How Does the Nando's Business Model Differ From a Traditional Franchise?

By UKFO Editorial · 14 September 2026

Nando's operates a unique restaurant partnership model that deviates significantly from the typical franchise system. This structure offers a different level of control and investment for potential operators compared to traditional franchising.

Understanding the Traditional UK Franchise Model

Before delving into what makes Nando’s unique, it’s essential to grasp the fundamentals of a traditional franchise arrangement in the United Kingdom. At its core, franchising is a business model where a franchisor (the owner of the brand) grants a licence to a franchisee (an independent entrepreneur). This licence gives the franchisee the right to use the franchisor’s brand name, trademarks, and, crucially, its proven system of doing business.

In a typical setup, the franchisee pays an initial franchise fee to get started. This fee covers the cost of training, support in finding a site, and access to the brand’s intellectual property. Once operational, the franchisee pays ongoing fees, which usually include:

A Management Service Fee (or Royalty): A percentage of gross turnover, paid monthly or quarterly, for the continued use of the system and ongoing support.
A Marketing Levy: A contribution, also usually a percentage of turnover, that is pooled into a national or regional fund to pay for brand-wide advertising and promotional activities.

The key principle here is one of ownership. The franchisee owns 100% of their own limited company, which operates the franchise. While they must adhere strictly to the franchisor’s operations manual and brand guidelines, the business itself, its assets, and its liabilities belong to them. They bear the full financial risk but, after paying the required fees, they also retain 100% of the net profits. This model is the standard for the vast majority of opportunities you will see promoted by organisations like the Quality Franchise Association (QFA) or listed on directories such as Franchise UK.

The Nando's Approach: A Partnership Model, Not a Franchise

Here is the single most important fact to understand: Nando’s does not operate a traditional franchise system in the United Kingdom. While they do have franchised restaurants in other countries like Australia and South Africa, their UK model is fundamentally different. Instead of selling licences to independent operators, Nando's enters into a joint venture partnership with its chosen operators, whom they call ‘Patrãos’.

A Patrão, a Portuguese word meaning ‘head of the family’ or ‘boss’, is not a franchisee in the legal sense. They are a managing partner. In this arrangement, a new company is formed to operate the specific restaurant, and both Nando’s UK and the Patrão are shareholders in this new entity. Critically, Nando's retains the majority stake, typically 51%, with the Patrão owning the remaining 49%. This structure moves the relationship from a licensor/licensee dynamic to one of shared ownership and direct partnership.

Breaking Down the Key Differences

This joint venture model creates significant divergences from a standard franchise in every aspect of the business relationship, from initial investment to the eventual exit strategy. For a prospective business owner, understanding these differences is paramount.

Ownership and Control

In a traditional franchise, you own the business, and the franchisor tells you how to run it. You have operational autonomy within a rigid framework. With the Nando’s model, you do not have sole ownership. You are a minority shareholder. Nando’s, as the majority shareholder, has ultimate control over major strategic decisions, such as significant capital expenditure or the long-term direction of the restaurant. The Patrão’s role is to be the on-site leader, driving operational excellence and managing the team day-to-day, but the corporate parent is always in the boardroom as a majority partner.

Financial Investment and Risk Profile

The financial side is perhaps the most starkly different area. To launch a traditional food franchise, a franchisee is typically expected to fund the entire cost. This includes the initial fee, shop fit-out, stock, and working capital, which can easily run into several hundred thousand pounds. You would seek funding from high-street banks, which have specialist franchise finance departments, and you would bear 100% of the financial risk.

The Nando’s partnership model shares the financial burden. Because Nando's is a co-owner, it contributes a significant portion of the start-up capital, commensurate with its majority share. The Patrão’s investment is therefore substantially lower than it would be for a comparable solo venture. This reduces the barrier to entry and spreads the financial risk. However, it’s crucial to remember you are buying a 49% stake in a business, not the whole business.

Fees, Royalties, and Profit Share

A franchisee pays royalties based on turnover. Whether the business is wildly profitable or just breaking even, the franchisor’s percentage of the top line remains the same. The franchisee’s goal is to manage costs effectively to maximise the profit that is left over.

The Nando's model dispenses with royalties entirely. As a co-owner, it would make no sense for Nando’s to charge itself a royalty. Instead, profits are distributed according to equity. The Patrão typically receives a salaried position as the Managing Partner responsible for running the restaurant. Then, after all operating costs, salaries, and taxes are paid, the remaining net profit is distributed to the shareholders as a dividend. Nando’s receives 51% of the profit, and the Patrão receives 49%. This aligns incentives perfectly: both parties are focused on maximising bottom-line profitability, not just top-line sales.

The Exit Strategy

When a traditional franchisee decides to retire or move on, they sell their business. The franchise agreement will grant the franchisor the right to approve the new candidate, but the franchisee is free to sell their asset on the open market for a price determined by its performance and goodwill. The value realised is their own.

Exiting the Nando's partnership is more complex and will be governed by a detailed shareholders' agreement. A Patrão cannot simply sell their 49% stake to anyone. Nando’s, as the majority partner, will almost certainly have pre-emption rights, giving them the first option to buy the Patrão’s shares at a pre-agreed valuation formula. This provides a clear exit path but removes the possibility of creating a bidding war or selling to a third party on the open market. The process is more controlled and less entrepreneurial than a typical franchise resale.

Why Does Nando's Choose This Model?

The rationale behind Nando’s UK strategy is clear: control and consistency. By being a majority owner in every one of its partner-run restaurants, Nando’s ensures that its famously strong brand culture and operational standards are impeccably maintained. There is no risk of a rogue operator cutting corners. This model also allows them to be highly selective, attracting top-tier restaurant operators who have the ambition to run their own business but appreciate the safety net and financial firepower of a corporate partner.

For the Patrão, the model offers a unique proposition: the chance to run a Nando's restaurant with a significantly reduced personal investment, shared risk, and the might of the parent company working directly alongside them, not just as a support office, but as a fellow owner.

What This Means for UK Entrepreneurs

The Nando’s business model is a powerful reminder that not all opportunities fit into a neat box. It is a hybrid, blending the entrepreneurial drive of a local owner with the corporate structure of a joint venture. It’s a compelling offer, but it’s not for everyone.

If your primary goal is to build a saleable asset that you own 100%, to have the final say in your business, and to keep all the profits after fees, then the traditional franchise model is the right path for you. You will find thousands of such opportunities available across the UK.

However, if you are an experienced, high-calibre hospitality manager who values partnership, is comfortable with shared control, and is attracted by the idea of a lower personal investment in exchange for a share in a globally recognised brand, the Nando’s Patrão system presents a fascinating alternative.

Ultimately, whether you are considering a traditional franchise or a unique partnership like Nando's, the guiding principles remain the same. Conduct thorough due diligence. Scrutinise the information pack or disclosure documents provided. And most importantly, seek independent legal and financial advice from solicitors and accountants who specialise in franchising and business structures. This will ensure you understand exactly what you are buying into: a licence, a business, or in the case of Nando's, a powerful partnership.