8 We check out three casual dining brands so you don’t have to, in FT Undercover By FT Staff
10 Mooyah adds smaller footprint to boost expansion, in Behind the Sales By Alyssa Huglen
11 Hooters, Bar Louie in bankruptcy, plus more from FT Online By FT Staff
12 Snapology next for former hoops star By Joe Halpern
14 Pop’s Beef finds longevity in community By Alyssa Huglen
15 Global sourcing powers Waters Edge By Matthew Liedke
16 Haven touts all-in-one family care By Emilee Wentland
17 Magnolia Laine CEO advises patience, in The Upstart By Alyssa Huglen
COVER STORY
18 With new owner Blackstone, Tropical Smoothie Cafe is confident it can speed up growth as a major national marketing push gets underway. Blackstone’s buy captures the Deal of the Year in the 13th annual Franchise Times Dealmakers project. Get the full story and check out 10 more winners as we recognize the top players driving M&A in franchising. By Joe Halpern, Alyssa Huglen, Matthew Liedke, Laura Michaels and Emilee Wentland
18: Tropical Smoothie CEO Max Wetzel 12: Snapology franchisee Mike Robinson 17: Bridal boutique franchise Magnolia Laine 16: Haven founder Britt Riley 22: Bea Woodruff, Rainier Partners
Cover photo by Michael Schwarz
FRANCHISE FOCUS
35 Social media, TV put dirty soda in the mainstream By Emilee Wentland
37 Big brands tap into beverage boom By Alyssa Huglen
TOOLKIT
39 Multi-unit franchisees reap OpCo/PropCo benefits By Liz Wolf
42 Development challenge navigation tips By Beth Mattson-Teig
45 Little Caesars opens in Cambodia, extends global reach By Laura Michaels
Franchise demand rises in Cambodia, reports Country Profile By Laura Michaels
NEWS & VIEWS
49 Golf brand’s franchise launch starts in North Carolina, in The Wire By Matthew Liedke
53 Sandbox VR inks deal for Manhattan By Matthew Liedke
COLUMNISTS
59 Franchisors need to adapt to ‘click to cancel’ rule—if it sticks around By Emilee Wentland
60 Brand reputation in the lending community is a signal to private equity By Alicia Miller
61 Learn from top off-premises leaders who have done the restaurant legwork By Nicholas Upton
IN EVERY ISSUE
6 First Things First
44 Scoreboard
56 Executive Ladder
62 Grab Bag
CORRECTION:
In the April 2025 issue of Franchise Times, the story titled “Internet Star Jake Paul Throws His Weight Behind Dog Haus” incorrectly stated that Jake Paul co-owns the energy drink company Prime with British YouTuber KSI, the snack brand Lunchly and the clothing line Maverick. Those companies are co-owned by his brother, Logan Paul.
49: Swing Bays franchisee Nancy Gugliotta 37: SG Ellison, Diversified Restaurant Group CEO 53: Virtual reality concept Sandbox VR
Winning deals highlight PE’s impact in franchising
Private equity sometimes gets a bad rap. Some firms are accused of making short-term decisions without the long-term health of the company in mind so they can do a quick flip and make a larger profit. But in the case of the franchise sector, private equity’s investments have been mainly positive, with PE firms providing brands a launchpad for growth.
Take PE firm Roark Capital, which was launched by Founder and Managing Partner Neal Aronson in 2001. When Roark made its first investment, a controlling interest in ice cream franchisor Carvel for $30 million, the beleaguered brand needed help.
In fact, franchisee performance was not good, and the operators were distrustful of the brand’s new owner. Roark’s management team, including Aronson, went on a listening tour, he told me at the time. They visited franchisees and their stores, and asked questions about what was working and what wasn’t. They spent 18 months just working with the franchisees to make changes and improve profitability.
As many in the franchise sector are aware, Roark is a behemoth today, with $37 billion in assets under management, owning iconic brands such as Jimmy John’s, Arby’s, Subway and many more. And, it has expanded beyond food into service brands such as Maaco and and Massage Envy. Roark’s acquisitions are in the billions now. Indeed, its acquisition of Dunkin’ Brands topped $11 billion a few years ago. The firm’s calling card is the growth and success of the brands in which it’s invested. (And as a side note, Roark still own Carvel today, 24 years later. No quick flip for them.)
Our annual Franchise Times Dealmakers Awards is featured this month, which celebrates the top M&A deals in the sector over the past year. Our Deal of the Year Award goes to PE firm Blackstone’s acquisition of Tropical Smoothie for $2 billion in June 2024.
As Managing Editor Emilee Wentland writes in her cover story this month, “Tropical Smoothie Cafe is confident it can speed up growth. The brand added 161 new stores last year, nearly threequarters of them from existing franchisees.”
Plus, Tropical Smoothie CEO Max Wetzel told Emilee, in addition to development they will be “putting a tremendous amount of focus on AUV growth...improving franchise profitability even further.”
For Image Studios founder and CEO Jason Olson, the challenge hasn’t been attracting qualified franchisees to the system. The dilemma has been finding the best real estate for the brand, and getting the studios open quickly.
Enter MPK Equity Partners’ investment in the company last year, and Olsen said the PE firm’s data intelligence and real estate experience has been instrumental in securing the right locations.
“They have already helped us look at real estate pipeline timelines and analyzing how to improve the time in each stage so we get through the site selection into construction sooner and get them open faster,” Olsen told FT Senior Writer Joe Halpern. Plus, MPK opened up financing relationships for franchisees.
And at Highmount Madison, they believe they can bring certain qualities to the table after their investment in franchisor 4Ever Young Anti-Aging Solutions. In one instance, they “bolstered the operational team and renegotiated every vendor contract to deliver pretty significant cost savings to the franchisees early on, which helped us get buy-in,” James Kapnick, Highmount Madison managing partner and co-CEO of 4Ever Young, told FT Senior Writer Matthew Liedke.
There are more winning deals in this issue, with both franchisors and franchisees—you won’t want to miss reading about them. In a time when M&A deals are not as plentiful due to market forces and other reasons, it’s gratifying to celebrate the transactions that are benefiting both investor and investee.
Volume 31, Issue 5
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We
check out 3 casual dining brands so you don’t have to
One thing sit-down chain restaurants always get right is the number of free soda refills. The server at this TGI Fridays (A) outside of Minneapolis must have sensed my Diet Coke enthusiasm and brought a refill before the first glass was even halfway empty. From the menu came a Texas BBQ bacon cheeseburger with apple butter barbecue sauce and fries, the quick service being a pleasant surprise. The burger had an onion ring and what I’m sure were house-made pickles, both of which complemented the specialty barbecue sauce. Plenty of skepticism came with this visit given Fridays filed for bankruptcy last year and closed a lot of stores, including most of the locations around the Minneapolis metro. Fridays in 2024 tried and failed to merge with its largest franchisee, based in the United Kingdom, and went through three CEOs in 2023. Fridays would be one of my last choices if I was investing in a franchise. Investing comes with a high price tag of $2.7 million to $4.3 million—though that’s on par with other casual dining franchises.
The upshot: My weekday lunch endeavor lasted about a half hour and cost just over $22 before tip. That’s more than a trip to a drive-thru chain, sure, but a lot more delicious. —E.W.
Applebee’s experienced a rough stretch in 2023 and 2024 as restaurant closures continued and sales remained sluggish. But a visit to a location in a Minneapolis suburb didn’t reflect the brand’s struggles. Immediately noticeable was a toneddown atmosphere. It was still Applebee’s (B), but there was less clutter on the walls, replaced with a simple, cool red look. The food, though, was much more familiar. I ordered a couple staples from the menu, a steak dish and the “perfect” margarita. Not sure I’d describe it as perfect, but it was a well-balanced cocktail. The steak, meanwhile, was part of a surf-and-turf entrée with shrimp included, and it was cooked to my medium-rare order. Unsurprisingly, it wasn’t at the level of a steakhouse, but Applebee’s isn’t trying to be fancy. Value remains front and center, something core to the brand’s identity even as it’s strayed from time to time. Brand leadership has said Applebee’s plans to invest in technology for an improved off-premises ordering experience, more menu updates, a new marketing effort and dual-branded IHOP/Applebee’s locations.
The upshot: For Applebee’s, it was a solid meal. The price was a bit steep at $37.53. I’ve been to other restaurants with better value. —M.L.
Give Chili’s (C) credit. The 50-year-old casual dining brand that specializes in standard American and Tex-Mex cuisine still knows how to deliver tasty food at a reasonable price. While the “3 for Me” lunch deal featuring chips and salsa, choice of entrée and a non-alcoholic drink starting at $10.99 was tempting, this visit called for the $19.59 sizzling chicken fajitas. My companion chose the 400-calorie “guiltless” 6-ounce sirloin served with asparagus for $17.49. The steak was tender and juicy and cooked perfectly, but the asparagus was overcooked and tough. Still, we were both quite pleased with our choices. My tasty and satisfying fajitas came with four hot soft shells, baked beans and rice, along with a small plate of diced tomatoes, sour cream and shredded cheese for the fajita toppings. The generous portion of sliced chicken more than filled the shells. And who doesn’t love a plate that provides enough food for another meal? A mini kiosk on our table made paying for our meal quick and easy. The service during our two trips to a Chili’s outside Boston was great, with two different servers providing plenty of attention. We left impressed.
The upshot: Chili’s delivers good food, decent value and great service. — J.H.
Ever wonder how consumers feel about your franchise? Editorial staffers Laura Michaels, Joe Halpern, Matthew Liedke, Alyssa Huglen and Emilee Wentland check out three brands in a different genre each issue, and report back.
Mooyah adds smaller footprint to boost expansion
Fast-casual burger concept Mooyah is getting big by going small. The brand is launching smaller-format locations in hopes of adding to its 81 stores in 22 states. A traditional Mooyah restaurant is 2,200 to 2,400 square feet. The smaller models nearly halve this
to about 1,300 square feet.
“We started talking about it last year as we were looking for flexible growth models,” said Beth Stockmoe, Mooyah vice president of operations.
The smaller footprint maximizes profitability, reduces overhead and lowers labor, rent and buildout costs. This allows Mooyah to handle more takeout orders and push into high-traffic areas, a response to the increase in takeout since the pandemic.
“People really got used to convenience,” Stockmoe said. “While dine-in business has picked up, to-go business has remained the top sales driver.”
The prototype features selforder kiosks, already in place at some locations as Stockmoe noted the opportunity to upsell and boost overall ticket sales.
Initial investments are expected to be as low as half the cost of traditional endcaps.
“If a franchisee wants to build multiple locations, it allows them to do so more quickly,” Stockmoe said. “With less infrastructure, it requires less people to operate in a smaller footprint. The kitchens are tighter, and everything just becomes leaner.”
Mooyah is improving kitchen equipment and layout, and is looking to implement a geofencing technology to reduce wait times. The technology alerts staff to when customers and delivery drivers are nearby or in the parking lot, so they can have food ready on time.
The first of these smaller models is expected to open this summer in Melissa, Texas. Stockmoe anticipates at least one more to open this year.
Diversifying buildout options is nothing new for Mooyah, which built its first drive-thru locations in 2024. Those gave the brand its footing to serve food faster while maintaining quality. Mooyah will open at least two drive-thru stores this year.
“We’ve very interested in continuing to support our franchisees,” Stockmoe said, “making sure they’ve got the right profitability and are doing well with their teams.”
—Alyssa Huglen
Beth Stockmoe
Edible Brands buys Roti
BroadPeak Capital, the privatee equity firm formed by Edible Arrangements founder Tariq Farid, bought Roti Modern Mediterranean earlier this year and put it under Edible Brands. Roti, a brand that operated with a corporate-only development model, plans to sell franchises now that it has a new owner. The Chicago-based concept filed bankruptcy in August and sought a buyer; it has 17 locations. Somia Farid Silber, CEO of Edible and daughter of the founder, said the company’s been preparing to expand its portfolio for a few years. “With Edible Brands, the vision has always been about fresh, high-quality, innovative food experiences, and Roti aligned very well with that,” Farid Silber said. “It’s really a natural extension of our growth strategy for Edible Brands specifically, and it’s giving us an opportunity to
enter the restaurant space, which we’re really excited about.” Edible, meanwhile, launched an e-commerce hemp products business this spring after it acquired the edibles.com domain name. —E.W.
Hooters to sell 100-plus units
A pair of franchisees want to buy more than 100 corporate-owned Hooters restaurants as the franchisor works through the bankruptcy process. Hooters of America declared Chapter 11 bankruptcy March 31 in a U.S. Bankruptcy Court in Texas. Hooters Inc., the multi-unit group run by the original Hooters founders, and fellow franchisee Hoot Owl Restaurants, reached an agreement in principle with HOA they say will put units “in the hands of the best possible operators.” They plan to run the brand as a fully franchised system. A
proposed purchase price was not disclosed, and any deal must be approved by a U.S. bankruptcy judge. Hooters Inc. and Hoot Owl Restaurants operate more than 30 percent of the company’s domestic locations. —L.M.
Bar Louie files bankruptcy
For the second time in less than five years, Bar Louie filed for Chapter 11 bankruptcy. The casual dining franchise filed in early 2020 and again March 26 in a Delaware court. Prior to the filing, the company said in a press release, “Bar Louie closed underperforming locations to enhance its financial stability. The company has secured commitments from its lender for debtor-in-possession financing, ensuring it can maintain operations, complete the restructuring process, and meet obligations to employees and suppliers.” —E.W.
Snapology next for former hoops star
From drug addiction to street violence, Mike Robinson witnessed a lot of bad stuff growing up on the South Side of Chicago. But the tall, athletic youngster was fortunate to have ticket out of his neighborhood and a jumping off point to a safer and better life.
The former basketball star at the University of Michigan and Central Michigan University who went on to play eight professional years in Europe and South America is a Snapology and Class 101 franchisee in Chicago. His Snapology after-school programs provide hands-on science, technology, engineering and math, or STEM, classes for children ages 5 to 12.
It gives Robinson, 67, great pleasure that the majority of his Snapology programs take place in the city’s underserved elementary schools, where he feels he can make the biggest impact.
“I’ve been telling people that there are three stages to life. The first is to learn, the second is to earn and the third is to return. I’m now in the returning aspect of my life where I’m giving back to my community with our after-school programs,” he said.
A Snapology franchisee since 2021, Robinson said federal and state grants help schools pay for his classes. In turn, he helps supplement his Evergreen Park, Chicago-based business by offering Class 101 college planning and admission counseling services in Chicago’s more affluent suburbs.
Founded in 2010, Snapology has more than 180 locations and opened 32 units in 2024. Class 101, which is also owned by Unleashed Brands, has 100-plus college planners in about 45 locations.
Robinson said being a Snapology and Class 101 operator with his wife, Vicki, provides a business venture that’s meaningful. Within two years, his programs have grown to 25 to 30 sessions per week and now reach between 400 to 500 children with hands-on STEM learning. The Robinsons are in the top 15 percent of Snapology franchisees.
“I know I’m impacting young lives, which is my greatest accomplishment right now other than being a father and husband,” he said.
Robinson is used to standing tall in a crowd. Heavily recruited out of high school, the 6-foot-9, 260-pound center starred at Central Michigan University, where he averaged 12 points and eight rebounds. The former First Team All-MAC conference player was selected by the Utah Jazz in the seventh round of the 1981 NBA draft.
After being cut in training camp, Robinson was determined to prolong his playing career. He traveled the world while playing for pro teams in Scotland, Turkey, France, Belgium, Argentina and Venezuela. He said it was a lifechanging experience.
“Life was very good for me in the 1980s and 1990s traveling the world, but back home on Chicago’s South Side it was a much different story,” Robinson said. “I kept hearing about friends and family members who were addicted to crack and going to prison. Entire neighborhoods were being wiped out.”
Robinson never forgot his roots. After giving financial counseling and investment brokering a try, he knew what he had to do.
“Being a financial broker was not my calling. It wasn’t fulfilling or inspiring. It didn’t give me a purpose. So, I started searching around and going through the process of trying to figure out what would be next. I started a youth basketball program in Evergreen Park called Next Level Coaching and then I Googled children’s franchises and Snapology popped up,” said Robinson.
“I saw the video clips of kids building spaceships and amusement parks with Legos and I thought, yeah, this is for me. One thing led to another and a year later we bought a franchise,” he said
Robinson said he and his wife, who handles operations for their franchise while he focuses on business development, offer Snapology classes in about two dozen Chicago schools. He said it is a much different demographic than his Class 101 business that is geared toward preparing and guiding high school students through the college admissions process.
Parallels exist between his athletic and business careers, he noted.
“Someone once famously said that 90 percent of success is just showing up. I think that’s true. I was never late for practice or for one of my classes. I did whatever was asked of me to help my teams win,” he said. “No matter what you’re doing, whether it’s playing basketball or running your own business, you have to have the discipline and you have to take action.”
—Joe Halpern
Mike Robinson says his greatest accomplishment as a Snapology and Class 101 franchisee is being able to impact the lives of young people.
Pop’s Beef finds longevity in community
Kacie Dancy never thought she’d be working in the restaurant industry.
“It is some hard work,” she said. “There’s no days off, it’s open to close … I always said I’d never be a part of it. But what kept me in is the family.”
Dancy became vice president of operations for Pop’s Beef in 2010, when the fast-casual Italian beef concept started franchising. Dancy’s father, Frank Radochonski, and her grandmother opened the original Pop’s location in a suburb of Chicago in 1980. Her uncle opened the second location, and growth has continued ever since as the brand celebrates its 45th anniversary this year.
Pop’s Beef has 17 units across Illinois and Indiana, with another restaurant in the pipeline slated to open late this year or in early 2026.
Family remains at the brand’s core. Radochonski is still involved, and Dancy’s brother is a multi-unit franchisee.
Some change is to be expected for any business operating for nearly 50 years. But what hasn’t changed at Pop’s Beef is the importance of community presence. If anything, Dancy said, the brand is doubling down.
“We’re truly a part of the communities we’re in, which is really cool,” she said. “I think when you become a franchise, you can lose some of that, and I feel that we have not done that.”
Community and family ties have built franchisee interest as a regional brand, with family-oriented values trickling down to franchisees drawn to the brand’s image and story.
Dancy listed examples of Pop’s Beef franchisees: a group of three brothers, a husband-and-wife duo, college friends, and a dad with 10 children—four of them franchisees.
Pop’s Beef prides itself on trusting its franchisees and valuing their input, Dancy said. The brand has multiple committees within its franchise system and holds opentable meetings with franchisees to ask for direct feedback on what has and hasn’t worked.
“They have a voice, and I think when you give someone a voice, they feel valued and don’t feel like it’s a dictatorship. We care; obviously we’re in business because of them,” Dancy said.
The franchise touts its flexibility with a diverse menu and pricing options, different operating models and the ability for franchisees to create unique designs for their own restaurants.
flyers in their stores, and some are in schools and hospitals,” Dancy explained. Franchisees “know best how to market and advertise their restaurant because they’re in those communities, so we want the flexibility to be there for them.”
In addition to a 2 percent marketing fee, franchisees must spend up to 1.5 percent of monthly gross sales on local advertising and/or local and regional advertising cooperatives, according to the company’s franchise disclosure document.
In the past, these efforts have included participating in local blood drives, sponsoring children’s sports teams and supporting schools, hospitals, law enforcement and fire departments. Dancy finds this element of the franchise model pushes franchisees to look for unique ways in their market to spend advertising dollars.
“Community involvement will never go away,” Dancy said as she noted the brand began a partnership with the American Red Cross in December, one that will “hopefully only continue to grow.”
The community focus at Pop’s Beef is seen in franchisees’ marketing efforts, tailored to their respective communities, as well as involvement in local charitable efforts.
Kacie Dancy
“I think it’s come from my dad and how he started,” Dancy said. “He was 19 when he started in this industry, and I think that he wants to give everybody the same opportunity he had. Knowing that when you open this restaurant, though you’re buying into a franchise, you have to make it your own.”
Trust also weaves itself into the company’s marketing, which Dancy said ties back to each franchise’s respective community.
“We have older areas where we’ve been around a long time, where paper ads and the magazines work great. Digital marketing works way better in some areas. People use
Brand awareness will continue to be a priority as the company builds upon its 45-year history and looks to new markets. Dancy wants the franchisor to invest more heavily in marketing and advertising at the brand level than years past and continue brainstorming future partnerships and events.
“It’s just exciting to see that 45 years later, that initial vision of hot dogs and beef sandwiches grew into what it is today,” she said. “I feel that it’s this awesome community to be a part of.”
—Alyssa
Huglen
Global sourcing powers Waters Edge
Ken Lineberger has always been passionate about wine, but he’s not as ecstatic about the agricultural part.
When he and his wife, Angela, decided to launch their own winery businesses in 2004, they made it one where growing grapes was unnecessary. The result was Waters Edge Wineries, and not only did it fit what Lineberger was looking for, but the lack of an agriculture division meant it was easier to replicate.
“We weren’t interested in that side of the business and also didn’t want to be limited by what wine we could produce based on what we could grow in one region,” Lineberger said. “We also wanted to create a winery that we could teach other people how to successfully operate.”
More than two decades later, Waters Edge Wineries has grown from one location in California to a franchise with 15 locations across eight states. Its franchise push, Lineberger said, began in 2012 after they proved the concept over the course of eight years.
“What I really liked about franchising is you can grow faster because you’re not coming up with the capital yourself,” Lineberger said. “What’s more important is it’s a good way of assisting entrepreneurs. I’m passionate about helping people be successful. It’s something I’ve tried to do in the corporate world and now in franchising.”
Waters Edge Wineries is not alone as a winery concept in franchising, but it’s in a smaller category. Lineberger said the ability to open anywhere gives the brand an edge, similar to that of craft breweries.
“Look at the microbrewery craze,” Lineberger said. “It’s exploded across the country, almost to the point of saturation now. But that’s not true in the winery business. In fact, there are more than 6,000 brick-and-mortar wineries in the country, and 80 percent of those are in six states.”
Lineberger’s brand has a warehouse in Ohio shipping out raw juice to its locations, which takes about three days to deliver. Waters Edge also has agreements with vineyards around the world growing grapes for the concept, with the winemaking process completed at local units.
“Wineries connect the craft to the consumer,” Lineberger said. “You can buy a bottle of wine in a lot of places, but this is where it’s made and customers can meet the winemaker. That’s special.”
One example of a Waters Edge operation is the Norfolk, Virginia, location owned by Jason Witt. A United States Navy veteran and entrepreneur at heart, Witt opened a winery after noting the lack of one in the community and said guests appreciate the experience.
“In Virginia where Jason is, they have wines with fruit only grown in that climate,” Lineberger said. “They’re limited to that. But people know going to Waters Edge that this wine is different. Ohio and Michigan are similar, for example. They’re known for sweeter wines because the climate is colder and you can’t grow the grapes we have in California. But we can get those types of grapes from California, Italy or France.”
The goal for Waters Edge moving forward is to get the variety of wine options to more than 50 locations, with markets targeted in Arizona, Colorado, Florida, North Carolina, Pennsylvania, Tennessee and Virginia.
“We manufacture the bottles here and people get to be involved with their first-ever wine bottlings,” Witt said. “We can take them in the back of the house, crack open the tanks and show them the fermentation process and talk all about the background of the wines.”
Lineberger said the way the concept functions provides a variety other wineries can’t compete with.
“We see a ton of opportunity that’s untapped in this country for what we do,” Lineberger said. “We’re really on a path to try and accelerate that as we get more and more locations, more people will experience us and help us expand. We see somewhere in the 10 to 12 units per year range with the infrastructure we have. If we want to go up to 15 or 16, we’ll need more infrastructure.”
As part of that growth, Lineberger said Waters Edge is on the lookout for potential franchisees passionate about wine and can build relationships with people.
“We want them to have that passion and for them to also be an extrovert,” Lineberger said. “A lot of stories around wine come from the ability to communicate it to people who come through the door. Who’re able to talk about what region the grapes are grown and what the culture is like.”
—Matthew Liedke
Waters Edge Wineries aims to bring winemaking to more communities while sourcing its grapes from global vineyards.
Ken Lineberger
Haven touts all-in-one family care
Necessity is the mother of invention.
That’s how Britt Riley, a mother of two, came up with the idea for Haven Collective in 2017. “I wanted to do better with both childcare and my work,” Riley said. “Fitness had taken a major back seat at that point.”
Haven is a daycare provider that also provides adults with flexible workspaces and space to work out. Because of its large footprint, typically 6,000 or 7,000 square feet, the initial investment can reach $7.39 million.
“If we’re taking care of their kids, I feel like it’s part of our responsibility to try and make sure that their parents are doing all right, too,” said Riley, who co-founded the company with Morgan Everson, the brand’s chief operating officer. Riley called Everson “the other half of my brain.”
Haven provides services to families with children ages 5 and younger. Its curriculum is inspired by the Montessori method of teaching and has a strong emphasis on playbased learning.
Haven has three corporate locations, two in Rhode Island and one in New Jersey. The flagship location opened in 2019, then the other two came in 2021 and 2022.
“It took years for me to try and decide what the right path was going to be for us to take,” Riley said. Franchising, she decided, is that path.
“I just really wanted to make sure that there was someone who was the heartbeat of that community in the space at all times,” she said. “It’s a super important piece of our puzzle, because at the end of the day, we really are creating a community.”
Franchising means Haven can focus more on training programs, curriculum and technology, while franchisees focus on hiring and taking a hands-on approach to operations.
“We’re looking for people who really understand the need for what we’re doing and we’ve found that many people have been attracted to the brand because they felt a similar pull in every direction” that parents often face, Riley said.
A background in education or childcare isn’t necessary. Instead, franchisees need to embrace the mission of the company and have a passion for community involvement.
Haven aims to expand in the northeastern United States, in New Jersey, New York, Rhode Island and beyond.
Haven enhanced its leadership team in March with the appointment of John Collins and Kim Hodges as president and director of franchise development, respectively. Collins brings decades of experience from Patagonia, where he most recently led global sales and customer service. Hodges worked at WellBiz Brands, Drybar and Fun Brands before joining the Haven team.
Opening a business in 2019, one built on encouraging people to congregate, didn’t fare well at the onset of the COVID-19 pandemic in 2020. Haven closed for a few months, per area regulations, but opened up again once it could.
“Oddly enough, the challenges have been some of the most exciting parts of the journey for me,” Riley said. “Getting the first club open and proving the concept was a giant undertaking.”
That closure, though, was a blessing in disguise for Haven.
“We got to go back to the drawing board and say, all right, what would we have done differently?” she said. Then the team had the opportunity to refine and tweak things over the course of the location being closed.
With the pandemic came a rise in the number of adults working remotely, rather than commuting to the office every day. Riley said she thought normalizing remote work would be one of the biggest challenges of running Haven, but work-from-home mandates nipped that in the bud.
“We all saw what COVID did with that. It absolutely leveled the playing field. In doing that, we live in a completely different world,” Riley said.
For parents, working remotely—at home or at, say, their local daycare center that offers workspace—can be a huge advantage, she said. When Riley first had kids, she was working remotely as a marketing executive and she saw the benefits of being able to get her work done while watching her children.
“The pandemic, it was erasing that uphill battle in a matter of months,” Riley said, ”which was wild to witness for me.”
—Emilee Wentland
Haven founder Britt Riley is looking for franchisees who are the “heartbeat” of the community and embrace hands-on operations.
Magnolia Laine CEO advises patience
What is Magnolia Laine’s story?
The White Magnolia was our original bridal store concept. We have eight White Magnolia stores, which started in 2010. Over time, we had a lot of people asking, ‘Is this a franchise? Is there a way for us to have a franchise? We want to open a store like this.’ We weren’t ready yet. It took us about 12 years of running The White Magnolia to make the decision to open up franchise opportunities, as that was going to be a great way for us to expand our footprint faster than on our own. Myself and my business partner, Mallory Thorburn, are both moms and love growing our business but were to a point where we felt we could only do so much.
The franchise idea came about in 2021, when we opened the first Magnolia Laine in Atlanta. We already had a location in Atlanta but decided to open Magnolia Laine as an additional sister store and different inventory offering. When we opened that store, we made the decision: Why don’t we make this our franchise entity? People have been interested for many years and love bridal; it’s a very glamorous, fun industry, so we decided to make the leap and jump into franchising.
Where does Magnolia Laine fit in franchising, and how does a unique concept carve out a space?
There really isn’t much bridal opportunity in the franchise world. Bridal is very niche, and it’s a very unique kind of retail. What we do is special order only, so we have a
The company has seven units across six states.
tomers are searching you out and coming to you for specific designs, designers and styles. It’s a little more specialized. I think being a franchisee with bridal really gives you the opportunity to get to know the industry. You’re having an opportunity to learn from Mallory and I and our team, who are very experienced in this space. You’re getting a great foundation to learn the industry, learn how to work with brides and really be a part of something special.
“There really isn’t much bridal opportunity in the franchise world. Bridal is very niche, and it’s a very unique kind of retail.”
showroom with inventory and then place orders for brides. It’s different than just your everyday retail. With bridal specifically, I think there’s a lot of opportunity in really large cities but also in submarkets as well, where you have people probably driving many miles to get to a city to look for bridal. It’s a very special day; they want to make sure they have a great experience and great selection.
Bridal is very different, as it’s a retail segment where cus-
— Kerrie Hileman
What advice do you have for brands new to franchising?
It’s a long process and a little more overwhelming than I expected, but I do feel like being patient and taking correct steps to make sure everything was set up properly as we initially entered into the franchise space was really important. I would say to set your parameters and know what you want. Know how you want to structure your fees, the things you want to offer, the things available to your franchisees, what’s off limits and on. Having a good understanding of your business, how you’re going to offer that to someone else and what those parameters look like going into the process I think is key. Bridal in general is a really special, unique industry where I think there’s not enough good shops and experiences out there for brides. I would definitely say to anyone interested in bridal, it’s a very rewarding and fun industry to be in.
Reporter Alyssa Huglen asks what makes emerging brand leaders tick—and presents their edited answers in this column in each issue.
To suggest a subject, email ahuglen @franchisetimes.com
Illustration by Jonathan Hankin
Co-founders Hileman and Mallory Thorburn franchised bridal boutique concept Magnolia Laine in 2022.
KERRIE HILEMAN
DEAL OF THE YEAR WINNER READY TO TAP BLACKSTONE’S EXTENSIVE RESOURCES
With new owner Blackstone, Tropical SmoothieCafeisconfidentitcanspeedup growth. The brand added 161 new stores lastyear,nearlythree-quartersofthem fromexistingfranchisees.Moretechnologyfirepoweriscomingtoimprovestore operations just as a major national marketing push gets underway.
By Emilee Wentland
ax Wetzel isn’t worried about Tropical Smoothie Cafe fatigue, despite eating 10 to 15 meals there each week.
“You can have every meal at Tropical Smoothie Cafe,” said Wetzel, the brand’s CEO. “It’s all connected to who the brand is. Like 85 percent of our guests order a smoothie, but when we get them to move over
and also try our food, there’s a massive unlock in loyalty.”
Wetzel took the top spot at Atlanta-based Tropical Smoothie in November, just six months after Blackstone, one of the world’s largest private equity firms with more than $150 billion in assets under management, bought the brand from Levine Leichtman Capital Partners. He replaced former CEO Charles Watson, who held various leadership roles at Tropical Smoothie since 2010. (Watson was named CEO of burger franchise Smalls Sliders in April.)
The sale, for a reported $2 billion, came less than four years after LLCP purchased the chain from BIP Capital. Blackstone’s previous franchisor acquisitions include Hilton Hotels and disaster restoration company Servpro; it made a growth investment last year in 7 Brew Coffee.
In its Dealmakers nomination, adviser William Blair wrote LLCP’s growth strategy for Tropical Smoothie was “still being executed” during the sale. But it was the right time for LLCP to find a buyer who would carry on that
development plan. Blackstone did not comment for this story.
“Blackstone leveraged its franchise experience and global reputation for strategic investments to secure the winning bid and immediately identified how to continue the current strategy while beginning to implement changes,” the adviser wrote in the nomination. “Maintaining seamless operations and revenue targets was of primary concern—but it was not a significant challenge for savvy private equity investors with franchise experience.”
At a time when the M&A market was expected to slow down significantly, Blackstone bought Tropical Smoothie in one of the biggest franchise deals of the year in terms of dollar amount.
LLCP’s resources helped Tropical Smoothie enhance the customer experience, and the franchise expects to continue that innovation with Blackstone.
A. Tropical Smoothie Cafes offer seating for customers to enjoy their smoothies. B. Tropical Smoothie has more than 1,500 locations across 44 states. It operates inline and drive-thru locations, along with endcaps and freestanding stores. C. Smoothie options run the gamut, from tropical fruit to vegetable forward. D . A Tropic Bowl lineup joined Tropical Smoothie’s permanent menu in 2024. E. Tropical Smoothie aims to deliver a cool, beachy vibe in its stores. F. Savory items like sandwiches and wraps make the brand an option for lunch and dinner, too.
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and capital improvements that will enable Tropical Smoothie Cafe to provide its franchisees with the menu options, marketing support and other resources that will deliver increased sales,” a William Blair representative wrote.
In a statement at the time of the acquisition, Blackstone Senior Managing Director Peter Wallace said Tropical Smoothie’s “impressive growth trajectory” was a major factor in the deal.
LLCP sold a handful of noteworthy brands in recent years, including Nothing Bundt Cakes in 2021 and Hand & Stone Massage and Facial Spa in 2022. It’s also bought a few brands, including Kilwins Chocolate and Synergy HomeCare.
Blackstone started this year by finalizing its purchase of Jersey Mike’s Subs in a deal with a reported valuation of $8 billion.
Biggs as chief operating officer and promoted Chris Sasser to chief financial officer and Karen Wickliffe to general counsel.
“We’re obsessed with growth,” Wetzel said. One way to propel that growth is to implement more technology in its stores to improve ease of operation. “We’re having a lot of fun putting all of our thinking together.”
The brand has only one corporate store, which is located near the company’s headquarters in Atlanta. There, Tropical Smoothie tests new ideas before rolling them out on a larger scale.
Under LLCP, Tropical Smoothie increased its earnings before interest, taxes, depreciation and amortization, or EBITDA, three-fold, according to the brand.
Its average unit volume, meanwhile, has been in decline, dropping from just over $1 million in 2021 to $979,491 in 2023. It added more than 450 new stores in that time, and last year opened another 161 stores, nearly three-quarters of which came from existing franchisees. It had 1,515 cafes open in 44 states as of January.
(The brand had not filed its franchise disclosure document with 2024 sales by press time.)
‘OBSESSED’ WITH DEVELOPMENT
In just five years, Tropical Smoothie doubled its footprint from about 750 to 1,500-plus cafes.
“If you think about our journey over the last five years, it’s been explosive development growth,” Wetzel said. “We will continue to drive development, but we’re going to be driving development and putting a tremendous amount of focus on AUV growth … improving franchise profitability even further.”
Wetzel brings experience from leadership roles at Hardee’s and Carl’s Jr. owner CKE Restaurants and Papa Johns. Taking the helm of Tropical Smoothie was “too great of an opportunity to pass up,” he said. His superfan status started a decade ago when Tropical Smoothie had about 200 cafes.
Blackstone’s bolstering of the Tropical Smoothie executive team didn’t stop at Wetzel. The brand hired Baskin-Robbins vet Jonathan
During a visit in late March, the cafe had digital menu boards and ordering kiosks—though most customers that afternoon seemed to be ordering at the register.
“We’re going to become even more of a more digitally forward company over the next three years,” Wetzel said. “We already have a really strong digital base.”
‘TURN ON THE MARKETING FIREPOWER’
Deborah von Kutzleben, Tropical Smoothie’s chief marketing officer, is focused on launching a national marketing campaign this summer. Franchise development has long been the priority, so now it’s time to “turn on the marketing firepower,” von Kutzleben said. “We’re really going to be focused on driving brand awareness. That’s really job No. 1 in marketing.”
That will include building awareness in Tropical Smoothie’s existing markets as well as in new ones as it competes with the likes of Smoothie King, Jamba, Planet Smoothie and a host of other players in the space.
“Franchisees are excited to be at the party, say where they work and people recognize it and know it and love it,” von Kutzleben said. “They feel like it’s time. We’re at the scale now where moving to more national media makes a lot of sense
from an efficiency standpoint as well. It’s a better use of dollars.”
The brand charges a national marketing fee of 5 to 6 percent of gross sales.
Franchisees feel optimistic about the ownership change, Wetzel said. Operators, store managers and vendors congregated in March for a national convention to share Tropical Smoothie’s ambitions and plans going forward.
“The sentiment was extremely positive, a lot of excitement about the things that we’re talking about,” he said. “It’s like a family reunion. Everybody’s together and, of course, it’s got a tropic vibe.”
“It’s so fun,” von Kutzleben said of the convention. “It’s also awesome to see some that have come in with a single unit, and now they’ve grown their business to be multi-unit.”
Tropical Smoothie’s “better-for-you” positioning is attractive to consumers in multiple dayparts. The menu includes smoothies and acai bowls, as well as wraps, flatbreads, quesadillas, sandwiches and salads.
Von Kutzleben’s go-to is the peanut butter banana crunch flatbread, a warm bread topped with sliced banana, peanut butter, granola and honey. “It’s so unique. There’s nothing out there like it,” she said.
It’s one of Wetzel’s favorites, too. “I had that for dinner the other night,” he said. “I might be our most frequent customer at this point.”
Deborah von Kutzleben
Atlanta-based Tropical Smoothie Cafe is accelerating its unit growth efforts under new private equity owner Blackstone.
DEALMAKERS RECOGNIZES BEST IN FRANCHISE M&A
Omega Fitness flexes its muscles with Rainier Partners
ndy Gundlach references Rainier Partners a lot when he talks about his portfolio of Anytime Fitness gyms and his group’s success with the brand.
It’s not surprising, considering the impact of the Seattle-based private equity firm after it acquired Gundlach’s Omega Fitness in October 2023 in a leveraged buyout.
“We’ve nearly doubled our clubs with 65-plus acquisitions in the last 18 months alone and we’re far from done,” said Gundlach, who partnered with Russ Allen to form Omega Fitness in 2023. “We see a lot of space, a lot more potential territories, to grow our base of clubs and we have to thank Rainier for providing us
the data and analytics and overall support to make that growth possible.”
The consolidation of Gundlach and Allen’s Anytime businesses created one of the system’s largest operating groups, and it now has more than 120 gyms in Wisconsin, Minnesota, Illinois, California and Florida. The locations in the Midwest mainly operate in secondary and tertiary markets, which Gundlach pointed out are often in communities with few gym options.
“We liked the Anytime Fitness ecosystem and its smaller gym format that that can fit in more cities, more locations,” said Bea Woodruff, a vice president at Rainier involved in the acquisition of Omega Fitness.
nered with two of the best operators in the Anytime space.”
Rainier invests in lower middle-market businesses in several sectors including consumer services and industrial services.
“We also loved what Andy and Russ were doing with their gyms and we think we’ve part-
Anytime Fitness finished 2024 with more than 2,300 domestic gyms. With another 2,700 units in international markets, only Planet Fitness and 24 Hour Fitness have more locations.
Anytime Fitness is under the Purpose Brands umbrella, the platform company that rebranded from Self Esteem Brands after it merged with Orangetheory Fitness last year. Anytime, noted Gundlach, is a fragmented brand with more than half of its gyms owned by single-unit operators.
Opportunities for consolidating his business with Allen’s emerged after the COVID-19
Bea Woodruff
Omega Fitness, a large multi-unit operator of Anytime Fitness gyms, plans to acquire more locations as it draws on the backing of private equity firm Rainier Partners.
pandemic, when Gundlach acknowledged it was time he became “bullish about getting private equity into the brand.”
With Rainier’s support, Omega is working through a series of gym remodels as part of Anytime Fitness’ new “Evolution Refresh” initiative, which Gundlach said is the first new design in 12 years and is part of the brand’s “Real AF” platform. Launched in late 2021, the platform includes an interior gym revamp with branded spaces for personal training, nutrition coaching and recovery services along with a modernized logo.
They’ve refreshed dozens of locations so far, Gundlach said, and seen an uptick in membership at those new-look gyms.
and began talking with Allen, who operated 31 gyms in California and Florida, about opportunities to “put some steam behind us” by combining their businesses and securing a PE investment.
—Joe Halpern
Gundlach, who early in his career spent a decade with Pizza Hut and worked his way up from delivery driver to director of operations for franchisee Pizza Hut of Southern Wisconsin, opened his first Anytime Fitness in 2006.
By 2023 he had 35 Wisconsin locations
Highmount Madison eyes big growth at 4Ever Young
ith a strong belief in the potential of the wellness space, private capital firm Highmount Madison was on the lookout to invest in a comprehensive wellness brand.
After scouring a competitive and expanding category, Highmount discovered 4Ever Young Anti-Aging Solutions. The concept, founded
in 2014 and franchising since 2019, provides hormone replacement therapy and medical aesthetics, as well as traditional cosmetic and spa services.
The combination is what won the firm over, said Highmount Managing Partner and 4Ever Young co-CEO Dan Amin.
“Having it all under one roof was the differentiator,” Amin said. “Then we learned from the founders that they were looking to bring on a partner that could both acquire a majority of the business and then also come in with an operational approach to help scale the brand. To be more hands on than a typical private equity fund where a check is cut and they sit on a board.”
The negotiating process, which included Boxwood Partners as a sell-side adviser, took about three months. They closed the deal in October 2023, with Highmount taking over the brand when it had 29 locations.
“I think our general philosophy going into the negotiations was to be honest and open with the principals,” Amin said. “We had straightforward conversations about what their
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Andy Gundlach
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expectations were. I think Boxwood did a really nice job of brokering those conversations, and not closing the sellers off and acting as an intermediary. It was helpful having them involved.”
Since closing the deal, valued at less than $50 million, 4Ever Young’s unit count has more than doubled to 63 locations, with a large presence in Florida and Texas. James Kapnick, another Highmount Madison managing partner and co-CEO of 4Ever Young, said the franchise opens about two units each month.
“We think we’re at a healthy pace of growth to open about 20 to 30 units per year,” he said. “We’re very focused on sustainable growth, making sure that we have the sort of systems, processes and support in place to back our franchisees ahead of opening. That was a core theme in 2024 and continues to be in 2025.”
Amin said the firm’s goal is to establish 4Ever Young as a nationwide brand, which he felt confident in doing because of its proof of concept.
“At 20 or so units open, it was a good point where the brand is big enough to have proof of concept and find the right market fit, but have plenty of growth runway ahead of you,” Amin said. “We felt it was a good setup and we knew we could bring our own positive impacts. For us, that’s building a company that optimizes for franchisee success and positive patient outcomes.”
To pull that off, Kapnick said Highmount focuses its strategy on three pillars: operations, marketing and technology.
“We bolstered the operational team and renegotiated every vendor contract to deliver pretty significant cost savings to the franchisees early on, which helped us get buy-in,” Kapnick said. “On the marketing side, our playbook was similar, bringing in a leader with experience across multiple brands. We’ve also brought on new enterprise resource planning software and are building out our customer data and analytics stack.”
—Matthew Liedke
K9 Resorts attracts $10M investment from its franchisees
9 Resorts allows its dog clients to do everything they love: eat, sleep and play.
That’s what inspired Phil Nisbet and Alan Leibman to sign a franchise agreement with the brand and later invest $10 million in the luxury dog boarding franchise. “It’s like nothing else—visually and as a business owner,” Nisbet
said. “There’s no luxury brand in the market like K9 Resorts.”
The pair, co-CEOs of Luxury Pet Hotel Investments, invested in the brand in March 2024. They initially were developing 11 locations in Los Angeles and with this deal bought another 30 territories.
The cage-free environment gives dogs the freedom to run around and “get their steps in,” Leibman said.
Leibman said the brand has evolved, but that’s not entirely because of the extra millions. “We’ve had robust, good business discussions,” he said. “Everyone is pretty aligned.” The collaboration allows LPHI and K9 Resorts to share resources and ideas.
Dan Amin James Kapnick Phil Nisbet
Jason Parker Steve Parker
K9 Resorts is a luxury pet hotel franchise with more than 40 resorts nationwide. Franchisees Phil Nisbet and Alan Leibman last year invested $10 million in the franchisor.
Leibman has decades of experience in the (human) hotel space, with former stints at the Ritz-Carlton company in Australia and at Kerzner International, which owns luxury hotel brands such as Atlantis. Nisbet is a franchisee of Jersey Mike’s and Wingstop, on top of K9 Resorts.
K9 Resorts’ origin story is wholesome: brothers Steve and Jason Parker started a dog walking business as kids to convince their parents they could handle the responsibility of adopting their own dog. “We were never able to convince them we had enough responsibility,” Steve Parker said.
It’s come a long way since then. The Parkers opened the first K9 Resorts hotel in 2005 in New Jersey, started franchising in 2010 and today the brand has more than 40 resorts open nationwide. Facilities range from 5,000 to 15,000 square feet and on average can host 100 dogs overnight. Franchisees have built new facilities from the ground up on vacant lots and converted existing large spaces (think former Walgreens or CVS stores).
Leibman and Nisbet “were able to bring a franchise owner perspective to our board of directors, which I believe has been really
beneficial,” Jason Parker said. With that knowledge, K9 Resorts lowered costs to build a K9 Resorts facility. “The quality at each location is not affected, but each franchise owner is able to make a little bit of a smaller investment overall and, therefore, their return on investment is greater.”
K9 Resorts has raised capital a few times in the last decade, and each time Jason Parker comes away with this lesson: “You don’t know what you don’t know.”
LPHI’s capital investment is the largest to date for K9 Resorts. “They bought more units and invested in the parent company. They did that at the same time,” Jason Parker said. “That goes to show anyone out there that’s interested in the franchise model that, if you do things the right way, if the franchise owners make money and the franchise owners are happy, there’s no limit as to how you can grow with your family of franchise owners.”
—Emilee Wentland
ABOUT THIS PROJECT
Franchise Times Dealmakers is an editorial project and awards event designed to highlight excellence in buying and selling franchise companies to drive sustainable growth. Franchise Times calls for nominations in the fourth quarter of each year, and presents the finalists to a panel of judges. The award winners are featured in the May issue of Franchise Times and were honored at a virtual awards presentation during Dealmakers Week, April 21-24. Nominations for next year’s project open online October 1, 2025, at www.franchisetimes.com.
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Flurry of deals grows CMG’s units in Sonic, Little Caesars, Ace
ourteen transactions across three brands totaling 118 locations. That’s the dizzying M&A pace for CMG Companies in 2024 as the multi-brand franchisee added to its portfolios of Sonic Drive-In, Little Caesars and Ace Hardware units.
“It was a sprint,” said Cory Posey, director of M&A for Plano, Texas-based CMG. The company sources most deals itself by establishing relationships with prospective sellers in what are often fragmented, legacy systems and demonstrating an ability to close acquisitions in as little as 90 days.
“It’s our own capital. We 100 percent own the business, so that’s a big advantage when we look at these,” Posey said of CMG’s structure as a family office versus a private equity firm. “We could look at stores that maybe are losing money or not performing where they need to be, but we see longterm traction and growth in the brand. Then we’re a little bit more comfortable in that versus knowing we have to turn it around in X amount of years for an exit.”
process for each acquisition. No business is cross-collateralized.
In Sonic, which CMG entered in 2020, the company went from 101 to 179 restaurants following eight transactions in 10 states. (Already in 2025 it bought 12 more stores.) Belief in the leadership at Sonic owner Inspire Brands and at the brand level is a key reason why CMG wants to keep growing in the system, said Posey.
As one of the largest Sonic franchisees, he noted CMG influences the direction of the brand via positions on various committees. He touted the Sonic Smasher lineup and its beverage program as positives in the brand’s effort to boost sales.
Average gross sales for the drive-in heavy concept shot up to nearly $1.7 million in 2021 and have since settled around $1.5 million.
differentiators in a competitive pizza segment. On the retail front, the purchase of two Ace Hardware locations, one in North Carolina and one in Colorado—new markets for CMG—gave CMG 40 stores in that brand. Ajay Amin, principal and head of M&A for Bolster Hardware, the Ace portfolio group, said he expects CMG to remain an active buyer.
“The average owner, I think, is 60, 62 years old. So there’s a lot of stores that will be coming up for sale because there’s not a lot of succession planning,” said Amin as he noted CMG is able to invest in necessary renovations and technology updates.
Strong bank and non-banking finance company relationships are essential, and Posey said CMG often uses delayed draw term loans, which allow it to move quickly on transactions without going through a full loan approval
“I hope the brand can continue to focus on driving franchise profit. I think they’re doing that,” he said. “They’re definitely going in the right direction and the ship is turning. And I hope that they continue to focus on that with really driving those top-line sales and results because ultimately that’s how you’re going to flow through and help franchisees continue to grow the system.”
After acquiring its first Little Caesars stores in 2022, CMG bought 38 more last year via five transactions to bring its total to 60. Posey listed the brand’s technology prowess via its pizza portals and mobile app, along with its madefrom-scratch dough and marketing savvy as
Posey and Amin credited CMG’s front-end process and its ability to successfully transition acquired locations with helping it establish a reputation as a trusted buyer, one that isn’t out to quickly re-trade units.
“You tell them what you’re going to do in the beginning and you follow through with it,” said Amin.
“These are people that have built their entire life around this business. They have people that they care about there and we want to treat them with respect,” said Posey. “It’s understanding their motives, understanding what they need to get out of the transaction to really be happy and to be able to walk away where both sides are happy and felt like they got a good deal.”
—Laura Michaels
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Ajay Amin
Cory Posey
CMG continues to bolster its unit count in three key restaurant and retail brands. It bought a total of 118 locations in, from left, Sonic, Ace Hardware and Little Caesars last year.
Franchise Equity Partners has bold plans for Valvoline
ars are staying on the road longer and tend to travel far in the big state of Texas.
It makes the need for car maintenance more prevalent, and puts a brand like Valvoline Instant Oil Change on the track for growth. Franchise Equity Partners took note of the potential, inking a deal to purchase 38 Valvoline locations in the Lone Star State with the intention to open 75 more.
The deal, signed in July 2024 and finalized in December, expands an already diverse portfolio for FEP, which has about 850 storefronts across several industries including quick-service restaurants, auto dealerships and consumer business services. The Valvoline addition comes under its sub-company, Velocity Auto Care in Austin.
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Franchise Equity Partners sees plenty of opportunity to expand Valvoline Instant Oil Change in Texas, where it bought 38 locations and plans to develop dozens more.
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“This move with Valvoline ticked a lot of boxes for us,” said Mike Esposito, FEP managing partner. “The oil change industry is very attractive and we looked at a number of different players in the sector. There were others out there, but we liked Valvoline quite a bit. They have a simple service model about getting people processed through the oil change in under 12 minutes. As a result of that, they’ve been gaining market share over time.”
The timing was right for both parties, as Valvoline has been refranchising many of its company-owned units. In addition to the 38 it put up for sale in Texas, Valvoline committed to refranchising in Denver and Las Vegas.
“They have about 2,000 stores now and nearly 1,000 of those are company-owned,” Esposito said. “They still see a tremendous amount of white space, so I think they’re going to double their store count in the next five years. I think what they saw was, they can sell those 38 stores to a good capital partner who can then accelerate the growth in this footprint.
“For every dollar we put in, it’s one less dollar that they have to do at Valvoline, allowing them to focus on something else.”
The money FEP is putting into its Valvoline locations is largely to form an extensive team to lead all facets of the business.
“Each store had a general manager, and obviously employees below them,” Esposito said. “But beyond that, we had to build a whole executive team, which I would say was a heavy lift. But we are proud of the result. We hired a whole C-suite team, as well as new heads of HR and real estate. From there, we’ve built out a whole series of systems and processes.”
By creating such a team, Esposito said it provides the ability to scale and develop quickly. In addition to assembling an executive team, Esposito said FEP worked to improve data software and communicate with existing staff to settle any nerves.
“It’s an important issue,” Esposito said. “To be frank, when people hear ‘private equity is coming here,’ their antennas go up, and we’re
sensitive to that. Our message all the time is, at the store level, nothing is changing. We also let them know that, because we’re opening 75 more stores, the opportunity for advancement is dramatically enhanced.”
—Matthew Liedke
Patience, persistence pay off for Wendy’s seller in notable deal
oug Augustine compared selling his portfolio of 10 high-volume Wendy’s restaurants in southern Georgia to finally reaching the summit of the world’s
tallest mountain.
“It was like those people who climb Mount Everest. You got a short window of time to get to the top and get back down before the weather comes in. I’m just so thankful that it all worked out in the end for everyone and we were able to get this thing done after so many tries,” said Augustine, the former CEO of Elite Burgers and South GA Burgers.
It took four attempts over three years for Augustine to sell his Georgia-based Wendy’s before he finally did in a $13.2 million deal with Steve and Brandon Adkins of ADKCO Burgers. The closing date of the transaction, August 7, 2024, ended Augustine’s 30-year career in the quick-service restaurant space.
The closing of the deal with the father-andson team from ADKO Burgers didn’t come without drama. Augustine had a buyer lined up in early 2021, but the approval process dragged
Mike Esposito
Doug Augustine Naveen Goyal
Jason Olsen
Nick Huerta
It took four tries over the course of more than two years, but Doug Augustine finally sold Elite Burgers and South GA Burgers, encompassing 10 Wendy’s restaurants, to ADKCO Burgers last summer.
on for months and eventually the frustrated buyer pulled out.
Verbal agreements were made with second and third potential buyers, but those deals fell through when one pulled out at the last minute after citing concerns about the brand’s performance trends and overall QSR headwinds. Wendy’s did not approve the other buyer because it thought Augustine’s restaurants were too far from the buyer’s base of operations.
The fourth time proved to be the charm. Steve Adkins has vast experience in the Wendy’s system as a shareholder and director of operations for MUY Hamburgers, a Wendy’s operator.
“The overall overarching theme of all this is that this process can take quick twists and turns and can seem out of control for franchisees or even the brand,” said Naveen Goyal, the managing director of Auspex Capital and sellside adviser on the transaction. “But thankfully Doug trusted us and we worked through a very difficult environment to get this done.”
Goyal said the acquisition allowed Augustine to retain eight of his underlying properties and enter into a long-term absolute triple-net lease with the new buyers. He also explained how challenging it was to find a buyer for
Augustine’s profitable restaurants during an economic slowdown.
“We had high interest rates, labor shortages and government money affecting a cyclical market,” Goyal said. “It wasn’t easy getting the deal done but everyone, including Doug, persisted.”
Prior to Wendy’s, Augustine operated successful Taco Bell and Burger King restaurants. He became a restaurant owner in 1998 when he took over his father’s Taco Bell business and turned around a number of distressed stores. He got into the Wendy’s system in 2017 by acquiring six stores in Atlanta and then ended up getting seven more in Georgia.
An upcoming self-published book by Augustine will detail his franchise journey. In the meantime, he said he is enjoying retirement but admitted a part of him misses the restaurant business.
“It was at the same exhausting and satisfying to be able to improve the performance of our stores,” he said. “I’m so proud of what our team accomplished, but now it’s time to spend more time with my family.”
—Joe Halpern
MPK invests in Image Studios with goal to expand footprint
mage Studios founder and CEO Jason Olsen said it was never an issue finding well-capitalized, qualified franchisees to grow the business and fill salon suites.
The tricky part, he said, was finding prime real estate for new locations, securing the financing for them and then getting studios open in a timely fashion.
Olsen said a lot of those issues were resolved when MPK Equity Partners invested in his company last year. He said Image Studios now has the data intelligence and expertise to close on more prime real estate opportunities.
Olsen also lauded the relationships he has been able to start with several new banks that are open to providing the financing needed to develop new studios.
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Olsen, who launched Image Studios in 2009 with brother Shaun in Draper, Utah, even sounded confident that his development and opening time frames will speed up with MPK as a partner.
Image Studios, which leases salon suite space to independent beauty, health and wellness professionals, opened its 100th studio in February in Austin, Texas. Olsen said his company has more than 200 units in development and was anticipating opening locations in the first half of the year in Dallas, Phoenix and Georgia.
“There’s always going to be growing pains that brands go through, but I can say with confidence that having MPK as a partner will make a big difference in our company in terms of growth and development,” said Olsen. “They have already helped us look at real estate pipeline timelines and analyzing how to improve the time in each stage so we get through the site selection into construction sooner and get them open faster.”
MPK has helped with securing financing for franchisees. “Salon suites can be a little tricky. We are not SBA approved because we don’t occupy any of our real estate. We sublease it all out,” he said.
The investment range to open an Image Studios is $832,552 to $1.7 million, with the average unit volume in 2024 at $503,685 for locations with 90 percent occupancy, according to its franchise disclosure document.
Olsen said he was moved to start Image Studios after seeing the potential to disrupt the traditional salon space with a turnkey franchising model.
It was the success of Image Studios in growing its footprint from 50 units in 2018 to 100-plus locations in more than 20 states that caught the attention of Dallas-based MPK.
“Jason has built a very successful company which uses a fairly simple business model, and there are only so many levers you can pull in order to drive growth at the unit level. But we are confident we can help build the infrastructure for the brand, speed up their development processes and make the locations more profitable,” said Nick Huerta, co-founder and partner at MPK Equity.
MPK has experience in the segment and was part of a consortium of investment groups that acquired a majority interest in Sola Salons in 2018. The firm exited Sola in 2023.
“Where we can help Jason is helping the franchisees open strong from an occupancy perspective and also with improving
financial reporting, KPI tracking and site selection,” Huerta said. “Basically contributing to the brand’s success without being an active hands-on member.”
—Joe Halpern
Craveworthy Brands keeps portfolio growth going with Dirty Dough
ennett Maxwell recalls a simple LinkedIn message as his first interaction with Craveworthy Brands CEO and founder Gregg Majewski.
Early into franchising, Maxwell, then the CEO of Dirty Dough, reached out in early
M&A continued from 29
A. Image Studios, which leases space to beauty professionals, is making a growth push. B. Dirty Dough stores offer many indulgent cookie flavors. C. Menu innovation is essential at Dirty Dough.
ABOUT THE JUDGES
We thank the Franchise Times Dealmakers judges, invited to serve because of their expertise in franchise finance, who evaluated nominations and helped to select this year’s winners.
Brian Baumgart CLA Connect
Cristin O’Hara Bank of America
Eric Ongaro Olio Development Group
John Luehmann
Huntington Bank
Joseph Philip First Horizon Bank
2022 looking to raise capital. A message led to a phone call, with Majewski providing some helpful advice.
“Gregg was brutally honest with me,” Maxwell said. “He told me all the good, the bad and the ugly. What I was doing right, what I was doing wrong and where I was going to fail. I’m like, ‘OK, how do I stay in contact with you?’”
Majewski soon become an adviser on Dirty Dough’s board and later CEO at the end of 2023 when Craveworthy took over management control. Craveworthy decided to buy the company in May of last year and the deal closed in September.
“We were involved a lot longer than everybody else would have been,” Majewski said. “We were coming at it from a completely different side. For us, it was more of, let’s just keep going, go at a much faster pace than what we were today and see what we can accomplish.”
after acquiring chicken brands Wing It On and The Budlong. It later bought Mongolian Concepts—Genghis Grill, BD’s Mongolian Grill and Flat Top Grill—and purchased Untamed Brands (Taim Mediterranean and Hot Chicken Takeover) and Fresh Brothers Pizza. The company also has a handful of internally developed concepts.
Dirty Dough, with 80-plus units in more than 23 states, added a treats concept to Craveworthy’s portfolio of 17 brands. Craveworthy has done anything but slow down since, with the multi-restaurant platform company announcing the acquisition of gourmet cinnamon roll concept Kinnamōns and investing in Shaquille O’Neal’s Big Chicken in March. Majewski formed Craveworthy in early 2023
Majewski and Maxwell agreed Dirty Dough is the ticket to expanding into frozen consumer packaged goods.
“If you go to Costco today, or Walmart or Sam’s Club, and you go to the frozen section, there’s no cookie,” Maxwell said. “We want to break into that category.”
The brand started rolling out new menu offerings such as “dirty drinks,” a play on dirty sodas, and is exploring dirty ice cream and a breakfast component in donuts. It’s all part of Craveworthy’s goal to make Dirty Dough “the leader in the treats segment,” said Majewski.
Maxwell still has a heavy hand in Dirty Dough as chairman and has expanded into additional brands as Craveworthy’s director of franchise development.
“He was the one who built it, and that was what makes it important to me,” Majewski said about keeping Maxwell involved. “Otherwise, the company doesn’t have the DNA that is necessary to grow.”
Sharon Soltero Amur Franchise Finance
Todd Maldonado BMO
In his development role, Maxwell said the brand’s franchising prowess can spread through the rest of Craveworthy’s portfolio, especially those early into launching their franchise systems.
With steady growth ahead for Dirty Dough, Majewski recognizes the intentional approach needed to enhance the cookie concept’s systems—even if that means slowing things down a bit.
“Whenever I take over a brand, our sales tend to slow down for the beginning stages and then grow at a much faster pace after that because we fix the AUVs, we grow the business, we make everything better,” Majewski said. “It takes us a long time—usually 12 to 18 months—to get things to where we think we should be … so for us, it’s OK to slow down, correct the unit economics and then grow from there. In the Dirty Dough case, that’s exactly what we had to do and what we’ve been focused on.”
—Alyssa Huglen
Gregg Majewski
Craveworthy Brands finalized its acquisition of Dirty Dough in September, adding a treats profile to the platform’s ever-growing portfolio of 17 brands.
Advisers share key dealmaking tactics
By Laura Michaels
s part of its Dealmakers project, Franchise Times recognizes those in the adviser category. These winners are investment bankers, consultants, M&A experts, attorneys, CPAs, lenders and similar professionals facilitating multiple deals in franchising. This year, Unbridled Capital and Harrington Park Advisors earn the spotlight.
UNBRIDLED BRINGS SELL-SIDE WISDOM
It’s not just about the price.
Derek Ball, senior vice president at investment bank Unbridled Capital, said less than half of the firm’s deals go to the highest bidder. Many other factors are in play when it comes to successful sell-side M&A.
“Obviously, price is up there. If you’re just way off on price, it’s probably not going to matter how good you are in other aspects,” said Ball as he talked important elements of evaluating buyers. “Then, do you have corporate support? Corporate support is infinitely more important today than it was even when I got into business eight-and-a-half years ago. Franchisors will have no shame in vetoing buyers anymore. They do it left and right.”
How a buyer will finance the acquisition is likewise becoming more important as banks tightened their lending standards, especially for restaurant deals. Three years ago, said Ball, you could call up a bank and have the money 45 days later.
“It’s not that way anymore,” he said. “I want to know how much equity a buyer is looking to put into a deal, how much debt they’re looking to put into a deal and the source of both.”
While buyers used to put 90 percent debt on businesses, to win franchisor approval, many brands want a minimum 20 percent equity infusion; some are pushing for 30 percent. A rise in restaurant bankruptcies, high construction costs, inflation and sluggish unit sales affect the M&A climate, said Rick Ormsby, managing director of Unbridled. For franchisees looking to sell, he emphasized supply and demand.
only going to sell when the overall market is better. That’s not always the right time because you have higher supply of other restaurants out there for sale that compete against you.”
In short: Sell when the business is performing well in a tough environment.
That was the case in two deals in 2024. Unbridled advised Primary Aim on its sale of 65 Wendy’s restaurants in three states to Delight Restaurant Group, a large existing franchisee led by Rich and Andrew Krumholz. And it represented Scottish Foods as it sold 28 KFCs in North Carolina to KBP Brands. The value range for each was $50 million to $125 million.
banking at companies such as Merrill Lynch, Bank of America and, most recently, Arlington Capital Advisors. Harrington Park focuses on M&A in the multi-unit consumer services space, including restaurants.
Primary Aim, led by brothers Ben, Tim and Steve Thompson, started with one Wendy’s in Ohio in 1999 and grew to 78 locations. They continue to operate 13 stores in the Columbus area. “There haven’t been that many truly healthy businesses that have come up for sale,” Ormsby said, and Primary Aim was one.
“They had no private equity and no family office backing,” he added. “They just did it themselves with their family gusto and a little bit of money and a lot of dedication.”
Scottish Foods, a third-generation KFC franchisee, was likewise among the top performers in its system, said Ball, with its stores doing $2 million a year in sales, 60 percent above the national average. Eight offers came in, Ball added, “a massive testament to how good that business truly was.”
“An operator will say, I’m only going to sell when it’s doing bad because I’m tired of operating it. That’s the wrong time to sell something. You should sell only when it’s doing really well,” said Ormsby. “The second piece is, I’m
HARRINGTON TAKES
‘WHITE-GLOVE’ APPROACH
Ashish Seth founded
Harrington Park Advisors in 2023 to address what he saw as a gap in the investment banking space for middle-market, lower middle-market and emerging brands. Clients in those groups, he said, need an adviser in their corner, shepherding the deal with day-to-day service.
“The billion-dollar companies don’t need it, the $10 billion companies don’t need it,” he said of Harrington Park’s “high-touch, whiteglove” approach. “But the middle, lower-middle, emerging growth brands, these people really need true advice, fair advice, integrity, but also with a focus on excellence and quality.”
Seth spent more than 20 years in investment
When Seth and his team dig into a deal, they’re incredibly brand focused.
“My view is that if you’re a fried chicken brand, you’re not the only one out there. So how do we get you to rise above the other players in the market and drive a premium result for you?” he said. “You do that by differentiating what your brand means, what it stands for, how is it different and unique, and telling the brand story in its own voice.”
That’s the approach he took with Houston TX Hot Chicken in its sale to Savory Fund in November 2023. Founder and pro race car driver Edmond Barseghian grew the chicken concept to 11 corporate and franchise locations, and putting the brand’s young, colorful, edgy voice—in addition to its strong unit economics—front and center was essential to it standing out in the market.
“Part of our job is to communicate that to buyers and help them see the uniqueness,” said Seth. “This is not just one in 30 other chicken brands; this is one of one.”
Relationships, too, are important. Seth got to know Image Studios founder Jason Olsen in 2020 when he had a handful the salon suite locations. Post pandemic, “growth really supercharged,” said Seth, and unsolicited interest in Image Studios increased as Olsen sought the best path forward for a brand that had 76 units across 20 states and a pipeline of 220 units.
Harrington Park was the exclusive adviser to Image Studios as it sold a majority stake to MPK Equity Partners in March 2024. The key to that deal, said Seth, was constructing a transaction strategy that would convince a buyer to pay for growth yet to come.
“In a sea of other very successful salon suite businesses, where Image cuts through is that its brand is young and modern. It speaks to today’s salon professional and to today’s guests,” said Seth. Equally important was demonstrating with data a stable business with success in markets across the country, and leveraging Harrington Park’s expansive buyer network.
The firm last year also acted as the adviser to Untamed Brands (Taim Mediterranean and Hot Chicken Takeover) on its sale to Craveworthy Brands, and it advised Craveworthy on its purchase of Fresh Brothers Pizza.
Rick Ormsby
Ashish Seth
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Ridin’ Dirty Social media, TV put dirty soda in the mainstream
TikTokcontentcreatorswhogotaHulurealityseries kickstarted what’s become a nationwide trend. The dirtysodaconcoctionsarepopularinUtahandother Mormon-dominated communities. Is this trend everlasting? And how is it impacting franchise sales?
By Emilee Wentland
In an era where TikTok seems to dictate what everyone says, does, thinks or wears, it’s probably no surprise that it brought on the newest trend: dirty soda. No, it’s not alcoholic (but that’s kind of the point). Dirty soda comprises drinks mixed with cream, syrups and fruits, kind of like a mocktail.
The drinks are popular in Utah, Idaho and other mountain states. They gained popularity among members of the Church of Jesus Christ of Ladder-day Saints, often called the Mormon or LDS church, because the religion forbids drinking coffee, tea and alcohol.
TikTok’s #MomTok and Hulu’s “The Secret Lives of Mormon Wives” are a driving force behind dirty soda franchise sales growth nationwide.
For those who aren’t chronically online, so-called MomTok is a part of TikTok that a group of Mormon moms created to share content surrounding parenthood, Mormonism and, of course, trending dances. The members of MomTok got a reality show on Hulu that debuted last year, sparking the desire for dirty soda options outside Mormon-dominated communities.
“We don’t drink alcohol or do drugs, so [soda] is kind of our vice,” said “Mormon Wives” cast member Demi Engemann in one of the episodes.
Large players in the dirty soda franchise space include Swig and Fiiz, both based in Utah. (Swig is featured in the Hulu TV series, with a scene set in one of the shops. Cast member Layla Taylor touts drinking “at least one” 44-ounce soda from Swig every day.)
Swig in 2022 caught the attention of Utah’s best-known family office, The Larry H. Miller Co., which bought a 75 percent share in the company. Savory Fund maintains a minority ownership stake alongside Swig founder Nicole Tanner and partners Chase Wardrop and Dylan Roeder.
Since Tanner launched Swig in 2010 it’s grown to more than 100 locations in 14 states.
Top: Swig is one of the larger players in the dirty soda segment and appears in Hulu’s “The Secret Lives of Mormon Wives.” Above: Kelsi Child is the marketing manager at Fiiz, a fellow dirty soda franchise.
Dirty soda continued from 35
Fiiz, meanwhile, got its start in 2014 when the first store opened in Bountiful, Utah.
“What sets Fiiz apart from our competitors is we go off of our tagline: Your drink your way,” said Kelsi Child, marketing manager at Fiiz. “We’re all about the customization of sodas, energy drinks, frozen drinks—you name it.”
The decision-paralyzed customer can choose from dozens of set options rather than creating their own drink. There’s Spring Fling, with Sprite, passion fruit, pear and raspberry; Pirate Jack with Coke, coconut, pineapple, raspberry and cream; or Dr. Jekyll with ultra-white Monster energy drink, pineapple and vanilla, plus many, many more.
Fiiz, and most dirty soda chains, have products from all the major soft drink players (Coca Cola, Pepsi, Dr. Pepper), plus noncarbonated, sugarfree or caffeine-free choices.
“One of our most popular drinks is the actual custom soda. So that’s where we’re able to fit our customers’ needs, all the while creating a great guest experience,” Child said.
Fiiz has 70 locations, 67 of which are franchised. All stores moving forward will be franchisee-owned and operated, Fiiz President Scott Ball said. Ball joined the Fiiz team in September 2024.
In addition to Utah, Fiiz is expanding into neighboring states, plus the Midwest, Mississippi and North Carolina. It’s also signed agreements in New York and Florida.
“We’re actively selling franchises all over the country now, so we’re super excited about that,” Ball said. “We’ve got a lot of growth opportunity and people are real interested.”
The popularity coming from TikTok and beyond has sparked a lot of interest from
customers and prospective franchisees, Ball said.
“All the media and all the social media that we’re getting on this is certainly helping us from a marketing standpoint,” he said. “Our franchise development team is very, very busy right now.”
At Fiiz, about 80 percent of business comes from the drive-thru. Stores are smaller, with the biggest stores hovering around 1,500 square feet. But Ball said the team is looking even smaller, with a new modular prototype that could be as small as 700 or 800 square feet.
As younger generations turn to non-alcoholic options, dirty soda has made a splash as a fun alternative to a traditional cocktail, Child said.
“That, in and of itself, is already driving awareness and recognition to soda in general,” she said. “Then once you get the soda in people’s mouths with the cream, the syrups, the purees and things like that … They’re coming back multiple times. It’s just a matter of getting them in the door.”
franchises wanted to expand into Canada at the time, so Guenette took matters into his own hands and started his own mobile concept and signed a contract with West Coast Amusements, a Vancouver-based carnival company that tours western Canada. (Fiiz is set to enter Canada after signing a master agreement with Founder Brands, a group started by the creators of restaurant franchise Freshii.)
There are no doors at Canadian mobile concept Sip Soda Co., but founder Jeremy Guenette said business is booming.
After trying his first dirty soda in Idaho, Guenette said he was hooked. “It was one of the best drinks I’ve ever had. It was crazy,” he said, and his family was likewise enamored with the beverages.
“It was just ‘ding, ding, ding,’” he said, mimicking a bell.
None of the United States-based dirty soda
Sip Soda did 14 carnivals last year with the trailer to test out the concept because Guenette didn’t know if Canadians would go as crazy for the customizable drinks as Americans.
“It was an absolute hit,” he recalled. “The owners of West Coast Amusements could not believe the lineups we had. … We actually had lemonade stands dropping their price by $3 a glass, just trying to keep up with what we were doing.”
Customers would come back repeatedly throughout the day, or even buy a fair admission ticket just to visit Sip Soda again, Guenette said. (Some moms with rambunctious kids wondered why he wasn’t putting booze in the sodas for their sake, but Guenette explained the history behind it.)
Sip Soda will begin selling franchises in May, just as its first brick-and-mortar store opens. “We’re still tearing down the walls at this point in Canada,” Guenette said. “We’re very small at this point, but I really see very big potential here.”
Dirty sodas from Fiiz feature a variety of syrups, creams and fruits.
Fiiz Drinks, based in Salt Lake City, is working to take its specialty sodas to more western states and across the country via franchising as it adds to its store count of 70.
Scott Ball
Big brands tap into beverage boom
By Alyssa Huglen
Dirty sodas, craft refreshers and even “churro chillers.” Specialty beverages are all the rage among consumers, and big restaurant players want in on the fun.
While many quick-service restaurants have introduced unique beverage offerings over the years with limited-time offers or seasonal exclusives, larger brands have the luxury of making bigger moves, from adding permanent menu items to creating entirely new concepts centered on beverages.
“You have to have the size and the scale to be able to achieve that,” said George Hiller, founder and CEO of beverage consulting company Hiller & Associates. “McDonald’s obviously can. Taco Bell can. Sonic can. Others want to, but they may not have the resources or the size and scale.”
McDonald’s introduced CosMc’s in 2023 as a beverage-led concept with specialty coffees, teas, lemonades and slushies. The company played around with stores sizes, finding smaller units and drive-thrus perform better. In January, McDonald’s announced it would close three of its larger CosMc’s locations and open two smaller ones this year.
“I’d say that the learning with CosMc’s continues … We’re closing some stores, we’re adding some stores,” McDonald’s CEO Chris Kempczinski said during the company’s earnings call in February. “I think what we’re learning there is that there’s certainly an opportunity in that space.”
Taco Bell launched beverage-focused Live Más Cafe last year, serving Rockstar-infused Agua Refrescas, churro and coffee-flavored chillers and dirty Baja Blasts among the brand’s usual food offerings.
The concept made its debut in December in Chula Vista, California, in partnership with longtime Taco Bell franchisee Diversified Restaurant Group.
DRG has 350 Taco Bell units across four states and is an Arby’s operator with locations in two states.
SG Ellison, the group’s CEO, said conversations about the concept began with Taco Bell CEO Sean Tresvant just over a year ago in Las Vegas. Ellison’s interest in beverage innovation grew after moving to Southern California and traveling through Mexico City in recent years, experiencing authentic Mexican and Mexican-inspired café concepts.
different than maybe you would find for a traditional coffee or beverage user; these were cinnamon dolce lattes and café au lait, different sorts of spices and things within these great, amazing beverages,” he said. “I started to see that there’s a market to bring that to a broader consumer … and it just made a lot of sense that if you’re going to bring Mexicaninspired something, bring it to the brand that curated and originated Mexican-inspired—Taco Bell.”
SG Ellison
“They were doing something a little bit
Taco Bell’s dive into specialty beverages seems a no-brainer given its history. The brand’s iconic Mountain Dew Baja Blast just celebrated its 20-year anniversary, inspiring alcoholic beverages, energy drinks and various merchandising items.
DRG was “intimately involved” in creating the café concept, said Ellison, as Taco Bell’s team collaborated with The Family Vibe, a creative branding agency Ellison was working with prior.
A hospitality component—what Taco Bell
calls “hosbelltality”—drives the new concept.
“I think we saw through COVID a lot of advancements in technology, digital ordering and delivery, which inadvertently took a little bit of hospitality out of the restaurant space, particularly the QSR space,” Ellison said. “We have been focused on a thing called ‘hosbelltality’ and bringing some of that back into the restaurants to our customers. Leaning into technology and digital advancements but trying not to lose those ‘hellos, how are you, and how can I help you?’”
“Bellristas” making specialty beverages provide “unexpected moments of interaction,” an element Ellison said consumers may not be used to seeing at a traditional QSR. “It changes the vibe, and it elevates the vibe,” he said. “It kind of lands the plane of where we really wanted to be with this sub-brand.”
Sales have grown substantially in the concept’s first few months, with Ellison estimating a 40 percent sales increase at the Chula Vista location since debuting Live Más Cafe. This positive outlook drives DRG’s plans to open additional cafés in Southern California this year.
Beverage boom continued on 38
Live Más Cafe, Taco Bell’s new beverage-led concept, debuted in Southern California last year. The brand’s latest venture has found success in its first few months, driving plans to open additional cafes later this year.
Beverage boom continued from 37
“It’s certainly exceeded my expectations of how well the team, consumer, brand, market would respond to it,” Ellison said, “so no doubt we’re going to expand it.”
Potbelly, always open to menu innovation, expanded its beverage offerings last fall with craft refreshers.
“We continue to want to be on the leading edge of the beverage category,” said David Daniels, Potbelly’s chief marketing officer.
The sandwich shop concept partnered with Tractor Beverage Company to roll out the non-carbonated beverages, with flavors like lemonade and strawberry dragonfruit.
Like Taco Bell, Potbelly has had an extensive history with beverage offerings. The company has more than 25 bottled beverage options and later added fountain drinks to its offerings.
optimize our existing beverage lineup or find innovative, new offerings to bring to customers,” Daniels said.
The company tested the product early last year to much success, with a systemwide rollout completed in September. Daniels said Potbelly is seeing a lift across the board in overall beverage sales since launching craft refreshers.
“We’re always looking to how we can either
FRANCHISORS
and having that variety and flexibility.”
Hiller echoed this sentiment and noted the desire for variety and big, bold flavors explains why specialty beverages have risen in popularity among consumers and, as a result, franchise brands.
Shops have up to four flavors in dispensers next to the fountain drink machines, giving consumers the freedom to play around with beverage combinations and enjoy distinct flavor profiles.
“It’s a common behavior that they won’t just grab one flavor,” Daniels said of self-serve beverage offerings. “They’ll mix and create their own … That’s another benefit of having those bubbler units
Looking ahead, Hiller didn’t rule out the possibility of brands considering more unique beverage options, such as CBDinfused specialty beverages. He believes innovation in the beverage category will continue to surge and rejected the idea of specialty beverages as a shortterm fad.
“Do I think it’s here to stay? Absolutely,” he said. “There’s no turning back.”
Consumers “are all around wanting flavor options and dynamic flavor combinations. That’s what’s really driving it, and I don’t think consumers are looking back,” he continued. “I think they’re looking forward.”
It took huge effort and a long time to build your franchisor to scale. Now that you have achieved profitability – and the riskiest phase is over – keep your equity and reap the economic rewards of continuing to scale the business.
Diversified Royalty Corp’s royalty transaction is a liquidity option that provides:
GET THE MOST OUT OF YOUR FRANCHISOR BUSINESS
Diversified Royalty Corp. is publicly traded company engaged in the business of acquiring top-line royalties from well-managed franchisors in North America.
George Hiller
David Daniels
Value Unlock Multi-unit franchisees reap OpCo/PropCo benefits
Franchisees are looking for more opportunities to leverage their real estate, and the OpCo/PropCo structure is one way for them to access additional capital while protecting assets.
By Liz Wolf
Being a multi-unit franchisee is extremely real estate intensive, and savvy operators are always looking for ways to capitalize on the value of their real estate.
One strategy gaining popularity, particularly among restaurant franchisees, is the OpCo, or operating company, and Propco, or property company, model. This structure separates the operational business entity, the OpCo, from the ownership of real estate assets, including land and buildings, and related debt, the PropCo.
The OpCo then leases the property from the PropCo, generates revenue, manages daily operations and is responsible for potential liabilities associated with the business operations. Meanwhile, the PropCo owns a portfolio of properties that can be used as collateral to raise capital with lower-interest loans for expansion or reinvestment.
“If you can leverage the real estate, theoretically, that allows you to have more capital at your disposal because you have more collateral if you want to acquire more locations, or enter a new market,” said Vance Waldron, Cadence Bank’s managing director of franchise finance.
Waldron said he’s seeing increasing interest and inquiries from multi-unit franchisees about this structure, and it’s an emerging trend with potential for wider adoption across franchise platforms.
“It’s become a growing part of our Cadence portfolio,” he said.
In addition to attractive financing options, Waldron said franchisees can use the OpCo/PropCo model to protect assets, have greater control over real estate decisions and optimize tax and financial situations. The structure also creates a long-term revenue stream, generates “mailbox money” through self-paid rent, simplifies succession planning, and develops a potential retirement strategy.
Additionally, having a separate PropCo makes selling assets and/or the business simpler.
“It makes it much easier at some point if the franchisee wants to sell a particular piece of real estate if it’s separated
Top: Large Culver’s franchisee S &L owns 100 percent of its real estate and utilizes the OpCo/PropCo model. Above: Vance Waldron of Cadence Bank says interest in the OpCo/PropCo structure is increasing.
Real estate continued from 39
from the OpCo,” explained Brad Cashman, an attorney specializing in franchising at Monroe Moxness Berg.
“It’s also generally helpful that the real estate is in a separate entity when they sell the business,” he continued. “A lot of franchisees have an exit strategy, which includes accumulating a pretty sizable real estate portfolio and at some point selling the business and essentially becoming a significant landlord where they’re collecting rents from the buyer as basically an annuity.”
Cashman said the OpCo/PropCo also provides liability protection. “If there’s a problem with the operating company, it doesn’t necessarily bleed into the real estate and vice versa.”
A pioneer in OpCo/PropCo
Multi-unit franchise veteran Barry Dubin, founder and CEO of B Wild Investments, has been successfully using the OpCo/PropCo structure for 15 years. He’s a former executive at KBP Brands, one of the five largest restaurant franchisees in the United States with a portfolio of KFC, Taco Bell, Arby’s and Sonic locations.
During Dubin’s 13-year stretch at KBP Brands, the company started with 64 units in 2011, completed 90 acquisitions, and has grown to 1,100 restaurants in more than 30 states. Dubin believes KBP Brands is a pioneer in using the OpCo/ PropCo approach and is now seeing more businesses exploring this model.
“Many years ago, we created this OpCo/PropCo structure that allowed us to efficiently acquire restaurants that had real estate attached to them,” he explained.
“Whether you’re building a business from new units, acquiring assets to build your business or operating a business without any growth—say you have 10 units, and you’re just going to continue to operate those—this industry is very real estateintensive,” said Dubin. “All strategies lead to you needing real estate, and in many cases, you own some or all of that real estate. Regardless of your strategy, an OpCo/PropCo structure could be advantageous.”
For KBP, the strategy focused on acquisitions and favorable financing options. The biggest benefit, explained Dubin, is the clean bifurcation of the operating assets from the property assets, which generally leads to more advantageous financing.
The OpCo/PropCo structure also simplifies real estate transactions and allows for more strategic growth and expansion.
Throughout his use of the structure, Dubin said it “provided a high degree of likelihood of closing a transaction.”
Tide Laundromat expansion uses model
Dubin’s newest venture is with Tide Laundromat, where he again is successfully utilizing the OpCo/PropCo model. Last year he signed a 51-unit deal with the franchisor to open laundromats in seven states. He started 2025 with three units and will open four more this year.
“We will more than double the size of the business this year and plan to again double the size of the business in 2026,” he noted.
Barry Dubin
In the case of Tide, Dubin is using the OpCo/ PropCo model to help with development. Since Tide Laundromat has a “smart auto-dosing” system, Dubin said there are challenges in converting existing laundromats to the Tide system.
Rather than focusing on acquisitions, due to the need for these significant infrastructure changes, Dubin’s strategy focuses on development. “As quickly as we can find sites that we like, we will continue to develop,” he said.
Having the OpCo/PropCo structure within the laundromats, Dubin said, will provide preferred financing options in the years to come.
S &L utilizes strategy for Culver’s
S&L Companies, co-founded by brothers Jeff Liegel and Chad Stevenson, is one of the largest Culver’s franchisees with 111 restaurants in five states and 50 owner-operators.
group owns 100 percent of the real estate.
Culver’s requires an owner-operator in every restaurant, noted Liegel, S&L’s CEO. He said the OpCo/PropCo structure makes this easier by providing a lower entry point for general managers to become partial owners.
S&L began in 1994 with its first Culver’s in Portage, Wisconsin, and grew its portfolio through both acquisition and development. The
By separating the real estate from the operating business, managers can invest around $100,000 to acquire 19 percent to 25 percent of the business without being saddled with real estate debt, he said. Nearly all the debt is on the PropCo side and built into the leases.
Another advantage is S&L uses the equity in the real estate to secure future funds and upsides with their banking group.
“As long as you have a good lease, there’s quite a bit of equity that you can get out of the real estate,” said Liegel. “It’s no different than a sale-leaseback, but we just look at sale-leasebacks as temporary financing. At the end of the day, you don’t own it, and you’re always going to be paying. We’ve had this vision for the past 15 years, and that’s why we
have been adamant about owning the real estate. It’s probably our Midwest upbringing.”
Tips to get started
Before implementing an OpCo/PropCo, franchisees should conduct a complete financial analysis, ensure regulatory and legal compliance, and obtain advice from both legal and financial experts.
“Talk to your legal and tax advisers to come up with the optimal structure as well as what needs to occur to potentially move assets into those entities,” said Cashman.
While implementing and managing an OpCo/ PropCo structure can be complex, the additional administrative work is worthwhile for most multi-unit franchisees, said Cashman.
“In my view, the benefit almost always outweighs any sort of complexity or additional administrative burden of creating the two separate structures for real estate assets and operating assets,” Cashman added.
Jeff Liegel
Development challenge navigation tips
By Beth Mattson-Teig
High construction costs, access to capital and uncertainty related to the impact from trade tariffs are just a few of the impediments standing in the way of new development. Yet franchise groups are finding ways to overcome obstacles and push forward with expansion plans.
“If you’re in retail, you’re used to headwinds,” says Eric Ongaro, president of Olio Development Group and a former Raising Cane’s franchisee. Franchisees are constantly dealing with issues ranging from labor challenges to fluctuating commodity prices, and development is no different, he added.
Getting a new location across the finish line is always a complex process. It requires juggling a variety of moving parts, from site selection and managing construction costs to securing the necessary city approvals. The global landscape is even more complicated in an environment where interest rates and construction costs remain high, and trade tensions are creating uncertainty around future cost increases and supply chain disruption.
“Over the last couple of years, the big uncertainty has been inflation, and when will it stop. Now tariffs are the big wild card,” said Jason Olsen, CEO of Image Studios, a salon suite franchise with 105 locations. It’s unclear what tariffs will be put in place, for how long and how tariffs could end up impacting costs and supply chain disruptions. “That’s something we’re keeping a close eye on,” he said.
Bracing for higher costs
Rising tariffs could layer on top of already high construction and financing costs. Despite roughly 18 months of falling or flat prices for construction materials, costs remain considerably higher than they were pre-pandemic.
Associated General Contractors of America reported the overall cost of non-residential construction materials went up 39 percent from February 2020 to February 2025, outpacing the consumer price index for that same period of 23 percent.
Canadian steel and aluminum and raised tariffs on a variety of Chinese products.
“This is causing very significant cost increases for construction firms that’s going to flow through to the cost of projects for owners,” said Ken Simonson, chief economist at The Associated General Contractors of America. New U.S. immigration policies and a crackdown on deportation also is expected to impact the cost and availability of construction labor, which is heavily reliant on foreign-born workers.
Although tariffs initiated by the U.S. and retaliatory tariffs from other countries is a dynamic situation that may play out for several months, the impact is already rippling through construction budgets. As of mid-March, the Trump administration put 25 percent tariffs on
How are franchise groups tackling the cost hurdles? Franchisees can take some preventative steps to cushion the blow from future tariff-related increases by locking in pricing with their developer or contractor in advance of a construction start. From a planning perspective, brands also can take a conservative approach and add an extra cushion of 5 or 10 percent into their project budget to account for any unforeseen increases that may occur.
“What you’re seeing is the brands that have great unit economics are figuring it out,” said Ongaro. For example, some of the brands that
have historically operated standalone buildings are now going into less expensive endcap locations and driving economies of scale on construction costs. Instead of building a standalone location a brand might share a location with two or three other brands.
Olio Development is rolling out a new model for a multi-bay strip center designed to have drive-thrus on each endcap and a retail tenant in between. The building footprint is 6,000 square feet that can fit on about 1 acre with space that is divided into three 2,000-square-foot bays.
The model is similar to the co-location strategy where complementary brands locate next to one another, but it’s another step in space optimization, noted Ongaro. The firm expects to break ground this summer on its first multi-bay center in Marysville, Ohio.
Adapting to an expensive environment
Developers and operators are adapting to higher costs. Labor is a large component of overall construction costs, and while increases in material costs on things like wood and steel may move up and down, the labor cost increases are not likely to roll back. And in most cases, labor represents the majority of total construction costs.
“I think retailers have come to terms with if they want new stores, they have no option but
To help keep development costs in check, salon suite franchise Image Studios is turning to alternative spaces and taking advantage of office vacancies.
Morgan Hill Konstantinidis
to pay the higher rent because otherwise the developer just can’t build it,” says Morgan Hill Konstantinidis, vice president at Retail Sites, a development firm based in New Jersey. Especially for public companies that need to hit net new store targets for growth every year, they have to figure out how to deal with higher base rents, she added.
In some cases, the deal structure is changing a little bit to account for the higher costs, such as more negotiation on tenant allowances between landlord and tenant on store buildouts. Another way to manage the cost is to agree to a longerterm lease that tenant improvement costs can be amortized over.
Franchisees are continually looking for ways to value engineer spaces and optimize their footprints. Some design modifications that provide cost efficiency are motivated by changing consumer preferences. Over the last couple of years, the way that retailers deliver goods and services to their customers has changed with greater focus on reaching customers in an omni-channel format.
For quick-service restaurants, those changes include a higher volume of sales going out through the drive-thru window, and in some
cases, a separate lane for mobile app pickup orders. “That shift coupled with the push for efficiency and maximizing sales per square foot is giving brands the opportunity to really reinvent themselves,” said Ongaro.
The coffee chains are a perfect example of that downsizing. Twenty years ago, coffee concepts were designed with 15 to 20 seats dedicated to people who wanted to sit down for a cup of coffee. Now many of the new stores have small footprints of 700 to 1,500 square feet with more space devoted to serving off-premises customers.
Consider alternative spaces
Image Studios is in growth mode for its salon suite concept. The company opened 30 new locations last year and plans to open 42 in 2025. Its biggest problem these days is finding locations, which typically range between 5,000 and 8,000 square feet. The national retail vacancy rate in the U.S. dipped below 5 percent, which represents record low levels.
“Landlords have a lot of choices, and you really have to be on your A game when you present to landlords,” said Olsen. Image Studios is going into landlord meetings with a strong presentation to explain the concept, its business model
and the customer traffic that it attracts that can benefit other tenants at a center.
“The main thing is to put your best foot forward and package a great landlord deck that really shows off the brand and tells the brand story so the landlord can understand why they want you,” he said.
Another strategy Image Studios is using to lower costs is to consider alternative spaces. The company’s business model allows it to take advantage of higher vacancies in the office sector to get favorable deals in good locations.
“For the right office space in the right part of town near a retail corridor, our model works great. So, we’ve really seen a lot of success pivoting to more alternative space,” said Olsen. Franchise groups also can lean on their landlord as a resource, advised Konstantinidis. The landlord can recommend architects and contractors that are familiar with a shopping center and have proven to do a good job, which can result in time and cost efficiencies.
“We have a team of people that want to help that tenant be successful,” she said. “We really view it as setting up a partnership with a retailer that allows us to manage any of those hurdles as a team versus adversarial.”
Wingstop improves amid tough period
The increase in tariffs on numerous countries and introduction of new levies on a range of items by the Trump administration sent shock waves through the stock market during the last Scoreboard measurement period, with many franchise brands feeling the impact.
Of the 32 franchises listed on our Scoreboard, 24 experienced stock price declines in the last period. In that group, 17 of the declines were by double digits, with prices closed down by more than 20 percent for 12 companies.
While the majority of brands experienced drops, though, it wasn’t bad news for all franchises. Wingstop, for example, had the highest stock gain from March 10 to April 9 as it increased 16 percent, from $209.81 to $242.58.
While it’s positive sign, though, the chicken concept still has a ways to go before reaching its closing price at the start of 2025. Year-to-date, Wingstop’s stock has fallen 15 percent, from a high of $298.01 on January 3.
Wingstop’s stock price is more a reflection of
some settling following a record-breaking 2024, though, rather than poor performance. The closing price at the start of 2024 was $245.23 and it reached a high of $422.66 in June. Additionally, the lower closing price from March 10 was just under the pre-2024 high point for Wingstop, when its stock finished at $210.23 in May 2023.
The recent stock increase comes a couple months after the brand reported positive results for the 2024 fiscal year. According to its year-end data, Wingstop’s total revenue increased from $460.1 million to $625.8 million. Same-store sales increased 19.9 percent, while systemwide sales rose 36.8 percent, reaching $4.8 billion.
CEO Michael Skipworth said the results demonstrated the strength of the brand’s strategies.
“We reached new highs with domestic AUVs of $2.1 million and opened 349 net new restaurants,” Skipworth said in a statement. “As we enter 2025, we remain confident in the strategies we are executing and the opportunities in front of us.”
For its 2025 company outlook, Wingstop anticipates low- to mid-single-digit domestic same-store sales growth, with a global unit growth rate of 14 percent to 15 percent.
Along with Wingstop, Brinker International also experienced a stock increase, improving 12 percent from $135.36 to $147.96. Brinker’s portfolio includes Chili’s, Maggiano’s Little Italy and It’s Just Wings.
The brand with the best stock increase yearto-date, meanwhile, was Noodles & Company, up 67 percent from $0.71 at the start of the year to $0.97 in April.
Experiencing the largest decline, meanwhile, was Red Robin, with its closing price falling 32 percent from $4.44 to $3.01. It’s part of a larger recent downward trend for Red Robin, with its stock price declining 45 percent from a $11.36 closing price at the start of the year.
—Matthew Liedke
Retail, YTD Hotels,
Bigger Slice Little Caesars opens in Cambodia, extends global reach
WorldbridgeGroup,aconglomerateinPhnomPenh, openeditssecondLittleCaesarsinMarchandplans to develop at least 20 more. “There are very few foods ... more international than pizza,” says the brand’s global development leader.
By Laura Michaels
Putting a “Salmon Extreme” pizza on the menu or one topped with crab meat might not fly at a chain restaurant in the United States, but at Little Caesars in Cambodia, they’re two popular options.
The unique items also illustrate the inventive nature of Little Caesars’ culinary team and its ability to adapt to the tastes of local consumers, said Carlos Vidal, vice president of international development for the company.
“In Cambodia, seafood is really prominent in the diet and in the food habits,” he said. “We always leave some space for menu innovation, and we adapt some of the pizza specialties to the local taste.”
A seafood iteration of the brand’s Crazy Puffs, which Little Caesars debuted in the United States in early 2024
with cheese and pepperoni versions, and crab sticks are other distinctive items on the menu in Cambodia.
The arrival of the first Little Caesars in Cambodia in November marked the 29th country of operations for the Detroit-based brand. The new restaurant in Koh Pich, a business district in the capital of Phnom Penh, was followed quickly by the opening of a second location in March, both operated by Worldbridge Group.
Worldbridge, a conglomerate based in Phnom Penh, has more than 30 companies across a diverse range of sectors including logistics, property development, technology, food and beverage, media, hospitality, e-commerce, banking and security. Founder Rithy Sear, who was born into a Chinese Khmer family and survived the Khmer Rouge, a radical communist movement that ruled Cambodia from 1975 to 1979 and undertook the systemic murder of millions, established the company in 1992 as a logistics provider.
“We are excited to work with a globally renowned brand like Little Caesars to bring new dining options to the people of Cambodia. Our vision is not only to introduce affordable, high-quality pizza but also to contribute to the country’s economic growth through job creation and
Top: Worldbridge Group brings Little Caesars to Cambodia with its first location in the capital of Phnom Penh.
Above: Carlos Vidal, vice president of international at Little Caesars.
Franchise demand rises in Cambodia
Location: In Southeast Asia, Cambodia is between Thailand, Vietnam, and Laos. It’s slightly smaller than Oklahoma.
Language: Khmer (95.4%) is the official language. Chinese, Vietnamese and some minority languages are spoken.
Religion: Buddhist (97.1%); Muslim (2%)
Total Population: 17 million
Capital: Phnom Penh
Government: Parliamentary constitutional monarchy
Economy: While still a largely agrarian country, Cambodia has a fast-growing economy as tourism, clothing exports, and its manufacturing and construction sectors expand. Global trade has steadily increased since Cambodia became the first least-developed country to join the World Trade Organization in 2004. The United States is its largest single-country export destination, with approximately 40 percent of Cambodia’s total exports going to the U.S., mainly in garments, footwear and travel goods products. Cambodia has a bilateral free trade agreement with China, and Chinese foreign direct investment in Cambodia has grown markedly as that country seeks to establish greater influence in the region. While there have been notable reductions
Flag Facts
Featuring three horizontal bands of blue, red and blue with a white, three-towered temple, representing the Hindu-Buddhist temple of Angkor Wat, in the center of the red band. Red and blue are traditional Cambodian colors.
in poverty, particularly in urban areas, rural areas remain disproportionately poor.
News note: Cambodia continues to find success with its special economic zones, or SEZs, and last year approved 10 more with a total registered capital of approximately $850 million. These zones offer a range of incentives and benefits to foreign investors operating within them,
including tax breaks, customs duty exemptions and government support in the form of financial assistance. The zones are also considered attractive for skilled workers and have better infrastructure, including well-maintained roads, ports and airports.
Franchising in the Cambodia: There is no legal framework that specifically regulates franchises in Cambodia. Instead, franchise agreements fall under the country’s trademark law, and franchisee agreements should be recorded with Department of Intellectual Property at the Ministry of Commerce. The government this year introduced a draft law to provide legal protection for companies’ trade secrets, which aren’t specifically governed by trademark, patent and copyright legislation. And last year government officials said the country would start work to create a franchise law as the business model grows in popularity.
— Laura Michaels
LAO PDR
Temple Time
Depicted on Cambodia’s flag, the Angkor Wat temple in Siem Reap was built in the 12th century to be an unparalleled Khmer capital for King Suryavarman II. It draws nearly 3 million visitors each year.
THAILAND
Gulf of Tonkin
High Demand
More than 50% of Cambodia’s population is under 25 and these consumers want foreign brands from the U.S and Europe. The food and beverage sector is hot, drawing about 41% of consumer spending.
VIETNAM
CAMBODIA
Coastal Region
Sihanoukville, a coastal city and capital of the Preah Sihanouk province, is home to Cambodia’s only international and commercial deepwater port.
Capital City
Cambodia’s capital, Phnom Penh, is also its largest city with more than 2.2 million people. And it’s the country’s major economic hub.
Retail Rise
Shopping malls and convenience stores are driving retail growth, and for franchises, there’s significant opportunity in fast-food restaurants and coffee shops.
South China Sea
Use Caution
In 2021, the U.S. Departments of State, Treasury and Commerce issued an advisory to U.S. business operating in or considering Cambodia to be mindful of interactions with entities involved in corrupt business practices, criminal activities and human rights abuses.
Little Caesars continued from 45
franchise opportunities,” said Sear, Worldbridge’s chairman, in a statement. He was unavailable to comment for this story.
Hong Vanak, an economist at the Royal Academy of Cambodia, told The Phnom Penh Post for its story about the arrival of Little Caesars that Cambodia’s economic growth, rising incomes and an increase in international tourists have helped attract more prominent chains such as Burger King, Starbucks, Pizza Hut, Papa Johns, KFC and 7-Eleven to the kingdom.
The number of international franchise brands entering Cambodia has increased by more than 30 percent in the past five years, The Phnom Penh Post reported. Euromonitor International, meanwhile, noted consumer spending by Cambodians on quick-service meals rose 12 percent over the past three years.
Pizza Hut entered Cambodia in 2021 and has about a dozen locations in the country, which has a population of 17 million. That same year, Papa Johns announced its entry into the market with plans for 15 locations; it has one open. Burger King, and KFC, meanwhile, each list 13 units.
The presence of QSR competitors is positive in the eyes of Little Caesars, said Vidal.
“When we find that there is a good presence and that those brands are successful, rather than deciding not to go there because there is going to be a lot of competition, we think that is a good thing, a positive feature,” he said. “That means there is a market for the kind of food that we offer, and we believe our differentiating factors versus other brands are going to guarantee that we’re going to find a place and we’re going to be successful as well.
“There are very few foods or food types more global, more international than pizza.”
The locations in Cambodia aren’t deploying Little Caesars’ Pizza Portals, the pickup infrastructure that allows customers to come in, scan or enter a code and grab their pizza out of a
heated, automated slot, but do operate with the Hot-N-Ready system for easy pickup. Delivery volume is high, Vidal noted, and the stores feature dedicated third-party delivery pickup windows.
Worldbridge has proven to be a topnotch operator, said Vidal, and is planning to develop 20 to 25 locations. Like the majority of Little Caesars’ other international franchisees, Worldbridge owns and operates the restaurants, versus a master franchise approach that involves sub-franchising.
“We like the direct franchise relationship, and
we definitely like to work with parties which are going to invest their money and are going to own and develop their own stores and are going to be in close, direct contact with the business,” he said. Little Caesars, which has 4,000-plus units, added more than 250 stores worldwide in 2024 and this year expects to open in several new international markets, including India, the United Arab Emirates and Malaysia. Its largest concentration of restaurants outside the U.S. is in Mexico, with nearly 900 units, followed by Canada at about 350.
Seafood options, such as a crab-topped pizza, are on the menu in Cambodia.
First Swing Golf brand’s franchise launch starts in North Carolina
After gaining franchise experience in the staffing industry, husband-and-wife duo Phil and Nancy Gugliotta are entering the indoor golf sector. Their five-unit deal for NorthCarolinaisalsothefirstforstartup brand The Swing Bays.
By Matthew Liedke
Phil and Nancy Gugliotta have been in and around franchising by way of staffing and consulting, but their latest venture is taking them in a whole new direction.
The couple signed a five-unit agreement with startup indoor golf concept The Swing Bays, with locations planned across the Raleigh, North Carolina metro. It marks the first agreement for the brand, which launched its franchise system in 2024, two years after its founding.
It’s a pivot from what the husband-andwife team have been involved in for most of
their careers. After some work in sales and management, the Gugliottas got into the staffing industry and were franchisees of Snelling Staffing in New York. They moved to North Carolina and opened their own private staffing business and launched a franchise consultancy firm.
It was through their consulting business that Phil Gugliotta received an email about the new opportunity with The Swing Bays, which is working with franchise development firm Fransmart to expand. Gugliotta said he was interested from the start.
“I love golf,” he said. “I’ve been playing it my whole life and had dreamed of doing something in the golf industry. So, after finding out more information on it, I reached out before we visited Colorado.”
With a single unit open in a Denver suburb, The Swing Bays was established by PGA
professional Dustin Miller and offers access to golf simulators, lessons from PGA instructors and equipment services. For Miller, the concept is a continuation of a lifelong relationship with the sport. He grew up in a family of golfers, with some who worked in the business, and wanted to get involved himself.
He did just that, starting off in maintenance at golf clubs before getting into member relations, customer service and teaching. During the late 2010s, Miller noticed the rapid growth of indoor golf, and realized there was potential for his own entrepreneurial goals.
“I wanted to be in on the early stages of this and create something different in the space,” Miller said. “I wanted to make something more geared toward golf than it was geared
THE LATEST MULTI-UNIT DEVELOPMENT DEALS, FROM FRANCHISE TIMES
Phil Gugliotta
are than where locations will open.
toward events and birthday parties. A place people can come in, practice, get their clubs fit and have a fitness component as well.”
When the Gugliottas experienced it first hand, they said The Swing Bays ticked all the boxes.
“We found that it could be a really good fit for North Carolina,” Gugliotta said. “When we visited Colorado, we looked into how the business was run, and it lined up with what we were looking for. They showed a commitment to customer service and we were really attracted to the multiple revenue streams in one facility. They really maximize every inch of their unit with the services they offer.”
“Operationally, just on an employee standpoint, it doesn’t take much labor to run, either,” said Nancy Gugliotta. “You have the general manager, the general manager’s assistant, as well as a few part timers. You can also structure it with professional 1099 staff as trainers. That allows them to bring in their own business, without costing us in payroll and overhead.”
Multi-unit deals like the one signed with the Gugliottas will be the standard going forward with Swing Bays, as Miller said they’re looking to make deals in the three- to five-unit range. It’s part of a growth strategy where Miller said he’s putting more importance on who the operators
“We’re being very choosy on who we’re picking for our deals,” Miller said. “Phil and Nancy were exactly the type we were looking for. People who can jump in and do things the Swing Bays way. Who can lead the team, treat their employees right and be member-oriented. We’ve had a ton of interest so far and we’re looking to expand in larger markets all over the United States.”
For the Raleigh market, Phil Gugliotta said they saw a great deal of opportunity, both because of the area’s size and the number of golfers.
“It can definitely support five locations,” he said. “We did our homework on that, and looked over the demographics, the average spending on golf, and arrived at five locations as our target. We’ve already started looking at sites and have one that we’re close to finalizing. We hope to have our first up and running in the fourth quarter of 2025.”
The initial investment to open a location with The Swing Bays ranges from $260,000 to $924,000.
Port of Subs is set for major growth in Arizona after signing a deal for 50 locations. The agreement is with Lee and Heather Kroll, who plan to develop locations in Phoenix, Glendale and Scottsdale, among others. Lee Kroll has a background in leadership roles at JPMorgan Chase and IBM, while Heather Kroll has a franchise portfolio including Supercuts and Rosati’s Pizza. Port of Subs, founded in 1972 and franchising since 1985, has more than 135 locations.
Chicken Salad Chick is set to expand in the Maryland market with the signing of a four-unit agreement. Existing franchisee Paul Weitz plans to double his Maryland operation with the four additional stores. Founded in 2008, Chicken Salad Chick has more than 290 locations across 21 states.
Shipley Do-Nuts signed a deal for 30 locations to be split up over two states. Existing franchisee Vik Agrawal signed on to develop 10 units in multiple New Mexico markets and 20 more
The Wire continued from 49
Chicken Salad Chick is continuing its development on the East Coast with a new four-unit deal in Maryland.
Dustin Miller
Nancy Gugliotta
in the Miami metro area. Along with a single Texas Shipley location, Agrawal is a franchisee of Church’s Chicken, Supercuts and Costcutters. Founded in 1936, Shipley Do-Nuts has more than 370 units across 13 states.
Konala, which bills itself as a healthy quick-service concept, signed a pair of multi-unit agreements to develop five restaurants in Utah and three locations in Montana. Partnering with Konala in Utah is Tyson Adams, a former district manager at Jersey Mike’s. In Montana, Eric Garside, a franchisee with Snap-on Tools, is expanding his portfolio with Konala. The concept was founded in 2023 and has three units.
Glo30, a skincare brand, signed a deal for three locations with a husband-and-wife team who bring franchise experience. John and Gabriela Houston, owners with Dogtopia, will open their locations in Richmond, Virginia. Founded in 2012, Glo30 began franchising in 2023 and has 18 units open.
Fitness concept Pvolve inked a pair of multi-unit deals to grow in the Chicago and Washington, D.C. markets. In Illinois, entrepreneur and busi-
ness strategist Lindsay Cohen signed on to open two studios within 18 months. Dr. Mona Keshtkaran, a specialist in medical nutrition and preventive health, meanwhile, signed a deal for
the greater D.C. metro. Established in 2017, Pvolve has 20 locations.
Are you ready for a New
• Fast casual chicken franchise concept
• Investment starting under $450k*
• Multi-Unit Opportunities Available
• Targeting the Midwest, South, and Southwest (other areas considered)
• 40+ year pedigree in serving delicious chicken
The Wire continued on 52
Chicken concept Starbird is set to develop locations in Chicago and Salt Lake City. SALADS
The Wire continued from 51
Missouri-based Big Whiskey’s American Restaurant & Bar will expand into Texas with the signing of a three-unit deal. The agreement is with Tony and Mary Cook, who have backgrounds in restaurant construction and will now develop Big Whiskey’s in the greater Houston market. Founded in 2006, Big Whiskey’s began franchising in 2016 and has 17 locations.
Smalls Sliders, a QSR mini-burger brand, signed a deal to bolster its Missouri footprint with one unit for Jefferson City and another in Columbia. The agreement is with the husband-and-wife duo Vamsi Mandava and Tanya Vadlapatla, who are also Scooter’s Coffee franchisees. The two new units will join an existing Smalls Sliders location in the St. Louis area. Founded in 2019, Smalls Sliders has 24 restaurants, with the majority in Louisiana.
Quick-service chicken concept Starbird signed a pair of five-unit agreements to develop the Chicago and Salt Lake City markets. The company did not name the franchisees but said the
operators for both deals bring previous restaurant experience. Founded in 2016 by restaurant consultancy firm The Culinary Edge, Starbird has 17 locations in California.
At Franchise Times
The Wire is the place to find news of multi-unit development agreements, brought to you by Senior Writer Matthew Liedke. Want more? Sign up for the e-newsletter at franchisetimes.com/enewsletter. To share your brand’s multi-unit deals, email details to mliedke @franchisetimes.com
Shipley Do-Nuts inked an agreement to grow in both New Mexico and Florida.
JOE HALPERN EMILEE
MATTHEW LIEDKE
Sandbox VR inks deal for Manhattan
By Matthew Liedke
Investment firm JLG Ventures has established itself as a more-than-capable operator in New York City with several restaurant concepts. The next step in building its portfolio was diving into entertainment, and it found a partner in the virtual reality brand Sandbox VR. The group signed a deal to open three New York locations, with the first expected to open in Manhattan this fall.
JLG Ventures, led by president Carolyne Chan, also partially owns a pair of bar concepts in Double Chicken Please and Sinsa, as well as the restaurant Raku and bakery brand Patisserie Fouet, all in New York. The latest addition, Chan said, had been on the firm’s radar for a few years.
“We had been focused on the location-based entertainment industry and were particularly interested in virtual reality,” Chan said. “We found Sandbox VR and saw that it had a truly immersive experience, and there’s nothing quite like it.”
Founded in 2016, Sandbox VR has been franchising since 2019 and opened the United States to opportunities last year. Based in San Francisco, Sandbox VR has 57 locations globally, with 37 company-owned and 18 franchised. The U.S. is home to 35 of the company-owned units and three franchised sites.
“We took our time to consider and understand Sandbox VR’s model, vision and support for their franchisees,” Chan said. “In all of our encounters and dealings with them, their team has been exceptional. They have a deep understanding of immersive technology and can deliver high quality experiences, which made us comfortable with moving forward.”
Chan said the brand is regularly innovating its game offerings, and effectively blends technology and social interactions.
“We’ve built a strong foundation and we have a highly competitive franchise offer,” Hebditch said. “We have quite the powerful fly wheel, where strong demand leads to more locations, and that gives way to more revenue. It allows us to put in new experiences for the customers, and that keeps our brand fresh, capturing more attention. That cycle will fuel our expansion.”
“It’s something that can engage people who’re new to VR, as well as those who are obsessed with it and want to play games with different groups,” Chan said. “This is our first time franchising, but we’ve seen how successful other Sandbox VR franchisees have been, and we’ve been in touch with a few of them.”
Lee Hebditch, Sandbox VR ’s director of global franchise operations, noted the deal’s significance, with New York representing a key market as a global hub for entertainment and innovation. By developing there, Hebditch said the brand can attract an audience to help cement its global influence.
Per the brand’s franchise disclosure document, the initial investment to open a Sandbox VR ranges from $250,719 to $1.87 million.
Hebditch added the brand is in good hands with JLG Ventures, as the Sandbox VR team is on the lookout for franchisees with industry expertise and a shared vision for success.
“We’re always looking to partner with those who bring strategic value,” Hebditch said.
with their other concepts. It’s shown us they’re not just investors, they’re partners. They recognize the importance of brand identity, customer experience and operational excellence.”
The New York deal is part of Sandbox VR’s plan to target most major metro areas in the U.S.
In those regions, Hebditch said the brand is focused on developing with multi-unit agreements, though it is open to single-unit deals in smaller markets. Finding partners for those deals includes recruiting new and existing franchisees.
“We like to grow with our strong owners and give them the opportunity to expand their territories outward,” Hebditch said. “We look for those with strong financials, but more importantly, we seek experience in retail, hospitality or entertainment. Overall, we want a franchisee who shares our passion for immersive entertainment.”
“The team at JLG stood out because they understand what it takes to build, scale and innovate brands like ours. They have a great track record
Carolyne Chan
Lee Hebditch
Entertainment concept Sandbox VR will soon open in New York City thanks to a new multi-unit agreement.
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FOOD ON DEMAND OPENING
GENERAL SESSION
1:00 pm–1:20 pm
General Session Opening Remarks and Outstanding Operators Recognition Sponsored by dlivrd, Olo, ezCater
1:20 pm–1:45 pm
Winning in the AI Era: How the Smartest Brands Will Thrive
Adam Brotman & Andy Sack, Forum3
1:45 pm–2:35 pm Off-Premises Roundtable
Zach Noren, GoTo Foods; CJ Ramirez, Dog Haus; Julie Klinger, Playa Bowls; Korey Love Taylor, Taco John’s International
2:35 pm–3:25pm
Navigating the Future of Autonomous Food Delivery
Robin Riedel, McKinsey & Co.; Touraj Parang, Serve Robotics; Nicole Schone, Wing; Michael Boyan, Shake Shack
3:25 pm–4:00pm Data & Insights
Anand Tumuluru, LoopAI; Lisa Miller, Lisa W Miller & Associates; Victor Fernandez, Black Box Intelligence
Established & Emerging: Execs Talk Tech and Driving Digital Sales
Laura Michaels, Franchise Times & Jennifer Dodd, Main Squeeze Juice Co.
9:20 am–10:20 am
Third Party Deep Dive
Meghan Musbach, Uber Technologies; Jim Osborne, Grubhub; Ben Kim, KFire; Vishwa Chandra, DoorDash
10:20 am–10:40 am Refreshment Break
10:40 am–11:30 am
Developing Restaurants for Off-Premises Excellence
Fred LeFranc, Results Thru Strategy; Christophe Poirier, KFC; Adam Noyes, Potbelly; Jason Rusk, Wonder
11:30 am–1:00 pm
Food On Demand Showroom Open
12:00 pm–1:00 pm
Networking Luncheon
BREAKOUT SESSIONS
1:00 pm–1:50 pm
Next-Gen Marketing: Attracting the Digital-First Generation
1:00 pm–1:50 pm
The Power of Data, Building Loyalty Programs That Stick
1:00 pm–1:50 pm
Building Your Digital Storefront: How to Drive Direct Orders
2:00 pm–2:50 pm
Gen AI: Practical Solutions for Off-Prem Success
2:00 pm–2:50 pm
The Digital Trifecta: Marketing, Tech & Ops Aligning for Online Dominance
2:00 pm–2:50 pm
Is The Price Right? Navigating Value Wars in Turbulent Times
2:50 pm–3:10 pm Refreshment Break
3:10 pm–4:00 pm
From Tradition to Tech: How Legacy Brands Embrace Digital for the Modern Guest
3:10 pm–4:00 pm
Reputation Management: Navigating the Omnichannel Landscape and Staying On Top
3:10 pm–4:00 pm Optimizing Delivery; Blending In-House and Third-Party
4:00 pm–6:00 pm Food On Demand Showroom Reception
WEDNESDAY, MAY
7TH
8:00 am–9:00 am Networking Breakfast
9:00 am–9:50 am
Best Practices for Delivery-First and MultiConcept Hubs
Peter Backman, the Delivery.World; Andrew Martino, gtk; Prashant Kumar Patel, Chef on Call; Mate Kun, Growth Kitchen
9:50 am–10:40 am Around the Industry: Catering 101 Ryan Plamer, Lathrop GPM; Chris Heffernan, dlivrd; Byron Duncan, New Catering Connections; Ashley Elzinga, Foodservice Packaging Institue; Jeremy Cantarow, ezCater
10:40 am–11:30 am Catering Tech Uncoded Jenn Saunders-Haynes, Elizabeth Jewel Consulting; Eric Stepp, Bojangles
11:30 am–11:45 am
Conference Closing Remarks Jared Pfeifer, Food On Demand
Executive Ladder
McDonald’s announced Alyssa Buetikofer as the brand’s United States chief marketing officer, replacing Tariq Hassan, who stepped down.
D1 Training hired Elliot Capner as chief commercial officer.
Kampgrounds of America welcomed Erik Hoeffs as senior director of franchise field operations.
The Dog Stop announced the following additions to its leadership team: Jeff Farnell , vice president of operations; John Henning , director of franchise development; Megan Allen , director of real estate and construction; and Nancy Purvis , franchise support manager.
The Glass Guru, a glass restoration and replacement concept, hired Steven Maya as digital media and content creator.
Plamondon Hospitality Partners , a Marriott and Hilton franchisee, promoted Nichole Vasquez to regional director of operations.
KFC U.S. named Catherine Tan-Gillespie as president, replacing retiring president Tarun Lal . Tan-Gillespie was promoted from her roles as chief marketing officer and chief development officer.
Penn Station East Coast Subs brought on Don Champion as senior vice president of sales and development.
Rita’s Italian Ice & Frozen Custard hired Lawrence Brown as chief development officer and Carmela Hughley as senior vice president of marketing insights and innovation.
HTeaO welcomed Jodie Chau as vice president of supply chain.
A&W Restaurants promoted Betsy Schmandt from chief operating officer to CEO and president. Former CEO Kevin Bazner will continue in his role as chairman.
Smoothie King appointed Claudia Schaefer as chief marketing officer.
Home Helpers Home Care promoted Bobby Kelley and Clay McKee to vice presidents of franchise development.
American Family Care named Jeremy Morgan as CEO.
MassageLuxe announced Trista Ruchty as manager of franchise development.
The Goddard School appointed Sonia Cabell and Peg Oliveira to its educational advisory board.
Huddle House welcomed Stephanie Mattingly as vice president of marketing.
Zoom Room , an indoor dog training gym franchise, hired Don Allen as vice president of operations.
Cousins Subs promoted Joe Ferguson to executive vice president.
Church’s Texas Chicken announced Roland Gonzalez as CEO.
Better Homes and Gardens Real Estate named Chris Nichols as senior vice president of franchise sales.
Neighborly welcomed Reese Neumann as chief growth officer.
The Red Chickz, a hot chicken brand, appointed Spencer Sabatasso as vice president of development.
Tropical Smoothie Cafe announced the following changes to its leadership team: Jonathan Biggs , chief operating officer; Chris Sasser, chief financial officer; and Karen Wickliffe, general counsel.
Math and reading tutor franchise Kumon hired Angelo Chavez as assistant vice president of franchise development.
Sonny’s BBQ announced George McAllan as chief growth officer.
The Coffee Bean & Tea Leaf announced Tara Hinkle as president and head of the Americas.
Nothing Bundt Cakes appointed Charlie Morrison to its board of directors.
Re-Bath named Andrew Boorse as general counsel.
Spartan Fitness Holdings , a large Club Pilates franchisee, announced Brian Boucher as chief operating officer and Becky Hansen as chief financial officer.
Ellie Mental Health appointed Michael DiMarco to succeed founder Erin Pash as CEO, with Pash now chairwoman of the board.
FranData announced Alicia Miller as managing director.
Mobility City Holdings brought on Craig Kreakie as vice president of franchise operations.
Empower Brands appointed Felicia Reeves to chief marketing officer.
Massage Envy promoted Andrea McCauley to chief revenue officer; she was senior vice president of marketing.
Murphy Business Sales named Veronica Cardinale Ellinger as CEO.
RSVP Direct Mail Advertising hired Jeff Filaseta as director of national sales.
The International Franchise Association announced Jack Monson as chair of the IFA’s marketing and innovation committee. Heather McLeod was named the committee’s vice chair.
Princeton Equity Group announced the following promotions: Phil Piro, partner; James Nagle , principal; Alexandra Bouthillette , vice president; and John Norwood , associate of business development.
Send promotions and new hire news in franchising to Alyssa Huglen, ahuglen @franchisetimes.com
Felicia Reeves
Elliot Capner
Church’s Chicken at ‘critical inflection point,’ says its CEO
Roland Gonzalez has always been drawn to competition.
“I was a competitive athlete throughout all my life. I was a baseball player up until the time I got my MBA,” Gonzalez said. “The QSR industry, just food in general, is so competitive that it was a great transition from sports.”
Gonzalez has been with quick-service chicken concept Church’s Texas Chicken since 2023, working as chief operations officer prior to the company naming him CEO in February.
“It truly feels like you’re part of this legendary brand, and you have this incredible opportunity to just continue the legacy,” he said. “That’s what I’m looking forward to: maximizing the potential of the brand and the people within it and providing even more opportunities for growth.”
Gonzalez’s time as COO was all about refocusing on the basics, improving franchisee profitability and executing the brand’s loyalty program and mobile app.
Now CEO, Gonzalez pulls from this experience as well as his time with Restaurant Brands International, where he was responsible for leading operations standards on a global level for Burger King, Popeyes and Tim Hortons.
Church’s, he said, is at a “critical inflection point” in its growth journey.
The company’s international footprint continues growing, with more than 1,500 locations in 26 countries and systemwide sales exceeding $1.5 billion. Gonzalez said the company has remodeled more than 300 restaurants in its portfolio, seeing solid returns and high guest satisfaction.
it, that’s the time to double down and really not get complacent.”
Though the company has closed restaurant in recent years, which Gonzalez attributes to profitability issues and not opening in the right markets, 2025 looks to be a year Church’s sees net positive unit growth. The brand’s focus on technology investments, building upon digital growth and optimizing operational efficiency will lead the charge, Gonzalez said.
“Creating momentum in this industry over a decent period of time is one of the most difficult things to do because there’s so many variables out there, decisions that you have to make,” he said. “When you have
“We’re getting franchisees that are highly capitalized and very interested in getting into this brand of the chicken category,” he said as a result. “That’s a very strong category, and there’s a ton of white space in the U.S. for us to really grow. I don’t see any reason why we couldn’t double our footprint in the U.S. with the right partners.”
Sport Clips’ exec builds off consulting, restaurant experience
Vince Burchianti knows his title as Sport Clips’ second in command is unique.
“It is different and unusual,” he said. “But it’s very clear to our team where the lines are and what the roles are.”
Burchianti developed a relationship with the haircare provider as a consultant prior to making his official start in January. Sport Clips President and CEO Edward Logan asked about Burchianti’s plans as consulting came to an end.
“[Logan] was like, ‘Nah, I don’t think I want you to go,’ which was great because I was thinking the same thing,” Burchianti said. “I was able to get a trial run of the brand … and it was a very quick and easy decision for me to go from consulting to full time.”
Burchianti’s responsibilities entail growth development, cost savings and driving revenue. His love for mentoring will play a significant part in the new role. “My main goal is to make sure that we’re efficient, make sure that we’re ready for growth, make sure we have the right staff in
place and make sure that our offering is the best it possibly can be,” he said.
Working in haircare seems like a considerable departure from Burchianti’s prior work, as he spent 22 years in leadership roles at Firehouse Subs. But he said there’s more similarity than meets the eye.
“At the end of the day, it’s franchising,” Burchianti said. “At the end of the day, it’s still a retail, fourwall shop. Whether we’re selling a haircut or selling a sandwich, there’s a need for the consumer.”
The financial statement is where you start seeing differences, he noted. “There’s no cost of ingredients of a haircut,” he said.
Though the company is nearing 1,900 units across the United States and Canada, Burchianti said the approach to growth is quality over quantity. The essentials are how the company markets the brand, goes after leads and executes in opening stores and supporting franchisees.
“It’s all labor, it’s all professionals and licensed stylists performing a service to our clients. It is a very simple financial statement compared to a restaurant.”
“Most franchise concepts will come up with a number of units to grow by every single year. That’s not our approach,” Burchianti said. “Our approach is we want to make sure we do business with the best-quality franchisees we can. Our plan at the end is to build a legacy—really, to build a legacy for our franchisees.”
—Alyssa Huglen
—Alyssa Huglen
Roland Gonzalez
Vince Burchianti
Franchisors need to adapt to ‘click to cancel’ rule—if it sticks around
Gym memberships are notoriously hard to cancel.
There’s even an episode of “Friends” about it, in which Ross hypes up Chandler to finally overcome the obstructive practices that have prevented Chandler from canceling his membership.
“We were voted the best-equipped gym in New York two years running. Do you really want to give that up?” a membership salesman asks Chandler.
“Yes,” he replies. “I hate it here!”
This is a problem Americans face with memberships, gym or otherwise. They’re so hard to cancel. You can sign up for a free trial with two clicks, but you have to jump through hoops to get out of a contract.
If I can’t motivate myself to visit Planet Fitness once a week to walk on a treadmill for 30 minutes, do you think I’m going there to publicly admit my defeat? Absolutely not.
But gyms—and other membership-based business models—rely on that thought process for sales. Your local gym knows you don’t want to go through the hassle of canceling your monthly membership.
While Chandler’s story was for comedic purposes, this is a real problem customers face and it’s costing them money. That was the Federal Trade Commission’s rationale when it adopted the “click-to-cancel” rule. It requires sellers to make canceling a membership as easy as it was to sign up for said membership.
“The FTC’s rule will end these tricks and traps, saving Americans time and money,” said former FTC Chair Lina Khan in a statement last October. “Nobody should be stuck paying for a service they no longer want.”
The rule is formally called the Negative Option Rule, but gained the nickname “click to cancel.”
The original rule is from 1973—quite some time before people were signing up for a gym or massage membership through an app on their iPhones.
“It’s showing a trend of being consumer friendly and wanting transparency at the outset of someone subscribing or entering into a negative option program,” said Chiara Portner, a partner at law firm Lathrop GPM.
Is it here to stay?
The rule is being challenged in at least four petitions against the FTC. The petitioners claim the agency doesn’t have the authority to create such a rule “and violated procedural
requirements when doing so,” according to law firm Morrison Foerster. They also argue that the “rule is arbitrary and capricious and violates the First Amendment.”
Then, of course, there’s the unpredictable Trump administration, which has indicated a pro-business approach—though it’s up for interpretation what that actually means. Under Khan, the FTC promoted rules in favor of consumers, but new Chairman Andrew Ferguson could take a lighter approach to consumer protections.
Thirty states plus the District of Columbia already have automatic renewal laws in place. “Those still have to be followed if they’re more restrictive than the FTC rule,” Portner said.
IFA, franchisors have ‘mixed feelings’
International Franchise Association General Counsel Sarah Davies testified at an informal FTC hearing last year against the updated rule.
continued. “Customers electing to freeze memberships rather than cancel avoid paying a second initiation fee when returning and retain benefits and incentives offered to long-term members.”
MassageLuxe CEO Kristen Pechacek said she has “mixed feelings” about the rule. The brand is making labor and financial investments to accommodate online cancellations.
“Those things take time and resources,” Pechacek said. “It’s a bit of a limbo. Is this actually going to happen? … Is it going to get reversed? We’ve been in a little bit of a touchand-go scenario.”
“Many of these franchisees invested in their franchise systems based on a business model that includes as a core component a membership program, and the proposed rule interferes in their private contracts with their franchisors,” Davies said in January 2024. “Recurring billing is not inherently deceptive or unfair.”
By Emilee Wentland
She has a point. Consumers love convenience and sometimes that need for simplicity overpowers their need to save the $50 a month for a membership they’re not using. Franchisees may invest their life savings in businesses with a model that leans on recurring membership fees, and if a new rule suddenly changes that, what are they supposed to do?
Davies argued that many membership-based brands offer the option to temporarily suspend a membership rather than cancel.
“A massage franchise system reports that approximately 10 percent of memberships are frozen at any given time, with 75 percent of those members electing to reactivate their memberships,” Davies said.
“Our fitness center brands similarly experience members electing to freeze memberships rather than cancel at rates as high as 40 percent,” she
But while MassageLuxe didn’t offer online cancellation as of late March, the brand makes it easier for consumers to cancel or pause their memberships over the phone, if they don’t want to go to the studio, she said.
Guests can also pause their memberships for $5 a month and lock in their current rate when they come back.
“We want to make it easy, but we also want to talk to you about what value the membership has brought to you, where you’re at in your life, if you’ll ever come back,” Pechacek said. “And, of course, if perhaps just pausing your membership is the better option for you.”
As a consumer, I like the click-to-cancel rule. As a brand leader, I think I’d be wary. While gyms and other concepts can motivate and entice customers to use their memberships, they can’t force them into the business. With that said, if someone wants to throw in the towel, they should be able to—and with ease.
I confirmed I can quickly and easily cancel my Planet Fitness membership online, but I’m still holding out hope I can motivate myself to go. Unfortunately, the FTC can’t really help me with that.
Emilee Wentland is managing editor of Franchise Times, and writes the Continental Franchise Review® column in each issue. Send interesting legal and public policy cases to ewentland @franchisetimes.com
Illustration by Jonathan Hankin
LEGAL BEAT
Brand reputation in the lending community is a signal to private equity
I’ve written extensively about how private equity firms evaluate the franchise attractiveness, at both the system and unit level (since PE invests in both). If you’re keeping your long-term options open and want to potentially engage with PE at some point, knowing what PE buyers value and why—and building that can create tremendous enterprise value. This also tends to create value for your franchisees, which often makes it a win-win scenario.
But smart franchisors also know that long before they can successfully court PE attention, they need to start communicating with lenders to help the lender community understand their franchise to fund growth. In many ways, this education process with lenders is a dress rehearsal to the deeper investigation brands go through under PE buyer scrutiny.
Small business loans are the lifeblood of franchising, enabling would-be entrepreneurs to start their businesses. Of course, an increasing number of new launches are lower-cost businesses, so some entrepreneurs don’t need to take out loan, and there are also non-bank loan products, such as 401(k) self-funding options.
But for many systems, conventional and Small Business Administration loans remain a critical component of growth and success. That means maintaining lender support and expanding the number of lending options for your franchisees so they can effectively tap the market is a core deliverable of most successful franchise development teams.
Lenders want to understand both an individual franchisee’s ability to repay a loan, and the overall strength of the franchise system, including loan performance history and unit continuity. Also examined are net worth and capital requirements in comparison both to benchmarks and required costs to get open and ramp the business.
Consider the score
An important indicator of overall franchise health tracked by market research firm FranData, is called the Fund Report. The Fund Report is used by and is only visible to lenders. It is not available to prospective franchisees. The score is created using publicly available information in franchise disclosure documents and compares a franchise to best-in-class performance in brands across a number of categories.
Among the elements included in the score are: historical unit success, resale history, same-store sales trends, revenue per unit trends, the franchisor-franchisee relationship, system support
and related expenses, management experience and turnover, financial viability of the franchisor, prospect screening and approval requirements, agreement terms, and so on. The result is a score relative to other franchisors, which predicts overall unit success prospects in each brand. The Fund score is used as part of the loan underwriting process by lenders to assess risk and make informed underwriting decisions.
What happens if a franchisor has a low Fund score? This signals higher risk to lenders and makes it more difficult for them to underwrite either prospective franchisees or existing franchisee expansion. A low score also hurts resales because more deals must be self-funded acquisitions, narrowing the buyer pool. Underlying poor franchise system health leading to a poor Fund score also hurts resales, so it’s really a double whammy.
How can prospective franchisees learn whether a brand they’re considering has a low Fund score? Consult with a lender who has access to the franchise registry. Do this you before you fall in love and invest too much due diligence time.
ing to underwrite, and improved system health created sustainable growth. But if your franchise culture is mostly oriented around sell, sell, sell, you’re unlikely to turn things around until you put positive franchisee outcomes first in your mission statement, make adjustments to your culture, and enforce it through budgetary priorities, hiring and reward practices, and management follow-through.
DEVELOPMENT SAVVY
By Alicia Miller
Keep in mind that emerging brands won’t have a Fund score because they don’t have enough operating history. This is a public service reminder: Buying an emerging brand is more akin to venture investing. Proceed with caution.
There are many ways to improve a brand’s Fund score, but it starts with making a commitment to change and improving franchisee outcomes. If you can make meaningful improvements and produce documentation proving franchisees are achieving better outcomes, the score improves.
FranData has a detailed review process brands can go through to turn this around. But it begins with recognizing there is a problem and committing as a management team to doing things differently.
There are examples of brands that were struggling during the financial crisis for example, but which recommitted to turning things around and rebuilt system performance. Eventually their scores improved, lenders were more will-
Through the lender lens
Let’s circle back to the idea of keeping your PE options open. If system outcomes are weak, you are kidding yourself if you think you will attract a rich PE buyout. That’s not to say PE buyers never make errors of due diligence and buy something with more issues than they expected. Sometimes PE may also be seduced by hubris, overconfidence, large legacy cash flow (e.g. Subway) or a bargain price into picking up a “project.” But these situations aren’t frequent enough to validate your exit strategy if you’re running a brand abounding with red flags like a low Fund score. You’re likely spending every working day managing an impaired asset. And if you’re continuing to sell franchise “opportunities” in that same impaired asset, I implore you to reconsider your life choices. At worst, you’re willfully ignoring the risk to your franchisees and kicking the proverbial can down the road. One of the reasons I keep harping on the PE buyer lens is because I believe self-interest is a powerful motivator. Consider lender feedback a harbinger of PE feedback. If you can’t convince lenders, you’re unlikely to convince PE buyers. Do you know what your Fund score is?
Alicia Miller is the founder and managing director of Emergent Growth Advisors. Her Development Savvy column covers smart ways to market and grow a franchise. She is also the author of “Big Money in Franchising: Scaling Your Enterprise in the Era of Private Equity.” Reach her at amiller @emergentgrowthadvisors.com.
Illustration by Jonathan Hankin
Learn from top off-premises leaders who have done the restaurant legwork
Who has restaurant technology figured out? Nobody. But the brilliant operators named in Food On Demand’s Outstanding Operator series come close.
The Outstanding Operator project, produced by Franchise Times’ sibling publication, is dedicated to finding innovative restaurant technology strategies, and this year is no different. There are dozens of lessons from the operators named. So many great tidbits, in fact, that I’ll be dedicating two columns to this program because there are great insights for internal operations, and another set of insights for customer-facing technology.
Among the honorees are several brands who continuously innovate in-house operations for delivery, on-site dining and generally let smart folks attack problems with all manner of tools, not just cutting edge whizbangs. Each Outstanding Operator has at least one savvy operational leader testing, iterating and reimagining restaurant operations.
Clarity and consistency at Freddy’s
While a kitchen display system, or KDS, seems a bit “basic,” Sean Thompson, head of IT at Freddy’s Frozen Custard & Steakburgers, said an end-to-end rethinking of how orders are set up on the company KDS drastically improved efficiency and reduced pressure on staff.
Prior to a KDS rethink, Thomson said counter workers each had their own way of ringing up complex orders. That would translate to a hodgepodge of abbreviations and digital shorthand. Then the kitchen staff would have to decode the veritable hieroglyphics to make the food. That led to mistakes, stress and a huge amount of decision fatigue for kitchen staff.
Under a new strategy, the KDS visually shows restaurant staff what is in the order. Whether it’s the grill, the fryers or the custard station, staff receives a clear, detailed display of each order. The technology minimizes human error and ensures that even complex orders with multiple modifications are interpreted correctly.
That’s critical for in-person dining, but also because digital orders from apps or delivery providers may send order details in another format.
“My daughter likes her burgers plain, except for ketchup and grilled onions, and the cashier would know how to ring that in. But when you do it in the digital space, it would say, no mustard, no onion, no pickle, add ketchup, add grilled onion. ... But the order isn’t that crazy,” Thompson told FOD. “With our new KDS, the person on the makeline is seeing the order the
same way as my daughter. ... The person can see that it’s bun, patty-cheese, patty-cheese, ketchup, grilled onion, bun. When you have 100 sandwiches coming through in an hour, that’s great.”
Robots, really, at White Castle
I love some robots, but watching the hype-todisappointment cycle over and over has gotten exhausting. It’s different at White Castle, which has a robotic fry cook in 16 locations cooking fries and all manner of nibblers.
Flippy, the automation solution, continues to evolve. Version three has much better uptime, is easier to clean and has unlimited menu items.
White Castle brand leaders say the staff still loves it, or at least loves not coming home smelling like sliders.
“It takes some of that load off the team, allowing members to step away from the fryer and focus on other tasks,” said Steve Foreman, White Castle’s director of operations.
White Castle earned high marks for delivery operations. The goal is to keep the food flowing and delivery drivers moving.
37 percent of business going out via third-party channels, Dave’s Hot Chicken leaders are fanatic about order accuracy.
As Chief Operating Officer Jim Bitticks said, “We label every single product that comes out of the kitchen with its own individual label, so it looks like FedEx and Starbucks combined.”
This level of detail ensures each item is tracked through the process, reducing the chances of miscommunication and order mix-ups.
TECH STACK
By Nicholas Upton
The brand added multiple new KDS screens and additional makelines to flex into high delivery times so off-premises and in-house orders didn’t compete for staff attention. For the front of the house, there are fewer screens thanks to total integration with Checkmate, an order integration firm. Now, all digital orders flow right to the kitchen instead of to busy counter workers.
“That was a huge step for us, especially for our operators. They didn’t have to worry about additional tablets,” said Foreman.
Food On Demand reported the brand created dedicated pickup stations and has rolled out heated storage lockers that keep food warm for pickup. All delivery orders are sealed in tamper-evident packaging. White Castle is testing adhesive prints to keep receipts attached to the bags to avoid pickup confusion.
Shipping chicken at Dave’s
Every operator knows order accuracy for thirdparty delivery is paramount. Any order mistake can quickly snowball into a total refund. With
Qu, a point-of-sale provider, a KDS from QSR Automations, and integrated orders from Olo send orders directly to the label maker.
Smart labels aren’t the only reason Roark Capital is looking to acquire Dave’s. There’s also a little dash of AI magic in the company. Bitticks said the company is working with Loop AI to do the busy work of tracking errors to highlight needs for retraining or new processes. The AI platform also helps manage reconciling revenue, grabs proof of delivery and accurate orders to manage fraudulent refunds.
“It’s a third-party management platform that we started working with about a year and a half ago,” he said. “It’s helped us recover refunds. It’s cut them more than in half. Our refund number used to be 1.1 percent of third-party sales and now it’s down to under half a percent.”
The brand is leaning on a loyal customer base thanks to a loyalty program that is “skewed generously in favor of the guest.” The quo end of that quid is data as juicy as the discount hot chicken. The brand uses that data to create new products and drive customers to grab premium options.
Head over to FOD to read more from the Outstanding Operator series as the group shows some seriously smart approaches to technology. Maybe the only unifying guidance from these operators: There are plenty of tech solutions, but savvy operational leaders can find the right one or make the most out of the tools at hand.
Nicholas Upton has reported on retail and restaurant technology for more than a decade. His Tech Stack column aims to distill complex ideas into actionable insights. Send interesting tech topics to upto0013@gmail.com.
Illustration by Jonathan Hankin
Scenthound CEO talks sweet tooth favs and why he wants to read minds
Who is an actor you would watch in anything?
Timothée Chalamet is very intriguing to me. I think he’s a captivating actor. ‘Dune’ parts one and two were probably my favorite recent movies. He does such a powerful job of taking the hero’s journey, like becoming something bigger that he believes he could become. I love the story of the struggle with greatness and leadership and doing the right thing.
What’s something not many people know about you?
I used to be a thrill-seeker. I used to be an avid skydiver when I was in college. I’ve hang glided before, bungee jumped, mountain biked, snowboarded. My most recent thrill-seeking adventure is Scenthound.
What’s your biggest pet peeve?
When something doesn’t work as it should. I grew up analog and now I’m digital, so like passwords drive me bananas if I can’t get into something or if there’s a glitch in the software. If something doesn’t work as expected, it definitely drives me crazy.
What’s something you would seriously stockpile if you found out it wasn’t going to be sold anymore?
Cadbury Mini Eggs. That is like crack cocaine. It’s good that they’re only out for a limited time. The day after Easter when they’re on sale we typically buy at least a bag or two and I try my best to manage my consumption rate.
What’s one trend you wish would disappear?
“I can snap every finger on my hand. I can snap my pinky all the way through.”
If you could be a member of any TV show family, which would it be?
The show we’re watching right now is ‘White Lotus,’ so no. The other is ‘Severance,’ so no to that one as well. One show I really love is ‘Peaky Blinders,’ though not sure I’d want to be part of the family. That would be an interesting one.
—Tim Vogel, CEO, Scenthound
The divisive nature of our political conversation. We’re no longer having positive, productive conversations. We’re now shouting our talking points past each other. We are made great by having thoughtful, open-minded discussion about things and coming to better solutions and that’s not happening anymore.
What’s your guilty pleasure?
Which time period in history would you want to visit?
I would love to be part of the time in North America before European settlers came. I love the outdoors, the national parks in this country. To have seen it before European settlers got here would have been truly amazing.
What’s the most useless talent you have?
I can snap every finger on my hand. I can snap my pinky all the way through.
What superhero power would you most like to have?
The ability to read minds. Then everything is true honesty. It would probably be tough in some situations but then it’s about truth. It’s about that person’s truth, it’s like getting super empathy.
Besides Cadbury Eggs? I’m a sweet tooth, so the other one is Ben & Jerry’s Half Baked Ice Cream. It’s cookie dough, half of it, and the other half is brownie batter. It’s like half-baked brownies. You can find it any time. I personally think it’s the best of all the Ben & Jerry’s.
Stock up!
Editor in chief Laura Michaels asks the tough questions—What superhero power would you most like to have?
What’s the weirdest thing you’ve ever eaten?—to show a side of franchising execs you don’t normally see. To suggest an industry professional, email lmichaels@franchisetimes.com.
Illustration by Jonathan Hankin
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The Growth Mindset
Growing your franchise takes a solid strategy and access to the right financing. We know how challenging both can be. At Cadence, you’ll find all of the financial products and services you need to run and grow your franchise, from specialized loans designed specifically for franchisees to debt consolidation, freeing you to focus on your vision.
That's what makes us the right partner. Contact us today to find out how we can help you achieve your potential.
