I think franchising is the fastest way to expand. And while it isn't as lucrative as owning the locations themselves, I still believe that the best possible game plan is to let franchisees essentially provide free marketing for other products like merchandise and frozen food that have high margins and that Giggles retains 100% ownership of.
If/when Giggles sells the company to a private equity firm, it'll be more the ancillary stuff that provides the consistent stream of revenue. Actual locations are burdened by limited hours of operation, maximum seating capacity, etc.
As far as how to secure financing, the idea of the rights offering makes the most sense to me. Unfortunately, with stock prices so low it'll absolutely crush the share structure. So if he's going to do the rights offering, he needs news of some sort -- the only news he has 100% control over are franchising rights. Even this costs upfront money but I'd look for a more traditional business loan to expand -- if the revenues are what he says they are, he should have no problem getting money through a traditional mechanism to finance the up-front costs such as legal, architecture, etc to start the franchise process.
The biggest problem for Parsi is that he shot his wad so to speak by taking the company public prematurely. He lost the ability to do a private Series A or Series B round, and then take it public with an oversubscribed IPO once he has 50-100 locations. Either Parsi desperately needed money and had to tap into public market because he lacked the ability to raise fund privately, or his ego wanted to run a public company. Either way, not good for those initial investors.
