franchising needs to abandon the relationship discourse and assume a more professional logic. For Castelo, it’s not about affinity, but about technical capacity and discipline in execution.
This change becomes even more urgent given a transformation already underway. According to the businessman, two factors have been redesigning the sector: the search for efficiency and the reduction of dependence on labor.
Businesses that require many people have become more expensive, more difficult to manage and more vulnerable. At the same time, automated models are gaining ground, with operations that work almost without human intervention.
300 Franchising itself is betting on this movement with new autonomous formats. During the interview, Castelo anticipated the launch of a solution aimed at the pet market: an automated animal washing system that works without the need for operators. The model carries out the complete cleaning and drying process autonomously and records images of the animal during the procedure, also creating an experience for the customer.
According to the businessman, the proposal combines reduced operational costs with increased efficiency, a trend that should gain ground in the coming years.
Another sensitive point is in the structure of franchisors. For businesspeople, one of the biggest mistakes in the sector is believing that growing slowly is safer.
In practice, small networks are not sustainable. The account does not close. Without scale, the franchisor does not generate enough revenue to set up marketing, technology, support and training teams. Without structure, the network loses quality, the franchisee is left unassisted and growth slows down.
The result is a cycle of fragility that often ends in the closure of the operation. Castelo states that there is a “valley of death” in franchising, in which chains with few units simply cannot survive. For him, growing fast is not an aggressive choice, but a structural necessity.
Within 300, this vision led to the separation between expansion and management. While one team is dedicated to selling new units, another works to support and develop franchisees.
The logic is to avoid conflicting priorities and ensure efficiency. In the executive’s opinion, mixing the two functions compromises both the entry of new investors and the network’s performance.
In addition to the structure, Castelo points out that the main points of friction continue to be technology, marketing and local adaptation. Franchisees question centralized systems, strategies and decisions, which require a balance between standardization and flexibility.
Despite the criticism, the businessman recognizes that Brazil occupies a relevant position on the global stage. In his assessment, the country is already among the most mature markets in the world in franchising, behind only the United States.
Still, he believes that the sector limits its own growth by adopting unambitious goals and avoiding more complex decisions. “There are companies that want to have 30 or 40 units and think that this is enough. It is not. It does not sustain the operation and does not create a strong brand”, he says, criticizing the lack of vision in expansion.
For Castelo, the future of franchising will be defined by three pillars: scale, technology and data-based management. Networks that do not advance on these points tend to lose competitiveness.
The clear conclusion is that the franchise model remains relevant, but requires more professionalism than traditional discourse usually admits. In a more demanding market, it is not enough to replicate a formula. It is necessary to operate with rigor, invest in structure and abandon the idea that entrepreneurship can be simple.
