FOOD AND FRANCHISING PART 2 from FRANCHISING USA

FranchisingFeature food - part 2

future of location intelligence: data-driven market planning for RESTAURANTS

a franchisee’s perspective: the importance of evolving a brand

quick and casual delivers profitability in food service

no vember 201 8

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what’s new!

Farmer Boys Opens Tenth Orange County Location

Copper Branch Opening First U.S. Location In New York City Farmer Boys, the popular fast casual burger concept with 93 locations throughout California and Nevada, has opened its tenth Orange County restaurant in the city of Irvine at 17380 Red Hill Avenue. This opening marks the second store to open doors in Orange County in two months, following closely on the heels of the La Habra restaurant that opened in August.

Irvine franchisee Gihan Wasif was first introduced to the Farmer Boys brand and franchising opportunities through her brother and fellow franchisee, Joseph Sadek. After watching Sadek open Farmer Boys locations across California, including three in Orange County, Wasif was inspired to join the brand and open a Farmer Boys franchised location of her own. She plans to follow in her brother’s footsteps by opening additional Farmer Boys locations across Orange County.

“After many years of watching my brother build a successful business within the Farmer Boys family and open restaurant after restaurant, it’s an honor to have a location of my own,” said Wasif.

Founded in 1981 and headquartered in Riverside, California, Farmer Boys® is a fast casual restaurant chain serving awardwinning burgers, specialty sandwiches, crisp salads, signature sides, and all-day breakfast. Today, thanks to an ever-expanding franchise operation, the Farmer Boys family continues to grow.

The chain continues to seek sites and franchisees in new and existing regions.

For more information, visit www.farmerboys.com.

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Copper Branch, a Canadian-headquartered plant-based fast casual eatery with over 30 locations in Canada is slated to open its first location in the United States. The new location will be situated in the SOHO/Greenwich Village area of Lower Manhattan, best known for art galleries, trendy shops and eateries as well as the NYU campus.

Rio Infantino, the CEO of Copper Branch and a veteran restaurant franchise owner, states, “New York City was a clear choice for our first U.S. location as it provides great visibility for the brand and is one of the world’s most recognized active and forward-thinking cities.”

Copper Branch offers all-day breakfast, lunch and dinner with a menu that includes power bowls, soups, sandwiches, burgers, wraps, salads, fresh sides, desserts, and power smoothies. The chain also features many certified organic, non-GMO and naturally gluten-free ingredients. Seasonal menu items and limited-time offers are also key staples. Mr. Infantino adds, “This is food I’m proud to have my children eat!”

The first Copper Branch opened in 2014 in downtown Montreal.

Since then it has received worldwide recognition amongst vegans, flexitarians, and health conscious consumers. Copper Branch is on schedule to open 80 locations in 2019 and another 150 locations in 2020, with locations across Canada, the U.S., and even France. All of their locations are franchisee-run.

In addition, the company is committed to working with Rainforest Trust, a global organization protecting our planet’s most endangered rainforest land and animals. www.eatcopperbranch.com

California Restaurant Association Foundation Has Raised More Than $83K Thanks to The Habit Burger Grill The California Restaurant Association Foundation (CRAF), a non-profit that empowers and invests in California’s restaurant workforce, is thrilled to announce that in partnership with The Habit Burger Grill, has raised over $83,000 through its annual “Make It A Habit” fundraising campaign.

The 8th annual fundraiser took place at the 2018 Western Foodservice & Hospitality Expo held in Los Angeles and sponsored by the California Restaurant Association.

Over the past eight years, The Habit has generously donated more than 17,000 vouchers redeemable for a free Charburger with Cheese. CRAF offers these vouchers at their “Make It A Habit” expo booth in exchange for a $5 donation, with 100% of the proceeds benefiting the foundation programs. The Habit has donated $68,000 over the campaign’s lifetime.

“It’s extremely important to the entire

ProStart alumni volunteers at the 2018 “Make It A Habit” booth: Orlanda De’Paz, Ali Mlilar, Andrew Moreno, Chris Angelo Marinas

Habit Burger system to invest in the future of the culinary industry and, having served on both the CRA and CRAF boards, I’ve seen firsthand the enrichment students receive from these programs,” said Russ Bendel, President & CEO of The Habit Restaurants, Inc. and CRAF Emeritus Board Member. “There is a critical shortage of talent in the restaurant industry that is challenging every aspect

of foodservice. Taking a more active approach and supporting organizations like CRAF is one way we can help today’s youth prepare for their first jobs in the culinary profession and pursue a career in a field they’re passionate about.”

For more information about the history of the CRAF, its many programs and success stories, visit www.calrestfoundation.org.

Slaters 50/50 Opens Franchise in Huntington Beach Slaters has just opened their newest location in Huntington Beach, California. The new location is at: 17071 Beach Blvd. in Huntington Beach. The new space, formerly a Chili’s Grill and Bar, features a more prominent bar and an updated look.

Slater’s 50/50 was founded in 2009 in Anaheim Hills, California

by Scott Slater, a SoCal native with a passion for burgers, bacon, craft beer, and a disdain for all things boring. Inspired by the belief that bacon is meat candy, Scott created the original 50/50 patty– made of 50% ground bacon and 50% ground beef – and a menu full of amplified burgers and indulgent dishes.

Some of the new add-ons, include: Brunch & Bloody Mary Bar, Express Lunch, Wake’n Bacon Brunch, and new Loyalty App at Slaters 50/50.

Slater’s 50/50 is THE place where guests create their own

Excesstasy™, a coined phrase which describes the overwhelming excitement felt when indulging in the Slater’s 50/50 experience.

The bacon centric menu uses bacon throughout including bacon meatballs and spaghetti, and even a milkshake that has bananas, peanut butter, and a bacon crust. The bacon love doesn’t stop there as they also have cocktails, flatbreads, and happy hour specials like the bacon mac n cheese balls.

For more information on franchising a Slaters 50/50 location, please visit slaters5050.com/franchise.

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what’s new!

Delivery Problems, Public Health Scores & Sticky Tables: What’s Keeping Diners Away From Restaurants?

Thirty-one percent of diners said they would avoid eating at other locations of a chain restaurant if just one location was involved in a foodborne illness outbreak. That result is just one of the eye-opening results found in the Diners Dish e-book, available today from Steritech, the premier provider of food safety and service excellence assessments for the restaurant industry.

The Diners Dish E-book includes exclusive insights from a survey which tackled consumer preference and behavior in several key revenue-driving areas, including delivery, online reviews and social media, public health and cleanliness, and foodborne illness.

Highlights from the E-book include:

• 60 percent of diners have ordered food for delivery in the last six months – and 30% of those have experienced a problem with their order • 75 percent of consumers sometimes or often use restaurant review sites to help select where they will dine

• 41 percent of those surveyed say a restaurant’s health department score factors into their decision on where to dine

• Sticky or dirty tables and chairs is the top pet peeve of diners • 31 percent will stay away from an entire chain if just one location has a foodborne illness outbreak

These and the more than two dozen other facts found in the Diners Dish e-book can help restaurants adjust their operational practices to better meet their customers’ preferences.

To download the full E-book, visit auditbetter.steritech.com/ dinersdish.

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Kenya-Based Social Enterprise Receives Investment from Founder of Edible Arrangements Tariq Farid Stella Sigana, founder of Kenya-based Alternative Waste Technologies, has captivated the interest of many, including that of Tariq Farid, founder of Edible Arrangements. In February 2018, Stella won the honorary Social Franchise category of the 2018 NextGen in Franchising Global Competition for her work with her company Alternative Waste Technologies.

Founded in 2015, Alternative Waste Technologies focuses on improving the air quality in homes across Kenya by producing clean fuel for cooking. Amongst the judging panel was Tariq, who was instantly captivated by Stella’s work and entrepreneurial drive to bring awareness to an issue he too had experienced. Having spent much of his younger years in Pakistan, Tariq saw first-hand the poor air conditions many experience in that part of the world and wanted to help lead the efforts to solve this critical issue affecting thousands of lives each year.

Today, Alternative Waste Technologies has received a $10,000 pledge from the Tariq and Asma Farid Foundation to help Stella purchase additional machinery to meet the increased demand

for their products. Farid has also established a GoFundMe page to help raise an additional $25,000 for Alternative Waste Technologies to expand its reach in Kenya and throughout SubSaharan Africa.

To donate, please visit www.gofundme.com/alternative-wastetechnologies.

Mediterranean Restaurant, Daphne’s, Now Under New Management with New Menu, New Look and Retail Line With an inspired new menu featuring a blend of California and Greek flavors, Daphne’s is now under new management. Los Angeles-based Elite Restaurant Group has taken over operations of all 23 Daphne’s locations — all in California. The group, headed

by Michael Nakhleh, has reworked the Mediterranean concept for new growth.

The name has been simplified to just Daphne’s, dropping the “California Greek.”

“Daphne’s will always keep its emphasis on Mediterranean, -- but now everything is made from scratch in house, all fresh, with a lot of organic items,” says Nakhleh.

All 23 Daphne’s restaurants have been remodeled with a new, more contemporary design that make them more current.

Daphne’s has opened four new locations in: Oceanside, Mission Valley, Escondido, Conoga Park. The company has plans to franchise the fast-casual Daphne’s, as well as add roughly 10 new corporate locations annually.

Daphne’s locations have launched a new menu, created with the help of menu consultants Think Culinary, including: whole slow-roasted chicken, marinated with lemon zest, rosemary and garlic, along with roasted vegetables, garlicherbed red potatoes, tzatziki, pita and Greek salad, which can serve four to six.

Also, an organic spring mix salad with grilled chicken, strawberries, walnuts, feta and honey vinaigrette with pita.

stores, including a gyro kit and two salad kits.

The average check will be about $14 per person. The company has also launched Daphne’s-branded retail line in Costco

For more information on franchise opportunities with Daphne’s, please visit https://buyadaphnes.com.

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what’s new!

Subway® Brand Invests Millions in Guests with Massive Delivery Program

SAJJ Mediterranean

Announces Aggressive Expansion Plans SAJJ Mediterranean, the popular family of fast casuals and food trucks known for fresh, exotic, and customizable Middle Eastern cuisine, is pursuing an aggressive expansion plan over the next twelve months.

On the heels of being named one of the ‘Top 100 Fastest Growing Private Companies’ by San Francisco Business Times in September, the concept has disclosed the sites of three more locations currently in development across California, which include Irvine (November 2018), San Jose (December 2018), and San Ramon (early 2019).

The rapidly growing Mediterranean fast casual plans to have 15 locations open by the end of next year, with sights set on strengthening their hold in the Bay Area’s Mid-Peninsula and East Bay and in Southern California. Plans are also being finalized to expand beyond the Golden State and into markets outside of California over the next two years. SAJJ Mediterranean currently operates seven units throughout the state, with the most recent opening in San Francisco’s Financial District in July.

Named ‘Best Fast-Dining Spots in the Bay Area’ by San Francisco Magazine and ‘Best Value’ by SF Weekly, SAJJ’s fully customizable menu offers traditional Middle Eastern dishes made with fresh, locally-sourced ingredients. Guests begin building their meal with a choice of pita bread, SAJJ wrap, salad, or turmeric rice bowl, then fill it with chicken or steak shawarma, pomegranate chicken, the plant-based Impossible Kabob, or SAJJ’s famous falafel, which Zagat SF called the ‘best falafel in the Bay Area.’

For the latest happenings and expansion announcements, visit www.sajjstreeteats.com.

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The Subway® brand launched one of the largest delivery agreements in the quick-service industry. Subway is one of the first QSRs to partner with four of the largest third-party delivery providers DoorDash, Grubhub, Postmates and Uber Eats. Now nearly 9,000 U.S. Subway restaurants offer delivery – and that number is expected to grow in the coming months.

“We want to connect with consumers and give them the convenience of choice, whether it’s in a customized, made-toorder sandwich or in how they get their meals,” says Michael Lang, Subway’s Senior Director of Global Convenience. “It’s a necessity that we meet the needs of our guests and that we invest in programs that help drive traffic and profitability for our Franchise Owners.”

With food delivery making up a growing share of the $800 billion restaurant industry according to National Restaurant Association and an expectancy to grow at least 12% over the next five years according to Technomic, it’s clear that consumers want delivery options.

Subway’s move into delivery is an example of the company’s continued investment in new and improved technologies and its commitment to help drive restaurant profitability and traffic.

Subway has invested over $250MM to enhance the guest experience through initiatives such as its new Subway App and Subway MyWay® Rewards program.

For more information, visit www.subway.com.

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®

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Featu re

b y G i n a G i l l Fr a n c h i s i n g U S A

food feature part 2

A well-known franchising option is the food industry. Whether it’s fast food take out or high end restaurants, the business of food service always has an opportunity to expand beyond a street corner.

Once consumers begin to enjoy a meal and experience, they want their palate to relive the same taste from other areas of town at different times of day. People always have to eat, and they appreciate good food from a familiar place and are willing to spend money for a guaranteed experience.

Food franchises bring consistency to the table, with a variety of options.

Some restaurants are family friendly, while others are simply fast food focused. Both options guarantee success because it automatically comes loaded with a familiar logo, established marketing and a consumer base.

However, food reaches well-beyond the typical restaurant and it’s time to look outside the box when it comes to food franchising. Outside the walls of restaurants are fast food industries that have changed dynamically over the last decade: grocery stores with great profitability, natural health food establishments and a variety of different dessert bars.

Fast Food Of course the fast food restaurant is a big part of the franchising corporation and puts franchising on the map as an option for every American to run their own business, not just the supremely rich. Though it does come with a great start up fee, it’s a tried and true guarantee for success. The world may be seeking healthier options, but it’s bombarded with schedules and timelines that are not conducive with home cooked meals. Everyone finds themselves at the drive thru on a hectic day or for a quick treat.

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“Recently, a lot of fast food franchises have also started serving all day breakfast options to give people what they want whenever they want it.”

According to the website dosomething. org , 52 percent of Americans think it’s easier to do your taxes than it is to eat healthy. That’s over half the population that’s confused by how to pursue a healthy diet. The fast food industry appeals to this population. While also adhering to young kids with flashy toys and quick meals, young adults with little money, and working families with no time.

“The world may be seeking healthier options, but it’s bombarded with schedules and timelines that are not conducive with home cooked meals. Everyone finds themselves at the drive thru on a hectic day or for a quick treat.”

Fast food has also started providing salads and healthy options to adhere to all of its consumers, while also dabbling in coffee and dessert options. Recently, a lot of fast food franchises have also started serving all day breakfast options to give people what they want whenever they want it.

For an easy franchise that can essentially run itself on its name brand and operations method, the fast food industry would be a safe and successful choice for investors.

Grocery Stores A considerable investment would be a grocery store which has grown into a whole other type of business. The grocery store has expanded its shelves to more than just produce. What used to be the pit stop before supper is now a department store for all your needs.

Grocery stores now have aisles dedicated to household cleaners, storage and items.

Some even carry clothing and beauty products. It’s become a bulk shop instead of a source of food.

There are subcategories of grocery chains: drug stores are starting to carry food to keep up with the bigger grocery chains.

While gas stations and convenience could fall under the food franchise, since it specializes in snack foods.

much competition is within your desired territory?

For those interested in grocery store franchises and it’s subcategories, the first step is research. How much marketing does each franchisor offer?

How recognizable is the company? How

Reach out to other franchisees and ask them the pros and cons of owning a grocery store and compare it with convenience store franchisee’s personal experience.

A new consideration to review is the product: how many recognizable brands are sold in the store and how many categories of products are offered?

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“Outside the walls of restaurants are fast food industries that have changed dynamically over the last decade: grocery stores with great profitability, natural health food establishments and a variety of different dessert bars.”

Dessert Bar

Natural Food store While 1 in 4 people eat fast food everyday, there is still a strong push for a healthier lifestyle. Natural food stores have jumped onto that consumer desire and flipped a profit. Natural food stores specializes in specific foods that adhere to certain diets, allergies or limitations.

As people have more and more access to information through the internet, there is an ongoing trend in food that is constantly being invented. From gluten- free to ketogenic, it’s hard to keep up with the best way to lose weight or be healthy in general.

Natural food franchises make it easy for the franchisee to keep up with the ongoing needs of its consumers. Rather than being responsible to keep up with all the fitness gurus, the franchisor will provide the rotation of products and supplements for you. Support and marketing give franchising natural food stores a leg up on the competition.

For those interested in a healthier lifestyle and providing different options to the public, this is a great option for investment.

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Dessert specific restaurants are also a franchise opportunity in the food industry.

For those with a sweet tooth, ice cream bars, candy stores and cupcake bakeries are an ongoing business trend that has been successful.

Some of these franchise are offered as small pop ups with a smaller start-up price tag because the location cost is lower. Ice cream stores can be located within a mall through a small kiosk.

Franchisees can choose a flavour specific to their palate: from popcorn to smoothies, and cookies to chocolate, junk food franchises have no limitations. Plus, everyone loves a good dessert; according to dosomething.org, Americans consume over 10 billion donuts a year.

To get a feel for options, simply take a flavorful journey through the mall and narrow down what type of dessert you would love to work with: do you prefer salty or sweet? Candy or chocolate?

Drinks or food? Then take note of what kind of location you would prefer for your franchise, and what type of reputation certain dessert bars have within your territory.

Of course, food franchises are not limited to the options discussed. It’s the widest franchising option available. Food is served everywhere and anywhere, because everyone has to eat. It’s just how you want to go about it.

Most food franchise do have a bigger start up fee, but their map to success has been laid out in stone and is a safe bet to profitability. A lot of food services have expanded to other services and products in line with the busy American lifestyle.

Food franchises offer a great work life balance, because the franchisee is rarely involved in the operations. It’s been laid out to run itself in a successful and profitable way.

If food is your desired business investment, don’t sell yourself short but take the time to really cleanse your palate and stuff yourself with all the information before choosing from the franchise menu.

ABOUT THE AUTHOR: After receiving an English Degree, followed by a Journalism Diploma, Gina Gill became a freelance journalist in 2008. She has worked as a reporter and in communications, focusing on social media. She currently works as a community information officer with Epilepsy Society, while pursuing her writing career at the same time.

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Expert Advice: Jackie and Cary Albert, Albert Enterprises

A Franchisee’s Perspective: The Importance of Evolving a Brand

In today’s competitive marketplace, the need to remain relevant is paramount - particularly for quick service and fastcasual restaurants.

With elevated technology, a focus on fresh and sustainable ingredients, and changing customer attitudes, franchisees must overcome the fear of change and make an investment in keeping their brands relevant.

We know that a transition can be uncomfortable and exciting at the same time. When we opened our first Schlotzsky’s in 1995, we knew the brand as Schlotzsky’s Deli, famous for large sandwiches on homemade sourdough bread.

Today, Schlotzsky’s Austin Eatery is the result of the company going back to

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“Taking a comprehensive look at consumer behavior and franchisee feedback when evaluating the complexity of the brand’s evolution will help lead a brand in the proper direction.” its roots. Sometimes a transformation is as simple as making a few changes, while other times a complete departure is necessary. Taking a comprehensive look at consumer behavior and franchisee feedback when evaluating the complexity of the brand’s evolution will help lead a brand in the proper direction.

However, taking a step back and analyzing all brand feedback is only the beginning of the process and there are many factors to consider when embarking on a brand evolution.

Here are some reasons why every brand should consider a refresh.

Progress with the Times It’s no big secret that the restaurant industry is changing. The industry as a whole is adapting to a new era of technology, innovation and consumer expectations – including an increasing demand in quality and convenience of their food. Brands must be able to adjust and figure out how to meet and exceed consumer expectations. Embracing offpremises sales, healthier food options, third party delivery, mobile technology and catering are examples of how a brand can remain at the forefront of today’s trends. However, it’s also important that every brand finds its niche. Know who you are and stay focused on the areas where you can differentiate. There’s a lot to consider as the industry continues to evolve, but don’t try to be too many things to too many people.

“Ultimately, brands that are committed to innovation and customer experience are going to thrive and obtain customer’s loyalty, enabling long-term success.”

Customers Lose Interest Oftentimes, franchisees that are passionate about a particular brand are hesitant to change, afraid that they won’t retain a connection with their loyal, longtime customers. However, the most successful franchisees know the importance of continually moving the brand forward in an effort to propel growth. Evolutions can be challenging, but they are necessary.

When a franchisee and franchisor becomes complacent, it can harm their progression.

Brands must be real with themselves. If sales are trending downward, foot traffic is slowing and franchisees aren’t signing, then changes are necessary.

Appeal to a New Demographic Strategic evolutions are opportunities for franchisees to appeal to larger audiences.

Consumer attitudes are changing based on generation. Millennials and Gen Zers dine out an average of five times per week and have been some of the biggest drivers of change. Think of an evolution as an opportunity to reimagine the dining experience for your consumers, which could include a new restaurant design, menu, interior build-out and brand message. As the millennial and Gen Z population continues to take over the workforce, brands will notice that these generations will be spending more time in their restaurants. It’s critical to consider transforming aspects of your brand to meet the world’s changing demographics.

Communication is Key It’s important to communicate with your franchisees when embarking on any sort of change. With evolutions come new menu items, training procedures, brand messaging, apparel and possibly even store remodels. All of these might equate to additional costs and learning processes for your franchisees.

Jackie & Cary Albert

Customers tend to like fresh ideas, so this process can be an easy transition for them, while franchisees will be responsible for implementation. It’s imperative to communicate and gather their feedback before progressing. Be an open book with your franchisees, communicate why the change is to their benefit and listen to their feedback. The response will be gratifying.

As demographics shift, restaurant operators and franchisees will need to stay relevant and learn from the new generation. The focus on fresher ingredients, convenience and higher quality options are trends that are more than likely here to stay. Ultimately, brands that are committed to innovation and customer experience are going to thrive and obtain customer’s loyalty, enabling long-term success. While brands will make the ultimate determination to evolve, it’s up to franchisees to provide the feedback needed to influence that change.

Evolutions might seem scary, but they will provide ways for your respective brands to remain relevant and profitable. Encourage the change. You won’t regret it.

Cary and Jacquelyn Albert have been franchisees of Schlotzsky’s since 1994. With 30 locations in operation and an additional 5 more currently under construction or development, the Albert’s and their impressive team (now 800+ strong) believe the sky is the limit with this brand. With stores from Dallas to Austin to San Antonio, and everywhere in between, the Albert’s plan to grow 5 to 7 stores annually for the foreseeable future. albertenterprises.com

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Expert Advice: Christopher Conner, President of Franchise Marketing Systems

Quick and Casual Delivers Profitability in Food Service

In the world of ecommerce and the digitization of everything, people want speed, they want quick, they want high quality and they want it right now.

The food service segment of franchising is no different when we look at trends and brands that have that “it” factor both in and out of franchising. The reality is that Fast Casual is where the growth is because that’s what today’s consumer wants.

According to Technomic, the Fast Casual Dining segment will expand by 7.5% in 2018 which is incredible growth, while Quick Serve is projected at

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3.5% growth and fine dining is only at 2.7%. People want good food, they want it quick and they want an

experience from a brand that stands for more than just chucking burgers out the window at people. If we

look out at the franchise landscape at brands that have scaled effectively in recent years, most match up with

these trends. Concepts like the “Better Burger Space” have done exceedingly well with brands like Five

Guys, Burger-Fi and newcomer Buddy’s Burgers which are high quality products in a faced paced, upscale environment. (Think Chipotle, but Burgers).

So if you are a budding entrepreneur and you’re

considering starting your own restaurant, what are the key items you should incorporate into your business plan?

“Today’s consumer is ordering food online; they are ordering takeout and they are eating your product just about anywhere that is NOT your restaurant.

Design your business to be focused on this segment, not as an afterthought and odds are your bottom line will thank you. ”

“People want good food, they want it quick and they want an experience from a brand that stands for more than just chucking burgers out the window at people.”

First, think cool, trendy, edgy and fun.

Whatever you do, do not design your image, logo, store or anything else to look like something a 40+ year old would like; that will be certain death for your brand.

Second, think “Off Premise”. This is the second buzzword of the day and is the leading trend for all food service businesses across the universe. Today’s consumer is ordering food online; they are ordering takeout and they are eating your product just about anywhere that is NOT your restaurant. Design your business to be focused on this segment, not as an afterthought and odds are your bottom line will thank you. Zunzi’s, a cool Savannah-based brand has this concept nailed down and focuses on carry out and delivery business.

Third, you need to be health conscious and focused on organic/vegan/keto or some other kind of diet that is trending today. If you are like me, it’s hard to comprehend all of these diets, but your customers (millennials and other young people), will notice and will spend accordingly if you don’t have menu options that match up with their eating preferences.

Finally, think 1,200 – 1,700 square feet in size. You want to keep your location compact, simple and highly visible.

Today’s food service business will be simple and easy to locate real estate for and can be placed next to a Starbucks and still make the business model work.

Now on the other hand, if you are investigating franchises, the same type of characteristics should be in place with a potential franchise brand you might consider investing with. All of the food service trends that play into the consumer market are taking hold in the franchise market as well.

Blaze Pizza is the perfect example, fast casual, simple, fun and cool branding mixed with a customer-centric pizza product that is fast and convenient. Duck Donuts has brought the same winning traits from food service trends to the retail donut market segment with a high quality product, quick, fun and full of selections for every customer….and yes donuts are $5 a piece.

At the core of any strong franchise investment, start with the financials; make sure the ROI is there to justify not only the initial investment, but also the fees the franchisor is asking for in the terms of the franchise relationship. But then I would dig further and interview customers at existing locations of the franchises you are considering buying from. Get to know why people buy from a certain franchise

Chris Conner

brand and then cross check to verify that your market has these types of customers and offers similar opportunity. Check the franchise brand against the trends to make sure that the franchisor has “checked the boxes” and offers systems which address each of these key market drivers.

Christopher Conner is the President of Franchise Marketing Systems and has spent the last decade in the franchise industry working with several hundred different franchise systems in management, franchise sales and franchise development work.

His experience ranges across all fields of franchise expertise with a focus in franchise marketing and franchise sales but includes work in franchise strategic planning, franchise research and franchise operations consulting.

For more information on how to choose the right food service franchise, contact Chris Conner at Chris.Conner@ FMSFranchise.co.m www.fmsfranchise.com

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Expert Advice: Danielle Lackey, General Counsel, Motus

Are You Reimbursing Your Delivery Drivers in Compliance with Labor Laws?

Understanding Labor Laws and How They Put You at Risk

Danielle Lackey

Restaurants and food franchisees have faced a growing demand for faster delivery service, resulting in increased awareness of how delivery drivers are being reimbursed for their trips to and from hungry consumers.

As a result, there’s more pressure on owners to ensure their mileage reimbursement rates are compliant with both federal and state labor laws. Failure to fairly and accurately reimburse drivers can expose franchisees to potentially costly lawsuits.

So, what do franchisees need to know to maintain compliance with labor laws, and what tools can help them get there?

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Under the Fair Labor Standards Act (FLSA), employers are required to pay their employees minimum wage. Many workers in the food service industry are minimum wage employees, including delivery drivers. What separates delivery drivers from their in-store colleagues is that they rely on a vehicle to fulfill their job responsibilities – and in most cases, drivers choose to use their own car. This means drivers are not only using their own fuel to make deliveries on behalf of the franchise, but they are also footing the bill for any maintenance, oil and tire wear costs that are associated with driving for business. If you’re paying an employee at or slightly above minimum wage, these additional costs can very easily create a minimum wage law violation if not properly reimbursed.

Why is this? Because “wage” is calculated by taking an employee’s earnings and subtracting any unreimbursed costs they incur that are necessary to perform their duties. So, as a simplified example, let’s assume that it costs your minimum-wage employee one dollar per mile to operate a vehicle. If you only reimburse 95 cents, you’ve now knocked them 5 cents below the minimum wage. This shortage, multiplied by the number of miles your delivery personnel drive each week, means your employees could be racking up hundreds of unreimbursed dollars of job-related costs– costs that cause their paychecks to fall well below minimum wage, and could expose you to litigation and government penalties.

An example of such a violation occurred

in 2013, when 300 delivery drivers brought a case against a Jimmy John’s Gourmet Sandwich franchisee for allegedly violating the Fair Labor Standards Act. The drivers claimed they were made to pay for costs incurred while delivering sandwiches to customers, including gasoline, vehicle parts and fluids, automobile repair and vehicle insurance and maintenance, which effectively brought their pay below minimum wage.

Jimmy John’s ultimately entered a costly settlement with its drivers, in addition to paying over $70,000 in legal fees and costs.

Maintaining Additional Compliance with State Labor Laws In addition to federal laws such as the FLSA, franchisees need to adhere to the labor laws for the state in which they operate. States often have even stricter employee-protection laws that outline specific requirements for expense reimbursements or deductions. These laws have formed the basis for numerous class action lawsuits and multi-million dollar settlements by franchisees.

Of all the states in the U.S., California has long been known to have some of the most intricate labor laws, one of which is California Labor Code Section 2802.

In simplest terms, this law states that employees should be reimbursed for each and every expense they are subjected to in the course of their employment. This places a higher burden on franchisees to track and reimburse all expenses, as this requirement comes into play regardless of the employee’s wage.

“Implementing mobile GPS technologies that integrate geographically-specific costs of driving allows franchisees to document exactly where their delivery drivers drove, and the mileage expenses required to get there.”

Similar laws requiring expense reimbursement are also in effect in many other states, including Massachusetts, North Dakota, South Dakota and New Hampshire, and, effective January 1, 2020, in Illinois.

IRS Rate Isn’t Enough Many employers choose to reimburse their drivers for reasonable expenses using the IRS business mileage standard. While this complies with federal labor laws, the likelihood that drivers will be inaccurately reimbursed is high.

This is because the standard business mileage rate is a fixed, nationally averaged rate that is calculated once each year, based on the previous year’s average costs of operating a vehicle.

Because the IRS rate is not based on current prices or location-specific costs, and vehicle costs like insurance, fuel and vehicle registration vary substantially by geographic area, a flat mileage rate translates to inequitable reimbursements where some drivers win and some drivers lose. (The driver in San Francisco is underpaid relative to her counterpart in Omaha.) Furthermore, franchisees using the IRS rate can still under-reimburse employees in higher cost areas – leaving themselves open to the possibility of employment lawsuits.

Technology: Giving Franchisees Peace of Mind The most accurate way to reimburse drivers is to leverage data based on each individual, calculating reimbursement rates that most accurately reflect the driving costs each driver incurs.

Calculating mileage reimbursement rates manually, however, is a time-consuming process that could lead to reimbursement inaccuracies. This is where technology can help.

Implementing mobile GPS technologies that integrate geographically-specific costs of driving allows franchisees to document exactly where their delivery drivers drove, and the mileage expenses required to get there.. These technologies record data automatically in real-time – eliminating any guesswork, fraud or inaccuracy in mileage reporting – and allow franchisees to have data that defends the reimbursement rate they use for

each driver. Above all, technology gives franchisees peace of mind knowing they are abiding by the law.

Danielle Lackey is General Counsel for Motus, the definitive leader in mileage reimbursement and driver management technologies for businesses with mobile workers. At Motus, Danielle is responsible for all of the company’s legal affairs, and also serves as executive sponsor of initiatives that bolster IRS and legal compliance for Motus clients. www.motus.com

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Expert Advice: Keenan Baldwin, Founder of SiteZeus

Future of Location Intelligence: Data-Driven Market Planning for Restaurants leveraging the power of data may find that their competitors will “eat their lunch” so to speak, taking a bigger and bigger bite out of their market share. Operators can no longer choose locations based on gut instincts. Franchise groups need to make data-driven decisions that are backed by science.

Keenan Baldwin

With 2019 right around the corner, it’s time to start thinking about New Year’s resolutions. At the top of the list, it’s time for restaurant brands to embrace the future of big data and analytics and ditch the outdated sales forecasting techniques.

All businesses today are operating in a data-driven marketplace, and restaurants are no exception. Franchisors that are not

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The democratization of data means that very granular, accurate data is no longer available only to large corporations. It is now easily accessible – and affordable – for all brick and mortar franchise locations. Restaurants do have to be aware of where that data is coming from.

One of the common missteps that people make with their data is pulling data from a hodge-podge of different data sources that may not be accurate or even all that current. Some of the classic examples of stale data include U.S. Census data and Department of Transportation traffic data.

Brands also need to ask themselves – are we using the “right” or most effective data? Location intelligence companies now provide deep market insights from pre-selected and vetted data partners across several core categories. All of these data sets roll into location intelligence platforms that can help to create more accurate sales forecasting models.

Data Pools Continue to Evolve Traffic Volumes: Datasets can now break down traffic at any point in the U.S. to show how many cars are going by

a certain address at any given hour or day of the week. For example, for restaurants that depend on breakfast customers, it is important to choose locations that are on the right side of those traffic flows during key morning hours.

Geofence: Users can create their own zones or “geofence” boundaries. For example, data sets can track where people are traveling two hours before entering and exiting a unit location, which helps users to identify marketing opportunities and potential cannibalization of existing stores.

Social Network Segmentation: Also known as geo-social, psychographics or sentiment data, this dataset collects, and aggregates keywords being used on social network platforms in certain geographical areas.

This data set helps to create “heat maps” of interests in certain geographies or zip codes, such as identifying cookie lovers, families with small children or sports fans.

Store-Level Sales Data: Measure the performance of restaurants through annualized sales, as well as indexed Market & National grades, A+ through F. Identify relationships between your locations and others – synergistic and competitive.

Performance Index: This data allows restaurant brands to benchmark themselves against other restaurants performance within a target trade area or zip code. Not only does this help to identify desirable markets for new

locations, but it also can show how an existing store might be under-performing relative to its peers.

Internal Location Data: Multi-unit operators also have access to their own proprietary data. But are you collecting the right metrics? Research in the SiteZeus platform highlights the top site attributes that are most effective in forecasting sales performance for restaurants. The top 10 site attributes for restaurants are: 1. Age of Store 2. Reviews/Ratings 3. Brand Recognition 4. Parking Spaces 5. Square Footage 6. Corner Location 7. Seats 8. Point of Sale Systems 9. Hours 10. Distance from door to the road

“The democratization of data means that very granular, accurate data is no longer available only to large corporations. It is now easily accessible – and affordable – for all brick and mortar franchise locations.” *It is important to notice that location intelligence companies can now take hundreds of variables into account, so beginning to track your data is a big first step.

Data-Powered Technology Platforms Data is put to work in location intelligence platforms to solve for a variety of issues including locating potential sites in new and existing markets – greenfield and infill growth, as well as conducting a data-driven analysis of store relocations, remodeling, and closures.

Location intelligence platforms simply put objective methodology behind key decisions. Who makes the best cotenants for your brand? How does one location compare to another one down

the block? How close to your competition do you want to be? Location intelligence technology like SiteZeus helps to answer those questions and remove the uncertainty so that operators can make more confident decisions about new and existing locations.

Keenan Baldwin is a fifth-generation Tampa native. Keenan along with his brother Hannibal Baldwin founded SiteZeus in 2013. SiteZeus’ location intelligence platform leverages artificial intelligence and machine learning to create fast, accurate and transparent predictive modeling. Multi-unit brands use the A.I.-powered technology to make confident, data-driven decisions to solve for infill expansion, greenfield growth, remodel analysis, relocation analysis and closure analysis. sitezeus.com

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