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INVESTMENT INSIGHTS ■ PEOPLE ■ FINANCE

Multi Unit Multi-Unit

MULTI-UNIT FRANCHISEE

Franchisee

2 0 1 7 M V P S

2017 s P V M

ISSUE III 2017

HONORING THIS YEAR’S MOST VALUABLE PERFORMERS

& M U 5 0 R A N K I N G S

INSIDE ■ REAL ESTATE BLUES

Finding the best sites in a tight market

■ MULTI-UNIT CONFERENCE REVIEW 2017 event sets new attendance records again

■ MU50 RANKINGS

Multi-friendly brands by totals and percentages

Johnny Weber, Sport Clips’ largest operator and brand evangelist

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Multi-Unit

Franchiseecontents I S S UE III, 2017

COVER STORY

MVP Awards 8

Get the inside stories of 2017’s MVP Award winners: Brendon Ayanbadejo, Audra & Todd Fetter, Mark Friedman, Kevin Kelly, Karen Morse, Andy Patel, John Ponczoch, Eddie Rodriguez, Bret Stewart, Johnny Weber, and Mitchell York. BY HELEN BOND

LISTS

MU50 Ranking the most multi-friendly brands 52 Franchising’s top brands by number and percentage of multi-unit franchisees

FEATURES

Space Is the Place 56

Competition for the best sites heats up as the market tightens BY SARA WYKES

Multi-Unit Franchising Conference 62 2017 sets new attendance records – again! BY EDDY GOLDBERG

Reconnect Profile 72

“Life’s short, grow fast!” says multi-brand operator Grant Simon BY KERRY PIPES

Under 30 Profile 76

Two young partners prepare to open their third franchise unit BY KERRY PIPES

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MULTI-UNIT FRANCHISEE IS S UE III, 2017 2009

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Departments CHAIRMAN’S NOTE

2018 MUFC Co-Chairs Are Passionate About Franchising 6 ONLINE

What’s online @ mufranchisee.com 7

Columns

Franchisee CHAIRMAN Gary Gardner CEO Therese Thilgen EXECUTIVE VICE PRESIDENT OPERATIONS Sue Logan CHIEF CONTENT OFFICER Diane Phibbs VICE PRESIDENT BUSINESS DEVELOPMENT Barbara Yelmene BUSINESS DEVELOPMENT EXECUTIVES Jeff Katis Judy Reichman EXECUTIVE EDITOR Kerry Pipes MANAGING EDITOR Eddy Goldberg

CUSTOMER SERVICE

CREATIVE MANAGER Kevin Waterman

Customers – Right As Usual? 78

MAGAZINE DESIGNER Peter Tucker

Why customer perceptions differ radically from our own BY JOHN DIJULIUS

PEOPLE

Hiring Flexibility 80 Accommodating lifestyles is a big draw for employees BY JOCELYN MANGAN

FINANCE

Global Account-Ability 82 Financial mastery is the same worldwide BY ROD BRISTOL

INVESTMENT INSIGHTS

5 Investment Myths Debunked 84 Correct your misperceptions to achieve your goals BY CAROL SCHLEIF

EXIT STRATEGIES

Casual Dining’s Upside 86 Investment opportunities abound as valuations fall BY DEAN ZUCCARELLO

FRANCHISE MARKET UPDATE

Where Are We (Going)? 88 For retail, the future has already arrived BY DARRELL JOHNSON

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Multi-Unit

DIRECTOR OF TECHNOLOGY Benjamin Foley WEB DEVELOPER Don Rush WEB PRODUCTION ASSISTANT Esther Foley WEB PRODUCTION ASSISTANT Juliana Foley DIRECTOR OF EVENT OPERATIONS Christa Pulling SENIOR MANAGER, EVENTS & PRODUCTION Katy Geller SENIOR SUPPORT MANAGER Sharon Wilkinson PROJECT COORDINATOR Joanne Peralta SUPPORT COORDINATOR Leticia Pascal VIDEO PRODUCTION MANAGER Wesley Deimling GRAPHIC DESIGNER Cindy Cruz MARKETING ASSOCIATE Cameron Gustafson FRANCHISEE LIAISON SUPPORT Greg DelBene CONTRIBUTING EDITORS Rod Bristol John DiJulius Tom Epstein Darrell Johnson Jocelyn Mangan Carol Schleif Dean Zuccarello CONTRIBUTING WRITERS Helen Bond Debbie Selinsky Sara Wykes ADVERTISING AND EDITORIAL OFFICES Franchise Update Media 6489 Camden Avenue, Suite 204 San Jose, CA 95120 Telephone: 408-402-5681 Fax: 408-402-5738 SEND ARTICLE INQUIRIES TO: editorial@fumgmail.com MULTI-UNIT FRANCHISEE MAGAZINE IS PUBLISHED FOUR TIMES ANNUALLY. Annual subscription rate is $49.00 (U.S.) FOR SUBSCRIPTIONS EMAIL sharonw@franchiseupdatemedia.com or call 408-997-7795 FOR REPRINT INFORMATION CONTACT FOSTER PRINTING AT 800-382-0808 www.fosterprinting.com

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Chairman’sNote

Passionate About Franchising

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o say that my husband Joey and I are honored to be named as the chairs of the 2018 Multi-Unit Franchising Conference would be an understatement. The resume of the 2017 chair, Guillermo Perales, who has 750 units across multiple brands and industries, was a bit overwhelming. But when we heard Guillermo share his story this past April at Caesars Palace (he started with one unit financed by an SBA loan), it became clear that even though we only have 42 stores and are passionate about one brand and one industry, we all are passionate about franchising. I started with Supercuts in 1980 when our brand and the franchising program were in their infancy. It was an exciting time to be in business and experience the drive and energy of the people who started our concept. But I did not start with Supercuts as a franchisee, and certainly not as a stylist. I was a bookkeeper with no experience, an education in hospital administration, a past in restaurant management, and a new mom looking for a job that paid well without working nights or weekends. I had worked there only 3 years when Candi Overman, who had hired me, gifted me a piece of a new shop, and in 1983 my journey as a franchisee officially began. Later Joey and I started our own company and have been working together ever since. Since the beginning, my husband has been my partner. At night, after his day job as a CPA for a national accounting firm, he would help me understand how to set up books for new companies and new locations. We share this because although there are incredible leaders in franchising like Guillermo and other past chairs like Michael Kulp, Aziz Hashim, and of course our mentor, Gary Grace, there are many more franchisees like Joey and me. We work

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hard on our salons and have raised our kids enjoying the flexibility that making your own hours can give you. We keep learning and growing so we can pass on the information and the opportunities to the people who work with us. This annual conference is where we come to learn, to grow, and to stay current in an everchanging world. We have formed relationships with franchisees and suppliers who have made a big difference in our business. At the first MultiUnit Conference in Los Angeles, I met a vendor who was setting up Wi-Fi for customers. That doesn’t sound so exciting now, but it was super exciting 17 years ago. Who knows what you will learn at next year’s conference? You may learn about a new brand looking for a franchisee just like you. You may learn about a supplier who can help you grow your company to the next level. Certainly you will hear from expert, sophisticated franchisees who can share their experience with financing, the joint employer rule, and the state of franchising, among many other topics. You might also hear about the challenges of working with your spouse—even if he is the most wonderful husband and partner. Come celebrate with people like yourself— people who, regardless of industry, store count, or location want to be better franchisees and better business people. Celebrate your achievements and your future with us at the next Multi-Unit Franchising Conference April 3–6 at Caesars Palace in Las Vegas.

Cheryl & Joey Robinson 2018 Conference Chairs

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2017

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✓ CONFERENCES 2017 Multi-Unit Franchising Conference By the time you read this, you’ve missed the 2017 Multi-Unit Franchising Conference, held this April 23–26 at Caesars Palace in Las Vegas. But don’t worry: we’re holding another one next year! Attendees enthusiastically agreed this year’s gathering was a highly useful, valuable experience. And following another year of record-breaking attendance by multiunit operators and exhibitors alike, many are already making plans to return next year. This annual conference is a unique, must-attend opportunity for multi-unit franchisees to meet and learn from the best in the business, explore new brands, and soak up invaluable expertise at the educational sessions. Need some inspiration? Take a peek at the conference online to see the speakers and review the educational sessions. Next year’s conference will be held April 3–6 at Caesars Palace in Las Vegas. Sign up to keep current on developments for 2018 at www.multiunitfranchisingconference.com

✓ONLINE Multi-Unit Community Grows Check out our community-based website for multi-unit operators. It’s your exclusive look into the world of multi-unit franchising, your one-stop shop to find: • New brand opportunities • Exclusive interviews • Networking opportunities • Operator profiles • Online edition and archives • Financing resources www.franchising.com/multiunitfranchisees

✓NEW ONLINE VIDEOS EmpireBuilders.tv Expands Great entrepreneurs build great organizations. They possess a knack for making smart business decisions, building great teams, and creating successful companies. But as we’ve learned from years of interviewing successful multi-unit franchisees, they’ve also struggled, doubted, and made more than a few mistakes—yet they’ve soldiered on, persevered, and ultimately come out on top. To provide a deeper sense of their journeys, insights, and personalities, we’re selecting franchisees from our most inspiring print interviews and creating a new series of online videos of these franchisee leaders. We call them Empire Builders.watch.franchising.com/empire-builders/

✓FRANCHISE OPPORTUNITIES Looking for your next franchise opportunity?

Have we got the tools for you! Find articles on companies, concepts, industries, trends, and profiles—and search our features. Find franchisors looking for multi-unit franchisees, area reps, and area developers. Search by top opportunities, alphabetically, investment level, industry, state, and more at www.franchising.com

✓RANKINGS Check out our annual rankings of the top multi-unit franchisees and their brands to find out “who’s on first.” This issue contains our annual Multi-Unit 50 rankings, which show the most “multi-friendly” brands. To see our Mega 99 rankings of the largest multi-unit organizations and their most popular brands, go to www.franchising.com/multiunitfranchisees/ mega99.html

✓PUBLICATIONS

“Don’t just survive, thrive!”

Franchise Update Media’s 2017 Annual Franchise Development Report, and the best-selling book, Grow to Greatness by top franchise consultant Steve Olson, offer invaluable tips for franchise sales success and unit growth in today’s economy. To order, visit www.franchising.com/ franchisors/afdr.html and www.franchising.com/ franchisors/growtogreatness.html

✓QUICKLINK For a one-click link to articles in this magazine and to past issues of Multi-Unit Franchisee magazine, visit www. franchising.com/multiunitfranchisees

FREE YOUR EMPLOYEES! “We realized we just needed to allow them to be real human beings with our customers to make them happy, smile, and feel at home. How can you be the best part of someone’s day? How do you go above and beyond for your guests and your employees? Take off the shackles and allow employees to think on their own and do what is right.” — John Ponczoch, TravelCenters of America, a multibrand franchisee with more than 800 locations

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BY KERRY PIPES & EDDY GOLDBERG

2017 MVP WINNERS S

These multi-unit franchisees set the bar high

electing the winners for our Most Valuable Performer (MVP) Awards means analyzing applications submitted on behalf of many of the best multi-unit franchisees in the business. This year we declared 11 winners, who were recognized on stage in front of their peers at the 2017 Multi-Unit Franchising Conference, held this April at Caesars Palace in Las Vegas. To qualify, multi-unit franchisees must have at least five operating units and have been in a franchise system for at least two years. This year’s recipients demonstrated outstanding performance in growing both their organizations and their brand—or brands. Here’s a preview of the 2017 MVP Award winners, whose full profiles grace the following pages. AMERICAN DREAM AWARD • Anand (Andy) Patel. Since buying a flailing IHOP in 1992 and doubling its volume within a year, Patel has experienced soaring multi-brand growth, today managing more than $220 million in revenue and 4,500 employees. “My definition of the American Dream is the ability to be successful through hard work and determination,” says Patel. COMMUNITY INVOLVEMENT LEADERSHIP AWARD • Karen Morse is an 18-year franchisee of Ben & Jerry’s, pioneers in the socially responsible business movement. Her ongoing effort to support the community that supports her seven shops is just part of who she is. “We don’t know how to do it any other way,” says the Washington, D.C.-based operator. PRO ATHLETE INFLUENCER AWARD • Brendon Ayanbadejo. This former NFL player operates 20 Orangetheory Fitness locations in Los Angeles, Santa Clara, and Santa Cruz counties—already halfway to his goal as franchisee and area developer in just 4 years. The son of interracial parents, he is known for advocating for marriage equality, including samesex marriage, and brings the same energy, passion, and leadership to franchising he was known for as a Baltimore Ravens captain. INFLUENCER AWARD FOR HUSBAND & WIFE TEAM • Todd & Audra Fetter operate 8 Buffalo Wings & Rings, with 2 more on the way. Three of their five children work in the business. They earned this award for demonstrating growth, perseverance, and excellence as a team—which mirrors Todd Fetter’s advice to other franchising couples: “Stick it out. It is extremely hard work, but the rewards are phenomenal.” INNOVATION AWARD • Mitchell York traded in his corporate career for the Hawaiian shirts and laid-back culture of Maui Wowi. That was 15 years ago, when the brand’s business model was based on selling smoothies at public events. “I got my first location at Yankee Stadium. A few years later, I saw an opportunity to create a catering model,” he says. He not only created the model, he wrote the ops manual and trained new franchisees on this high-margin part of the business.

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MEGA GROWTH LEADERSHIP AWARD • Eddie Rodriguez has been in franchising for 43 years, 23 as a franchisee. His company operates 179 Wendy’s that generate nearly $300 million in annual revenue. Recently inducted into Wendy’s Hall of Fame, he says, “When you run a restaurant a lot of the cost of your business is in a two- or three-mile radius. The way you deal within that radius and serve those customers day in and day out determines how successful your restaurant is going to be.” MULTI-BRAND GROWTH LEADERSHIP AWARD • John Ponczoch is senior vice president of food operations and marketing for TravelCenters of America. “I think it’s important to point out the uniqueness of our company,” says Ponczoch. The company operates more than 25 franchised brands at 800plus locations in 43 states, and parent company TA-Petro also operates 9 brands as a franchisor. NOBLE CAUSE AWARD • Bret Stewart. A multi-unit franchisee with 17 Auntie Anne’s, 2 Schlotzsky’s, and 1 Cinnabon, Stewart’s creative commitment to his employees and community knows no bounds. He created his own Dream Builders program to help fund the goals and aspirations of his team members. Two of his Auntie Anne’s are owned by the social enterprise organization Washington Vocational Services (WVS). SINGLE BRAND LEADERSHIP AWARD • Johnny Weber has been franchising for 8½ years and operates 56 Sport Clips locations as a franchisee and area developer. Sport Clips founder and CEO Gordon Logan, who nominated Weber for the award, calls him a superstar franchisee: “We couldn’t have a better brand ambassador than Johnny Weber.” SPIRIT OF FRANCHISING AWARD • Mark Friedman traded in his career as a management consultant to become a Senior Helpers franchisee. “I realized the dream of doing something that I really loved, which was making a material difference in people’s lives, so they can age in place,” says Friedman, who now has 6 units. In August, he plans to open his own school for home health aide training. VETERAN ENTREPRENEURSHIP AWARD • Kevin Kelly. This former U.S. Navy fighter pilot, who operates 19 Planet Fitness locations, is a stellar example of how well military training translates to franchising. “When you are in the military you generally operate on big scales, so translating this into a business just comes naturally,” he says. “Consider hiring a veteran. I can pretty much guarantee you won’t regret it.” Congratulations to these Most Valuable franchisees, who exemplify the best of what franchising has to offer. In this issue, we also reconnect with Grant Simon, and profile an under-30 franchisee. And don’t miss our annual Multi-Unit 50 rankings, beginning on page 58!

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2017 MVP AWARDS BY HELEN BOND

Hard-Hitting Success Former NFLer Scores Big, Does Good

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hen it comes to making his mark and doing good, Brendon Ayanbadejo, recipient of this year’s Pro Athlete Influencer MVP Award, wants you to know he is just getting started. Ayanbadejo is halfway through his current mission to open 40 Orangetheory Fitness facilities in California’s Los Angeles, Santa Clara, and Santa Cruz counties as a franchisee and area developer. The former Baltimore Ravens linebacker turned entrepreneur has quickly become a fitness ambassador and top revenue generator for the brand. “Receiving this award validates the journey that I’m on,” says Ayanbadejo, a three-time NFL Pro Bowler who spent 12 years in the NFL. He was fresh off a 2013 Super Bowl victory with the Ravens when he walked into an Orangetheory Fitness near his Los Angeles home to give the heart-monitored, high-intensity workout a try. When he decided to retire from the game, Ayanbadejo set his sights on a new venture that was the perfect fit. “The franchise space is so much about teamwork and team building and that is what I’m good at, so I’m so excited,” says Ayanbadejo—who, in 2013, after years of offseason studies, also earned his exNAME: Brendon Ayanbadejo TITLE: Area developer, franchisee NO. OF UNITS: 20 Orangetheory

Fitness AGE: 40 FAMILY: Wife, Natalee, daughter

Anaya 11, son Amadeus 6 YEARS IN FRANCHISING: 4 YEARS IN CURRENT POSITION: 4

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2017 MVP AWARDS PERSONAL Formative influences/events: It was rough growing up in the inner city of Chicago. We lived in a single-parent home with three kids. My mom led our team with everything she had—that was our family unit, that was our team. Everyone else in the Lathrop Homes projects in northeast Chicago was just as poor as us. We all lived each day to the fullest and dreamed about being athletes, stars, or changing the world. Ironically enough, my older brother Femi (former NFL player Obafemi Ayanbadejo) and I did just that. Mom has always taught us to have an unwavering belief in ourselves. This single mom from the projects raised three children who racked up five college degrees, including two MBA degrees, 20 seasons in the NFL, three Pro Bowl appearances, two Super Bowl championships—and most important, six grandchildren. Key accomplishments: Helping change equal rights laws in the U.S. 2012/2013. Earned my Executive MBA at The University of George Washington in 2013. Baltimore Ravens 2013 Super Bowl Champion. Owner of the highest-grossing Orangetheory Fitness location in 2016. Work week: Every morning I drop my kids off at school and teach three fitness classes. Once I am done with the workouts for the day, I hit the KPI portal and Listen360 for customer feedback. I check in with my regional staff, managers, employees, and members as well. We are rapidly expanding at the moment. Real estate, letters of intent, and lease negotiations are a heavy part of my daily agenda at the moment, along with coaching classes. I also am in charge of launching our new-to-market studios. I train all of our fitness staff on the art of how to be a successful Orangetheory Fitness coach. I have to say that is one of the most rewarding parts of my job. What are you reading? It’s Your Ship by D. Michael Abrashoff. Best advice you ever got: Always believe in yourself. (Mom) What’s your passion in business? My passion in business and life all boils down to helping people achieve their goals. When my staff achieves their goals, the business wins. When our members achieve their goals, the business wins. We put the staff and members first. Being a successful business owner means you are a revenue generator. When the business is a robust revenue generator, we also become a robust income distributor. When I see our employees buying new cars, homes, wedding rings, and having children I would have to say that it makes me feel a little tingle inside my heart and soul.

“I know I’m still a small fry, but I have a lot of goals, a lot of ambition, passion, and two feet on the ground.”

ecutive MBA from George Washington University as part of an invitation-only School of Business program for professional athletes. Ayanbadejo brings the same energy, passion, and leadership to franchising that he was known for on and off the field as Ravens captain and NFL Players Association representative. The son of interracial parents, he also is known for advocating for marriage equality, including same-sex marriage. Whether training staff, teaching daily classes, opening new gyms, or constantly monitoring client feedback, it’s all about the positivity, he says. “I always try to improve and get better every day,” he says. “I started playing football really late, and every day I just wanted to get better at the sport. It is the same thing in business and the same thing in life. It is kind of like the saying, ‘How you do one thing is how you do everything.’ I’m always trying to get better.” For Ayanbadejo, no challenge is too big. He hopes to invest in additional complementary health and fitness brands and is exploring international expansion possibilities that he believes can directly reduce disease rates by spreading the powerful benefits of health education and fitness. “I know I’m still a small fry, but I have a lot of goals, a lot of ambition, passion, and two feet on the ground,” says Ayanbadejo. “There is a lot more that I want to do and accomplish. Part of it is getting wealthy, but another part of it, which is bigger and more important, is changing the world with my legacy.”

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BOTTOM LINE Annual revenue: In 2016, overall company gross revenue as master franchisor was $19.7 million; revenue as a franchisee was $8.3 million. 2017 goals: How do you measure your growth? Close out the year with 25-plus open units to market. We are currently sitting at 18. Growth meter: How do you measure your growth? So far in 2017 we have opened two units. We would be excited to open eight more locations this year. Vision meter: Where do you want to be in 5 years? 10 years? I plan on being a multibrand franchisee in the next few years. I also plan on being international. In the next three years the plan is to have a fully mature market with 40 open stores. As of late, I have the angel investor bug as well. I might even come up with my own franchise concept. What are you doing to take care of your employees? Little things go a long way with our staff. Holiday bonuses, team meals and nights out, and incentivized team competitions all build the team. We also have emergency funds readily available for the team that they do not have to pay back. We have bought flights home to see family members, replaced stolen laptops, and provided cash when tragedy strikes. What kind of exit strategy do you have in place? There is no exit strategy in place. If and when a sale takes place we will see how many multiples we can get for our units. I would be more than happy to get all 40 of our units to market and continue to cash flow at our current margins, which are pretty spectacular.

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2017 MVP AWARDS

MANAGEMENT Management method or style: The team, the team, the team! I boldly lead by example. I like to lead from the front. We all have to continue to move up or out. Greatest challenge: Complacency. There is no time for it. Good is the enemy of great. Good is not good enough. How do others describe you? That’s a great question. I honestly do not know. Hopefully they say I am well-rounded, intelligent, and that I genuinely care. How do you hire and fire, train, and retain? Human capital is the most important asset to any non-IP based business. I let my managers and regional managers hire their staff. They are the ones who have to work with them on a daily basis. They are also responsible for training their staff. KPIs are attached to the performance of our locations. Managers are graded and earn bonuses based on their monthly KPIs. As mentioned earlier, I do get to train some of the staff. They go through a very intense 40-hour training, which I lead. It is an audition process. Even though they complete the certification training, there has to be a personality fit with their working team. When prospects see the value and commitment put into the integrity of the brand, as well as the high level of proficiency from the team, they are immediately excited to be a part of it—or intimidated and decide it’s not their true passion. As far as firing goes, we always give the employee an opportunity to up their game and meet our standards. Action plans are typically 2 weeks to 30 days in duration to meet the minimum criteria in our evaluation process. It’s pretty blackand-white. Evaluation scores, along with completion of the action plan, will dictate employment status. Behavioral infractions are a different beast. While written warnings do get issued, some infractions call for immediate termination.

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2017 MVP AWARDS

Pro Athlete Influencer Award Why do you think you were recognized with this award? I believe I was selected because of precise execution of my post-NFL goals. In 2010, I started my MBA. I completed it in 2013 and retired from the Baltimore Ravens after winning the Super Bowl. I also signed my Orangetheory Fitness contract that year. In 2017, we have 18 open stores and are just about halfway through our projected business model. I suppose the bar is not too high for former professional athletes in business. I have looked up to guys like Ronnie Lott and Joe Montana for years. There are a bunch of former and current younger athletes out there disrupting the business norm as well. Israel Idonije, Gary Brackett, Drew Brees, and Ryan Nece, to name a few, are doing just that. How have you raised the bar in your own company? Just as in the NFL, my job was to be an excellent football player, and to also protect the shield. My job now is exactly the same. Be an amazing operator and disrupt my corporate big brother. There is a reason why we have the highest-grossing studio of all time, and 6 of the top 30 performers in the company from my regions. We have a commitment to excellence and continue to set the excellence bar higher and higher. What innovations have you created and used to build your company? I would have to say the blueprint is there for us within the FDD. We have done a particularly good job of not watering down the product. In my experience, I have learned that revenue is tied in to studio usage. The more people work out, the more revenue is going to hit. We have come up with fun ways to pack the studio. With the additional utilization, we have had to be strategic in how we usher members in and out of the studio. We came up with some unique solutions that are now implemented not only in all of our 18 studios, but also around the nation as well. What core values do you think helped you win this award? Whether it is known or not, I firmly believe in conscious business practices. It’s important to positively affect one person. Maybe that’s your first hire. From there we want to positively impact the neighborhood. Perhaps that’s your first member. Eventually we want to impact our community, city, and nation. Ultimately, sustainability and conscious business trump the bottom line. I’m not here to get rich. I am here to impact as many lives with health and fitness as I possibly can. With this mindset, there are a lot of businesses that I wouldn’t be a part of because I wouldn’t be able to sleep at night. On the other hand, there are also a lot of companies that are right in line with my core values that I would be happy to have an association with. How important is community involvement to you and your company? We are always doing something in the community. We have partnered with Angel City Sports so adaptive sports athletes have a place to play and complete. As a company, Orangetheory Fitness raised almost $2 million for Augie’s Quest benefiting ALS research. We recently did a charity with Project Angel Food, a charity that delivers meals to the needy. We also do an annual cancer-based charity in October. The list goes on and on. We even donate old equipment to local high schools. Without the community we are just four walls with fitness equipment inside of them. What leadership qualities are most important to you and your team? Say what you mean and mean what you say. It’s all about 3 C’s: communicate, critique, and congratulate. I like to build our staff up even when we need them to make some changes. I will typically find out what they do really well and will sandwich it with a critique in the middle. We also have our leadership team do this as well. Along with communication and leadership you have to be able to forecast and have these conversations ahead of the curve. We always try to add a measurable metric to our staff’s performance so the information comes from an objective view.

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2017 MVP AWARDS BY HELEN BOND

A Couple of Winners Husband-and-wife team make business a family affair

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odd and Audra Fetter, winners of the 2017 MVP Influencer Award for a Husband & Wife Team, have always had a team approach to marriage, but the decision to become hands-on franchisees has changed the playing field for communicating as a couple. “Knowing when to drop the business discussion and become plain ol’ husband and wife has meant learning how to have

open and candid conversations, without the emotional additions,” says Todd Fetter. “It’s hard, but so very important to have candid discussions.” Fetter was looking for an investment that could include his wife and five children when he launched his franchise quest. The Fetters, huge wings and sports fans, found the perfect family fit with Buffalo Wings & Rings, based in nearby Cincinnati. With eight restaurants now open in

Ohio and South Dakota, Fetter says the secret to working in business as husband and wife is knowing your roles: he focuses on site selection, financing, and NAME: Todd and Audra Fetter TITLE: Franchisees NO. OF UNITS: 8 Buffalo Wings & Rings AGE: 51 and 50 FAMILY: Daughter Kyla (30) works in

the surgery center at the hospital; son Kellen (29) is head of operations at the Lima store; son Keaton (26) handles the farming (all the corn and bean planting and most of the harvesting, and hog farms); son Kieran (23) is regional manager of the Columbus store; and Hubertine (14) is the daughter we adopted from Africa

YEARS IN FRANCHISING: 4 YEARS IN CURRENT POSITION: 4

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2017 MVP AWARDS

“I just have a high tolerance level for risk. I like to get away from the trunk of the tree— I like to get out on the limbs.” PERSONAL Formative influences/events: My father and my grandfather’s entrepreneurial spirit rubbed off on me. Audra comes from a family where they believed in getting a job and staying with it. Her father was with his company for nearly 40 years. My father did farming, sold real estate, and had a self-starting, entrepreneurial spirit. My influence was my family, so it wasn’t that big of a leap for me. That’s what I knew as the norm. When I had a job with Honda welding seat frames and left to sell real estate, my in-laws went nuts. I just have a high tolerance level for risk. I like to get away from the trunk of the tree—I like to get out on the limbs. Key accomplishments: My family is involved with me in my Buffalo Wings & Rings business. That is a huge accomplishment, but it’s difficult at times. What a huge accomplishment it is to sit down at Thanksgiving and open presents at Christmas and then still have some, let’s call it “candid” discussions about business and practices together. Another key accomplishment for Audra and me is that we are so proud of the retention of our employees that we’ve had since day one. We’ve had nine people who have risen through our ranks to become managers at our stores. Of those people who we promoted up the ladder from servers, hosts, and bartenders, we have 100 percent retention. I think that’s a huge accomplishment. Work week: It really is a work week.It’s a sevenday-a-week job. It’s like Jim Collins says with the “20-mile march.” It’s the things you do every day. For me, I keep a written log of the sales, bank account balances, and sometimes even where we rank in the system. I do that every morning with my cup of coffee, even on Sunday morning before church. On Sunday night, Audra and I will be at Bob Evans or somewhere having coffee and talking about the week coming up. I take my time off like everyone does. But there isn’t a day that goes by where I’m not thinking about or talking about the business. If I go on vacation, my briefcase comes with me. I don’t view it as work. I love to do it. We try to get to the different stores as often as we can and balance that with our 14-year-old daughter’s school activities. We have four grandsons too, so we make time for them. We are sending emails at 12 minutes after 6 in the morning and sometimes at 10:30 at night. It’s what we love to do. I don’t complain about the hours,

MANAGEMENT

because we love to do it. Audra loves communicating with the managers every day of the week. We aren’t bosses who just sit there and cross our arms. We tell them that they’re not working for us, they’re working with us. They see me in the apron in the dish area or Audra setting up the food and I think that motivates them. When you work with employees, they work better. We have a challenge at one of our stores where they try to race me to the tables when a party leaves. I have the rag in my hand and they try to get to the table before I can. They respect that when you work with them. What are you reading? We’re currently reading TJ Schier’s book S.M.A.R.T. Restaurant Guide to Effective Food Service Operations. I recently read Liar’s Poker about Wall Street by Michael Lewis. I like to read things that have some realism to them. Bill O’Reilly’s Killing Jesus is one I recently read. I have Killing Reagan but haven’t started it yet. Think and Grow Rich by Napoleon Hill and The Goal by Eliyahu M. Goldratt are two good ones. Then we read all of the publications, the franchising news, and everything we can get our hands on. We have always wanted to see ourselves in those magazines—and I guess now here we are. Best advice you ever got: My grandfather, Russell Fetter, never wore a watch. He said that you weren’t done based on the time on a clock. You were done when the job was done. I spent a lot of time with that old man, and that’s how I’ve tried to approach life and how I’ve tried to mold my work ethic. What’s your passion in business? Audra and I spoke about this recently. Whatever we do, we like to build things and to build the infrastructure to support it and develop the staff to support it. I’ve built up several businesses and I’ve sold some. It’s tied to my approach in coaching. I’ve coached high school girls basketball. The girls had only won about 125 games in 30 years. It was a pretty horrible program. In 3 years, we won a conference championship, a sectional championship, and had a winning record. I also coached Midget Football for 17 years. When I became the head coach, I was so driven to build the program. We never had a losing record in more than a dozen years. So I like to win at everything—but I really enjoy the challenge of taking something from nothing and making it great. It’s the same with business.

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Business philosophy: If you’re not willing to do it yourself, you can’t ask someone else to do it. Lead by example. That goes from the words you use to always speaking the truth. Management method or style: I have a very hands-on management style. Just do it. I like to be visible and active in the restaurants. Watching and observing is important at times, but I like to get up and be involved. We have working managers who have learned that management style from Audra and me. If they accept a management role with us, they know what we’re expecting because they’ve seen us in action. Greatest challenge: Initially, financing and learning that piece of the puzzle in franchising was a challenge. Secondly, learning how to stage yourself for growth. One to two stores is a big jump, but then two to eight is a whole other ball game. It takes different skill sets and different types of support to make it successful. We’re speaking with consultants. We aren’t arrogant enough to think we have all of the answers. So we asked corporate and they helped us to work with folks to develop a process to get to the next level. The learning continues. How do others describe you? I hope that people would describe me as hardworking, honest, fair, and consistent. I’ve learned in coaching that if you aren’t fair and consistent, you lose credibility quickly. They’d also probably say that I don’t get mad very often, but if I do, boy you better run and hide (chuckles.) How do you hire and fire, train and retain? We hire through Indeed. We also tell good servers and good bartenders to refer their friends who they know will be good employees. We train very hands-on and it’s constant. Each general manager needs to have a trainer and we train for a week. We do menu testing and other testing so that when they hit the floor they are a good representation of the brand and ourselves. If someone doesn’t do well on testing, we go back into training. Corporate has told us that our retention is incredible. We took a picture when we first opened, and I can count a dozen or so who are still with us. We try to show them the ladder to success.

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2017 MVP AWARDS construction; she is in charge of operations and the day-to-day business. Two of their adult sons are involved in operations, with room for more, he says. “We call ourselves the Fetter Empire.” As a result, for the first time after multiple entreprenurial ventures, Fetter has no exit strategy planned. He credits the support of his family and franchisor for the staying power. “It truly feels like Buffalo Wings & Rings is a family affair—with our family, corporate leadership, and our team,” he says. “They are always willing to listen and are responsive.” With two additional BW&R units in the works, he strategically targets territory to keep the businesses close operationally and the family closer, including his employees. “We love our people,” says Fetter. “When they are at work, they feel as though they are working with us, not for us. And that is a huge difference.” The Fetters also practice what they preach. They never miss a child’s sporting event or function and have a 100 percent attendance rule for family vacations and “Fetter Empire” family meetings. All of their stores are also active community partners. The MVP Award for this husbandand-wife team was for demonstrating growth, perseverance, and excellence as a team—which jibes perfectly with Fetter’s advice to other franchisee couples: “Stick it out. It is extremely hard work, but the rewards are phenomenal.”

2017 MVP AWARDS

Influencer Award for Husband & Wife Team Why do you think you were recognized with this award? My wife does a great job with the operations part of the business, of being the face. I do a lot of the site selection, but when it comes to running the business, she’s fantastic. We have a great brand and have a lot of support from Buffalo Wings & Rings. Without that, we wouldn’t be great operators. Audra keeps me focused and centered. There are a lot of great candidates from across the franchise world who do a lot of great things in their communities. It’s really the whole team that Audra and I have in place that allows us to be successful and was the reason we won the award. How have you raised the bar in your own company? Through our actions. How we treat and take care of people helps to make sure we’re doing business right. How did you treat each other? When the big guy upstairs asks me that question, I want to have a good answer. That’s the philosophy I take to it. What innovations have you created and used to build your company? I’m going to applaud the women who handle our training under Audra’s tutelage. They have innovated. We gave them the freedom to do that. We’ve made some changes on some of the blueprints and have provided feedback based on our experience that we feel has helped the brand evolve a little bit. What core values do you think helped you win this award? Do the right thing. Treat people right and work hard. We’re all in this to make money. We hope everyone loves what they do, but we all have bills to pay and need to buy groceries. We’re all in this for the same reasons, so you should treat your people right. How important is community involvement to you and your company? We take money from our sales and give it back. In 2016, one of our stores gave back around $16,000 to organizations within the community. We have benefits and fundraisers where we give a percentage of sales back to groups and organizations. We sponsor Little League teams, sports tournaments, bowling leagues, and more. We try to be active. We don’t want to just take from the community, we want to give back. I’m proud of that. It’s fulfilling to be able to do that. What leadership qualities are most important to you and your team? Lead by example. Be honest. Be fair and consistent. If you do those things, you can hardly have any problems—and if you do, they won’t be problems that you generated.

BOTTOM LINE Annual revenue: $15 million (approx.). 2017 goals: Slight, controlled growth. We bought an existing store in Omaha this year, and we are opening the first Buffalo Wings & Rings in Minnesota, in Mankato. We have some irons in the fire that should hit in 2018. We have allmanager meetings where we gather the team, bring in speakers, get a good meal, and break out the markers and boards to brainstorm and discuss strategy to keep improving. This year we’ve focused on our stores and being more efficient and more profitable. The 2017 focus has been on what we can do to improve our individual locations, and what we can do to help our managers be successful. Same store growth is really the 2017 focus—not just sales, but maturity and improving the experience. Growth meter: How do you measure your growth? In years past, we were focused on growth but this year we decided to focus on the existing stores. Without focusing on your existing stores, there won’t be any growth. The sales will come if you take care of the guests. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, I want to still be growing the brand. I am in the markets where I want to be. Members of the family keep telling me that we need to look at potentially going a little farther south, so we have somewhere to go in the winter months

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(chuckles). I want to fill in the gaps between my existing stores and cluster in markets. In 10 years, I want to continue to develop my inner team and be in a position to share information and begin to grow up and mature the inner circle— whether family members or others. After that, I’m looking at Key West or something like that to relax and enjoy it all. What are you doing to take care of your employees? We are launching a 401(k) pilot program at one of our locations. You don’t want to offer something and then have to take it away. So we’re going to test it at one of our locations and make that part of our compensation package if it works. We’re talking about other benefits for the employees. We’re reworking our bonus structure right now to incorporate more of the guest experience into how we reward them. So we’re bringing guest satisfaction into our bonus structure. We try to be competitively priced in pay. We’re taking almost every single general manager to the Buffalo Wings & Rings conference this year, so we’re keeping them involved and letting them see that side of the business. What kind of exit strategy do you have in place? This is the first time I’ve ever been in business with my family members, and I’m having so much fun that I really don’t have an exit strategy. Two sons are directly involved, my wife is directly involved, and I’m just loving what I’m doing. I’m sure I’ll exit one day, but right now I’m good.

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2017 MVP AWARDS BY HELEN BOND

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A Helping Hand Making a difference in the lives of seniors

ark H. Friedman has 25 years of management consultant experience crafting high-end, multi-milliondollar turnaround strategies for large companies. But he says his decision to buy into the home healthcare franchise Senior Helpers has been his best investment yet. “I realized the dream of no longer being a consultant—because it’s a tough lifestyle—and doing something that I really loved, which was making a material difference in people’s lives, so they can age in place,” says Friedman, owner of Senior Helpers Boston and Senior Helpers South Shore in Massachusetts, and the 2017 MVP recipient of the Spirit of Franchising Award for demonstrating exceptional performance and providing invaluable community aid. In 2008, Friedman was busy as vice president and head of retail for Adidas

NAME: Mark H. Friedman TITLE: Owner, Senior Helpers Boston and South Shore NO. OF UNITS: 6 AGE: 43 FAMILY: Married, two children,

Lee 20 and Dora 15

YEARS IN FRANCHISING: 7.5 YEARS IN CURRENT POSITION: 7.5 North America when he agreed to back someone as a silent partner in a Senior Helpers franchise. When he left the global sports brand a year later to start his own consulting firm, he stepped in to more quickly realize his investment return, ultimately growing the business 420 percent until 2013, when the decision was made to split the agency and

part ways. Friedman officially retired from consulting in 2016 to focus solely on being a multi-unit franchisee. “I have always had an impatience for the status quo, even if it’s working,” he says. “I always looked at this business as if I were a client myself. What could be different? What could be better?” he says. “You can’t worry about today. My focus has to be what is going to happen in 12, 24, or 36 months, and then build the operation behind me, to manage today with my guidance, so I can focus on what we need to worry about next.” Friedman doesn’t have to look far to cite the motivation behind his purpose to “do what you love and take care of those close to you.” His formative influences include a personal connection to United Airlines Flight 175, which took off from Boston and was flown into the South Tower of the World Trade Center on 9/11. “I was ticketed and put two

PERSONAL Formative influences/events: 9/11/01. Watching my father, grandfather, and uncle in their businesses for many years. I’m a fifth-generation retailer, which goes back to a pushcart. Key accomplishments: Father and husband (almost 38 years); founding president of Congregation Shirat Hayam of Swampscott, Mass.; 25-plus years of successful entrepreneurship in management consulting in North America, South America, and Europe. Work week: 7 days. What are you reading? The Challenger Sale: Taking Control of the Customer Conversation by Matthew Dixon and Brent Adamson, and The White Ninja by Eric Van Lustbader. Best advice you ever got: Enjoy life, it’s not a dress rehearsal. What’s your passion in business? Enabling those who work with and for me to succeed and reach their potential. Earning the respect and right to return the next day to do it again.

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2017 MVP AWARDS people on the plane,” he says. “It left an indelible mark.” Friedman is passionate about helping his team manage care by employing skilled eyes on every case. In August, he plans to open his own school for home health aide training and “cherry pick” the graduates. “Massachusetts is unlicensed, so on a good day it is chaos,” he says. “I believe that, regardless of whether there is a license, I set the bar as to how my agency operates, above any level licensing you could ever consider throwing at me.” Friedman says he is very much humbled to receive the Spirit of Franchising Award. “I was surprised when they told me, because I can be a very difficult franchisee because I’m not willing to just accept the company plan,” says Friedman, who credits his franchisor for being “willing to put up with my challenge to

MANAGEMENT Business philosophy: Always meet or surpass your commitments. Solve problems, don’t contribute to them. Management method or style: Leadership is the ability to inspire others to follow you. Everything you do reflects on who you are as a person. Never ask an employee to do something you are not willing, or shown you are willing, to do. Greatest challenge: It comes from my definition of leadership. Leadership is the ability to inspire other people to follow you, and that is all it ever is. You have to truly believe the direction you are going, and you have to be honest with people about what it means. You have to inspire others to follow you. If not, you are not a leader; you are just one person walking a path. My greatest challenge is to challenge myself that I always believe in that direction, so that I’m not misleading other people and that I’m actively leading the people who choose to follow me in the direction we want to go. So the greatest challenge is internal honesty about what you are doing that you are also asking others to do. It is not a challenge because it is hard—you have to challenge yourself to do that every day.

BOTTOM LINE Annual revenue: $4.7 million in 2016. 2017 goals: $5.2 million-plus. Growth meter: How do you measure your growth? It’s about quality, not size. I will cut growth plans to keep quality high and be the place my employees want to work. Vision meter: Where do you want to be in 5 years? 10 years? To be the most respected agency in my market. 10 years? Retired. What are you doing to take care of your employees? We have great benefits, education opportunities, and feel strongly about promoting from within. What kind of exit strategy do you have in place? 2024 plan: Keep ownership, but provide incentives for the leadership team. Sell internally. Sell and exit.

keep the bar high to deliver excellence as a whole.” Friedman serves on the brand’s National Advisory Council and has an open-door policy for prospective and fellow franchisees. “What makes franchising work is when the franchisees invest back into the system,” he says. “If all the individual franchisees stop giving back into the system, the opportunities stagnate. Part of the value of a franchise is that we have 200 franchisees, representing 300 territories in the United States. Building on each other’s successes is what the royalties are all about. It is investing into the collective, so we all get better faster and we all refine things faster and make fewer mistakes—especially in this business, when we are engaged in people’s lives. If we make a mistake and 199 other people don’t make that same mistake it can make a big difference.”

2017 MVP AWARDS

Spirit of Franchising Award Why do you think you were recognized with this award? I have invested myself in the success of both my agency (franchise) and that of the franchise system. I helped re-form our FAC and have held the national chair role for six years. I have led the FAC service and offer committee for four of those years, a sales process initiative, and our technology committee as well. I am an enthusiastic supporter of our brand and consider it an honor to speak to prospective franchisees, and I have an open door if they want to make a due diligence call. I think it is my strong belief that each franchisee has a responsibility to not just take from the system but to give back that earns the support of the franchisor and my peers. My business extends that philosophy to the communities we serve. We sponsor key local activities and local aspects of national elder care needs (Alzheimer’s, Parkinson’s, healthy aging initiatives, etc.). We provide extensive professional education for our communities and others in healthcare as well as family education on navigating elder care decisions, Alzheimer’s, Parkinson’s, recovery risk management, and other topics. How have you raised the bar in your own company? We consistently seek to be a top performer both in results and in methods. We strive to promote the highest reasonable standard at all times and share our approach with our peers in the system. What innovations have you created and used to build your company? Focus on institutional contracts. Development and pilot of our soon to be national Recovery Care offering. What core values do you think helped you win this award? Commitment to doing it right—no exception. Investment in people to get it right. Willingness to be wrong, learn, and adjust.

How do others describe you? Aggressive (from a business perspective), compassionate, and fair.

How important is community involvement to you and your company? I am passionate about being engaged in our communities. Professionally, we are active in three Chambers of Commerce in our served markets. We serve on Alzheimer’s disease and Parkinson’s advisory committees. We are a resource for numerous councils on aging and first responders, as they too serve our elder population. Personally, I have always been active communally. I was the founding president of my synagogue, which was formed from the consolidation of two synagogues of doubtful longevity. That was a six-year process and we are now over 10 years old. I have also sat on community nonprofit boards.

How do you hire and fire, train and retain? This is simple. Treat others as you expect to be treated.

What leadership qualities are most important to you and your team? We have leaders at all levels of my company! Lead as you would want to be led. Listen first. Always have a measured response. Don’t be afraid to lead (make decisions), but enable your team to get there. Enable others to succeed.

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2017 MVP AWARDS BY HELEN BOND

Strategic Flight Plan Combat-tested veteran thrives in franchising

K

evin Kelly, a decorated fighter pilot, credits his 25 years of active duty for his strategic focus on the big picture in his multi-unit franchise business. “The ability to think strategically and on a large scale is something many people struggle with,” says Kelly, a combat veteran with multiple tours in the Middle East. “When you are in the military, you generally deal and operate on big scales, so translating this into a business just comes naturally.” Kelly, the 2017 MVP Veteran Entrepreneurship Award winner for outstanding performance and leadership by a veteran, served in both the U.S. Navy and Air Force before teaming up with two friends 6 years ago to invest in Planet Fitness. Today the partners operate 19

NAME: Kevin Kelly TITLE: Principal (1 of 3) NO. OF UNITS: 19 Planet Fitness AGE: 49 FAMILY: Wife, Marisa, sons

Roman 4 and Dylan 2, daughter, Kira Grace, 3 months

YEARS IN FRANCHISING: 6 YEARS IN CURRENT POSITION: 6 gyms in Phoenix, with expansion plans under way in Washington and Mexico. While the playing fields are different, Kelly often takes a page from his military days when managing his franchise operations. When it comes to day-to-day operations, he says, the key is to under-

stand the difference between tactics and strategies. “As a leader in your company, your day should be filled with events and decisions dealing with where your company will be in 5 to 10 years—strategic in nature,” says Kelly. “If your calendar is filled with meetings about day-to-day activities, you’re most likely mired in tactics, and the future vision and trajectory of your company will be dictated by outside forces. That is a place you do not want to be, but most people get stuck in that type of thinking. I always remember a quote from the ancient Chinese general, Sun Tzu: ‘Strategy without tactics is the slowest route to victory. Tactics without strategy is the noise before defeat.’” During his time as a Navy officer and A-6E Intruder pilot, he was responsible for the leadership, training, and development of more than 250 enlisted sailors.

PERSONAL Formative influences/events: Military combat, fatherhood, near bankruptcy. Key accomplishments: Surviving 25 years as an active duty military fighter pilot. Creating a business from nothing. Coming back from the brink of bankruptcy. Producing a documentary movie. Landing on an aircraft carrier at night. Marrying my wife. Work week: 55 to 70 hours, but really always at work, unless I shut it down or unplug. What are you reading? Economics in One Lesson by Henry Hazlitt. Best advice you ever got: 1) Habits eat will power for breakfast. 2) The majority is always wrong. What’s your passion in business? Creating a business from the ground up, creating opportunity and wealth for others, allowing leaders to lead.

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2017 MVP AWARDS

“We run our company like a fighter squadron. Accountability and standards are paramount.” After graduating from the Naval Justice School with honors, he also served as squadron legal officer and was selected for an inter-service transfer to the Air Force, where he earned his F-16 Instructor designation. Kelly says he has tried to take something away from every leader he came into contact with early in life, a habit that carried on into the military. Truly outstanding leaders, he says, put their people before themselves and tie everyone’s success to the overall success of the squadron. “Everyone knew their role, knew what was expected of them, and were rewarded for superior performance when they rose to that level,” says Kelly. He takes the same leadership approach with Planet Fitness to focus on cultivating leaders. “You have to develop your leaders on purpose,” he says. “If you aren’t deliberate in growing leaders within your organization then, once again, you are leaving the future strength and stability of your company to chance.” When it comes to the future growth of his company, Kelly is leaving nothing to chance. His plans include continued expansion of the Planet Fitness brand in the U.S. and internationally, and the addition

MANAGEMENT Business philosophy: The best decisions are made at the lowest level in an organization. Management method or style: Describe an extremely detailed future picture for your company, then get out of the way and let your talented people paint it for you. Provide small brushstroke corrections for them as they create the masterpiece for you (and themselves). Greatest challenge: Articulating to the organization where it is we want to be in 5 years, and keeping them focused on that lighthouse. How do others describe you? Having an almost pathological aversion to dysfunction. How do you hire and fire, train and retain? Hire who you think is the best at the time, let them learn and then lead. If you need to fire them, you’ve most likely failed them, not the other way around. Retain your people by giving them the runway required to fly, and then tie their success to your success.

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of two complementary franchise brands, The Joint and Modern Acupuncture. In May, he signed a regional development agreement with The Joint, a fast-growing chiropractic franchise, to help develop up to 20 new clinics in Washington. “My new partners and I are very excited about these two concepts, and plan on opening them in adjoining spaces whenever possible, as we see tremendous synergies in these exciting brands,” he says. “Keep an eye out, as I think both will be incredible success stories.” Kelly says he is honored to receive the MVP award and hopes his story will encourage fellow franchisees to consider hiring veterans as a smart investment. “I hope most multi-unit franchisees recognize these skills in our veterans who may be applying for positions inside their organizations,” says Kelly. “Consider hiring a veteran. I can pretty much guarantee you won’t regret it.”

BOTTOM LINE Annual revenue: $34 million. 2017 goals: Open five more stores in the U.S. and one in Mexico. Growth meter: How do you measure your growth? Home-grown leaders who now have an equity stake in whatever we are doing at the time. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, 60 stores in the U.S. and Mexico, with another 60 in the queue. In 10 years, vigorously pursuing and executing on the best opportunities that will inevitably present themselves. What are you doing to take care of your employees? Trying to have as many leadership positions available for the leaders we grow in-house. It’s perhaps our biggest challenge. We have an outstanding director of training and development, Jeff Maguire, whose primary duty is to identify, train, equip, challenge, and place our own people into leadership roles. Once in that role, they immediately know what is expected—but more important, what and where their next leadership position resides. They are always focused. What kind of exit strategy do you have in place? Death or an 8X EBITDA offer, whichever comes first.

2017 MVP AWARDS

Veteran Entrepreneurship Award Why do you think you were recognized with this award? I think my team and partners made me look good. How have you raised the bar in your own company? We try to build each club better than the next and are constantly trying to refine and hone our operations. We always share what we’ve learned with the other franchisees. In that way, I think we have contributed significantly to the Planet Fitness family overall. What innovations have you created and used to build your company? We run our company like a fighter squadron. As a result, there are no silos in our organization, and every area of responsibility across our company has a proper name associated with it. Accountability and standards are paramount. What core values do you think helped you win this award? Always admit your mistakes, then let everyone know how you are going to change your behavior to prevent that mistake from happening again. Creating this culture is critical in never allowing people to lose confidence in your leadership, and builds open lines of communication at all levels of your company. It’s not about who is right, it’s about what’s right! How important is community involvement to you and your company? Part of our “future picture” has always been to be concerned about “outsider perception.” From the beginning, we wanted to be seen by those outside our organization as a respected, generous, contributing member of the local community. Every club we open has a local relationship with the community that strives to be seen this way. We do myriad charity, community, and in-club events to foster this reputation. It’s not forced, but fun. What leadership qualities are most important to you and your team? Honesty, integrity, clear communication, accountability, and leading by example—easy to say, and easy to do once it becomes ingrained in your culture. It is almost impossible to change the culture of an organization if it doesn’t start at the beginning and isn’t demonstrated from the top down.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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2016 Restaurant Business Magazine #2 Consumers' Favorite Chains

FRANCHISE OPPORTUNITIES AVAILABLE Average Net Avera Sales in 2016

$1,650,105

for 301 Franchised Traditional Locations that were open for all of 2016*

In a Category by Itself! For more information: franchising@mcalistersdeli.com • www.mcalistersdelifranchise.com • 1-888-855-DELI (3354) *Figures reflect 2016 averages for 301 franchised traditional McAlister's Restaurants that were in operation continuously during the period from January 1, 2016 through December 31, 2016 and from whom we received complete and timely financial information for such period, as published in Item 19 of our April 2017 Franchise Disclosure Document. There were an additional (i) 35 franchised traditional McAlister's Restaurants which were not added to the sample because they did operate continuously during the 2016 period, and (ii) 19 franchised express McAlister's Restaurants which were not added to the sample because they are not traditional McAlister's Restaurants. Of the 331 restaurants in the sample, 147 restaurants [or 44%] attained or exceeded the average total net sales. You should review our Franchise Disclosure Document for details about these figures. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. THE FOLLOWING APPLIES TO TRANSACTIONS GOVERNED BY THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA ONLY: These franchises have been registered under the franchise investment law of the State of California. Such registration does not constitute approval, recommendation or endorsement by the commissioner of corporations nor a finding by the commissioner that the information provided herein is true complete and not misleading. This information is not intended as an offer to sell a franchise. We will not offer you a franchise until we have complied with disclosure and registration requirements in your jurisdiction. Contact McAlister’s Franchisor SPV LLC, 5620 Glenridge Drive, NE, Atlanta, GA 30342, to request a copy of our FDD. RESIDENTS OF NEW YORK: This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the New York Department of Law. RESIDENTS OF MINNESOTA: MN Franchise Registration Number: F-8196. ©2017 McAlister’s Corporation

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6/26/17 10:36 AM


2017 MVP AWARDS BY HELEN BOND

Scoop It Forward

Serving up ice cream and community involvement

N

ot only is Ben & Jerry’s franchisee Karen Morse a veteran of serving up the brand’s mantra of peace, love, and ice cream, she strives to scoop it forward. Morse, honored with the 2017 MVP Community Involvement Leadership Award for her continuous community service and setting an example for others to follow, is an 18-year franchisee of Ben & Jerry’s, pioneers in the socially responsible business movement. Her ongoing effort to support the community that supports her seven shops is just part of who Morse is. “We don’t know how to do it any other way,” says the Washington, D.C.based operator. She even sweetened the brand’s mandate for franchisees to spend a portion of proceeds on community support with the development of a “Scoop It Forward” program. Under the program, companies that booked new off-premise and catering business were allowed to select the charity or cause of their choice to be the recipient of a free ice cream party. “The main point of this was that we took no credit for the party,” says Morse. “We told the charity it was a gift from their benefactor. The social media we got from the program with the company tweeting and posting, the nonprofit tweeting and posting, and us tweeting and posting was amazing.” Scoop It Forward provided Morse, a D.C. native, with a competitive edge and boosted catering sales. Companies began calling to book events with their NAME: Karen Morse TITLE: Owner/franchisee NO. OF UNITS: Built my Ben & Jerry’s to 16 units; currently have 7 AGE: 55 FAMILY: Four sons 24, 22, 22, 17 YEARS IN FRANCHISING: 18 YEARS IN CURRENT POSITION: 18

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2017 MVP AWARDS “We made the largest ‘ice cream pie’ on the Capitol lawn to demonstrate how many children were without healthcare.” PERSONAL Formative influences/events: I am fortunate to work with a franchisor that is the world leader in understanding that a business can be profitable as well as socially conscious. Over the past 18 years, I have witnessed how an ice cream cone can literally change the world. Businesses can learn to partner with other organizations or businesses that lead with their values. Ben & Jerry’s takes tremendous efforts to source products that meet specific criteria with non-GMO and fair trade standards and practices. They encourage franchisees to get involved in events that support the greater good, whether that is climate change, fair and equal voting rights, or non-GMO labeling efforts. Here in D.C. we work on all of these issues and so much more! We put our ice cream where our mouths are and have, through the years, built the largest “Baked Alaska” on the lawn of the Capitol to protest the ANWR drilling rights issue. We made the largest “ice cream pie” on the Capitol lawn to demonstrate how many children were without healthcare. We gave out our “I Dough, I Dough” flavor on the steps of the Supreme Court to celebrate the marriage equality decision! At each event, we were surrounded by loyal fans who love the brand and the fact that we do take a stand. Also in those groups were people who didn’t necessarily agree with our stand, but were happy to have us share our point of view. As a franchisee, this type of community outreach translates to shop sales. The loyal brand fanatics seek us out when deciding where to buy, and the general goodwill translates to a larger audience. Our sales are truly strengthened by the general public’s perception that we have the best quality ice cream and we really do stand for something that can effect real change in our neighborhoods and our countries. When we are not out changing the world, we truly are changing our communities by sharing our ice cream with local organizations that promote urban farming, river cleanups, cancer walks, reducing homelessness, promoting youth leadership efforts, the fight against autism, supporting the National Zoo, and Orange Wednesday for suicide prevention awareness. We are very proud of our work for fallen police officers and their families. While Ben & Jerry’s ice cream is working for social issues worldwide, here in D.C. our ice cream cones are truly changing our communities for the better. My entire team thanks our founders, Ben and Jerry, for being the role models for

MANAGEMENT

social change and encouraging not only me, but our entire system of franchisees to look at business as a way to effect meaningful change while increasing the profitability of every scoop shop! Key accomplishments: Washington Business Journal Best Places to Work (2017). JW Marriott Award for working with youth with disabilities (2014). Ben & Jerry’s Innovator of the Year Award. Ben & Jerry’s Marketer of the Year (awarded two times). Ben & Jerry’s Social Mission Leader of the Year. Ben & Jerry’s “Big O” winner for best systemwide operations. Multi-Unit Franchisee magazine’s MVP Community Involvement Leadership Award (2017). Work week: It is certainly not a work week, it’s more like a work season. Spring, summer, and fall are very busy, and every owner knows it really is a position that requires a lot of time spent working on the units. I do not really keep track. My team and I are fully committed to get the job done and love what we do. Luckily we all get some time to regroup and have some fun in the off-season! What are you reading? Turn this Ship Around: A True Story of Turning Followers into Leaders by L. David Marquet; Leaders Eat Last: Why Some Teams Pull Together and Others Don’t by Simon Sinek; and Catherine the Great by Robert Massie. Best advice you ever got: Anyone in the franchise business knows it is a leap to go from one unit to three. It is the first big leap and it can be difficult if you don’t make the jump from technician (actually running the shop) to management, which is teaching others to be responsible. Seventeen years ago, a business associate reminded me of my actual responsibilities: “You are not there to run your business from behind a counter, you are there to grow your staff into leaders.” Empowering your staff down to the lowest levels is the key to successful ownership. It is also the key to profitability and cost control. More importantly, it ensures the success of your business and builds a solid team for the long term. What’s your passion in business? Staff development. My entire shift, lead, and management team (except for one person) started working with me when they were a junior in high school and now manage and lead high-volume successful locations with full-time positions with benefits.

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Business philosophy: Support the community that supports the shop. Understand your real intentions about the impact you want to have in your community, with your staff, and a laser focus on ways to increase profitability. Management method or style: Don’t focus on selling more ice cream, focus on who is selling it. Bottom line! The rest will come. Reward and challenge employees out of their comfort zones by adding responsibility that perhaps someone so young would not have the opportunity to learn in another business. They are always grateful for the knowledge and raise eyebrows when they move to their next position with the extra skills they have learned. Reward the team (not any one individual) for the success of the shop! High tide floats all boats! Greatest challenge: I would imagine the greatest challenge for most multi-unit operators is staffing. This is particularly challenging in a seasonal business. Other than senior staff, which we retain all year, most of our employees are seasonal. We do significant hiring in the spring with high-school and college-aged workers. They return to school in the fall. This means going from a fully staffed operation in season to minimal supervisory staff in the fall and winter down times. Rehiring an entire new crew for seven locations every spring is really challenging. Training is key to success with the new hires. How do others describe you? Passionate, focused, never take no for an answer. Hopefully compassionate and employee-focused. They would say that I can always make things happen. Motto: “If I cannot find a way, I will make a way.” (Hannibal) How do you hire and fire, train and retain? We give lower management positions a lot of leeway in this regard. Every new hire is interviewed several times, mostly by hourly paid leaders. Assistant managers, shift leads, and keyholders all interview, hire, and train and have the ability with management to review and to fire new hires. After all, they are the ones working with them. They hire people who buy into the team and its philosophy. Incentives are paid based on team performance. If someone isn’t doing their job, it could mean the staff isn’t hitting incentive goals. If that is the case, the weakest links are quickly “voted off the island” by their peers.

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2017 MVP AWARDS “We gave out our “I Dough, I Dough” flavor on the steps of the Supreme Court to celebrate the marriage equality decision!” BOTTOM LINE Annual revenue: $3.9 million. 2017 goals: We are adding one more D.C. location in 2017 and are currently building out the shop. Happy to keep growing if the right location becomes available. Vision meter: Where do you want to be in 5 years? 10 years? I would say I am always looking for other opportunities, but I am currently happy with my current holdings. What are you doing to take care of your employees? We are focused on the things that matter most to our employees and pick incentives and benefits that have real value to them. They include free food, freebies for friends, extra cash, and help with transportation costs. We are really on target! Staff retention is significantly higher than at similar outlets, which means less training and hiring. We offer many incentives, such as staff meals on the weekends. If you work the busiest, toughest schedules you get dinner and/or lunch Friday, Saturday, and Sunday. Free cone coupons every paycheck for your friends. They don’t have to “steal” by giving products to friends and family, and we can keep track of what the staff is giving away—and they are empowered by being able to give free cone coupons to friends. Metro allowances each paycheck to help defray public transportation costs. Hourly incentives for hitting target dollar hours each day based on hourly sales targets. We have tried many things to find the incentives that work! In the past we paid for a laundry service to collect laundry from workers at each location. Total cost to management was $12 per bag, per person, per week; great perk for young people, very little cost for management. This year we are experimenting with Uber to offer rides to employees who close the shops late and Metro trains have stopped running. Transportation in D.C. closes at 11 p.m. and our shops close as late as 2 a.m. Offering an Uber ride for those late weekend nights keeps the registers ringing at a very nominal cost. What kind of exit strategy do you have in place? Still under process and changes quite often.

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nonprofits already selected, she says. “Ben & Jerry (the real guys) are keen on making profits, make no mistake,” she says. “But if we can make those profits while supporting worthwhile hard-working groups in our market, all the better!” Morse’s franchisor has taken note of her business and marketing savvy. She previously earned the brand’s “Innovator of the Year Award” for introducing shop ideas such as a bubble machine at the front door, and whimsical outdoor seating in the shape of life-sized cows that, she says, “surprise and delight the customers.” Morse says while a solid marketing strategy and goodwill intentions are paramount, her staff is the critical piece in keeping focused on her organization’s goals. She makes a point to show every employee the numbers—every month— and educate them on what they mean. “You cannot talk and talk to your staff about COGS if they don’t know what that actually means and how they, personally, can affect those numbers,” she says. “They have to feel the value of their contributions to the team’s success and they have to be rewarded. Pay people what they are worth and keep bonuses real and attainable. Also, keep bonuses immediate. Nightly bonuses are much better received than those that are put on paychecks at the end of the quarter.” Morse’s focus on the success of her staff is paying off. This year her company, DC Ben & Jerry’s, earned the nod as one of the best places to work by the Washington Business Journal. “We are very proud of this honor,” she says. “The employees actually nominate their business and it is quite a thorough process. We must be doing something right!”

2017 MVP AWARDS

Community Involvement Leadership Award Why do you think you were recognized with this award? I think the Ben & Jerry’s brand identity helped. As a franchisee I am able to bring that identity to my market and really make a difference. How have you raised the bar in your own company? Over 18 years I have introduced systems and operational ideas that we developed here in D.C. that the franchisor pushed out systemwide. We are all really proud of our innovations and ability to implement them in our system and across the broader franchise system. What innovations have you created and used to build your company? Innovations have included adding whimsical elements to the shop design to create a better customer experience. Also, significant innovations in line speed and employee incentive programs. What core values do you think helped you win this award? The Ben & Jerry’s philosophy of providing great ice cream in a sustainable way that makes the world a better place. How important is community involvement to you and your company? See above. What leadership qualities are most important to you and your team? Responsibility, self-reliance, and stressing how important it is to do the right thing—even when no one is watching. That goes for life as well as work.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 1:05 PM


READY TO ADD MORE FLAVOR TO YOUR PORTFOLIO?

“FAST-CASUAL MEXICAN RESTAURANT BRAND OF THE YEAR” -Based on the 2017 Harris Poll Equitrend ® Study

$1,278,747 AVERAGE TOTAL ANNUAL GROSS SALES 670+ RESTAURANTS

For more information, contact: 404.705.2051 • requests@moes.com *Figures reflect averages for 188 franchised restaurants that were in operation continuously for 3 or more years and that provided us with complete financial information for the full calendar year of 2016, as published in Item 19 of our April 2017 Franchise Disclosure Document. These averages are based on a 52-week annual period from January 1, 2016 through December 31, 2016. Of these 188 restaurants, 72 Restaurants (or 38%) attained or exceeded the average total Gross Sales and 72 Restaurants (or 38%) attained or exceeded the average EBITDA. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. This offering is made by prospectus only. THE FOLLOWING APPLIES TO TRANSACTIONS GOVERNED BY THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA ONLY: These franchises have been registered under the franchise investment law of the State of California. Such registration does not constitute approval, recommendation or endorsement by the commissioner of corporations nor a finding by the commissioner that the information provided herein is true complete and not misleading. This information is not intended as an offer to sell a franchise. We will not offer you a franchise until we have complied with disclosure and registration requirements in your jurisdiction. Contact Moe’s Franchisor SPV LLC, 5620 Glenridge Drive, NE, Atlanta, GA 30342, to request a copy of our FDD. RESIDENTS OF NEW YORK: This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the New York Department of Law. RESIDENTS OF MINNESOTA: MN Franchise Registration Number: F-8188. ©2017 Moe’s Franchisor LLC

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6/26/17 10:32 AM


2017 MVP AWARDS BY HELEN BOND

Master of Innovation Hard work and determination are rewarded

A

nand D. (Andy) Patel is the recipient of the 2017 American Dream MVP Award for achieving remarkable success in the U.S. with multiple brands. For this MVP winner, a relentless work ethic is just part of who he is. Patel, who moved to the U.S. from

“My focus is solely on my family, business, and employees.”

NAME: Andy Patel TITLE: Owner/operator NO. OF UNITS: 73 Burger King, 51 Applebee’s, 18 Pizza Hut, 5 IHOP AGE: 53 FAMILY: Wife, four children, and grandchild YEARS IN FRANCHISING: 26-plus YEARS IN CURRENT POSITION: 9

India in the 1980s, secured his first job with a Wendy’s restaurant in Laurel, Md. Within six months, the native of Gujarat was promoted to management—while also holding down part-time jobs at McDonald’s, Domino’s, and Burger King! “My definition of the American Dream is the ability to be successful through

PERSONAL Formative influences/events: When I got my first job at Wendy’s, the franchise group owned 42 locations. I knew then that I wanted to have more locations than them, which drove me to become a multi-unit franchisee. Key accomplishments: In 1992, I purchased my first restaurant and helped turn its operating loss into a profit within one year. Two years later, I purchased an IHOP restaurant from corporate and doubled the revenue within one year. That year, I won an award for the highest sales increase across all IHOPs nationwide. In 2002, I bought another restaurant and won the highest sales increase in the country. I have won various awards throughout my career for my management approach. Awards: IHOP: Highest sales increase in North America; Franchisee of the Year 1994,1995, 2002. Applebee’s: Operations Excellence Award. Stevi B’s: Rookie of the Year. Burger Florida (my Burger King brand) ranked second in my division in overall operational metrics my first year with the brand. 2017 MVP American Dream Award. Work week: Working all the time. Best advice you ever got: In 1989 I was working at Wendy’s and my manager John Stevens told me I shouldn’t be working hard over here (in the U.S.), but instead I needed to be working smart. After I finished my shift, I told my dad. My father told me to tell John that in our culture and with us, if you want to be successful you have to work smart, but also work very hard. You went to a rich country, so if you want to be successful, that is what you have to do to make it.

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2017 MVP AWARDS hard work and determination,” says Patel, principal of Boynton Beach, Fla.-based Apple Investors Group, founded in 2008. “I started as an employee of one chain restaurant and through some long hours turned that position into an assistant manager, which eventually led me to my first restaurant purchase. Thirty years later, I have expanded my portfolio to over 140 restaurants with the help of my team.” Since buying a flailing IHOP in 1992 and doubling its volume within a year, Patel has experienced soaring multi-brand growth, managing more than $220 million in revenue and 4,500 employees. He is lauded for being a master at turnarounds as well as an innovator. “Being a leader, I make it a point to know as much as possible about every

position within the company,” he says. “I believe my employees help me understand what is necessary to make the company succeed. Through them we can see what is or what is not working.” Patel, who admits he is driven by competition, says his goal is to be one of the top 10 privately owned, multibrand restaurant companies in the U.S. and, ultimately, to open his own concept. He has received numerous awards throughout his career, but being named this year’s American Dream MVP came as a surprise. “I never imagined myself receiving such an award,” he says. “My focus is solely on my family, business, and employees. Without them this award would not be possible.”

2017 MVP AWARDS

American Dream Award Why do you think you were recognized with this award? I came to America with a dream in my heart: to not only own my own business, but to be able to employ others and provide well for them. I have done this. While I am still growing, I have worked hard, sacrificed much, and have taken risks to build a company that my family and I would be proud of. How have you raised the bar in your own company? I challenge my team to be the best franchisee in each brand. We develop a plan to take us where we want to go and then we stay relentless in our pursuit. What innovations have you created and used to build your company? I have built my business always thinking outside the box. Creative innovation is a key part of our success. Past innovative implementations include: • IHOP—First to use the kitchen screens in 1999; one of the leaders to go from registers to computers; and one of the first to go 24 hours. • Applebee’s—First to implement the afternoon and late night appetizer program. • Burger King—First to introduce the two-board system company-wide (we created a separate board for drive-thru and front counter, improving SOS by more than 30 seconds); worked with the marketing team to develop the 2 for $5 promotion, which has become a major marketing strategy for the brand; among the first to advocate the removal of the Whopper box, improving paper costs by more than .3% and SOS; and we were among the first to incorporate state-of-the-art drive-thru timers into our business (BK corporate later mandated a similar system for all franchisees). What core values do you think helped you win this award? Our core values include: 1) People—they have been the key to our success. We search for top talent and take great care of them once they are a part of our team. 2) Great food, delivered hot and fresh every time. 3) Great service, friendly and fast to every guest, every time. 4) Innovation. Change is part of our culture. We must accept it, embrace it, and bring it to life! 5) Value. Our guests will feel they received more than they paid every time. We believe in HHH: humble, hungry, hardworking.

MANAGEMENT Business philosophy: We are a committed team of passionate and innovative people dedicated to providing great food and quality service to every guest fast. Management method or style: I have more of an authoritative (visionary) style of management and strive to provide long-term direction and vision for my employees. Motivate by persuasion and feedback. Greatest challenge: People. Finding the right people at each level of the business. How do others describe you? Provides clear direction and gives others the autonomy to get the job done. Firm, but fair, leads by example, and a relentless work ethic. How do you hire and fire, train and retain? I use a wide array of recruiting methods, such as job boards, recruiters, referrals, etc. Typically, my HR director will send candidates to me after he has screened them. I have the ability to quickly assess the skills and talents of candidates. When terminating someone, I am always respectful. I use my team to help me train, but I also spend hands-on, one-on-one time with new employees at various levels.

BOTTOM LINE Annual revenue: $200 to $300 million. 2017 goals: Our goal is to be one of the top 10 privately owned, multi-brand restaurant companies in the U.S. and to open our own concept. Growth meter: How do you measure your growth? Develop and/or acquire more locations within the next 3 years. Vision meter: Where do you want to be in 5 years? 10 years? Best in customer service. One of the top 10 privately owned franchisees in the U.S.

How important is community involvement to you and your company? Community involvement provides our employees with the opportunity to become active members of their community, which has a lasting, positive impact on them and the society they serve. Simply put, it gives employees an avenue to give back to those who support us. It helps to build morale and builds a collaborative and inspired team.

What are you doing to take care of your employees? First and foremost, I let them know that I appreciate them. In addition, I pay my team well. I am at the top of the pay scale for each brand. Finally, we have incentive programs in place to consistently recognize and award my team for performing their job well.

What leadership qualities are most important to you and your team? Honesty, commitment, confidence, decisiveness, and the ability to inspire.

What kind of exit strategy do you have in place? We don’t want to exit.

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29 7/10/17 1:14 PM


2017 MVP AWARDS BY HELEN BOND

Making Their Day, Every Day

TravelCenters of America serves food, fuel, and smiles

J

ohn Ponczoch believes there is always a way to make someone’s day. Ponczoch, senior vice president of food operations and marketing for TravelCenters of America (TA-Petro) since 2010, is the recipient of the 2017 MVP for Multi-Brand Growth Leadership Award for continued success in operating multiple brands—dozens, in fact. TA-Petro, the largest full-service travel center company in the U.S., operates the TA and Petro Stopping Centers and employs more than 12,000 on the foodservice side alone. “I think it’s important to point out

the uniqueness of our company,” says Ponczoch. “We are not only a franchisee of 25-plus brands, we also franchise our brands and operate in more than 800 foodservice outlets.” In addition to its franchised brands, TA operates 9 brands as franchisor: Country Pride (110 company, 3 franchised); Iron Skillet (55 company, 10 franchised); Quaker Steak & Lube (55 company, 35 franchised); as well as 6 other brands with 1 company site each. The difference-makers for TA-Petro, says Ponczoch, are the company’s management bench strength to promote

NAME: John Ponczoch TITLE: SVP Food Operations, TravelCenters of America NO. OF UNITS: 66 Popeyes, 54 Godfather’s Pizza, 51 Subway, 38 Taco Bell, 32 Burger King, 30 Pizza Hut, 10 Starbucks, 10 Dunkin’ Donuts Express, 9 Dunkin’ Donuts, 8 Arby’s, 6 Hunt Brothers Pizza, 5 Charleys Philly Steaks, 5 Pizza Hut Slice Bar, 4 Broaster’s Chicken, 4 Piccadilly Pizza, 3 A&W, 3 Chester’s Chicken, 3 Sbarro, 3 Wendy’s, 2 Dairy Queen, 2 Baskin-Robbins, 1 each of Champs Chicken, Charley Biggs Chicken, Hot Stuff Pizza, Noble Roman’s, Taco Time, Tim Hortons AGE: 53 FAMILY: Married, 3 children, 2

grandchildren

YEARS IN FRANCHISING: 25 YEARS IN CURRENT POSITION: 8

(30 with company)

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2017 MVP AWARDS “We don’t make people into leaders, but we influence people to do great things.” MANAGEMENT Business philosophy: Leadership is influence. No more, no less. We don’t make people into leaders, but we influence people to do great things. Everyone is a leader to someone, whether that is a friend, co-worker, employee, child, or anyone you come in contact with in life. How many times have you regretted not taking the time to speak to someone, giving your child a few minutes of your precious time, giving an employee your undivided attention (versus multitasking), or not saying a kind word to someone in the military you pass, or not calling mom every week? It’s leadership and you missed an opportunity to influence someone with just a little moment of your time. Second, you are only as good as your weakest link. When you take a young manager or leader and you get them to think about this, the reaction is amazing. Then (if you and they are honest), if they want to be a better leader they will do something about it. And they typically do. Management method or style: Avoiding micromanaging at all cost. It’s not an environment that creates a positive culture or allows others to grow. I get that it can be effective in some businesses, but it’s not my style. I want people to have responsibility and to be held accountable, but they must be able to make decisions on their own to grow. Mistakes made? Yes,

you can count on it and should expect some, but let them grow and learn and develop. I expect people to work hard, but I also expect to reward them for success throughout the company. We are all in this together. Also, trust in others, trust in society. Don’t judge. You have no idea what a person has been through. We all have a story to tell. Greatest challenge: The rapidly changing environment with technology, employees, food trends, logistics, eating habits, leadership styles, changing strategies, changing designs, social media, and great effective leaders. Each of these, although uniquely different challenges, is important and worked on every day in our organization. How do others describe you? I honestly don’t know. I hope and believe they would describe me as passionate about life, about business, about food, about people, and that I have professional integrity and am a trusted leader they can depend on. Always available to all levels if something is needed. Maybe, trustworthy of others and I always try to see the good in people. They may also say I need to relax a bit more. How do you hire and fire, train and retain? Hiring is the toughest. It’s a gut feel for me.

It’s looking someone in the eyes to get a sense of who they are, and it’s hiring attitude over experience. It’s hiring drive over knowing it all. At the end of the day I love folks who are stronger and smarter in their jobs than I could be. Everyone talks about the Millennials and how different they are, and how they must have a purpose for working in a job. Millennials are the future; we just have to adapt some of our teaching habits to stay relevant and give them a reason and purpose to work for you. Training is never-ending and must happen every day. When we stop learning, we stop growing, and when we stop teaching we should find a career we can go get excited about again. Firing is not always tough. When you get to that point and have done everything in your power to give someone success and for whatever reason it does not fit, it should be no surprise to the individual you are asking to leave. You know in your gut it needs to happen. And as bad as it may feel at the time you feel better immediately when it’s done— and so do the other folks on the team, who probably felt it coming, too. If you are not improving from the bottom up, you are not improving. Sadly, firing is a necessary part of doing business. As long as you have done everything you can to help people before you fire them, many times you are doing both of you a favor.

PERSONAL Formative influences/events: Growing up in a small town of 1,200 people taught me a lot about real life and provided me with experiences and people who influenced my life forever. It taught me the importance of the simple things in life: hard work, church on Sundays, family meals, family values, freedom, and feeling safe—simple, yet meaningful times when you had the time to really get to know and care about others. The pace of life was not full of anxiety, but more about connecting with others. You had real friends for life and could count on them every day, for everything. Much different than today, but when you can live by these values, people are surprised and respond in a very positive manner. Values and respect were part of everyday life. It was safe; it was real. Not all foods killed you and not everything was electronic. People were trusted and fun was had. I’ve moved 35 times since leaving this small town. My parents had a tough time keeping up with all my moving parts, but never did they discourage me from moving forward to the next opportunity. So influence #1 for me? Great parents and great support growing up (except for my high school counselor who told me I was in the bottom three of the class and not to have any expectations on making anything good with life).

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Key accomplishments: As a franchisee operator we have experienced continued year-over-year growth in both like sites and total sites for seven straight years. Typically, we outperform industry and brand averages, and when we partner with a brand it’s a partnership and agreement we uphold to the highest standard of the brand. It’s a must if you want to grow. And because we are both a franchisor and a franchisee, we understand how important this can be. To watch so many leaders grow and flourish in this industry from hourly positions to influential leaders. After 25 years, I have many on my team today who began in hourly functions and now hold key leadership roles. Work week: It’s the restaurant business. When is it not seven days a week? What are you reading? Franchise Times, Restaurant Business, Nation’s Restaurant News, Restaurant Finance Monitor, Transport Topics, the Bible. Best advice you ever got: Work hard and keep your nose clean—from my father, a man who worked hard his entire life to support his kids and give them any opportunity he could. High integrity and

hard work and saved every penny he could find, all in support of giving his kids a better opportunity. That and get food delivered to the table: hot food hot and cold food cold. It amazes me today how many people fail at this simple idea. It’s tough to execute every day, but when a restaurant does deliver this consistently they win. Last, our time here is short, what legacy do you want to leave? Don’t wait to prepare for it or you will regret it. Life is brief. What’s your passion in business? People. There is nothing more enjoyable than to watch a young, talented person become passionate and grow into leadership positions. Or, if not growing into a leadership position, then just seeing people do incredible things at the level in life they are comfortable in. Not everyone must be a leader, but everyone can make a difference in others’ lives. I see it every day. It drives me each and every day. It’s no different than watching your child grow and blossom into something special and you see it happen before your own eyes and happen very quickly. This should drive us all.

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2017 MVP AWARDS from within, and its customer service approach to make every employee’s and every customer’s day better. “People are proud to be Daymakers,” he says, referring to TA’s signature customer service program, launched more than 6 years ago. “We knew we were not treating our customers with the respect they deserved. We had shackles on our employees around policies and procedures they had to follow,” says Ponczoch, a 30-year industry veteran. “We realized we just needed to allow them to be real human beings with our customers to make them happy, smile, and feel at home. How can you be the best part of someone’s day? How do you go above and beyond for your guests and

BOTTOM LINE Annual revenue: QSR, $180 million; FSR franchised, $10 million; FSR, $215 million; QSL, $37 million. 2017 goals: Stay above the industry average in the QSR and FSR space with franchised brands. Continue to strengthen our bench for continued leadership and company growth. Growth meter: How do you measure your growth? For 2017, open 16 locations. Vision meter: Where do you want to be in 5 years? 10 years? I expect the brand to continue to grow both in same site revenues and also unit count growth. I hope the organization will continue to have me be a part of the influence that makes this happen. There is no reason to slow down at this time. What are you doing to take care of your employees? Everyone has an opportunity for growth. We continue to see people strive and grow into leadership roles at the site level, district manager level, and director positions. None of this works without great leaders. With more than 12,000 employees in the food business, we do our best to give them opportunities for growth or be a steppingstone for their next career. Our front-line employees make us great—not what I do or what others do in HQ. I only wish we could recognize every moment they made it special for a guest. What kind of exit strategy do you have in place? I’m not planning on leaving anytime soon, but when I get ready I expect there will be a number of talented leaders on my team who can fill the position. I’m sure whoever steps into this role will only make it better and keep it growing.

your employees? Take off the shackles and allow employees to think on their own and do what is right.” Daymaker is now deeply instilled in the company’s culture and is being expanded to emphasize the approach with hourly employees. Ponczoch says the focus is constant to “preach and teach” and reinforce the message with training, feedback, and motivational customer videos that share the impact of the program. “We try to teach our employees that everyone has a story in life,” he says. “They may not be smiling or in a great mood, but don’t make a judgment about them. You don’t know what they are going through. When people understand that, they can make someone smile.”

2017 MVP AWARDS

Multi-Brand Growth Leadership Award Why do you think you were recognized with this award? Our team does an incredible job managing more than 25 brands. Each brand is unique and is required to be operated to the highest standard of their company. We simply follow their rules of execution and add the best service we can to the guest experience. I hear from brands constantly that they love working with our people and love our professionalism from the ground up. How have you raised the bar in your own company? Again, this is about the level of leadership we have, the Daymaking culture we have, and the support we give our location managers. Ninety-five percent of our multi-unit managers have been developed from within. I have seen every level of employee grow into leadership roles. From servers to cashiers to dishwashers, and cooks, all grow into all levels of management, including many who are with us today in director and district manager roles. They know what it takes and they make it happen. When you see 15-year-plus passionate employees all around, you are in good hands. What innovations have you created and used to build your company? Because in so many of our operations we are the franchisee, we are not necessarily coming up with new operational procedures, but more operating the brand to the exact procedures and methods the brand dictates. We spend a great deal of time, money, and resources ensuring that our leaders have this knowledge and the support to do it right. We did develop “Daymaking,” which we teach and train daily: we teach our leaders to be bold, work hard, hold themselves accountable, encourage others, leave their comfort zone, speak up, take action, be passionate, leave a legacy. Simply put, it’s what Steve Jobs said: It had better be worth it—you don’t get a chance to do that many things and every one of them should be truly excellent. Because this is our life and it’s brief. We have all chosen to do this with our lives, so we better be damn good at it! What core values do you think helped you win this award? There is a respect for the industry, for our employees, and for our guests. When you have this value for all three and allow it to lead your decisions, you cannot help but succeed. The award is great and we are proud to have it, but we are even prouder of the thousands of employees and leaders who helped us successfully partner with so many national brands and represent them in a good fashion. How important is community involvement to you and your company? Our core company support annually is the St. Christopher Truckers Fund, whose mission is to help truck drivers and their families who have financial needs as a result of medical problems. Beyond this we allow our leaders and employees in the field to be involved with the local communities where they operate. Fundraising at all of the brands we operate supports local schools, sport teams, children, police officers, firefighters, USO, National Military Family Association, Wounded Warriors Family Support, Folds of Honor, and Alex’s Lemonade Stand Foundation. What leadership qualities are most important to you and your team? Integrity, passion, inspiration, empowerment, accountability, and opportunity.

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2017 MVP AWARDS BY HELEN BOND

“The Machine”

Growing the brand and growing his people

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endy’s Hall of Fame franchisee Eddie Rodriguez is all about mega growth—one restaurant at a time. Rodriguez, chairman of Pompano Beach, Fla.-based JAE Restaurant Group, is the 2017 MVP for Mega Growth Leadership for achieving excellence in growth and expansion. The QSR veteran is closing in on 200 restaurants and $300 million in annual revenue with the same approach to growth he’s practiced since opening his first Wendy’s in 1993. “A lot of people fail to understand that when you run a restaurant a lot of the cost of your business is in a two- or three-mile radius,” says Rodriguez. “The way you deal within that radius and serve those customers day in and day out determines how successful your restaurant is going to be. You want to own that trade area and be part of the community.” These days, Rodriguez’s business picture is crystal clear, thanks to help from his custom-developed software he calls “The Machine.” The idea for the project was born during restaurant visits, when Rodriguez and his partners saw the amount of daily administrative work required for the general managers to do their job. “This is a tool that was developed to make our managers’ lives easier,” says NAME: Eddie Rodriguez TITLE: Chairman, franchisee COMPANY: JAE Restaurant Group NO. OF UNITS: 179 Wendy’s AGE: 61 FAMILY: Wife Laurie, son,

daughter, and four grandkids, 18 months to 5 years

YEARS IN FRANCHISING: 43 YEARS IN CURRENT POSITION: 23

as a franchisee

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SUCCESS never tasted so good Schlotzsky’s®, one of the nations’s most dynamic fast casual restaurant concepts, is now offering franchise opportunities throughout the U.S. Schlotzsky’s represents a real opportunity to compete in a not so-crowded marketplace with a franchise product that stands out. Our commitment is to provide you with end-to-end support, cutting-edge technology, and ongoing service based on respect, trust, and dedication to the success of your business.

To learn more about this exciting growth opportunity and to schedule an appointment

visit schlotzskysfranchising.com or call 404-705-2051

We’ve been largely recognized by our peers. FastCasual.com

Top 50 Movers & Shakers 2014, 2016

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Technomic

Top 500 Chain Restaurants 2009-2015

Entrepreneur

Franchise 500 2009-2011, 2013-2017

Chain Restaurant Consumers’ Choice Food Taste & Flavor 2017

3/9/17 10:51 AM 3/24/17 9:47 AM


2017 MVP AWARDS Rodriguez. “It was put together to make us great operators and it has evolved to do just that.” The proprietary program sweeps every key performance item a manager needs to see every day into a single, user-friendly email pushed to the inboxes of senior management and managers in the field. Under development for more than two years and rolled out in the past 12 months, the program reduced employee turnover and saved the company time and money right off the bat: managers no longer needed to navigate numerous online sources to get the data they needed to run a restaurant effectively. The program has also been invaluable to “help us help managers get to the next level” and analyze operations in a new way, says Rodriguez. “I can tell you by opening this email how many employees we have per thousand dollars in sales,” he says. “Five years ago, I had to go to the payroll roster and count them, or go to the restaurant and

ask them the number of employees.” The future possibilities for the program to boost the bottom line and care for the customer are “open to our imagination,” says Rodriguez, who was inducted into the Wendy’s Hall of Fame in 2016, the

MANAGEMENT Business philosophy: To create a strong DNA and culture that resonates with internal, external, and outside partners’ expectations. Management method or style: Everyone is born with a brain free of charge, let them use it. Greatest challenge: Adapting to changes in today’s society, and understanding employees and customers and what their needs are. How do others describe you? Passionate, determined, sincere, and influential. One thing I’m looking to do better: Continue to become a better leader and a better listener.

PERSONAL First job: Assistant manager trainee for Burger King. Formative influences/events: Attending public speaking classes, hearing presidents give speeches, and attending the Wharton School of Business.

What’s your passion in business? People development, being able to give back and pave the road for team members to be successful and grow into management.

Key accomplishments: Sharing success with family and friends, building one of the biggest Wendy’s franchisee systems, and becoming one of the top 10 biggest Wendy’s franchisees.

How do you balance life and work? It’s very hard. I try to stay positive and laugh as much as I can.

Biggest current challenge: Creating stability in the company so team members can achieve longterm success.

Favorite book: How To Win Friends and Influence People by Dale Carnegie.

Next big goal: Transition the business to the next generation. First turning point in your career: When I left Burger King in 1988. Since then, I tell everyone I couldn’t pay for the education I received there and it put me where I am today. Best business decision: To expand the Wendy’s brand in 2013, where I went from 13 to 179 units. Hardest lesson learned: That you can’t dictate the needs of team members or customers. Exercise/workout: I try to do 45 minutes on the treadmill every day, and play racquetball. Best advice you ever got: From my father: Whatever you do, be the best at it. And from Dave Thomas: Take care of your business and your busi-

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ness will take care of you.

Guilty pleasure: Eating a cannoli every night.

Favorite movie: “Men of Honor.” What do most people not know about you? I give back a lot in a quiet way without acknowledgement. I sit on the board of the Boys & Girls Clubs of Broward County, an organization near and dear to my heart. Pet peeve: When people disrespect others. No matter your opinion, you should respect the feelings of everyone. What did you want to be when you grew up? I wanted to provide more for my family than my parents could provide for me.

How I give my team room to innovate and experiment: I give them a long rope, only pulling it back before they drown, if necessary. How close are you to operations? Extremely close. Whenever I judge progress, all I do is go to restaurants and talk to managers and employees. What are the two most important things you rely on from your franchisor? Strengthening of the brand, transparency, and improving the economic model. What I need from vendors: Strong partnership and dependability. Have you changed your marketing strategy in response to the economy? How? Yes, we’ve had to create value and update restaurants to cater to Millennials and new generations. How is social media affecting your business? We’ve had to transition traditional ways of marketing to stay up-to-date on social media, which is growing faster than TV and radio. How do you hire and fire? We have a hirefor-life mindset and fire only if they are jeopardizing the brand or the company. How do you train and retain? By creating a very strong culture that fosters growth; it goes handin-hand. We commit to training to develop team members’ skills.

Last vacation: Mediterranean cruise.

How do you deal with problem employees? A lot of coaching and outside development, such as classes and, sometimes, counseling.

Person I’d most like to have lunch with: My brother.

Fastest way into my doghouse: To be insensitive to others.

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Average Anuual Company Store Sales As of 12/31/16, there were 275 UBREAKIFIX locations in operation. As published in Item 19 of our Franchise Disclosure Document dated 3/27/17, these figures represent the actual, average total revenues for the calendar year ending 12/31/16 of all UBREAKIFIX company stores operated by us or our affiliates that met the following criteria: (i) open at least three full years as of 1/1/17, and (ii) were still open as of 1/1/17 (13 stores in total). Of the included stores, four (or 31%) exceeded the stated average total revenues. A franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. **This information is not intended as an offer to sell, or the solicitation of an offer to buy a franchise. If you are a resident of or want to locate a franchise in a state that regulates the offer and sale of franchises, we will not offer you a franchise unless we have complied with the applicable pre-sale registration and disclosure requirements in your state. This advertisement is not an offering. An offering can only be made in NY by a prospectus filed first with the Department of Law of the State of New York; such filing does not constitute approval by the Department of Law.

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2017 MVP AWARDS brand’s highest honor for lifetime achievement. While Rodriguez aims to be the biggest and best Wendy’s franchisee he can be, he takes the most pride on a value that goes beyond the numbers. “What really drives me is being able to provide people in my company with the opportunity to grow within the company.”

2017 MVP AWARDS

Mega Growth Leadership Award Why do you think you were recognized with this award? Because of my leadership as a multi-unit operator and dedication to brand success. How have you raised the bar in your own company? We raise the bar every day. I preach that when we are feeling good about our results we should go back to basics and see if we have new challenges. Being a consistent “B-plus” or “A” operator takes persistence.

BOTTOM LINE Annual revenue: $280 million. 2017 goals: To grow the company organically with 10 new restaurants per year. Growth meter: How do you measure your growth? One restaurant at a time. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, I want to be retired and on executive boards to help build better companies. In 10 years, I want to be traveling, watching the next generation grow the business, and making sure the DNA of the company stays true to its values. How is the economy in your regions affecting you, your employees, and your customers? Most of our market is a gateway to Latin America, so it’s healthy and robust with lots of opportunities.

What innovations have you created and used to build your company? “The Machine.” We know all operational measures daily with the click of one email. Also, growth through community involvement and owning our trade area one restaurant at a time is a huge part of our success.

Are you experiencing economic growth in your market? Absolutely. Miami and Fort Lauderdale have so much to offer in terms of growth from Latin America.

What core values do you think helped you win this award? Strong DNA, tremendous culture, and superior management teams at all levels of the organization.

How do changes in the economy affect the way you do business? We do more research on customers and employees in order to be effective and have more flexibility.

How important is community involvement to you and your company? The mission of JAE Restaurant Group is to be “A Cut Above” to our stakeholders, while remaining true to our values. We demonstrate Dave Thomas’s motto in everything that we do. Not only does JAE carry on with fresh, quality ingredients, we also operate quality restaurants with high-quality people. The founders have created a company that values the contributions of its employees. We promote a positive working environment where team members learn from one another from the cumulative years of Wendy’s experience we have under one roof. We require every restaurant to support at least one local organization such as Little League, the Chamber of Commerce, or the Boys & Girls Club.

How do you forecast for your business? We monitor the business daily, weekly, and monthly. Although we have a budget, we monitor it daily.

What leadership qualities are most important to you and your team? The executive leadership team, with over 300 years of restaurant and multi-unit operations experience, shares the values of Wendy’s founder, valuing people and the critical role they play in making a company successful. Our mission statement clearly articulates our “people first” philosophy and drives employee engagement. The company has created a family culture that celebrates employees’ life events through celebrations, on its Facebook page, and through the company’s newsletter.

What are the best sources for capital expansion? Internal cash flow; 30 to 40 percent of cash flow should be used for capital reinvestment. Experience with private equity, local banks, national banks, other institutions? Why/why not? Absolutely. In today’s business environment, you need to have relationships with a number of financial institutions. You also must have a great management team and not just invest for today, but invest for tomorrow. It’s not about what you want, it’s about where the company is going to go. What are you doing to take care of your employees? We host a big holiday party every year in every market. We’ve increased vacation time (four weeks after 10 years) and we’ve tried to create an environment that enforces happiness by giving lots of recognition for hard work. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We look at it as the cost of doing business. While it does have an impact on the bottom line, we don’t short-term any of these costs and try to be on the leading edge. How do you reward/recognize top-performing employees? We give monthly recognition of the employee of the month at the office, parking spots, holiday parties, GM rallies twice a year where we bring all the GMs together, and give rewards based on performance, sales profiles, and people development. What kind of exit strategy do you have in place? I plan on turning the business over to the family by creating value and creating demand for the business. If you have a successful business, you will always have an exit strategy, and never have to worry about it.

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40 YEARS OF DELICIOUS FOOD & FANTASTIC FRANCHISE OWNERS

Want to know our secret ingredients?

[ heart ‘n soul ]

Ask Raj P., Franchise Owner since 1996 with 10 locations in the Carolinas.

"Having grown with the Bojangles’ family over the past 20 years, we are even more excited about the future. As we expand our brand, more and more families will be craving our flavors.” LET’S GET COOKING. CALL 800.908.5939 OR VISIT BOJANGLES.COM/FRANCHISE

© 2017 Bojangles’ International, LLC. This franchise sales information does not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have registered the franchise (or obtained an applicable exemption from registration) and complied with the pre-sale disclosure requirements that apply in your jurisdiction.

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2017 MVP AWARDS BY HELEN BOND

Nobly Done!

Commitment to community knows no bounds

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hen Bret Stewart was growing up, he dreamed of being a doctor so he could help people. Life may have led him down a different path, but his desire to positively influence the lives of those around him is realized every day. Stewart, president of Woodinville, Wash.-based CenterTwist Inc., is the recipient of the 2017 MVP Noble Cause Award for his dedication and passion toward those in need. A multi-unit franchisee with 17 Auntie Anne’s, 2 Schlotzsky’s, and 1 Cinnabon

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“You don’t have to do much, just a little, and it can really make a difference.” in Washington state and Alaska, Stewart’s creative commitment to his employees and community knows no bounds. His good works have encouraged employees

NAME: Bret Stewart TITLE: President/owner NO. OF UNITS: 17 Auntie Anne’s Pretzels, 2 Schlotzsky’s, 1 Cinnabon AGE: 50 FAMILY: Two sons, 25 and 20 YEARS IN FRANCHISING: 25 YEARS IN CURRENT POSITION: 16

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2017 MVP AWARDS PERSONAL Formative influences/events: I grew up on a farm—and also in the city of Chicago. My parents were sort of hippies who wanted to get out of the big city and live off the land, but they got divorced and I moved around a lot between homes and states, farms, and cities. My last three years of high school in Snohomish, Washington, was the longest, continuous period of time spent at any one school growing up. I went to college at the University of Washington on a scholarship for disadvantaged youth. I worked my way up from a dishwasher in high school to a line cook at a local restaurant. In my sophomore year in college, I got a summer job at a pie shop (The Pie Pantry) at the Seattle Center in 1986. It would be the last job interview I ever had. I worked my way through the management ranks and also got scholarship help from that 24-location multi-concept company (Orange Julius, Dairy Queen, A&W, Auntie Anne’s, as well as independent concepts like the Pie Pantry). I became a partner in 1993 and eventually bought the seven Auntie Anne’s franchises in 2001. Eleven days after the deal was closed the towers were hit in NYC and we went into a pretty deep recession—but we made it! Key accomplishments: Started a social enterprise business (Auntie Anne’s) with a nonprofit that works with people with disabilities. Income from that over the years has helped support their organization. Recognized as a Medium Private Employer in the U.S. for hiring people with disabilities (1994) and won again in 2004 as a Small Private Employer for Washington state after I bought the Auntie Anne’s. Past chair of the Washington Restaurant Association and current board member of the National Restaurant Association. Elected by my fellow Auntie Anne’s franchisees to be president of the Western Region of Auntie Anne’s franchise advisory council various times over the years. Opened my first Cinnabon bakery in 2015. I also started a small mystery shopping business with my best friend in 1993 that is still in business today! Work week: Always with my phone/email. I do travel a lot, but Wi-Fi on the plane helps me keep current and productive. What are you reading? Game of Thrones (again). Best advice you ever got: Be tough on standards, but easy on people. What’s your passion in business? Seeing people grow and either get promoted with us, or move on to their next phase in life. I love creating places where people want to work and stay engaged, where they have fun and feel good about themselves.

to pursue their passions, provided jobs to those with special needs, and enabled the company to feed and fund countless community projects and programs. Stewart didn’t have to look far for a corporate role model. Inspired by the giving spirit of Anne Beiler, who founded Auntie Anne’s with “caring for others in mind,” he created his own Dream Builders program to help fund the goals and aspirations of his team members. Every Dream Builders recipient has a story. The fund has covered dance academy tuition for an employee who is now a member of her college dance team; paid

“Promote from within, celebrate successes, and care for those who stumble.” for airfare to enable another worker to travel on a mission to treat Indonesians with AIDS; and covered the application fees for funding to provide hearing aids to an employee who could not otherwise afford them. This year, the company will award college scholarships to working students and help many employees with financial hardships. The program is funded by company profits and overseen by a general manager, says Stewart, who knows firsthand what can happen when someone believes in you: he attended the University of Washington on a scholarship given to disadvantaged youths with potential and aspirations for college. “I want the people who work at my Auntie Anne’s, Cinnabon, or Schlotzsky’s to look back and think that was one of the best jobs they ever had,” he says. “Part of this, I think, is creating amazing opportunities for people to have access to or achieve something they never thought possible.” Stewart’s contributions have been well received within the communities he serves. Two of his Auntie Anne’s locations are owned by the social enterprise organization Washington Vocational Services (WVS). Stewart oversees the operations and management of the WVS locations, in which the profits are used to fund the

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organization’s mission to provide employment services for people with disabilities. Most of his locations have someone on their staff referred by a social service agency. His company also gives mightily to raise money for Alex’s Lemonade

MANAGEMENT Business philosophy: Be positively engaged. Find solutions to challenges and make a difference. Act honestly and ethically in all affairs. Always focus on the long term, not the short term. Management method or style: Trust your people, but verify with your systems. Promote from within, celebrate successes, and care for those who stumble. Take care of the details of your people, so they can take care of the details of the guests. I don’t micro-manage! I also want working in my company to be part of someone’s life, not their whole life—just a successful part of it. Greatest challenge: Evolving the business model in this dynamic new retail and governmental regulatory environment. I recently terminated a lease for a 3-year-old location in Seattle because of increasingly burdensome and untenable regulations for a business my size. How do others describe you? Friendly, outgoing, optimistic, and kind. (I hope anyway!) How do you hire and fire, train and retain? I think friendly team members and clean stores attract people who want to work in friendly, clean, and busy stores. It’s not just good customer service, but it attracts those people who want to be part of that. Keeping people is the most important thing I focus on. It starts the first day on the job! We need to be really organized and get the paperwork out of the way, but then make sure the new people are welcomed and have fun right away. We want them to experience rolling a pretzel on their very first day—not in the back doing dishes. From there, we hope we can be consistent and flexible with their schedules and give room for internal growth. Our shift leaders help interview new applicants, and supervisors also share in bonuses for sales, food, and labor control. We have Pretzel Olympics every other year. Stores compete with two of the best from each location. It’s a great event and I always look forward to it. We also have a Dream Builders fund where our people can apply for funds to help them achieve a dream or personal goal. Financial assistance is also available from this as well. We are giving scholarships away to our working students. Basically, we invest in our people with decent uniforms, through training and participating in choosing new hires, and we try to be a resource for them to move on in their life in a positive way.

MULTI-UNIT FRANCHISEE IS S U E III, 2017



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2017 MVP AWARDS Stand Foundation, Auntie Anne’s national charitable partner that fights childhood cancer, and supports the Make-a-Wish Foundation and Children’s Miracle Network Hospitals. It was a Children’s Miracle Network

BOTTOM LINE Annual revenue: A bit over $11 million in 2016. 2017 goals: Look to diversify service and delivery models, renew/remodel five existing locations, look for opportunities that might arise where it makes sense. Add one to two more Cinnabon locations. Growth meter: How do you measure your growth? Not really looking at a number of locations, rather just maximizing and/or surviving the current landscape and growing where and when it makes sense. Vision meter: Where do you want to be in 5 years? 10 years? This is a good question, and one I need to perhaps think about more. I feel like I am trying to adjust, survive, and thrive in the current year and 2018. Beyond that I have not firmed up yet! What are you doing to take care of your employees? Creating hybrid jobs that help us as we grow and that also leverage their unique skills (IT, marketing/social media, maintenance tech, multi-unit). I try to create career paths and added value for the company for long-term employees when it seems a good fit. Our Dream Builders fund allows me to donate money to help fulfill our team members’ dreams or ambitions. This has also evolved into an employee assistance fund for those in need. We offer more than just money, also providing advice and methods to help them long term, not just pay a bill. Recently, I have been coordinating personal financial workshops with insurance brokers and bankers. Many people did not get financial coaching or skills from their parents or in school and do not know how to budget their own money and save. We have 40- to 45-hour work weeks for managers (average around 42). And we try to pay our shift leaders and supervisors competitively so managers are able to retain a good team. We have fun contests and I love to take all my managers to franchisor conventions and business trips whenever possible. What kind of exit strategy do you have in place? There really isn’t an exit strategy for me. I guess renewing leases where it makes sense and diversifying my concepts and locations that allow us to grow smartly.

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radiothon that provided Stewart with a powerful epiphany on the power of giving: when manning the phones he took a pledge from a little boy and his sister who wanted to donate all the money they had in their piggy bank. “I was on the phone for 10 minutes while they counted the change,” he recalls. “I will always remember feeling that this donation (something like $2.48) was the biggest donation I took that day. It wasn’t the size of the gift, it was the spirit of giving what they could. That still resonates with me and we do what we can, when

we can. I always get inspired by others who give to their community in creative ways, especially those who don’t have a lot to give but still find a way.” Leading with a noble purpose, Stewart says, is about reaching out. “You don’t have to do much, just a little, and it can really make a difference,” Stewart advises his fellow franchisees. “Some things might really catch on and be amazing! But even a little help to someone that needs it matters. I think most everyone wants to find ways to help others.” Sometimes, all it takes is a dream.

2017 MVP AWARDS

Noble Cause Award Why do you think you were recognized with this award? We have raised money for the Alex’s Lemonade Stand Foundation and Seattle Children’s Hospital over the years, but I think our Dream Builders is what is so unique. We have really engaged some people into looking into their future and seeing what their dreams are. We have bought airfare for a couple of people to go on missions. We have paid dancing school tuition. We have helped a deaf employee get hearing aids he could not afford, and we are giving away scholarships to our working students this year. Also, our employee assistance fund for those who need a little help has been an increasing focus for us. We have always hired people with special needs and have some individuals in most, if not every, store who use supported employment. I have always been an advocate for hiring people with disabilities and have seen so many lives affected by all companies that practice this. Most of these things are just being good members of the community and are what I see a lot of restaurant companies doing. It surprised me to get the award. Maybe it was the variety of things we do, but the theme is always helping people, especially those who can’t really help themselves, or who are doing all they can. I really want to help them—like I was helped when I was growing up. How have you raised the bar in your own company? I try to be a positive influence with our leaders. I want them to feel proud of where they work and to get the recognition of working for the best company compared with other franchisees. I love it when they win awards for being Pretzel Perfect, or for sales increases, marketing ideas, or fundraising. I also get involved in franchise leadership at the corporate level as best I can with our brands, and also in our industry. I think that my managers are aware of that and proud that our organization takes a leadership role. What innovations have you created and used to build your company? We have had a deliberate focus on manager and leader retention and promoting from within. Tenure is very real in my manager’s longevity! We have compensation strategies, benefits, and HR policies that evolve to help retain our leaders (including annual contests and a culture of giving back and helping those in need). These don’t just happen, they need to be intentional, simple, consistent, and be always practiced. What core values do you think helped you win this award? Helping others, being a good example for others, being positive, and giving opportunities to people to realize their potential. How important is community involvement to you and your team? As mostly a snack brand (Auntie Anne’s), our role is to support the community by hiring, and to provide fundraising opportunities to our local community groups. I want to have a solid long-term reputation as being a great place to work. For hiring people with disabilities, I feel we are a great fit, as all our positions are customer contact. They all involve interaction with the public, even if it is just greeting people walking past the store. I think this is important as it shows people that there can be good jobs for everyone in their community. Last year I attended the funeral of an employee who passed away. I heard so many people comment at his service that they saw him in the mall, and they would talk to him about his job at church. I didn’t know him really well. He worked a couple of days per week, five to eight hours a week, for a number of years. But that was a big part of his world and his family’s world as well. I was proud to have been a happy part of his life. What leadership qualities are most important to you and your team? Trust. Be a good example. It’s okay to make mistakes—and fix them. Do the right thing. Have fun.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 1:18 PM


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6/27/17 1:53 PM


2017 MVP AWARDS BY HELEN BOND

What’s in a Name? I

For Sport Clips’ largest franchisee, it’s everything

f there is a way to see or hear the Sport Clips name, Johnny Weber will make it happen. Weber, the brand’s largest franchisee with 56 stores, and recipient of the 2017 MVP Single Brand Leadership Award, is all about spreading the word on the brand— all day, every day, in every way. “We like to say we are leaving a lit-

tle Sport Clips glitter everywhere,” says Weber. “We logo cars, shirts, hats, and our tailgate tents at SEC football games. When we order coffee or a table for dinner, it is under the name Sport Clips. If we can name it, we put it there. We try to brand everything.” Weber’s hustle to expand and passion for the brand are fueling his drive

NAME: Johnny Weber TITLE: Franchisee/area developer NO. OF UNITS: 56 AGE: 45 FAMILY: Two sons, Cole, 20, and

Tanner, 18

YEARS IN FRANCHISING: 8½ YEARS IN CURRENT POSITION: 8½

PERSONAL Formative influences/events: My father Eugene Weber. He taught me how to be honest, work hard, and treat people right. I grew up on a farm in Oklahoma. I was also the president of my FFA chapter and was an Oklahoma State Wrestling Champion (work ethic, passionate, competition). Key accomplishments: Area Developer of the Year, National “Sporty Award” Culture Leader for the Sport Clips brand, Area Developer Leadership Award, largest franchisee in the Sport Clips brand. Work week: We hustle every day! When you love what you do, then you do what you love! We are open seven days a week and work our schedule around our clients’ schedules. I eat, breathe, and sleep Sport Clips with a focus on growing the brand every day. What are you reading? 20,000 Days and Counting: The Crash Course for Mastering Your Life Right Now by Robert D. Smith, and The Seven Decisions by Andy Andrews. Best advice you ever got: “Life doesn’t get better by chance, it gets better by change.” You have to put in the work to get results. Don’t be afraid to try something, because if it doesn’t work it is better to try and not succeed than not try at all. What’s your passion in business? Building relationships is crucial for business success, and it gives me great satisfaction. I am passionate about having a positive impact on those around me. I am building a brand by focusing on building relationships and people.

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MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 1:20 PM


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2017 MVP AWARDS to grow his portfolio to 100 stores with “a team that is superior to any in the industry,” he says. Sport Clips founder and CEO Gordon Logan, who nominated Weber for the award, calls him a superstar franchisee. “We couldn’t have a better brand ambassador than Johnny Weber,” says Logan. Weber recently earned another nod from his franchisor at the brand’s Annual Huddle with “The Sporty Award”

(named for the company’s mascot) for turning the brand’s “culture into a way of life.” Weber, a franchisee since 2008, is also the brand’s area developer in Tennessee, Indiana, Kentucky, Alabama, and the Florida Panhandle. With a constant focus on supporting his fellow franchisees, Weber says he is in the business of building and growing people. “It is my belief that the better we can build a brand nationally, the better we are all going to do.”

MANAGEMENT Business philosophy: To create a championship haircut experience for men and boys in an exciting sportsthemed environment. Management method or style: 1) Living by our values and heart of a champion. 2) Can I trust you? – To do what’s right. 3) Are you committed to excellence? – To do your best. 4) Do you care about me? – By treating others the way they want to be treated. Greatest challenge: Starting my business with very little money. However, it taught me how to maneuver through hard times and find lending partners, both banks and private lenders. How do others describe you? You can see the passion I have for Sport Clips every day. I am logoed everywhere I go and consider myself a leading ambassador for this brand and this industry. I think other people see that I care for others and I want to help people succeed. They will also see the will to win in all aspects of my life and business. Motivated, passionate, and kind. How do you hire and fire, train and retain? You can only be successful if you can build great teams! We are in the people business. My team is my biggest investment. Training is key to retaining, and we hire to develop. Our training programs are critical in developing, motivating, and retaining each team member. When a team member is competent, they are confident. Confident team members provide a championship haircut experience and stay within our organization. Turnover can be detrimental to any organization, and we work with any team member that loses focus of company goals. Our goal is to have each team member experience personal and professional growth within our organization. If turnover does happen, our teams need to know that they did everything they could to help that team member before parting ways.

BOTTOM LINE Annual revenue: $23.8 million. 2017 goals: To open 11 personal stores and 22 in my developing territory. Growth meter: How do you measure growth? Same store sales growth, revenue, and client count. As we grow the brand, the number of stores we are adding is important as well. Vision meter: Where do you want to be in 5 years? I would like to own more than 100 Sport Clips stores and have a team that is superior to any in the industry. What are you doing to take care of your employees? Becoming the employer of choice is a top priority within my company. We have high expectations of our team members and value the work they do. Being able to provide a work and home life balance is something we pride ourselves in. We really focus and invest time in developing team members to move up in our organization. “We Hire To Retire” is a philosophy we live by to train and share daily business skills to become a lifer in our organization. We develop a relationship so we can help in times of need and help coach our team members like we would a friend. What kind of exit strategy do you have in place? I haven’t ever thought about an exit strategy. I’m still pretty young and dream about continuing to grow my business better and larger to provide opportunities for the great people who work with me.

2017 MVP AWARDS

Single Brand Leadership Award Why do you think you were recognized with this award? Appreciation is the first word that comes to mind. As an entrepreneur I love what I do and appreciate the values Sport Clips is about. Back when I started my company, I bought and took over several stores that were struggling and turned them around to profitable locations. I have always been willing to help other franchisees and team members of our brand. We build our business following these core values and truly care about the brand and all of our team members.

46

What core values do you think helped you win this award? Trust, compassion, determination, and leadership drive me every day to be the best I can be. I pass this along to all avenues of Sport Clips. I know there will be obstacles and times of struggle, but through determination and belief in our brand success will follow.

How have you raised the bar in your own company? Surrounding myself with a great team has allowed growth and strong team development. Our standards are met through hard work and dedication. Every quarter we are focusing on the next and building to end the year with a bang.

How important is community involvement to you and your company? Being part of local communities is something that gives back to me every day. As a small-business owner, having community support is huge. Whether it is pairing with a local charity or donating our time (and sometimes our hair) to the nonprofit St. Baldrick’s Foundation in the fight to conquer childhood cancers, that’s what our business is about. We try to pay it forward and rally around our communities as much as possible.

What innovations have you created and used to build your company? Keeping it simple is where we start every day. If we treat every client with kindness and a sense of urgency we can create that “wow” experience! Our smiles are the most important part of our uniform.

What leadership qualities are most important to you and your team? Accountability and pride in what you do are at the top of my list. We want to make sure there is complete satisfaction for every client, every time and deliver a flawless and championship MVP experience.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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6/8/17 3:41 PM


2017 MVP AWARDS BY HELEN BOND

The Wowi Factor From corporate executive to Hawaiian shirts

W

hen Mitchell York first came across Maui Wowi Hawaiian Coffees & Smoothies as a possible investment, the corporate executive immediately passed on the brand, vowing he’d never wear a Hawaiian shirt. Turns out the extraordinary laid-back vibe of Maui Wowi was just what York needed to fully depart from his corporate career in magazine publishing and other e-commerce ventures. York signed on as a franchisee in 2002. He even wrote a book on how the move changed his life. Some 50 Hawaiian shirts later, York is the recipient of the 2017 MVP Innovation Award for expanding the ways Maui Wowi serves up fresh fruit smoothies and gourmet coffee, ultimately developing the Tiki Hut catering model the brand uses today. York admits he stumbled upon the catering idea after an event planner booked him for a college event. “That was a big success and very profitable—and a lot easier than retail sales,” he says. “So I started focusing on colleges and it snowballed. I now have over 150 regular college accounts and it grows all the time. A lot of things in business seem NAME: Mitchell York TITLE: Franchisee NO. OF UNITS: 3 Maui Wowi

Hawaiian Coffees & Smoothies AGE: 60 FAMILY: Married, 3 children, 1

grandchild YEARS IN FRANCHISING: 15 YEARS IN CURRENT POSITION: 15

48

“The franchisee has to think and act like an innovator and business owner no matter what the franchise is.”

2017 MVP AWARDS

Innovation Award Why do you think you were recognized with this award? Maui Wowi’s business model 15 years ago was based on selling smoothies at public events—venues like stadiums and arenas, as well as fairs and festivals. I got my first location at Yankee Stadium. A few years later, I saw an opportunity to create a catering model. The franchisor was flexible enough to allow me to specify new equipment that would be more transportable. At their request, I wrote a catering operations manual and trained new franchisees. Today, almost all franchisees in the system derive significant revenue—and very high margins—from their catering operation. How have you raised the bar in your own company? Growing sales every year, adding new products (like coffee and espresso catering). What innovations have you created and used to build your company? I developed the campus activities market very early on because I believed college students were a prime market for our products. I now have 150-plus college accounts across the country. I established partnerships with our best operators in other regions so we can cooperate and jointly benefit from this market. What core values do you think helped you win this award? Fairness to employees and partners, courtesy to clients, and remembering that no one needs what we sell. How important is community involvement to you and your company? We cater numerous charity events for diseases and causes we feel strongly about. What leadership qualities are most important to you and your team? Everyone needs to be a leader. We are a small company. All our people represent me, and the brand, every day. I try to influence my team to do the right things and not take shortcuts.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 1:22 PM


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6/26/17 12:09 PM


2017 MVP AWARDS

“The people who think this is a ‘set it and forget it’ way to make a living are in for a lot of surprises.” I helped train new franchise owners in some of what I have learned through catering Maui Wowi smoothies and coffee.” York says success in franchising is all up to the owner. “A lot of people think owning a franchise doesn’t make you an entrepreneur. I couldn’t disagree with that more,” he says. “A franchise is no guarantee of success, even the most wellestablished ones. The franchisee has to think and act like an innovator and business owner no matter what the franchise is. That’s one of the reasons franchises aren’t for everyone. The people who think this is a ‘set it and forget it’ way to make a living are in for a lot of surprises, and not the good kind.”

like great ideas, but happen accidentally.” York’s stamp on the brand comes naturally. He grew up working weekends, summers, and holidays for his father’s upscale catering company in Manhattan and credits his franchisor for being willing to listen to the idea designed to cut overhead and boost margins. “You know the saying ‘Necessity is the mother of invention?’ Necessity is also the mother of innovation,” says York. “I had made a substantial investment in the franchise and it wasn’t doing for me what I wanted it to, so I had to find a way to

PERSONAL Formative influences/events: My father owned an upscale catering company in Manhattan from 1954 to 1975, where I worked weekends, summers, and holidays. Key accomplishments: Creating the catering model for Maui Wowi; earning an MBA from Columbia, paid for by my employer at the time; leaving the corporate world after 24 years; wrote a book about franchising called Franchise: Freedom or Fantasy—How to Know If a Franchise Is Right for You After Your Corporate Career. I wrote the book because I hadn’t really thought through my own decision very well. I was rebounding from a few really hard years at the end of my corporate career. I was really terrified to look for another corporate job, and I turned to franchising as sort of a last resort. It worked out well for me, but I knew lots of people who weren’t suited for running their own businesses who got into franchising as a way of avoiding getting a job. Work week: Any 60 hours of my choice. What are you reading? With the Old Breed: At Peleliu and Okinawa by E.B. Sledge, a memoir of a World War II Marine. Best advice you ever got: If you can’t make the right decision, make the decision right. (Michael Haith, former CEO of Maui Wowi) What’s your passion in business? Selling and increasing revenue year to year.

50

mold it to my needs. I can’t imagine too many other franchisors allowing me to do what I did in terms of specifying new equipment, new operating procedures, and more flexibility overall. I have shared my knowledge with dozens of other franchise owners on a one-to-one basis, and

MANAGEMENT Business philosophy: It’s only smoothies. While I’m very serious about the business, and we strive for excellence, out of nearly 500-plus catering jobs a year, a small number—maybe 1 percent— have problems. I tell my staff that we’ll make it right, but remember, “It’s only smoothies” (or coffee), not life and death. Management method or style: Benevolent dictator. Greatest challenge: “Just when I thought I was out, they pull me back in.” Permanent delegation is very hard. In a small business the owner is never really out of it. How do others describe you? I don’t know and I don’t want to know. How do you hire and fire, train and retain? We look for people who can be independent and handle a lot of responsibility. Sometimes we push them beyond what they’re ready for, but we rarely have to fire anyone.

BOTTOM LINE Annual revenue: NA. 2017 goals: Grow 15 percent a year. Growth meter: How do you measure growth? I look at three things most often: prior year’s sales, new accounts opened, and in-bound lead flow. About 65 percent of our accounts are repeat clients, so we work hard to stay in contact throughout the year. We also pay a lot of attention to opening new accounts on a continual basis. Along those same lines, we track our lead flow to make sure our search engine optimization is working well. Vision meter: Where do you want to be in 5 years? 10 years? Spending more time with my wife, children, and granddaughter (and maybe other grandchildren). Continue to visit Paris once every 5 years. What are you doing to take care of your employees? Full-time employees are covered by excellent health insurance and get all the smoothies and coffee they want. What kind of exit strategy do you have in place? I hope to sell the business in the next 5 years.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 1:22 PM


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Visit owncheckersfranchise.com/update or Call 888-913-9135 © 2017 Checkers Drive-In Restaurants, Inc. 4300 W. Cypress St., Suite 600, Tampa, FL 33607. 1. 2016 Named Best Franchise Deal by QSR Magazine. 2. Per Item 19 in Checkers & Rally’s 2017 Franchise Disclosure Document (FDD). Same-store sales results are measured by combining 2017 FDD and 2016 FDD data. 3. Per Item 7 Checkers & Rally’s 2017 FDD. 4. Per Item 6 Checkers & Rally’s 2017 FDD. Written substantiation will be provided on request. This advertisement is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. The franchisor, Checkers Drive-In Restaurants, Inc. is located at 4300 West Cypress Street, Suite 600, Tampa, Florida 33607, and is registered as file number F-4351 in the state of Minnesota. In New York, an offering can only be made by a prospectus filed first with the Department of Law, and such filing does not constitute approval by that Department. 20170683

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The2017Multi-Unit50

Ranking the most multi-friendly brands Top 50 Brands by Number of Multi-Unit Franchisees RANK BRAND 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 34 36 37 38 39 40 41 42 43 44 45 45 47 48 48 50

SUBWAY MCDONALD’S DUNKIN’ DONUTS LIBERTY TAX SERVICE THE UPS STORE AFC (ADVANCED FRESH CONCEPTS) H&R BLOCK LITTLE CAESARS DAIRY QUEEN GREAT CLIPS DOMINO’S HEALTH MART PHARMACY RE/MAX BURGER KING ACE HARDWARE FIREHOUSE SUBS VISION SOURCE JACKSON HEWITT TAX SERVICE JIMMY JOHN’S TACO BELL CENTURY 21 ANYTIME FITNESS KFC WENDY’S HISSHO SUSHI SPORT CLIPS COUNTRY INN & SUITES BY CARLSON PAPA JOHN’S DUNKIN’ DONUTS/BASKIN-ROBBINS COMBO PAPA MURPHY’S EDIBLE ARRANGEMENTS COLDWELL BANKER FANTASTIC SAMS CHICK-FIL-A SONIC DRIVE-IN GNC SUPERCUTS DQ TREAT JERSEY MIKE’S SUBS ARBY’S BASKIN-ROBBINS PIZZA HUT COLD STONE CREAMERY AUNTIE ANNE’S MIDAS POPEYES LOUISIANA KITCHEN ZAXBY’S JIFFY LUBE KUMON MIRACLE-EAR

MULTI-UNIT FRANCHISEES

SINGLE-UNIT FRANCHISEES

TOTAL FRANCHISEES

4,186 2,070 1,179 810 801 778 720 709 600 565 544 535 516 507 506 469 425 416 403 370 359 349 343 329 318 307 273 272 256 254 252 248 222 215 215 211 208 207 198 192 191 178 176 172 166 166 164 147 147 143

4,033 435 773 972 2,359 1,544 792 75 2,135 359 307 2,934 1,896 403 2,600 19 2,235 142 322 327 908 1,433 526 242 10 151 78 443 237 286 304 509 315 1,261 322 294 150 873 196 134 620 122 410 295 272 552 30 163 1,188 25

8,219 2,505 1,952 1,782 3,160 2,322 1,512 784 2,735 924 851 3,469 2,412 910 3,106 488 2,660 558 725 697 1,267 1,782 869 571 328 458 351 715 493 540 556 757 537 1,476 537 505 358 1,080 394 326 811 300 586 467 438 718 194 310 1,335 168

Source: FRANdata Brands with 25 or fewer franchisees were excluded.

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$1,110,530 AUVΔ

$67 Billion

Pet Industry Size

26.2% Comp Sales Growth◊

80+

In Development

No Inventory Simple Operations Recurring Revenue Recession Resistant Major Markets Available Multi-Unit Opportunities

MEET THE NEW

CASH COW (Sans the whole cow thing.)

Alex Samios

Vice President, Franchise Development

949-702-6262 dogtopia.com

Daycare • Boarding • Spa Showing dogs the love since 2002.

This advertisement is not an offer to sell any Dogtopia (DT) franchises in, nor is any such communication directed to, the residents of any jurisdiction requiring registration of the franchise before it is offered or sold in that jurisdiction. No DT franchises will be sold to any resident of such jurisdiction until the offering has been exempted from the requirements of, or duly registered in & declared effective by, such jurisdiction & any required FDD has been delivered to the prospective franchisee before the sale in compliance with applicable law. ΔAverage total YTD for the Top Quintile franchise stores from 12/26/15-12/31/16 per Item 19 of the Amended 2016 FDD. ◊Comparable sales growth for stores 13mos + from 12/26/15-12/31/16 per Item 19 of the Amended 2016 FDD.

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The2017Multi-Unit50 Top 50 Brands by Percentage of Multi-Unit Franchisees RANK 1 2 3 4 5 6 7 8 9 10 11 12 13 14 14 16 17 18 19 20 20 22 23 24 25 26 27 28 29 29 31 32 32 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

BRAND PANERA BREAD FIVE GUYS BURGERS AND FRIES GATEWAY NEWSTANDS HISSHO SUSHI APPLEBEE’S PANCHEROS MEXICAN GRILL FIREHOUSE SUBS SAM’S HOT DOG STAND BOJANGLES’ JACK IN THE BOX LITTLE CAESARS CAPTAIN D’S WORLD OF BEER BRUEGGER’S BAGELS PALM BEACH TAN THE LITTLE GYM MIRACLE-EAR ZAXBY’S MCDONALD’S JIMMY’S PIZZA SWEET FACTORY GRANDY’S PASSPORT HEALTH HERTZ SIMPLE SIMON’S PIZZA COUNTRY INN & SUITES BY CARLSON HUNTINGTON LEARNING CENTER RADISSON BARBERITOS BUDDY’S HOME FURNISHINGS AARON’S FRESHII RALLY’S JACKSON HEWITT TAX SERVICE GODFATHER’S PIZZA PLANET FITNESS CARL’S JR. SUN TAN CITY VALVOLINE INSTANT OIL CHANGE BETTER HOMES AND GARDENS REAL ESTATE COST CUTTERS FAMILY HAIR SALON SPORT CLIPS HARDEE’S DUTCH BROS. PACLEASE DENNY’S PENN STATION EAST COAST SUBS CHECKERS MCALISTER’S DELI DOMINO’S

% MULTI-UNIT FRANCHISEES

MULTI-UNIT FRANCHISEES

SINGLE-UNIT FRANCHISEES

TOTAL FRANCHISEES

100.00% 97.60% 97.26% 96.95% 96.88% 96.67% 96.11% 96.00% 94.94% 91.00% 90.43% 90.00% 89.66% 89.29% 89.29% 86.54% 85.12% 84.54% 82.63% 82.14% 82.14% 81.82% 81.40% 79.55% 78.13% 77.78% 76.30% 76.09% 75.86% 75.86% 75.25% 75.00% 75.00% 74.55% 73.45% 72.49% 72.32% 70.00% 68.75% 68.66% 68.57% 67.03% 66.40% 66.22% 66.10% 65.89% 65.48% 64.76% 64.71% 63.92%

28 122 71 318 31 29 469 24 75 91 709 63 26 25 25 135 143 164 2,070 23 23 27 35 35 100 273 132 70 22 22 76 39 24 416 130 137 81 28 55 46 48 307 83 49 39 141 55 68 33 544

0 3 2 10 1 1 19 1 4 9 75 7 3 3 3 21 25 30 435 5 5 6 8 9 28 78 41 22 7 7 25 13 8 142 47 52 31 12 25 21 22 151 42 25 20 73 29 37 18 307

28 125 73 328 32 30 488 25 79 100 784 70 29 28 28 156 168 194 2,505 28 28 33 43 44 128 351 173 92 29 29 101 52 32 558 177 189 112 40 80 67 70 458 125 74 59 214 84 105 51 851

Source: FRANdata Brands with 25 or fewer franchisees were excluded.

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FRANCHISE WITH A LEADER

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BUILD A WORLD-CLASS BUSINESS WITH DUNKIN’ BRANDS • Convenient, high-quality and affordable products • Industry-leading Franchisee support • Fresh and innovative store concepts • Deep incentives available across the U.S.

Apply today at: dunkinbrands.com Or contact us directly: 781-737-5530 • dunkinfranchising@dunkinbrands.com *Brand Keys Customer Loyalty Index © 2017 DD BR IP Holder LLC. All rights reserved.

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BY SARA WYKES

Space

IS THE PLACE

BREAKING GROUND IS HARD TO DO IN 2017

“R

eal estate development is one of the hardest things for a franchise,” says Philip Schram, chief development officer and chair of Buffalo Wings & Rings. Since buying the brand in 2005 with Nader Masadeh and Haytham David, he has helped rejuvenate and rebuild it to 70 locations today. However, changes in the real estate market, construction industry, lending policies, and regulations are slowing him from his goal of adding 75 new locations in the next 5 years. “In 2009, when the economy collapsed, a lot of people left construction,” says Schram. The result was a shortage of qualified contractors and construction workers. As the downturn continued, nobody wanted to be a tenant, he says, and “we developed an excess of real estate.” For those willing to sign a lease, it was a buyer’s paradise. But when the economy began to recover and development activity increased, that labor shortage persisted, even worsened, as many contractors had exited the

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business. Of those who remained, he says, “builders can only go at a certain speed.” Nearly a decade later, fallout from the subprime mortgage crisis also persists, resulting in a real estate and lending market nowhere near as friendly as it had been before the Great Recession. “Before that,” says Schram, “there was

Philip Schram

much more trust that the money would go to the right person and the job would be done. Now there is less trust and more underwriting, and that takes time. There are new guidelines banks must follow that are more stringent than they were in 2009.” Robert Thatcher, director of franchise and real estate development for Ben’s Soft Pretzels, agrees. “The days of 110 percent financing are long gone,” he says. “It takes real equity now.” Thatcher says he’s also seeing today’s higher costs for the most desirable real estate driving an expansion out of core markets into secondary and tertiary markets, where land and rents are more affordable. Power shift The economic recovery that followed the recession also altered the attitude of municipalities toward development. “When things were slow, cities were begging developers to come in,” says Schram. “Now they are in a stronger position and are becoming more demanding—and that affects how long it takes to develop a location.” The economy’s improving health has

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©2017 Firehouse Subs

#1 America’s Favorite Chain for “Top 5 Brands Overall” Restaurant Business

#1 America’s Most Loved Fast Food Restaurant Business Insider

#1 America’s Favorite Sandwich Chain Market Force

To own a franchise, visit FirehouseSubs.com/Franchising or call 877.887.8330.

A ST R AT EG IC INI T I AT I V E OF T HE IN T ER N AT ION A L FR A NCHISE A S SOCI AT ION

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SP AC E I S T H E P L A C E stimulated development, but the law of supply and demand still holds. This has shifted the balance of power, says Dan Burrell, a franchisee and area developer/ director with Jersey Mike’s Subs. “As more competition in a growing economy fights for space, we are back in a landlord’s market,” he says. “That reduces tenant improvement terms and other tenant incentives and makes it difficult for singleunit franchisees to compete.” Burrell anticipates additional changes as the real estate market continues to tighten. “I expect landlords to not even offer exclusives, which help protect investments by franchisees. If franchisees want to get in the game, expect slim margins because rent increases continue to require more risk.” The price of land is rising, with competition keenest for prime space in hightraffic, high-visibility corridors—especially for brands with similar footprints and customer demographics, says Schram. Says Thatcher, “The reality is we have fewer sites that are demographically feasible for new development. Many markets have been overbuilt and we’re seeing a trend toward urbanism. Cities want higher and better land use.” Back to brick-and-mortar A change few predicted when the dot-com boom began disrupting traditional retail is also affecting the real estate market. Although online sales made shopping from home easier and weakened many retailers, some online businesses are now establishing physical sales outlets, adding to the competition for the best locations. On the other side, many traditional brickand-mortar stores pressured into adopting digital sales channels are converting some of their real estate into warehouses and distribution centers for their online sales. “All the lines are blurring and coming together, driving the demand and absorption of gross leasable space,” says Thatcher. Mall operators also felt the pinch of the recession and e-commerce, but they are evolving and adapting too. “There has been a shift toward outdoor malls and power centers,” says Chris Naylon, net lease advisor for the Sands Investment Group in Sherman Oaks, Calif. He sees the changing tenant and customer mix at malls as an opportunity for franchise brands seeking space, especially those that serve food. “Customers are looking for an experience beyond just shopping,” he says. “I

58

“The reality is we have fewer sites that are demographically feasible for new development."

Robert Thacher believe restaurants will play a large role in revitalizing tired malls. They play an important part in adding to the overall shopping experience and attracting additional prospective shoppers.” More regulations, more delays While you can expect new rules and regulations to cause delays with permitting, sometimes the delays stem from a different cause: smaller towns often have only one or two planners on staff, who become

overloaded by increased demands from developers. If a region becomes attractive for franchises and other developers, its larger cities might have an adequate number of planners on hand to handle the influx, but the smaller towns around it most likely don’t. “The Orlando DMA in particular is loaded with towns that are simply overwhelmed with requests for new development approvals,” says Ray Lauletti, vice president of real estate for Arby’s Restaurant Group. And, he says, “As local governments shift more of the work to outside consultants and independent contractors, the store planning process has become even more unpredictable.” Further, as more municipalities feel overwhelmed by commercial development, many are attempting to control it by imposing limits on certain types of businesses, adding another level of competition for the top sites. “Towns like Kissimmee in Florida and Franklin in the Nashville DMA have limited the number of locations they will allow QSRs with drive-thru locations,” says Lauletti. “In addition to increasing time to gain approval, those municipal limitations on site supply drive up the price of suitable sites where drivethrus are allowed.” What can you do? Franchise real estate and site selection pros who have dealt with the ups and downs of several economic cycles have learned ways to smooth the path to opening new locations, no matter what the external conditions. As the environment continues to shift around them, their ideas, detailed below, are yet another reminder of the need to continually adapt, and adjust development plans and schedules to fit a changing marketplace. • Build in more time. Regulations at every level of government are in neverending flux. Ignoring their impact on a project’s start-to-finish timeline is a mistake. “We have significantly altered our store planning expectations and added time to our store opening schedule,” says Lauletti. “While senior management is not particularly excited by these delays, it pays to be realistic and to communicate early and often about delays in the planning and zoning process.” For any new build project anywhere in the country, he says, “We now estimate a minimum of 18 months from site identification to opening. In Florida, we add at least 6 months

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INGREDIENTS FOR SUCCESS TECH ADVANTAGE • One standardized POS system with mobile app and online ordering for all stores • Proprietary app to helps you manage your business with “real time” sales figures, labor & more

IMPRESSIVE SALES GROWTH • 7 years of consecutive same store sales growth*

EXPERIENCED LEADERSHIP • Executives average 30 years of industry experience

FIRST IN FLAVOR • The originators of Flavored Crust® Pizza with 8 customizable crust options • 100% mozzarella cheese • Dough made freshly daily right in-store

ESTABLISHED BRAND WITH TERRITORIES AVAILABLE • Over 30 years of franchising

INDUSTRY RECOGNITION • Technomic’s 2017 Consumers’ Choice Award Winner for “Overall Takeout Capabilities” • Entrepreneur Franchise 500 (2013-2017) • 2017 Top Franchises - Franchise Business Review

To learn more go to franchising.hungryhowies.com or call us today at 248.414.3300 *Results measure company-wide same store sales figures for each calendar year over the previous calendar year. The measuring period is January 1, 2010 through March 26, 2017. Excludes store sales from the State of Florida, units which are not obligated to and do not report sales to Hungry Howie’s, and units which opened and/or closed during the measuring period. Not all individual stores experienced the same results. New franchisees may have results that differ. This advertisement is not an offer of a franchise. Franchises are offered and sold only through a Franchise Disclosure Document 2016. STATE OF CALIFORNIA: THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE COMMISSIONER OF CORPORATIONS NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE, AND NOT MISLEADING. STATE OF NEW YORK: THIS ADVERTISEMENT IS NOT AN OFFERING. AN OFFERING CAN ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. SUCH FILING DOES NOT CONSTITUTE APPROVAL BY THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. MINNESOTA STATE REGISTRATION NUMBER F-2873. HUNGRY HOWIE’S PIZZA & SUBS INC., 30300 STEPHENSON HIGHWAY, SUITE 200, MADISON HEIGHTS, MI 48071, 248-414-3300

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SP AC E I S T H E P L A C E on top of that.” • Learn the territory. Local knowledge is essential for success, especially in new or unfamiliar markets. Thus it is vitally important to set schedule and budget expectations as soon as possible, says Jason Glasrud, development manager for the CBC Real Estate Group in Kansas City. “Most communities have established processes that inform the developer and operator. Drilling down into possible restrictions that can affect a brand’s trade dress, drive-thru lanes, and permit, tap, and impact fees is critical in the early stages of a project and allows you to obtain relief when you can.” Says Naylon, “Understanding the fundamentals of real estate and the advantages of a particular location becomes increasingly important, even more so in core markets versus secondary or tertiary markets. Poor site selection will lead to poor sales performance in a market where margins are becoming tighter and tighter.” For smaller franchisees or those with minimal experience in real estate and development, it is even more vital in today’s competitive market to take advantage of firms with strong local connections, and remain focused on running a successful franchise business. • Staff up in advance. In real estate development today, it’s important to have enough dedicated real estate staff on hand, and to hire exclusive brokers to work in specific territories, says John Metz, president of RREMC Restaurants, which operates Denny’s and Dairy Queen restaurants, hotels, and real estate. Metz also is the franchisor of Hurricane Grill & Wings, providing another lens for his concerns about finding the best real estate for his brand, as well as for his new fastcasual version, Hurricane BTW (burgers, tacos, wings). • Be patient… “My hope is that the balance of supply and demand is going to balance itself, so my only advice is to be patient,” says Schram. “You know what is a good location and what’s a bad one, and you must resist the urge to put the wrong franchise in the wrong place.” It also matters what you do with the time you spend being patient. “The smart thing we did in 2010 was not to let go of anybody in the company,” says Schram. “We looked at what was working and what was not. We did some rebranding. We worked on training. All of that gave us a better product and a better

60

"If franchisees want to get in the game, expect slim margins."

Dan Burrell company. Some people were tempted to shrink their business. That sends a very bad vibe to your staff.” • …but don’t sit back. As markets have matured, “The American consumer has become pretty bored with the same enclosed mall concept and the same merchandise from the same retailers,” says Thatcher. To compete for prime space in malls nowadays, franchises must distinguish themselves from competitors. “Landlords are seeking products that are fresh and artisanal,” he says. “It’s about a shopping experience that drives traffic.” For Ben’s Soft Pretzels, that means “tinkering and rolling out new product offerings, even on a short-term basis,” says Thatcher. “Providing seasonal offerings is hugely important for all retailers. It keeps things fresh.” Eleven gourmet dips and sauces support Thatcher’s goal of rolling out new options for his customers.

Schram is also seeing the value of adapting, especially for foodservice brands. “More and more people, especially Millennials, are picking up food and eating it at home,” he says. “Franchisees may press for smaller spaces, but we’ve concluded we needed to maintain our size and we’re using some of that space for grab-and-go. People need to think about your brand as now having that option.” • Piggyback to market. Ben’s Pretzels is also taking advantage of an opportunity where another party provides the real estate. “We picked up concessions to sell Ben’s at Notre Dame football on Saturdays,” says Thatcher. “That introduced 80,000 people to our product, and those same customers may end up at our brick-and-mortar stores.” Since then, the brand has picked up more than eight baseball stadiums and other sporting venues. “The concession business has been a clear differentiator,” he says. “Now we’re getting a lot of interest from the West Coast and hope to grow there soon.” • Conversions and the need for speed. In Kansas City, Glasrud and his team at CBC Real Estate have made the competition for prime sites a top priority and have focused on adapting existing structures as a way into trade areas where retail sites are either unavailable or too expensive. Given the demand for prime sites today, says Glasrud, “both developer and operator must move quickly.” Arby’s is also concentrating on converting existing structures instead of developing raw land. “We have a variety of such projects in our pipeline” says Lauletti. “We’re converting a Pizza Hut in North Canton, Ohio, a former Bojangles’ in Greensboro, North Carolina, and a former Hardee’s in Jacksonville, Florida.” The reason, he says, is simple. “Although many vacant buildings require significant upgrades and come close to the cost of new builds, speed to market is quicker and produces quicker cash flows from operations.” • Partner with developers. Finally, make new friends. At Arby’s, says Lauletti, “We are pursuing more up-front partnerships with developers who can better navigate the process of raw land and improved pad development.” That kind of partnership produced a recent opening in Gainesville, Ga., working with an Atlanta-based developer. That same group, says Lauletti, is now working on development assignments throughout Georgia and Florida.

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N3 Delivers Real Estate to Retailers • Build-to-Suit • Acquisitions

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• Brokers Protected 260+ Projects Completed Nationwide in 25 States

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Chris Via 301.466.7186 cvia@n3realestate.com

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MULTI-UNIT FRANCHISE OPPORTUNITIES AVAILABLE FOR LEADING AUSTRALIAN BRANDS Retail Food Group (RFG) is a Global Food and Beverage Company headquartered in Australia, with a regional presence in Los Angeles. RFG’s areas of expertise include:

GLORIA JEAN’S COFFEES • 900+ coffee houses in over 55 markets worldwide • Vertically integrated business from bean to cup • Quality Arabica beans and wide variety of coffee beverages

FRANCHISOR: 12 Brand Systems, 2550 outlets in over 75 licenced territories worldwide

Exciting new brands entering the US proven Internationally DONUT KING • Australia’s largest specialty donut franchise • 30 million donuts served per year

RFG has significant expansion plans and is now offering Multi-Unit and Master Franchise opportunities for territories within the USA.

CRUST GOURMET PIZZA BAR • Established brand with over 14 years of experience • Australia’s largest gourmet pizza brand BRUMBY’S BAKERY • 40+ year heritage • Baking 10.5 million loaves per year • Wide variety of bread loaves and multi-daypart food offerings

P: 1-877-320-JAVA | E: franchise@retailfoodgroupusa.com | rfgbrands.com Ad_half_7.375_4.625_template.indd 1

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7/7/17 10:11 PM


2017

-

BY EDDY GOLDBERG

GROWING IN TOUGH TIMES 2017 Multi-Unit Franchising Conference shows how

M

ulti-unit and multi-brand operators continue to grow in both numbers and size—and so does attendance at the Multi-Unit Franchising Conference. This year’s chair, Guillermo Perales, began his franchising career 20 years ago with a single Golden Corral, $100,000, and an SBA loan. Today his company, Sun Holdings, with nearly 750 units, is one of the largest franchise organizations in the country. The conference offers something for everyone, from single-unit franchisees looking to grow, to multi-brand operators looking to diversify further. It’s designed each year by an advisory board consisting of franchisees of different sizes, types of businesses, and locations. The annual gathering took place this past April at Caesars Palace in Las Vegas. And just as franchisees and franchisors pride themselves on consecutive years of same store growth, the conference racked up another consecutive year of record attendance.

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raises tens of thousands of dollars for worthy causes, such as the Little Rock Foundation, an organization of parents with children living with blindness, visual impairment, and other disabilities. The day on the links was followed by a welcome reception that evening at Carmine’s Italian restaurant in The Forum at Caesars Palace. The reception featured cocktails, hors d’oeuvres, and plenty of lively conversation.

Marcus Lemonis and Guillermo Perales Golf, charity, welcome The conference, which this year ran from Sunday through Wednesday, began with the annual fundraising golf tournament. The scramble-style outing is a chance to relax and make new friends in the beautiful Nevada desert—while raising significant sums for charity. Each year the conference

Keynote & power panel The conference kicked off Monday morning with a welcome from Therese Thilgen, CEO of Franchise Update Media. She

CONFERENCE BY THE NUMBERS Aggregated statistics from the 2017 Multi-Unit Franchising Conference: • Attendees: 1,651 • Franchisees: 716 • Units: 12,000+ • Exhibitors: 220+ • Revenues: $15 billion • Employees: 200,000

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FRESHLY BREWED OPPORTUNITIES AWAIT

Become a part of the oldest privately held specialty coffee company in the country. Select territories available for franchising immediately.

OUR GROWTH:

BUILDOUTS: • Stand Alone • In-line • Drive-Thru • Kiosk Contact: Brian Reid

Stores Worldwide

1,146

Stores Domestically

300

CHANNELS: • Traditional • Airports • Universities • Hotels • Military Bases

Business Development Manager | (310) 436-5152 | breid@coffeebean.com | www.coffeebean.com

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2017 2017

-

MULTI-UNIT FRANCHISING CONFERENCE

Greg Vojnovich noted that the company is celebrating 30 years in business—another milestone to be proud of in any business. As she looked out onto the crowded room, she recalled that just 10 years ago only 150 attendees were on hand for the conference, held at The Broadmoor in Colorado Springs. More than 1,650 registered for this year’s conference. Of those, 716 were franchisees, representing more than 500 franchise enterprises. All told, the franchisees oversee 12,000 units, employ more than 200,000 people, and conducted $15 billion in business in the past year. And they’re expansion-minded: collectively, they expect to add 4,000 more units in the next 12 months and 12,000 units over the next

Therese Thilgen

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5 years. Fifty percent of the franchisees operated 2 or more brands. Greg Vojnovich, chief development officer at Arby’s, introduced Marcus Lemonis, the first keynote speaker. Lemonis, star of CNBC’s show “The Profit,” began by sharing stories of his difficult childhood and adolescence, which he said has given him insights into business leadership. “Vulnerability and the compassion you have for others is ultimately the golden ticket to be successful,” he said. He challenged attendees by asking what their definition of success is: money, a personal definition, or what you do to help other people to success. For himself, he said, “It’s not

franchisee, former Applebee’s CEO). They held a lively, informative conversation discussing current challenges, how they built their companies, how they differentiate themselves, their biggest mistakes, key metrics, where they found advice as they grew, and where they find it now. Two separate luncheons followed, one exclusively for franchisees, the other for franchisors and exhibitors. The topic of the franchisor/supplier luncheon was “Franchisee Challenges in Finding Great Sites.” The franchisee-only luncheon offered franchisees a pitch-free environment where they could rekindle old relationships and build new ones.

Michael Kulp, Guillermo Perales, Adam Saxton, Omar Simmons, Dave Goebel about the glory, but about the opportunity.” He said the reason he invests in small businesses that are struggling—not necessarily financially—is that they’re the underdogs. He called small-business owners “the most dysfunctional, hard-working, selfless people you’ll ever meet.” Comparing franchisees’ role to that of a parent, he urged them to be better leaders of their companies. (Yes, your employees want your attention and approval!) “It’s important to understand the magnitude of your responsibility,” he said. “As business owners, you’re responsible for the humanity within your four walls. At your funeral you want people to say you changed their life; what you did for other people.” A general session panel, led by last year’s chair, Michael Kulp (450 units including KFC, Taco Bell, and First Watch), took on the challenge of “Franchisee Growth & Success in a Changing Environment.” Panelists were Perales, Adam Saxton (70 McAlister’s), Omar Simmons (54 Planet Fitness), and Dave Goebel (Pie Five Pizza

Afternoon breakouts The afternoon’s concurrent breakout sessions provided something for everyone: M&A (one session for buying and one for selling); remodel trends; scaling your organization for growth; franchisee advisory councils and franchisee associations; lease negotiations and renegotiations; and reputation management. The Money Room, introduced last year to unanimous acclaim, opened at 3 p.m., offering franchisees an opportunity to meet one-on-one with potential lenders to discuss financing options. The Law Room, new this year, provided attendees with a chance to sit down with franchise attorneys and speak privately about their legal concerns and any related issues keeping them up at night. Another new feature this year was a lounge where attendees could sit and relax, make phone calls, catch up on email, or hold impromptu meetings. After a full day of speakers, panels, breakout sessions, networking, and plenty

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Darrell Johnson of sitting, attendees headed to the Opening Networking Reception in the Exhibit Hall, where more than 200 franchise brands and third-party suppliers were on display to discuss franchise opportunities, products, and services. The three-hour opportunity to explore new brands and learn about new solutions was facilitated with plenty of food and drink. Day 2: The economy Tuesday opened with a continental breakfast as attendees fueled up for Day 2. Gary Gardner, chair of Franchise Update Media, and Conference Chair Perales welcomed the crowd and introduced the day’s first speaker: Darrell Johnson, CEO and president of FRANdata, who presented his annual report on economic trends and their effect on franchising. “It’s time to be more opportunistic than optimistic,” he began. Touching on many factors affecting the economy and marketplace, he cautioned that in the area of capital markets, the next credit tightening cycle will arrive soon. Two financing trends he noted are the growth of alternative lenders, and a shift from relation-driven lending to data-driven lending. On a positive note, he said, the franchising business model is doing “very well,” with publicly traded franchise companies outperforming the Russell indices for the past 11 years. And new brands are appearing almost daily, with about 300 new brands appearing each year. Many of the new brands, he added, are increasingly specialized and focused on subsectors. Also, Ronnie

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he said, franchisors are offering strippeddown, lower-cost versions of their brands to allow easier entry. Although many small-business owners were looking forward to a rollback of Obama-era regulation, the dysfunction of the new administration has disappointed many seeking quick relief from what they see as burdensome over-regulation. However, he reminded the crowd, even with a functional White House and Congress, “political change takes years to put into practice.” Other observations: 1) Transparency is a big issue in business today, and franchisors have responded: FPRs have risen from 47 to 66 percent in just the past 3 years. 2) Nontraditional units are boosting franchise growth. 3) Franchisors are providing more incentives to existing owners, such as reducing the franchise fee for additional units. Summing up, he said, “Franchise growth looks stable for the next year or two.” MVP Awards The much-anticipated Most Valuable Performer (MVP) Awards ceremony recognized outstanding franchisees for their contributions to their brands, their organizations, their employees, and their communities. In a moving ceremony, honorees stepped up onto the stage and were presented with plaques honoring their achievements. Each winner is profiled in this issue, beginning on page 8.

Lott with his “center,” Don Rush

Woooo! Ronnie Lott, after an introduction by Scott Hoots, vice president of franchising at American Family Care, made a dynamic entrance, running across the room and up onto the stage, football in hand, for his keynote address. Lott, a four-time Super Bowl champion with the San Francisco 49ers and known for his fierce on-field competitiveness, is considered one of the best safeties in the history of the game. His talk focused on finding your passion. “Are you willing to go the distance, give everything you can?” he challenged. “What do you think about every day? What makes you feel passionate about being here today? What makes you excited every day?” he asked—adding that at age 57, “When I ran up here, I thought about wanting to be my best.” Lott talked about “Bringing Woooo!” to your life, meaning giving your best to whatever you do, every day. “Some days you don’t want to get up, but you’ve got to get up and bring a little Woooo!,” he said, adding that everything he brought to football he now brings to his life. He also spoke about the importance of getting like-minded people on your team and of the value of service. “You can have it all but you have to serve; you have to give it up to others,” he said. And he’s been backing that up for more than 20 years with involvement in many philanthropic ventures. External threats Lott’s high-energy presentation was followed by a general session panel, “The New Normal: Legislation, Regulation, and Its Impact on Franchisees.” Gary Robins, a Supercuts franchisee, facilitated the panel, which consisted of Rob Branca (Dunkin’ Donuts franchisee), Aziz Hashim (NRD Capital), and franchise attorney Michael Lotito (Littler Mendelson). External threats from the federal, state, and municipal levels— from the NLRB to the ACA to minimum wage—are on the minds of franchisees nationwide. One problem the panel identified is the need to educate elected officials, policymakers, the media, the general public, and even employees of franchisees about what

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rent sessions. Topics were how to protect your bottom line in the face of external threats; becoming the employer of choice in your markets (attracting and retaining the best talent); securing capital (separate sessions for $10 million or less and $20 million or more); and key items to look for in assessing a brand. The Law Room and Money Room both opened for business again before attendees headed to the Exhibit Hall for the closing networking reception.

Gary Grace, former chair with Joey Robinson, 2018 co-chair franchising is—and isn’t. To illustrate the depth of the problem, Hashim, who called franchising “the last bastion of the American Dream,” cited one alarming finding from focus groups: three out of four believed a franchisee’s employees are paid by the franchisor. Other surveys have found that many employees of franchisees believe the same thing! For a business that employs about 9 million Americans, generates $1.6 billion annually, and accounts for almost 4 percent of the U.S. economy, it seems that not a lot of people outside franchising understand how it actually works. “This ignorance has led to a vacuum of knowledge about the business model,” said Hashim, who spent much of his year as IFA chairman working on educational initiatives. “This is all about the special interest groups who filled this vacuum with their own narrative,” he said. To counter this and defend itself from over-regulation and other threats, he said franchising must promote its own story. Robins asked the panel about what he called “50/500” rules: how small business with 50 or fewer employees are harmed by legislation targeting large organizations employing 500 or more. “Legislators look at you like you’re Google or Apple,” agreed Branca. “In my company, it’s just me. That’s why we invested in lobbying—a critical line item in our budget—and convinced our franchisor to do so as well.” Lotito spoke about joint employer and the NLRB. He said that with a new chair

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appointed the previous Friday, and two more appointees to be nominated (now done), the NLRB is “moving in the right direction.” He also cautioned against complacency. “Your opponents spent $90 million and everything they said was wrong,” he said, referring to the SEIU’s Fight for $15 campaign. “We have this wonderful success story and we don’t tell it. That’s our fault—and we need more money to tell it. It needs to be told with passion and expertise to legislators at all levels. You’ve got truth on your side.” While all this bodes well for franchising, he said the SEIU will not give up easily. Lunch in the Exhibit Hall came next, followed by a second afternoon of concur-

Get active! The last morning wrapped up with breakfast and a panel discussion about how franchisees can get involved in telling their stories and protecting the franchise model from what Hashim had described as “unintended consequences of good intentions” on the part of legislators and regulators. The panel, introduced by Matt Haller, the IFA’s senior vice president of public affairs, included Shelly Sun, CEO of BrightStar Care and this year’s IFA chair; Catherine Monson, CEO of Fastsigns; Matthew Patinkin, an Auntie Anne’s franchisee; and Ron Feldman, chief development officer at ApplePie Capital. Their chief goal was to encourage franchisees to get active and tell their stories through participation in the IFA’s @OurFranchise initiative (atourfranchise. org). Legislators at all levels are most influenced by small-business owners telling their own stories, said Haller, who urged franchisees to come to Washington, D.C. this September 11–13 to do exactly that. Sun, who assumed the IFA chair ear-

Gary Robins, Rob Branca, Aziz Hashim, and Michael Lotito

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Matt Haller, Shelly Sun, Matthew Patinkin, Catherine Monson, Ron Feldman lier this year, listed three main goals for the IFA in 2017: 1) increase engagement with franchisees; 2) increase the visibility of FranPac; and 3) increase support for emerging franchisors (fewer than 100 units). “Most franchisors don’t make money until they have more than 100 units,” she said, which is dangerous to franchisees and their employees. Patinkin said that while there has been no major effect yet from the NLRB’s joint employer rulings, it has created uncertainty and is a huge disruptor. “We talk about it at all our meetings, which is money and time spent on issues that don’t benefit our company. We want to talk about operations and making money.” Monson said that although Fastsigns has never been a joint employer, “We have made some significant changes.” She said Fastsigns has stepped back from delivering some services the brand used to provide franchisees, on the advice of her attorneys. “We don’t do that any more, and it breaks my heart,” she said. Sun echoed that sentiment, saying there are “things we’ve stopped doing” because of the new NLRB rulings. For example, BrightStar used to provide and pay for an

applicant tracking solution its franchisees could use. But “joint employer forced us to find a different company for this software—adding thousands of dollars to our franchisees,” she said. “We were willing to pay for it. We felt we were providing valuable guidance.” Feldman said the NLRB rulings have also affected franchise lending, valuations, and the pace of development. “If joint employment succeeds, every franchisee’s business will be devalued—and there will be fewer

Gary Gardner, Therese Thilgen and Ronnie Lott

people in the pool to buy your business.” He said so far the winners have been the lawyers and the third parties franchisors are now using to provide the support and services they used to do themselves. Monson pointed out that franchising has data on its side. “But that’s not what moves hearts and minds,” she reminded attendees. “We need to tell the stories of small businesses—personal stories.” For instance, how you used to work in a terrible job, but now you’re your own boss, hiring entry-level employees who now are managers or have their own units, and how the rejiggered definition of joint employer is threatening the livelihoods of everyone in your business. The conference’s Platinum Sponsors were Arby’s and Jersey Mike’s. Gold Sponsors this year were Bojangles’, Buffalo Wings & Rings, Carl’s Jr./Hardee’s, Dunkin’ Brands, IFA, La Madeleine, Toppers Pizza, and Zaxby’s. More than 220 franchise brands and suppliers sponsored the event. Next year’s conference will take place at Caesars Palace April 3–6, 2018. Visit multiunitfranchisingconference.com for a look back at this year’s conference, and for details on registering for next year.

2017 MVP Award winners

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MULTI-UNIT FRANCHISEE IS S UE III, 2017

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RECONNECT BY KERRY PIPES

Life’s Short, Grow Fast! G

Grant Simon is doing exactly that with 3 brands in 6 states

rant Simon is no stranger to these pages. We first profiled him in 2008 and then again in early 2014, when he had grown to 39 Great Clips salons, 11 T-Mobile stores, and 1 Smoothie King. He told us then and he told us again recently, “I love growth, and I don’t see our expansion slowing down anytime soon.” He means it, too. He currently operates 144 units across those three brands. Simon says his partnerships and infrastructure have been key to his success. “Without the formation of our management company, LSGF Management (Life’s Short Grow Fast) to provide the infrastructure and back office support for the brands, the goal of adding 45 more units in 2017 would be a dream and not a reality,” he says. Because of this rate of growth, he says, it became critical for him to begin working on the business rather than in it.

units from 20 in 2013 to more than 100 by the end of 2017. “Lou provides over 25 years of retail operational experience, making him a perfect fit to lead the TMobile day-to-day operations while LSGF manages finance, HR, real estate, and other foundational aspects of the business,” says Simon. He’s also been busy adding Great Clips salons. “The truly exciting measurement NAME: Grant Simon TITLE: CEO COMPANY: LSGF Management NO. OF UNITS: 88 T-Mobile, 52 Great Clips, 4 Smoothie King AGE: 52 For T-Mobile, Simon joined forces with Lou Provost. He says the move allowed them to grow at a blistering pace, entering more markets and increasing

FAMILY: Sophie 17, Rebecca 22 YEARS IN FRANCHISING: 23 YEARS IN CURRENT POSITION: 23

PERSONAL First job: Dishwasher. I was paid in cash because I was too young to legally work. I walked home after work at 1 a.m. I can’t believe my parents let me do that. Formative influences/events: My father always worked for himself and had excellent business acumen. He taught me how to negotiate, manage, and take chances while controlling risk. My mother taught me about integrity, honesty, and tolerance.

home, office, and gym are all within 5 miles of each other.

Hardest lesson learned: When my growth started accelerating, I did not have the people in place to support it. Resources were stretched thin and I suffered operationally across the entire company. From that I have learned to invest in people and technology well ahead of anticipated growth.

Guilty pleasure: Buttercream frosted cake.

Key accomplishments: Raising two great happy and successful kids.

Work week: Between 50 and 80 hours. I always try to spend time with my family and friends. I love what I do, so it does not seem like work to me.

Biggest current challenge: Finding the best technologies to help us continue to automate processes.

Exercise/workout: I work out regularly and enjoy a variety of sports including running, cycling, tennis, and racquetball.

Next big goal: Double the size of our company in the next 5 years.

Best advice you ever got: Don’t live above your means.

First turning point in your career: Forming LSGF Management, which has allowed us to accelerate our growth.

What’s your passion in business? I have a constant drive to move the business forward and grow while helping others around me grow and succeed.

Best business decision: Teaming up with operating partners who have skill sets that balance mine

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and who share my same drive, ambition, and values in business.

How do you balance life and work? My

Favorite books: Good to Great by Jim Collins; Capitalism and Freedom by Milton Friedman. Favorite movie: “Big.” What do most people not know about you? For 17 years, my business partner Greg and I have been going to the Taco Mac bar every Monday night to talk business, politics, and life. Pet peeve: Not doing something you tell me you are going to do. What did you want to be when you grew up? Out of college I found my dream job as a stockbroker. Then I found it was 100 percent commission, and at 22 I didn’t know anyone to sell stocks to. Last vacation: Southeast Asia with my daughters. Person I’d most like to have lunch with: My mother. And I do, once a month.

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RECONNECT MANAGEMENT Business philosophy: I open and acquire businesses to operate long term, never to resell. Long-term cash flow always trumps profits from a sale. Always be prepared for tough times by keeping operations lean and keeping debt to a bare minimum. Never do a deal that you have to stretch yourself too much for, or just doesn’t feel right. Management method or style: Focusing on what I do best. Hire people better than myself for the rest. Greatest challenge: Being content with where I am in life and in business. How do others describe you? Optimistic, hardworking, and detail-oriented. One thing I’m looking to do better: I am continuously looking for ways to improve support to our stores and field teams. I have added key leadership positions and they have significantly upgraded our systems and processes. this year is showing double-digit sales growth in our existing locations,” says Simon. Greg Thomas, his operating partner in Great Clips and Smoothie King, is a big part of that growth. “Greg and I have completely different skills and clearly defined roles,” says Simon. “His big outside-of-the-box marketing ideas, paired with his attention to detail and motivation of staff, is getting us great results.” Simon, a member of the Multi-Unit

How I give my team room to innovate and experiment: I hire the right people with the right skills and I don’t micro-manage them. If they want to try something new, I’ll help them think it through, make sure they have the resources they need, and then I get out of the way. How close are you to operations? As I have operating partners in each of the brands, my role these days is more focused on growth strategy, opportunities, and building our infrastructure to support that growth. I keep apprised of operational issues and review all key metrics on a daily basis. What are the two most important things you rely on from your franchisor? Marketing and employee training. What I need from vendors: Most of the vendors are really controlled by our brand partners and they do a great job. They screen and evaluate the contracts and negotiate pricing. Franchising Conference Advisory Board, says he always has striven for excellence and will continue to do so as he grows—with LSGF providing the foundational support to achieve his goals, whether adding new stores, boosting same store profitability, exploring new brand opportunities, or providing services to multi-unit franchisees. “LSGF Management executive members Don Noble (CFO) and Anne Lalinde (HR director) have implemented structure, processes, procedures, and technologies

Have you changed your marketing strategy in response to the economy? How? Yes, and we will continue to change based on market conditions. How is social media affecting your business? More and more of our marketing budgets have gone toward targeting social media channels. How do you hire and fire? I like to hire driven people with career ambitions. People fire themselves. How do you train and retain? All the brands provide great training tools. We weave our culture into the materials, making sure our employees are well-trained and understand the expectations. How do you deal with problem employees? We have a structured corrective process that will lead either to their improvement or termination. Fastest way into my doghouse: Not doing what you told me you were going to do. that anticipate our future expansion while maintaining agility,” he says. Partnering with the right brands, the right operational partners, and having the right senior leadership team in place has taken Simon from his beginnings as a single-unit, basement office owner-operator into a top-notch multi-brand operator with the ability to continue growing at a double-digit pace. “We have a great team, and the future looks very bright,” he says.

BOTTOM LINE Annual revenue: $50 million. 2017 goals: At least 40 new stores. Growth meter: How do you measure your growth? I don’t just look at number of units or revenue. Same store profitability growth is my most important growth meter. Vision meter: Where do you want to be in 5 years? 10 years? I believe we can double the size of our business every 5 years. More brands, more regions, more growth. How is the economy in your regions affecting you, your employees, your customers? We have continued to grow despite the economy. Are you experiencing economic growth in your markets? Yes. How do changes in the economy affect the

74

way you do business? We focus on customer retention and change our business to retain customers. How do you forecast for your business? We forecast for existing and future growth.

growth opportunities for employees and a very caring and nurturing culture in which employees feel part of a great team.

What are the best sources for capital expansion? For acquisitions owner financing is usually the best, if you can get it. Other sources include the brands’ preferred lenders and local banks that understand retail.

How are you handling rising employee costs (payroll, healthcare, etc.)? We have looked at all our expenses and cut from nonessential areas. We work to optimize scheduling to control payroll costs, and we strive to find creative solutions to minimize healthcare increases.

Experience with private equity, local banks, national banks, other institutions? Why/why not? For our line of credit we found Renasant Bank, a regional bank that wanted to partner with us. They had the best combination of service, rates, and flexibility.

How do you reward/recognize top-performing employees? We share a lot of information with our staff through emails and newsletters. We recognize top performers and reward them with bonuses, lunches, dinners, contests, events, and trips.

What are you doing to take care of your employees? We offer a full array of benefits including vacation, holiday pay, and insurance. We provide

What kind of exit strategy do you have in place? I love what I am doing and have no plans to exit in the foreseeable future.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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Contact us now: midasfranchise.com or call 800-365-0007 7KLVDGYHUWLVHPHQWGRHVQRWFRQVWLWXWHDQRIIHURIDIUDQFKLVH$IUDQFKLVHRIIHULQJFDQEHPDGHE\XVRQO\LQDVWDWHLIZHDUH´UVWUHJLVWHUHGH[FOXGHGH[HPSWHGRURWKHUZLVHTXDOL´HG WRRIIHUIUDQFKLVHVLQWKDWVWDWHDQGRQO\LIZHSURYLGH\RXZLWKDQDSSURSULDWHIUDQFKLVHGLVFORVXUHGRFXPHQW)UDQFKLVHVPD\QRWEHDYDLODEOHLQDOOVWDWHV‹0LGDV,QWHUQDWLRQDO &RUSRUDWLRQ7%&:D\3DOP%HDFK*DUGHQV)/

YOUR HOUSE Open a hometown gathering place, serving all-day breakfast with Southern hospitality. Contact us about franchise fee and royalty incentives for development in target markets.

800.640.7125 huddlehousefranchising.com

Copyright © 2016 Huddle House, Inc. This does not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Certain states require that we register the FDD in those states. This communication is not directed by us to residents of any of those states. Moreover, we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law.

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12/28/16 11:04 AM

7/7/17 9:22 PM


U N D E R BY KERRY PIPES

Testing, 1, 2, 3…

E

Young partners prep to open 3rd location

dris De Vol has had two defining moments in his adult life: first, using an Any Lab Test Now franchise to determine he had high cholesterol; and second, meeting Omar Sharif. No, not the handsome Egyptian actor from “Lawrence of Arabia” and “Dr. Zhivago,” but someone who has become a friend, mentor, and business partner. De Vol, who grew up in Saudi Arabia, moved to Ohio to attend boarding school as a teenager and later attended college at Boston University. Sharif, originally from Jordan, moved to the U.S. with his family when he was 15. De Vol and Sharif met at a friend’s wedding a few years ago. Both were approaching 26, an age they would lose their health insurance coverage on their parents’ policies, and were looking at options for people in their shoes. De Vol had used Any Lab Test Now and told Sharif, who knew about franchising because he’d operated a Subway location in Texas. In 2015, the duo traveled to Atlanta to attend an Any Lab Test Now discovery day. At the end of the session, they inked a deal for their first franchise and two other territories. “Any Lab Test Now is a direct access lab testing franchise where patients do not need to see a doctor first. They can get in and out of the lab in less than 15 minutes,” says De Vol. In June 2015, the partners opened their first Any Lab Test Now location NAME: Edris De Vol TITLE: Owner COMPANY: Any Lab Test Now NO. OF UNITS: 2 (1 more by year-

end) AGE: 29 FAMILY: 2 brothers, 1 sister YEARS IN FRANCHISING: 2 YEARS IN CURRENT POSITION: 2

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in the Dallas suburb of Flower Mound. One year later, in July 2016, they opened their second location in nearby Southlake. Business is growing and the pair are scheduled to open their third North Texas location in Denton by year-end. The brand itself, which began franchising in 2007, has grown to more than 150 locations nationwide.

LIFE UNDER 30 How did you get into franchising at such a young age? My partner, Omar Sharif, gave me the idea. Was becoming a franchise something you’d planned on? No. Did you have a mentor or inspiration for getting into franchising? Omar Sharif. What jobs, skills, and experience have helped you operate a franchise business? Reading and writing contracts. How would you describe your generation? Globalized experience chasers. Omar Sharif and Edris De Vol (right).

Do you see franchising as a steppingstone or a career for you? Both.

MANAGEMENT Business philosophy: The right tools and the right communication. Management method or style: Hands-on. Greatest challenge: Training new employees. How do others describe you? Fair. One thing I’m looking to do better: Training new employees. How I give my team room to innovate and experiment: Give them a goal and let them find the way. How close are you to operations? Involved on a weekly basis. What are the two most important things you rely on from your franchisor? Marketing and operations infrastructure. What I need from vendors: Quality, not

quantity, of marketing materials. Have you changed your marketing strategy in response to the economy? How? Not really. I just entered the system 2 years ago. How is social media affecting your business? Brings me closer to the customer. How do you hire and fire? Hire: online resumes, then phone, then in person. Fire: three strikes, you’re out. How do you train and retain? Manager, training portal, and gift cards. How do you deal with problem employees? Probation period is 90 days, so that’s enough time to weed out the problem ones. Fastest way into my doghouse: Poor communication.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 2:13 PM


U N D E R

PERSONAL First job: Data entry clerk. Formative influences/events: After college I went to work for Baker Hughes in Dubai. My boss Tamer M. Nassar was head of legal and compliance. I was there at ages 24 and 25. Nassar taught me about good work ethic, organization, leadership, management, and negotiation skills I still use on the job today. I was there as Nassar empathized with employees at a facility in Egypt who were upset with upper management about alleged on-the-job injuries. Nassar managed to negotiate a reasonable compensation. He really listened to them and took the time to communicate with them. He also showed me how to negotiate without being aggressive. I learned the effectiveness of being brief, blunt with an open line of communication. Key accomplishments: Starting two companies, Any Lab Test Now and Swimming D1 for one season. I opened my first Any Lab Test Now franchise with my partner Omar Sharif in 2015. We now own two locations with a third on the way. I also own and operate a diagnostic technology company, commercial construction business in Dallas, and a rental property business. Biggest current challenge: Running multiple businesses. Next big goal: Open a CLIA (Clinical Laboratory Improvement Amendments of 1988) Complex Lab. I would broker for lab testing, like drug testing and toxicology testing. First turning point in your career: Leaving the oil and gas industry. Best business decision: Hire the right managers (Bianca and Heather) who really understand the importance of thorough communication. Hardest lesson learned: Always get it in writing. About a year ago, I agreed to a construction contract on good faith with nothing in writing and it went south. I learned my lesson. Work week: Monday through Saturday. I only go out on Saturday night. A typical day is to wake up about 6:30 or 7 a.m., work out, then respond to emails, texts, communicate with employees, landlords, and monitor lab progress through merchant services and LivePOS. I do 90 percent of my work on my iPhone, including signing contracts. At the end of day I will go home, cook with Blue Apron with my girlfriend. I am on a meat-free diet, eating only fish and veggies because of my high cholesterol.

Exercise/workout: 4 times a week, tennis or Life Time Fitness, maybe yoga. Best advice you ever got: “Nobody is going to build your empire for you.” That’s a quote from my father. What’s your passion in business? Strategy and finance. I am always looking to strategically finance a project. I will get bids from multiple contractors on a construction project to use during the negotiation process. I do the same to get lines of credit and bank loans (go to one bank and shop around for another, always looking for the best deal). How do you balance life and work? There is a difference between life and work? You can’t leave things up to chance, you have to actively pursue your goals. Guilty pleasure: Chocolate chip cookies. Favorite book: Candide by Voltaire. Voltaire is a dark author, but the book goes back to the idea that no one is going to build your empire except for you. Favorite movie: “Shawshank Redemption.”

“The economy is hot, which makes the labor market competitive.” BOTTOM LINE Annual revenue: $200,000 (approx.). 2017 goals: $250,000. Growth meter: How do you measure your growth? Number of transactions. Vision meter: Where do you want to be in 5 years? 10 years? Multiple franchises in different industries. How is the economy in your region affecting you, your employees, your customers? The economy is hot, which makes the labor market competitive. Are you experiencing economic growth in your market? Yes.

What do most people not know about you? I have high cholesterol. I knew my family had a history of high cholesterol. When I turned 26 and didn’t have any more insurance, my deductible was something like five or six grand. I searched lab services and found Any Lab Test Now. I got my exam and in 24 to 48 hours I had the results. I thought that was amazing. Then my friend Omar Sharif approached me about the idea of buying an Any Lab Test Now franchise. I remembered my experience and thought, Yes, for sure. Now because I am a franchisee, I am able to get tests done really cheaply. I’ve also adjusted my diet.

How do changes in the economy affect the way you do business? It affects my cost benefit analysis for my opportunity costs.

Pet peeve: Not washing your hands.

What are you doing to take care of your employees? Listening to their concerns and providing them the tools to alleviate the concerns.

What did you want to be when you grew up? Surgeon. At Boston University I started out as a pre-med, biochem major, but then started gravitating toward economics. Last vacation: Keystone, Colorado. Person I’d most like to have lunch with: Jimmy Carter. I think he was an underrated president, I think he had a good energy policy in place. The fact he was a peanut farmer said a lot about his character. He’s got great communication skills. He was heavily involved in the Middle East and energy.

How do you forecast for your business? Use comparable franchise locations to project growth. What are the best sources for capital expansion? Bank lines of credit. Experience with private equity, local banks, national banks, other institutions? Yes.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Trying to stay informed on the labor market. How do you reward/recognize topperforming employees? Gift cards. What kind of exit strategy do you have in place? Currently none.

MULTI-UNIT FRANCHISEE IS S U E III, 2017

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77 7/10/17 2:13 PM


CustomerService B Y

JOHN DIJULIUS

Who’s Better, Who’s Right? Why customer perceptions differ radically from our own

B

ain & Company asked leaders of 362 companies if they felt their companies delivered superior customer service. Eighty percent believed that the service they provided was indeed superior. What these companies didn’t know was that, at the same time, Bain was surveying more than 3,000 customers, asking them if they felt they received superior customer service. Only 8 percent of customers surveyed described their experience as superior. How can 80 percent of the companies think they are providing superior service, but only 8 percent of their customers agree with them? You are in the customer perception business. So who’s right? The customer! Businesses need to know that they are in the customer perception business. Think about your own experiences as a customer, just in the past week. How often did you experience exceptional customer service, the kind of service where you want to share your experience with others and bring it back to work as an example of a superior approach? Is it one out of every 10 experiences? Or is it one out of every 20? The sad truth is that the majority of businesses rank their customer service significantly higher than their customers rank it. The million-dollar question

Why is there such a huge gap between what businesses think they provide in customer experience and what their customers think? You can spend hours on this question alone with your management teams, and the discussions and takeaways around this would be incredibly valuable. Don’t ask the customers what they want; give them what they can’t live without. Learning from our customers is critical to building the experience we deliver. Many companies do a fairly good job measuring their customers’ satisfaction through their own devices or have outside companies

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really can have your Starbucks made over 80,000 ways). Nor would someone have said, “I would like to be able to hang out here for a couple of hours.” You wouldn’t have heard any of those ideas from customer focus groups, which means we probably would not have ended up with Starbucks—just the same way we wouldn’t have ended up with the iPhone or Amazon. Customers can only think in terms of what they have previously experienced, and that is typically not revolutionary. The million-dollar answer

collecting this data. I agree this needs to be done. However, on the flip side, you can’t ask the customers what they want—you have to give them what they can’t live without. Think about all the companies that have revolutionized their industries, broken the old paradigm, and turned everything on its head: Zappos, Amazon, Starbucks, Southwest Airlines, Uber, and Apple. They didn’t improve on what everyone else was doing—they completely transformed the way it was being done. Let’s pretend it is the 1970s and we brought a small group of coffee drinkers together and asked them what they would like in a coffee-drinking experience. They would have looked at us as if we had two heads and said, “A coffeedrinking what? There are two ways to have your coffee: with or without cream, and with or without sugar, for 25 cents. What experience?” And they would have been right. Not one would have raised their hand and said, “I would like to be able to spend 10 to 20 times as much.” You probably wouldn’t have heard, “I would like to be able to order it over 80,000 different ways and get it.” (You

Here is the real answer to why we (the business/employees) feel we deliver customer service so much better than our customers perceive: we are not in our customers’ shoes. The vast majority of customer-facing employees cannot relate to their customers. Many times they may have little in common with their customers. They might be of a different generation, quality of life, or most of all, never been a customer of the product or service they are selling. We do not relate to their reality. We are not and have never been them. And if you can’t relate to someone else’s situation or circumstances, it is impossible to have any kind of empathy with them. Without empathy, you lack compassion and creativity. Walk in the customer’s shoes

World-class service organizations teach their employees to view things from the customers’ perspective. Remember, many employees have never been their own customer, have never needed the services and products their company provides, and cannot comprehend what the customer’s mindset is. Therefore, they do not relate well and find it difficult to empathize, be compassionate, and anticipate customers’ needs—all key to delivering the experience 80 percent of companies believe they provide. John R. DiJulius III, author of The Customer Service Revolution, is president of The DiJulius Group, a customer service consulting firm that works with companies including Starbucks, Chickfil-A, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or info@thedijuliusgroup.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 2:14 PM


New Era. New Image. New Salon.

Since 1974, Fantastic Sams has been a pioneer in the no-appointment-needed hair salon industry. Our modern and sleek New Image Salon has ushered in a new era of growth and expansion. Own a Fantastic Sams franchise today!

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7/11/17 7:15 AM


People BY JOCELYN MANGAN

Hiring Yoga Flexibility is a big draw for top hourly employees

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ith new regulatory and legal hurdles, a newly confirmed Labor Secretary under a new administration, and revolutionary consumer technology developments popping up everywhere, all signs point to the continued disruption of the hourly workforce. The employer who doesn’t adapt is likely to lose out in this changing landscape—but by embracing flexibility, franchisees have the potential to flourish. Labor participation is up, unemployment is down, and more than half of U.S. restaurants have had moderate to high year-over-year job growth, according to TDn2K’s 2016 People Report. At Snagajob, we have seen a nearly 30 percent year-over-year growth in job postings. In other words, the candidate pool is shrinking. The competition is fierce to snap up the quality hires, and workers can afford to be selective. Employers should note that workers today value flexibility first and foremost. A recent survey we conducted at Snagajob found that almost half of hourly workers prioritize schedule flexibility and working enough hours when considering a job. Increasingly, workers are selective based on flexibility. A study released by Upwork and the Freelancers Union found that 55 million people (or 35 percent of the U.S. workforce) freelanced in 2016. Increasingly, the line between hourly workers and gig workers is blurring. Traditionally, hourly workers worked at a set location for a specific company for a certain hourly pay; while gig workers didn’t work for any single company or in any one location and grabbed shifts when they wanted or could. Within the past year, however, hourly workers are increasingly experimenting with jobs in the gig economy and adding these to their “other” hourly job in an effort to achieve their hourly and financial goals. Beyond hours and flexibility, employers can get creative with work culture, perks, and compensation to differentiate themselves in a crowded market. Increasing wages to attract applicants isn’t always feasible, but offering growth opportuni-

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ties, flexible scheduling, rewards in the form of gift cards or discounts, a unique company culture, paid family leave, and more can set your company apart. For example, Starbucks introduced a new dress code, and Chipotle is offering free education. On the even more creative side, Cava Grill, a fast-casual restaurant concentrated on the coasts, is offering pet insurance. Portability Portable benefits can also provide hourly worker flexibility, especially as the hourly worker and the gig worker become one and the same. Handy, an online home-

cleaning company, puts a percentage of each job toward the worker’s portable benefits. Online caregiver network Care. com recently expanded its benefit program, allowing families to contribute to their caregiver’s benefits; and its Care@ Work platform allows families to manage all their care needs 24/7 from any device. And they’re not alone. Companies like Etsy and Lyft have publicly stated that they are in favor of making benefits more portable and flexible. Beyond that, governments are starting to require these types of initiatives. Cities such as New York are already trying it out by introducing legislation that ensures social safety nets for all workers. Flexibility in this case won’t just attract workers, it will prepare you for any regulatory changes coming down the pike. Anticipating how new technology will revolutionize the workplace also is essential. We’re constantly exploring how technological advancements, paired with changes in consumer expectations, can open doors to new ways of thinking about historical roles. Right now, we’re experimenting with an on-demand service that connects employers with a pre-screened pool of workers so a shift can literally be filled in minutes. Even without a high-tech network, there are ways to make technology work for both employers and workers. Harnessing older technology (e.g., mobile phones) for new uses is another good way to give employees and potential hires what they want. We saw mobile job-searching go from under 10 percent to almost 70 percent in the past 3 years, making mobilefriendly applications necessary to meet quality hires where they are. Texting instead of calling also increases the likelihood you’ll engage more and better applicants. The hourly workforce and the work they do is changing— fast. Given all the new changes and choices, as we look to build experiences that improve finding a job, onboarding new employees, and managing the work they do, success lies in paying attention to anticipate and react to workers’ own priorities. Jocelyn Mangan is the COO of Snagajob, the nation’s largest online marketplace connecting hourly workers to employers.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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81 7/8/17 1:55 PM


Finance BY ROD BRISTOL

Account Ability Financial mastery is the same worldwide

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have just returned from a three-week trip where I presented programs for a client in India, the Philippines, Malaysia, and Singapore. I then went on to present two additional programs for a client in Australia who has many multi-unit restaurant owners. My mission was to present our Profit Mastery curriculum to them to drive up their financial acumen and introduce them to our online curriculum. You might think that the financial issues of an owner of multiple businesses in India would be different than those here in the U.S. Amazingly enough, finance is the same the world over. If you can’t get your profit to the gross margin line, it will never, ever drop to the bottom line. And if you don’t follow the 10 basic processes that allow you to get better information from your financial statements, you will never have the data necessary to manage a business more effectively. Here are the 10 ways to get better information from your financial statements. 1. Group your profit-and-loss expenses by category such as sales and marketing expenses, occupancy, etc. and not alphabetically. You would be surprised how many financial statements are so poorly organized that it is impossible to get real data from them. 2. Have your profit-and-loss and balance sheet statements produced on a monthly basis. It is absolutely unacceptable to have financial information presented to you, the owner, on a quarterly basis. You are already three months late, so if something bad is going on inside your business you are way behind in getting it fixed. 3. Get your financial statements in a timely manner. The minimum acceptable standard for financial reporting today is a monthly profit-and-loss and balance sheet presented to you by the 15th day following the close of business of the previous

82

Amazingly enough, finance is the same the world over.

month, every month. There is no other minimum acceptable standard. 4. Have your financial statements reviewed by a CPA on a regular basis, not just at tax time. This is especially important if you are unsure of the quality of the financial information you are receiving from your bookkeeper. In a future column I will share with you the 13 Red Flags to Bookkeeping Fraud, which can help you know if someone is stealing from your business financially. 5. If your franchisor has not already provided you with it, create for yourself a point-of-sale system that ties into your financial statements so you know your true inventory numbers. 6. Know your real gross margin percentage by knowing your true inventory number. (See #5.)

7. Try to minimize what you put into your “miscellaneous expense account.” I have seen many profit-and-loss statements where this account is approaching $100,000. Absolutely unacceptable! You should know where that money is going, because if it’s going to someone else it’s not going to you! 8. Avoid having too many categories, or at least have P&L and balance sheet reports that roll up into one page. It’s perfectly acceptable to have many subcategories to provide you with details regarding specific line items. However, it is absolutely critical to have totals that give you the clear picture of where the money is going. 9. Have your P&L and balance sheet show both dollars and percentages so you can see whether any changes are caused by changes in volume or true increases in costs, and then compare them to industry standards. This is one of the areas where so many business owners fall short in their financial reporting. Financial information expressed in percentages is critical for competent financial analysis of the trends in your business. 10. (And this is the tough one!) If your accountant or bookkeeper can’t do all of the above, get them trained, better advised, or replaced. Finally, if you have 3 years of data available, the most professional way to organize your financial information is to have the previous 2 years month-by-month compared with your current month, then your previous year data compared to your yearto-date results this year. This gives you the maximum ability to access trends and see where there are opportunities for you to drive up the financial performance of your business. Rod Bristol is executive vice president at Profit Mastery. For over 30 years, franchisors and franchisees have improved their financial performance and unit profitability by following the Profit Mastery process: financial training, benchmarking, and accountability/bankability modeling. Learn more at www.profitmastery.net, 800-4883520 x13 or email bristol@brs-seattle.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 2:16 PM


InvestmentInsights BY CAROL M. SCHLEIF

Rewiring Required Debunking 5 investment myths

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ur psyches are simply not constructed to make us wise investors. Blame it on our genetics and the survival mechanisms laid down in the most primitive parts of our brain. When we’re scared, rather than calmly assess fundamentals, we want to flee (sell) when the more appropriate response may well be to buy high-quality goods that are now on sale. What follows are five of the most common misperceptions about money management we’ve witnessed in our 35-year-long career, accompanied by a more helpful possible response. Myth #1: Every event needs a portfolio or trading response. As noted, we’re hardwired for action; it’s how our species has survived. But in the investment world, action typically means fees, taxes, and other cost drags, which can reduce overall returns. Study after study reaffirms that average investor returns are typically much lower than those generated by standard market indexes, with the difference caused by the cost and timing drag of more frequent decisions versus just getting in and staying put. One recent study showed that the S&P 500 Index generated an annualized return of 8.19 percent versus the average investor return of 4.67 percent. Solution: Write a plan and stick to it, especially when markets are unruly (up or down). Rebalance intentionally when valuations become extended and/or market action distorts ranges you’ve established during calmer times. Myth #2: Market timing works and all or none is the way to go. The implicit presumption most investors bring to their investment programs is that there is some magical signal that indicates market peaks or bottoms, highlighting the precise time to make an all-or-none leap into or out of the market. On average, markets follow the 80/20 rule, moving in sideways, range-bound action about 80 percent of the time. Often, sharp up moves come when headlines wouldn’t lead one to believe a rally is imminent. (It’s important to remember that the S&P 500 is one of the components used to cal-

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culate the leading economic indicators, meaning it moves up before headlines or fundamentals would seem to warrant). If you are not already invested when these moves come, it’s often too late to jump on board once they start. Assuming you can nimbly move all the way in or all the way out is next to impossible and implies you can precisely time both your sell and subsequent buy decision. Solution: Dollar-cost averaging in or out can help insure that at least some of your assets are at play and/or some of your potential gains are realized on an ongoing, smoothed basis.

Have a firm grasp on where you want to end up— either in saving for specific purchases, or relative to the level of assets and income you need. Myth #3: I must have all the info before I make a decision. We drink from a fire hose of information on a daily basis. This flood of information leads us to try to summarize, categorize, and discern recognizable patterns—even when none could or should exist. The media, in an effort to fill pages and hold reader attention, are forever trying to back into what “caused” markets to move one way or the other, an often futile exercise in the short term when even structural factors like illiquid markets, lopsided demand, or large investor asset allocation changes can sway individual securities or entire asset classes. Solution: The key relationship that matters for individual securities is current market price relative to long-term potential. Is the asset under- or over-priced relative to its income stream now and in the future? The

vast majority of what feeds the information flow each day is irrelevant toward your ability to outline and execute your long-term investment plan. Myth #4: Market volatility is the same thing as risk. There are many different forms of financial risk, from having insufficient cash flow or assets to support a lifestyle during inflationary times, to not having enough saved for education, retirement, or a home down payment. Day-to-day market swings are typically not considered a risk unless they lead to permanent loss of capital. Daily market swings are part and parcel of the daily interactions of millions of global buyers and sellers, each with their own agenda and goals. Solution: A firm grasp of reasonable valuation relative to current price, coupled with a clear view of one’s long-term goals and funding needs, can turn the view that daily volatility is “risky” into the understanding that interim mispricings often represent opportunity. Myth #5: Picking the right individual stocks or bonds is how the big bucks are made. While an inordinate amount of time and energy is spent researching and writing about individual investments, long-term studies have repeatedly shown that the bulk of an investor’s return over long periods comes from being in the right buckets to begin with (stocks vs. bonds vs. cash and types of sub-asset classes within those categories). Individual securities within those buckets are much more fun to talk about than asset allocation in a macro sense, but statistically they don’t matter as much. Solution: Have a firm grasp on where you want to end up—either in saving for specific purchases or events, or relative to the level of assets and income you will need to fund you during various periods. Regularly rebalance back to these long-term ranges when valuations, market action, or changing fundamentals push the broad categories outside your bounds. Carol M. Schleif, CFA, is deputy chief investment officer at Abbott Downing, a Wells Fargo business that provides products and services through Wells Fargo Bank and its affiliates and subsidiaries. She welcomes questions and comments at carol.schleif@abbotdowning.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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7/10/17 2:16 PM


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ExitStrategies BY DEAN ZUCCARELLO

Casual Dining’s Upside

are making a huge impact on the restaurant industry today.

Opportunities abound as valuations fall

Lower multiples, greater opportunity

I

frequently receive questions from clients and prospective buyers asking, “What’s the hottest new opportunity in the marketplace?” While it’s true that discovering the new McDonald’s or sexiest “brand du jour” seems most exciting, often the greatest opportunities are far less glamorous. Do new and flashy concepts seem instinctively more appealing? Perhaps, but glamour is inherently fleeting. And since we operate in the multi-unit franchise industry and not the fashion industry, this subjective allure will forever be eclipsed by stability and the potential for operational upside. This might come as a shock to some, but I believe that casual dining might just be that opportunity in 2017. So what about the widely publicized reports that the casual dining subdivision has suffered greatly over the past few years? It turns out that the explanations for this are legitimate. But they also are manageable, and by no means are going to cause the downfall of the entire segment. For example, some of the primary reasons for casual dining’s downtrend include more competition, consumers’ shifting preference toward take-out and delivery, changing tastes, and the demand for high-quality offerings and speedy service. Considering these factors, it’s not farfetched to view casual dining as behind the times. However, it is also important to note that all of the aforementioned elements affecting this segment are not solely problems for casual dining, or even restaurant concepts at large, but instead are factors that affect all businesses operating in the market today. Despite these issues, casual dining concepts will almost certainly bounce back in the future. There is one particular phenomenon I have witnessed time and again during my 35+ years working in the restaurant industry that is particularly relevant in this case: brands don’t die. Some brands will inevitably dissolve, but most find a way to survive and even thrive. Some relevant examples of this happening can be found by examining

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the Burger King, Arby’s, and Denny’s systems. All of these brands found a way to weather some serious hardships and are now arguably operating better than ever before. Thus, it is reasonable to expect that casual dining can and will experience a similar rebound. Furthermore, the casual dining segment is certainly not sitting idly by, waiting for the market to bring about this rebound. The big, savvy brands are making some

crucial adjustments to address the issues they are facing. Because of their established nature, these systems have the ability to leverage their large-scale infrastructure to put the necessary resources behind initiatives to win back their customer base. With a renewed focus on providing higher food quality, improving their menus, and refining their mobile apps and online ordering, these restaurants are ready to fight for the consumer’s attention. Casual dining is also in a unique position, as it is perfectly situated to capitalize on the growing take-out and delivery trends that

Interestingly enough, it is this current conflict in the casual dining segment that presents prospective buyers with the most substantial opportunity. The underperformance of the segment as a whole has significantly brought valuations down to the lowest multiples seen in years. On the flip side, valuation multiples for the topperforming QSR brands, such as Taco Bell, have reached record highs, making the casual dining financials look far more attractive to a prospective purchaser. We must also consider the fact that it wasn’t so long ago that the QSR segment was experiencing a nearly identical struggle, further demonstrating the ebb and flow of concept and segment success that is fundamental to the industry. Granted, casual dining restaurants will experience their own distinct complications, such as more limited financing options and a larger capital requirement. Nonetheless, these strong, broadly recognized concepts possess the brand equity to maintain consumer interest and adapt to better address the demands of the marketplace. Everyone who is active in the field plays with their own strategy, and there is no basis on which any one specific approach can be touted as best. But before determining which method suits you best, ask yourself this: “As a buyer, what do I find more compelling right now: a hot QSR brand at 8.0x EBITDA or a national casual dining brand sitting at 5.0x EBITDA?” We think some buyers will make the move toward casual dining and ultimately be happy that they did. Dean Zuccarello is CEO and founder of The Cypress Group, a privately owned investment bank and advisory services firm focused exclusively on the multi-unit and franchise business for more than 25 years. He has more than 35 years of financial and transactional experience in mergers, acquisitions, divestitures, strategic planning, and financing in the restaurant industry. Contact him at 303680-4141 or dzuccarello@cypressgroup.biz.

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The public and policymakers need to understand franchising. Our purpose

@OurFranchise is an industry-wide campaign created to spread the word about the value of franchising and share the stories of men and women just like you, who are leading the way as franchisors, franchisees, and franchise employees. The franchise business model has been proven time and time again to work, but it’s threatened when the public and politicians don’t understand how it operates to benefit local, independent franchise establishment owners and their communities. Putting a spotlight on real leaders succeeding with the franchise model is how we’ll ensure franchising is stronger than ever before.

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Since our launch in June 2016, we’ve reached 1.7 million people through outreach efforts, including events in key cities and states, where we spoke directly with business owners, employees, policymakers, and the media. Additionally, we’ve reached people across America through our website and social media channels, digital advertisements, and the promotion of We the Franchisees on Politico – but there is much more work to do. As a franchisor, franchisee, or franchise vendor, you are a leader in your community – and we need your support, now more than ever.

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By joining @OurFranchise, you’ll get access to exclusive stories and resources that can help grow your franchise business, educate employees at all levels about the franchise business model, and share the economic importance of franchising with consumers. You will also have the opportunity to share your franchise success story with your peers.

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This is just the beginning

Make sure you stay up to date with the campaign’s latest efforts through email updates and social media. Visit our website to read and share the latest stories of franchisors and franchisees making an impact in their communities. Become a franchise advocate to help ensure Americans, now and in the future, have the opportunity to start franchise businesses. Take the lead today!

Visit AtOurFranchise.org Contact Erica Farage, Senior Director of Political Affairs and Grassroots Advocacy and Multi-Unit Franchisee Engagement International Franchise Association efarage@franchise.org (202) 662-0760

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FranchiseMarketUpdate BY DARRELL JOHNSON

Where Are We? For retail, the future has already arrived

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ocation,location,location.” Those three words used to mean the same thing. I’m not sure that applies any more. In the new world of commerce, they may mean your location, my location, and some location where I will be. If you want to sell me your product or service, will you need to address all three? If so, there are huge implications for the contractual terms of the functions that franchisors are responsible for executing. This will span traditional contract topics such as exclusive territories and delivery models to franchisor functional activities such as training and site selection. Let’s look at some of the recent developments and trend prognostications that might influence future buying behavior. By future, I mean inside the typical real estate lease period for retail establishments. Each one of these points is disrupting one or more industries. • The largest taxi company in the world doesn’t own any taxis (Uber). • The largest hotel company in the world doesn’t own any hotels (Airbnb). • IBM’s Watson can deliver basic legal advice within seconds with 90 percent accuracy (compared with 70 percent accuracy from humans); and cancer is being diagnosed with four times more accuracy than by humans alone. • Facebook pattern recognition software recognizes faces better than humans do. • The first self-driving cars, trucks, and even ships will be in commercial use soon. • Working while you commute will move residential markets further out and change traffic patterns. • Few of our children will bother to get driver’s licenses. • With a dramatic decline in car accidents, the auto insurance business will drop dramatically. • Within a few years medical devices will work with your phone to measure more than 50 biomarkers that will identify nearly any disease, giving world-class medical access to nearly every person on the planet.

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• The first smartphones with 3D scanning capabilities will be out by the end of the year, allowing you to scan your feet at home and send the file to shoe companies that are now building equipment to custom manufacture your perfect shoes. • The cheapest smartphones now cost less than $10. Within the next few years 70 percent of all humans will own one,

What does “location” mean in a world that is being changed in a dramatic and rapid fashion? giving nearly everyone access to worldclass education offered by organizations ranging from Khan Academy to Stanford University. • Finally (not that it is relevant to this column), by about 2020 we will have apps that can tell by your facial expressions if you are lying. Imagine what that might do to televised political debates. Real-world consequences

Some of these developments and forecasts will take longer than predicted to implement. Some will morph into something else. However, most are already happening and have near-term consequences for retail businesses. Do I need a shoe store if I can essentially send my foot to a shoe company, pick the style I want, and get a custom-built shoe back, all in a matter of a few days or even hours? Do I need to go to the doctor’s office for a checkup when I can send all my biomarker information to her? If the auto and insurance industries are in for revolutionary change, how does that change where people live, how they move around, and what they spend money on? If my child (or me, for that matter) can take a course from a world-renowned educator online, what does that mean for

our educational system and all the ancillary education businesses? If software can recognize my face, change the menu board to my preferences, or instantly tell a salesperson about me, what kind of employees will you want to hire? That brings me back to the initial point: Location. What does that mean in a world that is being changed in such a dramatic and rapid fashion? Perhaps the starting point in answering that question is to focus on what people want to spend their free time doing. While this applies to all generations, I’ll use Millennials as an example. My key observation is how protective they are of their personal time. If your focus is trying to make their experiences better, you may be missing the point. Some may want that “experience” in your retail establishment, enjoying the ambiance and good service your establishment strives to achieve. Yet one size doesn’t fit all (think shoes, as the 3D point above dramatically demonstrates). They may want your product or service delivered to them so they can save their personal time for other things more important to them. Some may want your product or service ready as their autonomous vehicle drives by, or still in your establishment but in a less formal, minimal service way. Being all things to all people is a prescription for failure. However, being stuck with a fixed retail design without consideration for the variations in what your core constituency wants isn’t any better. Understanding how your key demographic spends their personal time is a good step. Of course, you need to first understand your key demographic. On that front, there is a tremendous amount of data to draw from. Our own experience accessing a data house with detailed records on 150 million households has been very helpful with our clients for both franchisee recruitment and consumer marketing. What a fascinating and challenging world we are in today. Darrell Johnson is CEO of FRANdata, an independent research company supplying information and analysis for the franchising sector since 1989. He can be reached at 703-7404700 or djohnson@fran data.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2017

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Multi Unit Franchisee Magazine - Issue III, 2017  

2017 MVPs Honoring This Year's Most Valuable Performers