Multi-Unit Franchisee Magazine - Issue III, 2018

INVESTMENT INSIGHTS n PEOPLE n FINANCE

Multi-Unit

Franchisee 2018

ISSUE III 2018

MVPs

HONORING THIS YEAR’S MOST VALUABLE PERFORMERS

INSIDE: n LOYALTY

Reward your best customers and keep them coming back

n EMPLOYMENT

Keep your best employees in today’s tight job market

n MUFC RECAP

Greg Cutchall, multi-brand operator and 2019 Multi-Unit Franchising Conference Chair

2018 event is a smashing success

n MU50 RANKINGS

Multi-friendly brands by total and percentage

OCTOBER 23-24, 2018 n LONDON, ENGLAND

Outstanding outstanding IN A SEA OF ORDINARY

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FAST- CASUAL EXPERIENCE

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GET ON BOARD. CAPTAINDSFR ANCHISING.COM • 800.381.1212 ©2018 Captain D’s, LLC. This is not an offer to sell a Captain D’s franchise, which may occur only in applicable states and through a Franchise Disclosure Document or prospectus.

Multi-Unit

Franchiseecontents I SSUE I I I , 2018

2018 MVP AWARDS

COVER STORY

MVP Awards 10

Get the inside stories of 2018’s MVP Award winners: Angelo Crowell, Shahin Urias, David & Joye Griffin, Alexander C. Johnson, Joe Brumit, Michael & Lou Ann McLaughlin, Robert Middleton, Paul Booth Jr., and Jay Pandya.

BY HELEN BOND

Reconnect: Greg Cutchall 44

Master of many brands and 2019 Multi-Unit Franchising Conference Chair

BY KERRY PIPES

Under 30: Chris Rigassio 50

This 29-year-old is one of Jersey Mike’s top performers

BY KERRY PIPES

LISTS

MU50: Ranking the most multi-friendly brands 54 Franchising’s top brands by number and percentage of multi-unit franchisees

FEATURES

Keep Your Customers Coming Back 56

Rewards and loyalty programs make for more visits, higher checks

BY SARA WYKES

Keep Your Staff Coming Back, Too! 62

Strategies for retaining your best employees in a tight job market

BY EDDY GOLDBERG

Multi-Unit Franchising Conference 68

2018 was a smashing success; George Will & Steve Young keynote

BY KERRY PIPES & EDDY GOLDBERG

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Departments CHAIRMAN’S NOTE

2019 MUFC Chair Says Franchising Is Today’s Business of Opportunity 6 ONLINE

What’s online @ mufranchisee.com 8

Columns CUSTOMER SERVICE

Word of Mouse 74 Online reviews can make or break your reputation

BY JOHN DIJULIUS

PEOPLE

New HR Approaches Needed 76 5 up-and-coming trends affecting your workforce

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 Krystal Acre Jeff Katis Judy Reichman EXECUTIVE EDITOR Kerry Pipes MANAGING EDITOR Eddy Goldberg CREATIVE MANAGER Kevin Waterman MAGAZINE DESIGNER Peter Tucker DIRECTOR OF TECHNOLOGY Benjamin Foley WEB DEVELOPER Don Rush WEB PRODUCTION ASSISTANTS Esther Foley Juliana Foley DIRECTOR OF EVENT OPERATIONS Christa Pulling

BY PETER HARRISON

SENIOR MANAGER, EVENTS & PRODUCTION Katy Geller

SOCIAL MEDIA

SENIOR SUPPORT MANAGER Sharon Wilkinson

Are Ads Killing Social? 80

PROJECT COORDINATOR Joanne Peralta

People don’t like ads and are making moves to avoid them

SUPPORT COORDINATOR Leticia Pascal

BY ADAM PIERNO

FINANCE

Funding Multi-Unit Growth 82 ApplePie Capital grows as a franchise lender

BY ROD BRISTOL

INVESTMENT INSIGHTS

Volatility — Get Used to It 84 Uncertainty reigns as the mid-term elections near

BY CAROL SCHLEIF

FRANCHISE MARKET UPDATE

The S-II Ratio 86 Can this tool find brands with the highest growth potential?

BY DARRELL JOHNSON

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VIDEO PRODUCTION MANAGER Wesley Deimling GRAPHIC DESIGNER Cindy Cruz FRANCHISEE LIAISON SUPPORT Greg DelBene CONTRIBUTING EDITORS Rod Bristol John DiJulius Peter Harrison Darrell Johnson Adam Pierno Carol Schleif CONTRIBUTING WRITERS Helen Bond 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@franchiseupdate.com MULTI-UNIT FRANCHISEE MAGAZINE IS PUBLISHED FOUR TIMES ANNUALLY. Annual subscription rate is $49.00 (U.S.) SUBSCRIPTIONS Email subscriptions@franchising.com or call 408-402-5681 FOR REPRINT INFORMATION CONTACT FOSTER PRINTING AT 800-382-0808 www.fosterprinting.com

Inspire Franchising Joe Sieve | Vice President, Franchise Development Franchising@InspireBrands.com

Chairman’sNote

Franchising, the Industry of Opportunity

S

pending my summers growing up working at my father’s A&W Root Beer stand, I had a love for the business when I was only 10. However, by the time I graduated high school I did not consider it a career path and had been accepted into the prestigious Brooks Institute School of Photography in Santa Barbara, California, which required a year of college before attending. I enrolled at the University of Nebraska at Omaha and took an assistant manager position at a KFC to help pay for school.

I saw my father Ray Cutchall and my uncle Bob Cutchall labor for years making a modest living with their A&W DriveIns, putting in long hours making their business succeed. Finally they got their break when they introduced KFC to the Omaha market with a partner. It was possibly the first-ever dual concept as they sold Kentucky Fried Chicken at their respective A&W restaurants, then soon followed with 10 standalone KFCs. It was never really a family business, just a business that I had little interest in.

During my planned short stint as a KFC manager I saw a huge untapped opportunity to grow business. Catering. Yes, like all KFCs back in the ’70s we accommodated Cub Scout banquets with large orders of fried chicken and coleslaw. We would use empty paper cup boxes, line them with foil, and fill them with chicken. We scraped the labels off gallon mayonnaise jars and filled them with coleslaw, made a $200 sale and never contacted the guest again.

Taking my idea to my marketing genius father, we contracted with the Omaha Box Company to build a catering box to our specs and with Wilkinson Manufacturing for aluminum pans, and introduced “The Colonel’s Buffet.” Great parties made simple for $3.95 a person!

I put photography school aside and with a truck, a Yellow Pages ad, a solid marketing plan, and a lot of sales calls over the next 3 years I grew catering sales from $20,000 a year to $500,000 a year (the volume of

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a good KFC restaurant back in those days and opened at a fraction of the cost). Sadly my father passed away a few short years later.

By that time I had decided I would stay on and follow in his footsteps. His partners wanted me to stay on board, and I had fallen in love with the business again like I did when I was 10. Later they promoted me to director of marketing and eventually vice president.

In the mid-’80s my bosses decided to retire and sell the company. I was determined to buy the company my dad co-founded years earlier. No money? No problem.

On a chicken wing and a prayer I organized a leveraged buyout of the 12 Omaha locations, became president, 20 percent owner, and at 35 maybe KFC’s youngest franchisee at that time.

After three very successful years and receiving Operator of the Year award from KFC, I realized I had made a bad choice of investing partners and left in 1989 to form my own company, Cutchall Management Company. Starting with a purchase of a failing Mexican restaurant in Lincoln, Nebraska, I turned it around then proceeded to open, develop, or acquire more than 100 restaurants and 17 different brands during the following 28 years. Some were brands I developed, but most were great franchise brands like Popeyes, Sonic, Domino’s, and First Watch to name a few.

During many of those years the Multi-Unit Franchising Conference was always a rewarding, beneficial part of my growth. I am honored, humbled, and proud to be your 2019 conference chairman. This is truly the industry of opportunity and the MUFC is clearly the conference of opportunity!

Look forward to seeing you there next March!

Greg S. Cutchall President, CEO Cutchall Management Company

✓FRANCHISE OPPORTUNITIES Looking for your next franchise opportunity?

✓ CONFERENCES First-Ever European Master & Multi-Unit

Franchising Conference Debuts in London October 23–24 Franchise Update Media and MFV Expositions are joining forces this October to produce the first-ever European Master & Multi-Unit Franchising Conference. Franchise Update’s highly successful annual Multi-Unit Franchising Conference will provide the basis for this exciting two-day event. The conference is designed to provide rich content for master and multi-unit franchisees, and for them to walk away with practical information they can apply immediately to their business. The agenda is set to inspire and inform industry leaders, with panels and speakers selected specifically for master and multi-unit franchisees. The roster will include some of the best, most experienced franchisees in the space. This event is the only one to focus on the most important and relevant concerns of today’s master and multi-unit franchising community. As such, it will offer something for everyone—from franchisees looking to grow with new international opportunities, to multi-brand operators looking to diversify further, to master franchisees seeking prospective owners. The conference will feature an exhibit hall with more than 50 franchise brands and product and service providers. https://eu.multiunitfranchisingconference.com

NOTHING YOU CAN’T DO! “There is nothing you can’t do, being consistent and setting long-term goals and facing all the roadblocks and challenges with an open mind and opportunity to make you stronger. No one is holding you back but you.”

—Shahin Urias, franchisee and team leader with 6 Sport Clips salons

✓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

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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/opportunities

✓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 list, which shows the most “multifriendly” 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

WORLDLY AMBITION

“In 5 years I would like to operate in multiple states. In 10 years I would like to be multi-country.”

—Alexander C. Johnson, 5 Auntie Anne’s Pretzels, 5 Cinnabon

✓PUBLICATIONS

“Don’t just survive, thrive!”

Franchise Update Media’s 2018 Annual Franchise Development Report and the best-selling book Grow to Greatness by leading franchise consultant Steve Olson, offer invaluable tips for franchise sales success and unit growth. To order, visit afdr.franchiseupdate.com 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

HARD WORK PAYS OFF “We are no longer looked at as being just a former-athlete owner. We put in the hard work, commitment, and dedication that it took to become successful.”

—Angelo Crowell, CEO, Kalo Restaurant Group, 12 Jersey Mike’s and aiming for 50 in 3 years

BY EDDY GOLDBERG

2018 MVP WINNERS These multi-unit franchisees show the way

S

electing the winners for our annual Most Valuable Performer (MVP) Awards means analyzing applications submitted on behalf of some of the best multi-unit franchisees in the business. This year we selected 9 winners, who were recognized on stage at the 2018 Multi-Unit Franchising Conference in 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 brands.

Congratulations to this year’s Most Valuable Performer Award winners, who exemplify the best of what franchising has to offer.

PRO ATHLETE INFLUENCER AWARD • Angelo Crowell, a 12-unit Jersey Mike’s franchisee and former NFL linebacker, credits a heart-to-heart talk with his big brother for his fast start in franchising. He was drafted by the Buffalo Bills in 2003, just as his brother Germane was retiring from football after 5 seasons. The talk was a game-changer for the younger Crowell. “That conversation started my thought process on what my next step would be when the game ended.”

AMERICAN DREAM AWARD • Shahin Urias learned early in life that giving up was not an option. Urias, who grew up in survival mode during a tumultuous era in Iran, later protected her own children from harm in the war-torn country inside a mud basement turned makeshift bomb shelter, with no electricity or running water. Today, as owner of six Sport Clips salons, she was honored for achieving remarkable success in a new country.

SINGLE BRAND LEADERSHIP AWARD • David & Joye Griffin have always had a singularly focused mindset to succeed, dating back to their college days when they ran a car detailing business from the back of Dave’s pickup. “Our intention was to be the best at whatever opportunities were before us,” says Dave. Their family-owned business operates 55 Jiffy Lube stores in 3 states and continually leads the system in sales, customer count, and other key indicators.

COMMUNITY INVOLVEMENT LEADERSHIP AWARD • For Alexander C. Johnson, giving back to his community is part of his nature. This second-generation franchisee is now paying it forward, sharing his know-how and leadership skills with the next generation as they navigate their way through the food and hospitality industry. Advocacy for others is a core value for Johnson, who operates 5 Cinnabons and 5 Auntie Anne’s Pretzels in the San Francisco Bay Area.

NOBLE CAUSE AWARD • Joe Brumit and his wife Janice are noted philanthropists whose already significant contributions to a wide range of charitable, civic, and nonprofit organizations continue to grow. “We are trying to make a difference in other people’s lives,” says Brumit, who operates 53 Arby’s in North and South Carolina. “I don’t

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know that a lot of people in business really concentrate on that any more. It is more about bottom line and me, me, me, versus what I can do for other people.”

INFLUENCER AWARD FOR HUSBAND & WIFE TEAM • Michael & Lou Ann McLaughlin. When Hurricane Harvey devastated Greater Houston in 2017, the staff and management at their Primrose Schools leapt to the aid of storm victims—without a word from the McLaughlins, who were dealing with flooding at their own home. Team members were simply following the example set by the McLaughlins, who have been business partners for nearly half of their 44 years of marriage.

MULTI-BRAND GROWTH LEADERSHIP AWARD • Robert Middleton has never been a status quo kind of guy.

“I have always tried to improve and be the best I can,” he says.

“Having that mindset has created unexpected opportunities throughout my career.” Middleton, who operates 4 brands with 42 restaurants in Michigan and Canada, is now gearing up for growth as part of a joint venture with Jersey Mike’s to expand the brand in Canada.

SPIRIT OF FRANCHISING AWARD • Paul Booth Jr. This Cincinnati entrepreneur is not only a second-generation McDonald’s franchisee, he’s also a sixth-generation minister and founder and lead pastor of Legacy Pointe Church. “I believe that the purpose of business is greater than business,” says Booth, who operates eight McDonald’s. “We serve Big Macs, fries, and Cokes. But at the end of the day, this is very much about people who have a heart for serving others.”

MEGA GROWTH LEADERSHIP AWARD • Jay Pandya, founder and chairman of Philadelphia-based Rohan Group, presides over a commercial real estate, retail, and construction empire. Pandya, who immigrated to the U.S. from India at age 14 with “pockets that did not run very deep,” today is the country’s largest franchisee of Checkers & Rally’s. A diehard cricket fan, he is backing the launch of a professional cricket league in the U.S by 2020.

• • • We also caught up with Greg Cutchall, chairman of next year’s Multi-Unit Franchising Conference. When we profiled him in 2013, his company was doing about $55 million in annual revenue. Today he’s riding along at $75 million, “mostly due to growth in Domino’s, First Watch, and Jams American Grill,” says the 66-year-old operator.

Looking to the future of franchising, we’ve profiled 29-yearold Chris Rigassio, a Jersey boy who grew up loving Jersey Mike’s. Fresh out of college and just 22, he approached the brand about franchising, but was met with skepticism. Today he not only has 9 stores open, he’s also director of operations for Northern New Jersey.

Finally, be sure to look into our annual Multi-Unit 50 rankings, beginning on page 54. It lists the brands with the highest number and highest percentages of multi-unit franchisees.

Want to kno w o ur secret ingredients? [ heart ‘n soul ] It’s a 40-year proven business model with three strong dayparts, a high AUV, and first-in-class support.”

JEFF RIGSBY FRANCHISE OWNER WITH 59 LOCATIONS

750+ locations to serve our passionate BoFanatics

A menu that includes breakfast all day, every day since 1977

Three strong dayparts that fuel a best-in-class AUV

800.908.5939 BOJANGLES.COM/FRANCHISE © 2018 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.

2018 MVP AWARDS

BY HELEN BOND

Sub Mission

Former NFL linebacker aims for 100 Jersey Mike’s

A

ngelo Crowell, a Jersey Mike’s multi-unit franchisee, credits a sit-down with his big brother for his fast start to franchising success.

Crowell, a former NFL linebacker, was drafted by the Buffalo Bills in 2003, just as his brother Germane was retiring from football after five seasons with the Detroit Lions. That family heart-toheart was a game changer for the younger Crowell, winner of the 2018 Influencer for Former Pro Athlete MVP Award.

“My brother asked me what would I do if football ended today,” Crowell recalls.

“I didn’t have an answer for him. He told me I needed to get an answer and start working on my transition plan—now.

That conversation started my thought process on what my next step would be when the game ended.”

His first franchise investment would be a familiar choice for Crowell, who grew up in Winston-Salem, N.C., one of six kids—all athletes. His mother cooked dinner Monday through Friday. On weekends Crowell went to Jersey Mike’s. The high school football star, who later earned All-ACC honors at the University of Virginia, loved the fresh grilled subs at Jersey Mike’s, where he talked sports—and what it takes to own your own business— with the brand’s local franchisee.

“When I started looking into franchising, the franchise models that were hot at the time were not going the way of the world. People were wanting healthier and fresher,” Crowell

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says. “I was already a fan of Jersey Mike’s, and once I understood the business model it just connected for us.”

Crowell and his wife Kim, his college sweetheart and now president of their company, Kalo Restaurant Group, opened their first Jersey Mike’s in November 2010, not long after Crowell left the NFL. Today they own 12 Jersey Mike’s in the Southeast in Florida, Georgia, and Alabama, and have plans to rapidly expand to 50 within the next three years, and double that in the next 10.

The Crowells are not new to recognition for their achievements. In 2011, they earned Jersey Mike’s nod for Rookie of the Year, and have been recognized with local business awards for their contributions to the economic development of Tallahassee, the company’s home base.

While Crowell appreciates his experience in professional sports, he is most proud of being seen as more than just a former athlete in business. “When people find out you played sports, it is the first thing they want to talk about,” he says.

“We are no longer looked at as being just a former-athlete owner. We put in the hard work, commitment, and dedication that it took to become successful.”

NAME: Angelo Crowell TITLE: CEO, Kalo Restaurant

Group NO. OF UNITS: 12 Jersey Mike’s

Subs, 4 in development AGE: 36 FAMILY: Wife Kim, daughter

Kendall 5, son Austin 2 YEARS IN FRANCHISING: 9 in

November YEARS IN CURRENT POSITION: 6

2018 MVP AWARDS PERSONAL Formative influences/events: 1) Advice from my older brother. When I was entering the NFL, my older brother, who played five years for the Detroit Lions, was retiring. He told me to start working on my transition plan—now. That conversation planted the seed to start thinking about what my next step would be if the game ended today, and I started looking for ventures. 2) Attending the Professional Athlete Franchise Initiative (PAFI) conference when I was researching the franchise business.

One of the first keynote speakers was Junior Bridgeman, a franchise mogul. Just hearing him speak about his transition from basketball and how he purchased three Wendy’s while he was still playing, was monumental for us. It set our vision to think big and execute. 3) Going out to Arizona, when I first joined the brand, to spend time with Jersey Mike’s franchisee Bill Mapes. He is still a mentor today. He talked about creating and managing the systems of business. It changed the game for me.

I saw it from a bird’s-eye view—how important systems were to the bottom line of the organization and the management of multiple locations.

Key accomplishments: Being respected as a business owner.

Work week: Generally, I get up around 4:30 to 4:45 a.m. to get in an hour of exercise. I come back and shoot out emails and correspondence hours before emails start coming in. Generally, I have all my emails sent before 7 a.m. so I can focus on getting the kids ready for school, getting breakfast going, and seeing my wife off to work.

I get into the office around 9 or 9:30 a.m. when emails are coming back in. From there, I am in the office, visiting locations, following up with my directors, looking at my stat sheets and inventory, and working on marketing. I don’t have a set schedule.

I just try to check my checklist off on a day-to-day basis.

What are you reading? Philosophies and Traditions by Russ Umphenour (RTM Restaurant Group).

Best advice you ever got: About a year and a half ago, my area director said, “You have to believe in yourself or nobody will.” I am one of those people who will analyze myself up and down.

That advice really forced me to put the pedal to the metal. I knew what I was doing, so I just needed to go for it—go big or go home.

What is your passion in business? People.

People are the fuel to the engine. Having great people around you to push the envelope for the organization and bring different perspectives to the business that you can trust and believe in.

MANAGEMENT Business philosophy: I don’t have a business philosophy right now.

Management method or style: I’m definitely a driver. My wife is the analyst. She will analyze the information, but I’m the driver to get things done.

Greatest challenge: Our people. Being able to find and retain good people who drive the organization to meet its goals.

How do others describe you? Kim, my wife and president of our company, describes me as “driven, intense, and a true leader.” And adds, “He has been successful his entire life because of those three things and his focus.”

How do you hire and fire, train and retain? I’m only hiring executives of the organization at this point. We are always looking for talent and we like to hire from within. We have hired managers off the street and taught them the Jersey Mike’s system, but we believe if you put your hard work in, grow the company, understand and cement the culture you want to build within the organization, it really comes from developing from within.

We want to continue to grow and create opportunities for our general managers who want to become district managers, and DMs who want to become directors of operations, to continue to grow and push the organization further. That is really what it is about for us right now.

BOTTOM LINE Annual revenue: $7 million-plus.

2018 goals: We would like to have 18 to 20 stores.

Growth meter: How do you measure growth? Top-line sales. We look at things globally now as a company to make sure we hit our top-line sales goals, cost of goods sold, and labor.

Vision meter: Where do you want to be in 5 years? 10 years? Our goal is to get to 50 units within 3 years and, realistically, we would like to have 100-plus units in 10 years.

What are you doing to take care of your employees? We pay above industry standard and have benefit packages for store managers and area general managers. We also have salaried area general managers. We are offering ownership opportunities for what we call tenured managers, who is anyone who has been in our organization for more than three years.

What kind of exit strategy do you have in place? No exit plan right now. It is generational for us. We have one brand right now, but who is to say where we will be five years from now? We have young kids and would like to see them grow up and one day work in the business in some capacity, and, if they are capable, maybe one day run the organization.

2018 MVP AWARDS

2018 Influencer for Former Pro Athlete Award Why do you think you were recognized with this award? People are taken aback when they find out what we have been able to accomplish in a short time. I remember when we opened our first location and people thought we were crazy. If you do franchising right, you can be very successful and change the game up.

nized us. We know what is going on throughout our multiple locations all at one time. It has changed our organization.

How have you raised the bar in your own company? It all starts at the top. If you are going to lead the organization, you have to set the example and drive people to be better. You have to set out a vision and path for the company that people can go chase. Having that vision and accomplishing that vision—not just being about the talk.

How important is community involvement to you and your company? We do fundraisers throughout the year with different organizations.

We connect locally with the entire community, giving 100 percent of our sales back on Jersey Mike’s annual Day of Giving, part of the brand’s national Month of Giving every March. To think about the lives you affect and the resources the money goes back to, it is a no-brainer. And we start looking at how we can raise even more money the next year.

What innovations have you created and used to build your company? We use the platform Red Book and have switched over to Zenput.

It has digitized our company. Red Book is what we call the “bible” for our company, with our checklists, reporting, and live, up-to-date data. It has synchro-

What core values do you think helped you win this award? Discipline. The ability to stay focused is our greatest strength.

What leadership qualities are most important to you and your team? Integrity and doing what you say you are going to do.

MULTI-UNIT FRANCHISEE I S S U E I II, 2018

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2018 MVP AWARDS

BY HELEN BOND

American Dreamer

S

“No one is holding you back but you”

hahin Urias learned early in life that giving up was not an option.

Urias, whose father was in the military, grew up in survival mode during a tumultuous era in Iran. At just 10 years old, following the unexpected death of her mother, Urias became the family caretaker. She would later protect her own children from harm in the war-torn country, inside a mud basement turned makeshift bomb shelter, with no electricity or running water.

Her story on the power of perseverance makes Urias a well-deserved recipient of our 2018 American Dream MVP Award. The owner of six Sport Clips salons, Urias was honored for achieving

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remarkable success in a new country, where she taught herself English after the family arrived in the U.S. in 1992.

“I started working at a cafeteria in Austin and it helped me a lot by listening and repeating back what I heard,” she recalls. “I also studied with my kids because they were also learning English.

I used their books to learn the basics and started using the words I heard.”

Urias eventually enrolled in cosmetology school. For 11 months, she walked 3 miles to and from school, cared for her children, and worked nights at Luby’s Cafeteria. She graduated with perfect attendance.

“I was very proud of myself for ac-

NAME: Shahin Urias TITLE: Franchisee/team leader NO. OF UNITS: 6 Sport Clips AGE: 55 FAMILY: Married with 2 boys and

1 stepdaughter. My oldest son, Elias, is serving in the U.S. Air Force; my youngest son works for a start-up company in Houston; our daughter lives in California

YEARS IN FRANCHISING: 10 (with

Sport Clips since 1993)

YEARS IN CURRENT POSITION: 10

FrAnChIsE OpPoRtUnItY

. t A T a E o T E c A l P T a E r AG .

In t S e V In o T E c A l P A GrEaT $2.47Mm* AvErAgE NeT SaLeS FoR ThE ToP QuArTiLe Of FrAnChIsE OwNeRs WiTh An

AvErAgE EbItDa Of $258,496** • Easy-to-Run Business Model – No Early Mornings or Late Nights, No Fryers or Grills • A Menu of Real, Handcrafted Food Served with Genuine Hospitality • The Experience and Buying Power of FOCUS Brands Behind You • Strong Brand Reputation and Commitment to the Communities We Serve

FrAnChIsE OpPoRtUnItIeS AnD LoCaTiOnS AvAiLaBlE. ViSiT McAlIsTeRsDeLiFrAnChIsInG.CoM Or CaLl 800.854.6550.

No MaTtEr WhErE We PuT A McAlIsTeR’S DeLi, ”ThErE SeEmS To Be No EnD To CuStOmErS WhO WaNt To ExPeRiEnCe AlL ThE ThInGs ThAt ArE GrEaT AbOuT ThE BrAnD. ” AdAm SaXtOn, MuLtI-UnIt FrAnChIsE OwNeR WiTh 78 LoCaTiOnS

*This figure represents the financial performance of 81 franchised traditional McAlister’s restaurants that were in operation continuously during fiscal year 2017, based on the weekly sales reports submitted to us by franchisees during the fiscal year 2017, as published in Item 19 of our April 2018 Franchise Disclosure Document (“FDD”). While there were 381 franchised restaurants operating at the end of fiscal year 2017, 37 franchised traditional restaurants were excluded from the financial performance representation because they did not operate continuously during the fiscal year 2017, and 20 were excluded because they were express restaurants. Of the 324 remaining restaurants, 81 restaurants were in the top quartile and had average net sales of $2,476,448 with 32 restaurants (or 40%) attaining or exceeding the average. The average net sales for all 324 restaurants was $1,693,232 with 145 restaurants (or 45%) attaining or exceeding the average total net sales. You should review our FDD for details about these figures. Some outlets have earned this amount. Your individual results may differ. There is no assurance that you will sell as much. **This figure reflects the financial performance of 239 franchised traditional McAlister’s restaurants that were in operation continuously during the fiscal year 2017 and from whom we received complete and timely financial information for such period, as published in Item 19 of our April 2018 Franchise Disclosure Document. There were an additional 142 franchised traditional McAlister’s restaurants which were not added to the sample because they provided some, but not all, of this data to us, and because our franchisees vary in how they calculate various expense information. Of the 239 restaurants in the sample, 101 restaurants [or 42%] attained or exceeded the average EBITDA from Operations. You should review our FDD for details about this figure. 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 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, located at 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: McAlister’s Franchisor SPV LLC: F-8196. © 2018 McAlister’s Franchisor SPV LLC. All Rights Reserved.

2018 MVP AWARDS complishing that,” Urias says. “I remember, after years gone by, I stopped by to say hi, and the owner of the school told me they are still using me as an example in the classroom.”

With an added new role as a single working mother, Urias took on a parttime stylist job with Gordon Logan, who would soon launch the Sport Clips franchise, specializing in haircuts for men and boys. Urias worked her way up from stylist to manager of one of the

top salons in the system for nearly seven years before she remarried and moved to Tucson. With the encouragement of her new husband, Urias opened her first Sport Clips salon in 2008.

“There is nothing you can’t do, being consistent and setting long-term goals and facing all the roadblocks and challenges with an open mind and opportunity to make you stronger,” says Urias, who became a U.S. citizen in 2000. “No one is holding you back but you.”

PERSONAL Key accomplishments: Ability to speak English without taking classes. Raising my two boys and getting them through college. Watching them grow up to become the people they are now. Establishing credibility among people who got to know me over the years. Becoming a U.S. citizen.

Work week: I work every day and sometimes over the weekend. However, I manage to have work and life balance by making time to exercise, hike, and travel to see my kids or take vacations.

What are you reading? Mostly businessrelated books.

Best advice you ever got: Don’t give up, there is nothing you can’t do, no one will hold you back but you.

What’s your passion in business? I love what I do. I enjoy watching my team members grow in their career, I have a passion to make people happy, and that satisfies me.

MANAGEMENT

BOTTOM LINE Annual revenue: $1.2 million.

2018 goals: $1.8 million.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years I want to own 12 locations. In 10 years, I would like to be able to retire and focus more on my passion of helping refugees who come to the U.S. and need help getting on their feet.

What are you doing to take care of your employees? I have a very generous benefit package, competitive base pay, and incentive pay plan.

We also have a small loan program to help them in times of need.

What kind of exit strategy do you have in place? I do not have a written plan as of now.

Business philosophy: I don’t have any business degree. I learned in business that if you stay true to who you are and what you stand for, and focus on what’s important and stay on track, and not let anyone or anything cause you to stray away from your path and goals, you’ll be successful and reach your goals.

Management method or style: I coach and train, and once that part is done the expectations and accountability take place.

Greatest challenge: To understand each individual and find a way to work with the challenges they face to reach the common goal.

How do others describe you? Very passionate, caring, strong, fair, honest, patient.

How do you hire and fire, train and retain? I do not hold that role any more. I train my managers to take that role, and we follow the Sport Clips system to hire and fire and retrain.

2018 MVP AWARDS

American Dream Award Why do you think you were recognized with this award? My hard work, determination, leading by example, and my ability to lead and grow the market.

How have you raised the bar in your own company? Leading by example. Holding up our values and believing in the system.

What innovations have you created and used to build your company? I opened my first location in 2008 when the economy wasn’t going in the right direction. There was no brand recognition in Tucson for Sport Clips, so I had to be creative for my business to survive. I started going door-to-door in residential areas. Introducing the business face-to-face in neighborhoods made a huge impact, and we were able to bring in more clients.

What core values do you think helped you win this award? Hard

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work, dedication, following the system, leading by example, not giving up, even in times that are so hard, and facing challenges.

How important is community involvement to you and your company? I’m involved in so many community programs. One program that is very important to me is childhood cancer. A campaign I organized for the Diamond Children’s Cancer Research Center in Tucson raised $10,000. I said if we hit that goal I would shave my head. When we hit the goal, not only did I shave my head bald, so did a bunch of our clients. The event was very successful, and I was happy that I was able to donate 100 percent of the money to such a worthy cause.

What leadership qualities are most important to you and your team? Walk the talk. Humble. Ability to surrender to people smarter than the leader. Communication skills and the ability to communicate the same message in different ways to team members with a different personality. Consistent.

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Visit FocusBrands.com/Franchising or call 800-227-8353.

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, Moe’s Franchisor SPV LLC, Schlotzsky’s Franchisor SPV LLC, Auntie Anne’s Franchisor SPV LLC, Cinnabon Franchisor SPV LLC, or Carvel Franchisor SPV LLC, located at 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 Numbers: McAlister’s Franchisor SPV LLC: F-8196, Moe’s Franchisor SPV LLC: F-8188, Schlotzsky’s Franchisor SPV LLC: F-8192, Auntie Anne’s Franchisor SPV LLC: F-8191, Cinnabon Franchisor SPV LLC: F-8190, and Carvel Franchisor SPV LLC: –F-8199. ©2018 FOCUS Brands Inc.

2018 MVP AWARDS

BY HELEN BOND

J

Dynamic Duet

Work hard, do your best, be accountable, dream big

oye and Dave Griffin have always had a singularly focused mindset to succeed in the automotive world, dating back to their college days when they ran a car detailing business out of the back of Dave’s pickup truck.

“Our intention was to be the best at whatever opportunities were before us,” says Dave. Their family-owned business operates 55 Jiffy Lube stores in three states, and continually leads the franchise system in sales, customer count, and other key indicators.

The Griffins, recipients of the 2018 Single Brand Leadership MVP Award, are set to take Griffin Fast Lube to new heights as a board-governed company in a move aimed at helping them be more collaborative and keep ahead of the competition.

The Ogden, Utah-based company is truly a family affair. Sons D.J., Jeff, and John, who grew up in the business, now

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are senior executives. Joye credits this next generation of leadership for being instrumental in expanding their footprint in many areas, using technology to improve processes and the customer experience, and keeping the company relevant in a changing work and consumer environment.

“Being a family business brings a more balanced, caring relationship with our employees,” says Dave. “We want to see them succeed in their careers, which benefits them personally and their families collectively. We see our employees as our customers, and if we are treating them well they will treat their customers well. “ Years of experience and hard work have helped the Griffins mesh their talents, set boundaries, and communicate in a way that brings out the best in both of them.

“We worked with an amazing third party who has helped us focus on strengthbased leadership, which allows each of us

to work in the areas of our strengths,” Joye explains. “When we focus on strengths instead of weaknesses we are more productive. We believe few couples learn how to be full business partners together, and even fewer can have all of their children work with them. We’ve been fortunate NAME: Joye and Dave Griffin COMPANY: Griffin Fast Lube TITLE: Dave, board chair and co-

founder; Joye, board member and co-founder NO. OF UNITS: 55 Jiffy Lubes AGE: Dave 60, Joye 58 FAMILY: Three sons, D.J., Jeff, and John YEARS IN FRANCHISING: 19 YEARS IN CURRENT POSITION:

39 as co-founders, 1.5 as board members

2018 MVP AWARDS that we’ve all set aside our personal issues and worked hard to build each other up.”

They project continued growth in their businesses, which, in addition to Jiffy Lube, include car washes, collision repair, detailing, and digital inspection facilities.

As the children of two entrepreneurial families, the Griffins took the best from both worlds and brought them together to build long-term success. They are now transitioning the next generation into leadership and building a future for their families and their dedicated employees.

MANAGEMENT Business philosophy: We love trying new things and want to keep ahead of the competition and market trends in our industry. We like to solve complex problems, and while it is difficult at times, the end result is very rewarding.

Management method or style: We like to promote from within whenever possible. We like to see our employees develop, grow, and get promoted within the organization, both in skills and leadership opportunities.

Greatest challenge: Doubling in size in 2008 and doubling in size again in 2009.

How do others describe you? This question is hard for us to answer ourselves, so we sought input from four employees who have been with us a variety of years. Joye: Caring, sincere, confident, with a tremendous ability to lead and inspire. A great role model for young women. Dedicated and does everything with love and compassion.

“She makes people know how valuable they are.

When she talks it is always with quiet dignity. Her knowledge always impresses us.” Dave: Honest, hard-working, inspirational, personable, energetic, confident, kind, and passionate with his work and family. Inspirational and always has a clear vision of what he wants to help others grow and where he wants the company to go. A hands-on leader who doesn’t just ask others to do things that he is not willing to jump in and do with them. “Dave is the dad you wish you had.”

How do you hire and fire, train and retain? We use a third-party company to assist in the application and screening process. We have an excellent training program they must certify in before they can begin work. We try to evaluate candidates in the screening process so once they are hired we have a higher chance of retention. However, turnover continues to be a challenge.

PERSONAL Formative influences/events: When we were in college, we detailed cars at night to help pay for our tuition. During these longs nights working together, we learned we could count on each other and we found we loved working together.

This led to many opportunities for us throughout the years.

Key accomplishments: We have a wonderful family of three sons and daughters-in-law and 10 fantastic grandchildren—6 boys and 4 girls. They are the most important accomplishment we have.

Work week: We are in the office most days, but our great leadership team makes it possible for us to have more personal time away from the demands of the day-to-day operations.

What are you reading? Joye: Getting to Yes: Negotiating Agreement Without Giving In. Dave: Entitlement Abolition.

Best advice you ever got: That which you persist in doing becomes easier, not that the matter of the thing itself has changed, but your ability to do has increased. We both were raised by entrepreneurial dads who taught us how to work and solve problems.

What’s your passion in business? To build a legacy business that provides for our family and many of our great employees. We love to provide a place for people to work at something meaningful and provide for their families.

BOTTOM LINE Annual revenue: $40 million.

2018 goals: Transitioning to a board-governed company.

Growth meter: How do you measure your growth? We are growing internally, adding approximately two stores per year. We also have other businesses we are growing as well.

Vision meter: Where do you want to be in 5 years? 10 years? We will most likely continue our growth pattern and add 10 new stores. We are also looking at expanding our portfolio with other business opportunities. We will begin to transition the company to our sons.

What are you doing to take care of your employees? We have annual family picnics where all employees bring their families and spend the day doing outdoor activities. We also visit each employee at Christmas time and deliver a gift from us. We also provide opportunities for them to participate in charitable giving at their community level and we are looking at other ways to assist and educate our employees.

What kind of exit strategy do you have in place? We are working on transitioning now.

We have several trusted advisors who are helping us get our assets and portfolio in place regarding tax laws, estate planning, and retirement financial security.

2018 MVP AWARDS

Single Brand Leadership Award Why do you think you were recognized with this award? We believe we received the award for the exceptional team we have assembled, our financial growth, and the excellent brand we represent.

How have you raised the bar in your own company? All levels of the company have clear reporting metrics, continued training opportunities, and we lead by example. Our industry is very competitive, and we want to be the best by providing excellent customer service and products.

What innovations have you created and used to build your company? We have leveraged technology in the automotive space to provide our service centers with leading-edge analytics and products to empower our teams with expanded knowledge of customer needs. We also use technology to assist in documenting sales and growth opportunities.

What core values do you think helped you

win this award? Our core values have always been to work hard every day, do your best, take accountability for your actions, and dream big.

How important is community involvement to you and your company? We have supported raising funds for a variety of charities. We take pride in giving back to our community whether through a national nonprofit or supporting a local school or individual student. We try to invest in childbased fundraising to assist the rising generation.

What leadership qualities are most important to you and your team? We believe in having honesty and integrity throughout our organization, as well as communication strengths. We host biannual retreats for our upper management on a variety of issues and assign them specific topics to address with the group. We also send our top executives to strategic leadership conferences to share best practices with peers in other industries.

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2018 MVP AWARDS

BY HELEN BOND

Community Leadership “We give to get, to give again”

F

or Alexander C. Johnson, giving back to his community is part of his nature. This second-generation franchisee is now paying it forward, sharing his know-how and leadership skills with the next generation as they navigate their way through the food and hospitality industry.

Advocacy for others is a core company value for Johnson, CEO of Pretzel Power and the recipient of our 2018 MVP Community Involvement Leadership Award.

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Johnson operates five Cinnabon and five Auntie Anne’s Pretzels locations in the San Francisco Bay Area and says he’s “in this for life.” This wasn’t always the case.

He was on his way to law school when he opted instead for an MBA to pursue business ownership as an entrepreneur.

Johnson says this was the best decision of his life.

“I spent my childhood and young adulthood working in my parents’ stores,” he says. “They had three Auntie Anne’s stores

NAME: Alexander C. Johnson TITLE: CEO NO. OF UNITS: 5 Auntie Anne’s Pretzels, 5 Cinnabon AGE: 29 FAMILY: Second-generation

franchisee

YEARS IN FRANCHISING: 8 YEARS IN CURRENT POSITION: 2

bold new flavors, a cool new look, and texas-sized sales.

People have been craving Schlotzsky’s® since we first opened our doors in Austin, Texas, in 1971. Now, we’re ready to impress a whole new generation of eaters and Franchise Owners with features that make us irresistible.

• Multiple Dayparts that Produce Total Gross Sales of $1,749,252* • FOCUS Brands’ Support & Buying Power to Promote High Margins • Flexible Footprints & Co-Branding Opportunities Come to the place where the ’zsky’s the limit.

SchlotzskysFranchising.com | 800-935-6286 *This figure represents the financial performance of 23 affiliate-owned traditional restaurants that were in operation continuously throughout the fiscal year 2017, as published in Item 19 of our April 2018 Franchise Disclosure Document (“FDD”). While there were 368 Schlotzsky’s restaurants in operation at the end of fiscal year 2017, all franchised restaurants (i.e., 343 franchised restaurants) were excluded from the financial performance representation because the franchisees provided incomplete information, and franchisees vary in how they calculate various expense information. While there were 25 affiliate-owned restaurants at the end of fiscal year 2017, 2 were excluded from the financial performance representation because they were non-traditional restaurants. The average net sales of the 23 affiliate-owned traditional restaurants in operation continuously throughout fiscal year 2017 was $1,610,548 with 9 restaurants (or 39%) attaining or exceeding the average. The average net sales for the 229 franchised traditional restaurants in operation continuously throughout fiscal year 2017 was $964,660 with 95 restaurants (or 41%) attaining or exceeding the average. You should review our FDD for details about these figures. Some outlets have sold this amount. Your individual results may differ. There is no assurance you will sell as much.

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 Schlotzsky’s Franchisor SPV LLC, located at 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: Schlotzsky’s Franchisor SPV LLC: F-8192. © 2018 Schlotzsky’s. All Rights Reserved.

2018 MVP AWARDS PERSONAL

MANAGEMENT

Formative influences/events: Working in my family’s stores growing up. Learning the value of a dollar early in life.

Business philosophy: We are in the people business first and foremost.

Management method or style: Autonomy.

Believing in others to do the right thing and hold themselves accountable.

Key accomplishments: Getting my MBA. Winning Auntie Anne’s Franchisee of the Year before age 30.

Greatest challenge: Saying no.

Work week: Never typical, always changing.

That’s why I love this business!

What are you reading? The Economist.

How do others describe you? Innovative, driven, helpful.

Best advice you ever got: It’s not about pretzels, it’s about people.

How do you hire and fire, train and retain? Lead by example.

What’s your passion in business? Becoming successful by helping others. We give to get, to give again. and ran them very ma-and-pa style. After deciding against going to law school, I spent about 18 months building the infrastructure we needed to begin growing.”

These days, Johnson is all about growth, with plans to ultimately be a multi-state and multi-country franchisee—with a commitment to every community his business serves.

His contributions are vast and varied,

ranging from sponsorships and fundraisers for schools, nonprofits, and local police and fire departments to mentoring youth. His company was ranked the area’s #2 LGBTQ-owned business by the Silicon Valley Business Journal, based on ownership and number of employees.

In addition, he actively lobbies on behalf of business and labor issues.

Most recently, Johnson signed on as an industry leader to serve as sponsor for the California Restaurant Association’s new job readiness training program, Force In Training (FIT)—a first-of-its-kind train-

2018 MVP AWARDS

Community Involvement Leadership Award Why do you think you were recognized with this award? My partnership with the California Restaurant Association and Force In Training—hiring and mentoring high school kids, putting on local school fundraisers, supporting local law enforcement, the chamber of commerce, and being named the Silicon Valley Business Journal #2 LGBTQ-owned business. I also am actively involved in local and state lobbying efforts on business and labor issues.

How have you raised the bar in your own company? We hold ourselves accountable by doing what we say and by being transparent. We constantly ask how we are adding value and look for ways to improve communication and the sharing of ideas.

What innovations have you created and used to build your company? We try to speak the language of our crew members, which means doing everything digitally. We conduct training on iPads using a very robust training software. Labor and inventory management is all done on the Restaurant365 software. Our stores run on the Revel iPad-based POS system. We embrace technology any way we can.

What core values do you think helped you win this award? Empathy and humility and generosity. Work should always be fun.

How important is community involvement to you and your company? Our locations are all clustered densely in the San Francisco Bay Area, so all of us live and work in the same community. Our customers are often our neighbors. We hire from the same pool of people who visit our locations. It’s important that we give back to the community that has given us so much.

What leadership qualities are most important to you and your team? Autonomy, transparency, humility, and generosity.

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ing program for high school students to teach job skills such as how to conduct a job search, prepare a resume, and be a good leader.

Johnson, an Auntie Anne’s Franchisee of the Year before the age of 30, knows firsthand the power that believing in others can have to change lives. He recently attended a graduation ceremony of a former employee who had approached him looking for a second chance. Johnson gave it to him.

“He was headed down a dark path of drugs and alcohol,” Johnson recalls. “I hired him and was able to mentor him in business. After several years of employment, he was overseeing one of our locations. He left to start his own business and obtain a degree in entrepreneurship.

The company he built is now a multimillion-dollar business and is thriving.”

BOTTOM LINE Annual revenue: $6.2 million.

Growth meter: Number of stores. I have 10 now and would like to keep adding.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years I would like to operate in multiple states. In 10 years I would like to be multi-country.

What are you doing to take care of your employees? Birthday and anniversary date recognition, bonuses, vacation time, group events, traveling out of state to attend leadership seminars, and providing praise and recognition whenever possible.

What kind of exit strategy do you have in place? No exit strategy. I am fulfilling my family’s legacy and am in this for life.

2018 MVP AWARDS

BY HELEN BOND

Passion for People

J

Making a difference in the lives of others

oe Brumit’s passion for people epitomizes a Noble Cause MVP Award winner. Humble, generous, and always focused on helping others do better, he has built a legacy of giving back that has become part of the culture of the Brumit Restaurant Group, which he founded 30 years ago.

“We are trying to make a difference NAME: Joe Brumit TITLE: Chairman & CEO, Brumit

Restaurant Group NO. OF UNITS: 53 Arby’s AGE: 65 FAMILY: Wife Janice YEARS IN FRANCHISING: 30 in

franchising, 50 in fast food YEARS IN CURRENT POSITION:

Since 1994

in other people’s lives,” says Brumit, who operates 53 Arby’s across North and South Carolina from his base in Asheville. “I don’t know that a lot of people in business really concentrate on that anymore.

It is more about bottom line and me, me, me, versus what I can do for other people.

We really have the philosophy of what can we do for other people?”

Brumit and his wife Janice are noted philanthropists whose already significant contributions of time and money to a wide range of charitable, civic, and nonprofit organizations continue to grow.

Brumit’s lasting impact on the communities his restaurants serve is seen at every turn. Staunch supporters of education and children, The Janice W. Brumit Pisgah House at UNC Asheville and the Brumit Center for Culinary Arts & Hospitality at A-B Tech Community College are named in their honor; while the company’s JoyFull Holidays at Home program, created in partnership with the

Arby’s Foundation and Eblen Charities, provides food for children and their families in need during school breaks, and inspired Arby’s “School’s Out, Food’s In” nationwide meal card program.

Brumit is marking his 50th year in fast

PERSONAL Formative influences/events: My last job with Burger King Corp. My title was franchise district manager, but essentially I was a field consultant working with franchisees. My last area was the Atlanta market, where I worked with a lot of retired corporate executives from Burger King who became franchisees. Being exposed to those people was rewarding, educational, and helped me decide that I wanted to become a franchisee. It was quite an experience. I had a special bond with a man who previously was senior vice president for all of the brand’s European operations. I learned a lot from him about being a good leader, doing business on the up and up, doing the right thing, and doing what you say you are going to do—all the good things you learn as a young person.

Key accomplishments: Arby’s Franchisee of the Year award honors twice and other recognition.

What matters more to me is our recognition from the community. My wife Janice and I were the recipients of the United Way’s Tocqueville Community Service Award. These types of awards really mean a lot to us.

Work week: I am semi-retired. During a typical work week, I check in to see if anyone needs me, work out, get cleaned up, and have a lunch meeting with someone in business or a nonprofit almost every day of the week. After lunch, I go to the office for three to four hours. I don’t go to the office on Fridays, but I am available any time my team needs me.

What are you reading? Angry White Men by Michael Kimmel and Relentless by Tim S. Grover.

I listen to a lot of books on Audible. I am just finishing the After series of books by William R. Forstchen.

Best advice you ever got: “Whether you think you can or think you can’t—you’re right.”

(Henry Ford)

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2018 MVP AWARDS food, which began with his first job in high school at a Burger Chef in Oakridge, Tenn., where he mopped floors, cooked, and worked the counters. He calls himself semi-retired, but his commitment to others is here to stay.

“My wife and I are going to concentrate on traveling a little bit more, volunteering a little bit more, and giving a little bit more back,” he says. “There is no exit strategy to sell the company. We want this company to continue once we are long gone.”

MANAGEMENT Business philosophy: I’ve seen this in a quote lately: “I either win or learn, I don’t lose.” We all make mistakes. We all have lost at things we have tried to do. But I don’t look at it as a loss, I look at it as an educational opportunity.

Management method or style: I am a very balanced leader. I know what my strengths are, and I use my strengths to the best of my ability. I am not a hard driver, which is why I surround myself with people who are and who can compensate for my lack of strength in certain areas.

Greatest challenge: Everybody’s greatest challenge, quite honestly, is people.

People development. Making sure your team is constantly learning, growing, and never getting stale. Constantly challenging them. For us it is as much what we do in life as it is what we do in business.

How do others describe you? What I hear quite a bit is, “Joe is just a nice guy and he is good people.” At the end of my life, if I leave this world and people say this, it means a lot to me.

How do you hire and fire, train and retain? I’m not really hiring and firing any more. For the past nine years, it has been all about taking the strong people on my team I already had and developing them to be the best they can be, so they can be the ones in the future to do the hiring and firing. That is where we have been for a long time now. JoAnn Yoder, president, and Greg Catevenis, my CFO and senior vice president, are running the day-to-day business and are partners in the business.

They are making those decisions, and I trust them to do that.

BOTTOM LINE Annual revenue: Slightly over $60 million.

2018 goals: Our goal was to have sales growth in the 2 to 4 percent range.

We are nailing right in the middle of that, up 3.5 percent year-to-date. Improve our cost of sale and labor numbers from last year, which we have done. Drive the bottom line even higher than last year, and I think we are doing a pretty good job of that as well. Last year we opened six stores and remodeled six, which was a little bit of a push and stretch for our team. So we decided we were going to back off on that and opened only three stores this year and remodeled two. We are concentrating a little more on doing things better and more profitably.

Growth meter: How do you measure growth? Cash flow growth and same store sales.

Vision meter: Where do you want to be in 5 years? 10 years? I want to be where my team decides they want to be. I want to help guide them.

To me, the growth we do as a company from this point forward is for the team and for my partners. It is not about me. I would love to see us grow by three to five stores a year unless an acquisition comes along. If we are sitting at about 70 stores in 5 years, we will achieve what we want to. As long as they are profitable units, we would like to continue the growth pattern we are on now.

What are you doing to take care of your employees? We offer the same things as all our competitors out there, but I think we do a better job of developing our people. I am continuing to develop my team, to develop their team, to make everybody better. It’s been said, “The best way to get ahead is to help others get ahead first.” If we all focus on doing that, it makes our whole team better. Also, while we are becoming a pretty large company, we try to keep that family feel for our whole company and treat everyone accordingly.

What kind of exit strategy do you have in place? Death. I have JoAnn and Greg running the day-to-day business. I’m semi-retired, but I still look at the numbers on a daily basis and am engaged with them when they need me—and sometimes more than they need, just because it is part of what you have to do. There is no exit strategy to sell the company. We want this company to continue once we are long gone.

2018 MVP AWARDS

American Dream Award Why do you think you were recognized with this award? We try to do the right thing as a company and as a family. We are very involved in the community and fund a lot of different programs in our community at large and region.

We are trying to make a difference in other people’s lives.

What core values do you think helped you win this award? Many years ago, we adopted the core values that Arby’s has had for years: Dream Big, Work Hard, Get It Done, Play Fair, Have Fun, and Make a Difference. If you live those, I don’t know how much better life can get.

How have you raised the bar in your own company? I look at what JoAnn, Greg, and other people in our company are already doing in our community, giving back and being involved in organizations that are the same or different from those we have been involved in. They are following in our footsteps and learning to give back. And that is huge for me to see that the next generation is following in our footsteps.

How important is community involvement to you and your company? We partner with and support many organizations including United Way, Child Abuse Prevention Services, the Autism Society of North Carolina, and Toys for Tots, among others. We are very proud of our JoyFull Holidays at Home program with Arby’s and Eblen Charities and our support of UNC-Asheville and AB-Tech Community College.

What innovations have you created and used to build your company? Our approach to developing people and being involved in our community. I think being a little bit different from the norm has helped us a great deal.

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What leadership qualities are most important to you and your team? Lead by example.

2018 MVP AWARDS

BY HELEN BOND

Teaching by Example Serving children, parents, staff, and community

W

hen Hurricane Harvey devastated Greater Houston in 2017, staff and management at the local Primrose Schools leapt to the aid of area communities—without being prompted by franchise owners Lou Ann and Michael McLaughlin, who were dealing with flooding at their own home. Ultimately, the couple would be instrumental in orchestrating a flood of assistance to affected families, even transforming one of their schools, located just 200 feet from the floodwaters’ edge, into a temporary emergency relief facility and staging area for water rescues.

Team members were simply following the lead and example set by the McLaughlins, operators of eight Houston-area Primrose Schools, and the 2018 recipients of the Influencer for Husband & Wife Team MVP Award. Whether serving children, parents, or the community, the couple’s reputation for doing good is well-established.

Michael was the first Jack in the Box franchisee in the Houston market, selling his stake in the successful operation in the late 1980s. Their decision to invest in an early education and child care brand a decade later was the perfect way to marry Michael’s love for business development with Lou Ann’s passion and lifelong experience in early education.

The couple have been business partners NAME: Lou Ann McLaughlin TITLE: Franchisee, Primrose Schools NO. OF UNITS: 8 AGE: 64 FAMILY: Husband Michael,

children David and Valerie, 5 grandchildren

YEARS IN FRANCHISING: Nearly 30 YEARS IN CURRENT POSITION: 20

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2018 MVP AWARDS for nearly half of their 44 years of marriage.

“Working together has made our relationship stronger,” says Lou Ann, who spoke with us for this MVP profile. “Partners in business must communicate. It turns out that communication is also a key for a successful marriage! Who knew? We talk about everything, my operations work and Michael’s development work. We don’t always agree on business decisions, but we have learned to work through our different approaches to problems and to listen to one another. It has worked well for us.”

PERSONAL Formative influences/events: Michael has always possessed an entrepreneurial spirit. After attending business and law school and practicing for several years, he turned his interests to commercial real estate and business development, but Houston was in a recession in the 1980s. He’d learned about the franchise model as a vehicle for associating a business with a successful brand and began to explore an opportunity to purchase and build Jack in the Box restaurants.

He was the first Houston market franchisee, successfully operating a portfolio of restaurants until he sold his interest in the late 1980s. My formative background includes an education degree and teaching experience, which led us to explore franchise opportunities in early education and care. We opened our first Primrose School about 20 years ago in the Houston area and have since opened additional schools. Our decision to work with strong brands owned by companies that possess an exciting mission and vision has driven our multi-unit success.

Key accomplishments: My degree includes a specialization in early childhood education. I taught kindergarten and all elementary school grades in both public and private schools in Texas and received a master’s degree in education administration from the University of Houston. I am also a state-certified preschool director and master trainer with the Texas Early Childhood Professional Development System. I am proud to have served on numerous AdvancED accreditation committees and currently sit on the Texas AdvancED Council, which represents early childhood interests in our state. I also sit on the Primrose Schools Advisory Council, and my husband and I are proud recipients of the Primrose Schools President’s Award for outstanding achievement. We also consider our MVP Influencer Award for Husband & Wife as a key accomplishment. We especially enjoy the work we do with The Children’s Fund in Houston, which supports small charities serving children in need.

Work week: Mine is spent in our schools meeting with parents, mentoring teachers, working with campus management, and playing with children every day. I find technology useful for gathering together teachers, support staff, and leadership team members for short video conferences to address issues important to the successful operation of our schools. I especially enjoy meeting with young parents facing the typical parenting issues and challenges that we, as parents and grandparents, have faced ourselves. Michael’s week is spent addressing business issues and developing our new schools.

What are you reading? As a grandmother to five and career educator, I find myself reading parenting books all the time. But right now I am reading Learning Contentment by Nancy Wilson.

Best advice you ever got: Approach each day with joy! Michael and I try to live each day with joy in our hearts, and we encourage our leadership team and teaching staff to do the same—to share in the joy and happiness of working with children. You can capture the beauty of this world through a child’s eyes.

What’s your passion in business? I’m truly passionate about developing leaders and about the important role of mentorship in our schools. I like to say, “All our employees need is a teachable spirit,” because we provide the tools to make them successful.

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MANAGEMENT Business philosophy: With everything we do, we seek to develop hightrust relationships with our stakeholders: our employees, parents, the children entrusted to our care, lenders, and members of the communities we serve. This commitment is the foundation for all of our decision-making.

Management method or style: Servant leadership is at the core of how we manage our business. Michael and I work alongside our campus management, teaching staff, and support staff. We will not ask our staff members to take on any work we have not done ourselves. This promotes a shared sense of purpose.

Greatest challenge: As we have moved from one location to eight, and especially looking forward to many more locations, our greatest challenge is continuing to deliver The Primrose Experience in multiple locations. We serve more than 1,500 children and employ more than 350 teachers and support staff, so we have a tremendous responsibility to ensure they all are well trained and operating our schools as if we were still owners of only one location. Our teaching staff members are our heroes. They deliver the curriculum and programming we promise parents every day on our campuses. We see our primary responsibility as preparing and supporting them for success.

How do others describe you? Many people say we work too hard! I hope they will also say it is obvious that we love what we do. We have a sense of accomplishment when we look back at the number of lives we have influenced, especially the number of parents and children whose lives have been affected by their experience in our schools and the care we have taken to serve their needs.

How do you hire and fire, train and retain? Primrose Schools has excellent recruitment and retention tools we faithfully employ. Many of our teachers and leadership team members have been with us for more than a decade.

My goal is always to recruit the best and most talented teachers, which means we’re always hiring and training. We now have a senior staff member responsible for training our staff. We also have an instructional strategist who ensures we are using best practices in implementing the curriculum and programming at all our locations. We believe that these “specialist” positions are important to the success of our schools. We want our teaching staff to know they are part of an important profession, and that there is value in providing high-quality early education that will shape our future leaders.

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2018 MVP AWARDS “First and foremost, we look for leaders who are people of good character. We value leaders who are collaborative, have a love for children and families, and have strong communication skills.”

BOTTOM LINE Annual revenue: $16.4 million.

2018 goals: We plan to open two additional schools in 2018, one in Albuquerque and one in Midland, Texas. We also will open our first employer-sponsored school on an employer’s campus this year. We have also begun the development process to open an additional school in Albuquerque in the first half of 2019. With this expansion planned, we are focused on strengthening our senior leadership team and providing more training and support.

Growth meter: How do you measure your growth? Our primary one is school enrollment. We track many different data points throughout the year, but enrollment growth helps us gauge our success.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, we hope to have an additional seven or eight schools open, and to have expanded to another market (in addition to Albuquerque and Midland). In 10 years, we hope our focus on leadership development will have paved the way for a

team that can continue to develop and operate new schools while maintaining the standards and high quality Michael and I value so much.

What are you doing to take care of your employees? Preparing our teaching and support staff for success and retaining our staff is a key to our business success. Many of our employees have earned certificates, degrees, and accreditations while working for our schools, and we are proud that many of our team members have worked in our schools for 10 years or more. We believe the many long-term career commitments our employees make result from them having a sense of purpose in our mission.

What kind of exit strategy do you have in place? Our exit strategy is focused on building our business into a sound and successful mid-market business with the skills and tools to both develop and operate Primrose Schools at a high level, which business investors and operators would find to be of value. We have confidence in the ability of our senior leadership team to carry forward our vision for the continued successful development of the business.

2018 MVP AWARDS

Influencer for Husband & Wife Team Award Why do you think you were recognized with this award? Our skill sets are very different, but they complement one another. Michael and I make a strong team. He has a sharp business sense, and I am the go-to encourager. That combination has made us successful in the eyes of our staff and customers, and has given Primrose Schools confidence in our ability to operate the system in a multi-unit environment. We believe the award recognizes the positive influence our work has had on the lives of our employees, parent customers, and children entrusted to our care! We are very grateful for this recognition.

How have you raised the bar in your own company? We have stressed the importance of effective communication as we have moved from singleschool ownership to multi-unit operations. What we once took care of ourselves, we now must rely on our staff to accomplish. So we have raised the bar (and our expectations) on developing and using communication tools that assist us in addressing issues before they become problems.

What innovations have you created and used to build your company? Several years ago, our parent surveys indicated there was an unmet need in our market for a private first-grade program. Working with the Primrose Schools education team, we developed and implemented a first-grade program at our Kelliwood school. The program is in great demand and has been very effective at preparing children for success, both academically and socially. Primrose Schools designated it as a School of Innovation, as it is the only school in the system offering a first-grade program.

What core values do you think helped you win this award? We are committed to developing and maintaining high-trust relationships among our staff, parent customers, and with the children entrusted to our care. This value very much aligns with the mission and vision of Primrose Schools. These high-trust relationships, along with hard work, integrity, and a commitment to continual improve-

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ment, have inspired confidence in our business from Primrose Schools and our customers, which in turn has facilitated our growth and recognition.

How important is community involvement to you and your company? Primrose Schools emphasizes character development and fosters a culture of giving without expectation in its Balanced Learning curriculum. Throughout the year, we use our campuses to serve as hubs for community giving. Students and their families participate in food and clothing drives for charitable organizations, donate countless books for area children in need, collect pet supplies for local shelters, and participate in many other community activities. Every year we raise money for The Children’s Fund in Houston and the Primrose Children’s Foundation. We also encourage our schools to host community events like blood drives and Girl Scout fundraisers to extend the culture of giving outside school walls.

In the aftermath of Hurricane Harvey, each of our schools, without prompting from us, reflected the culture of our business by coming to the aid of the community to assist in rescue and relief efforts. Before we could even get out of our flooded home to assess damage, the management team at our Kelliwood school (who could make their way there) opened the school to receive families by the hundreds as they were rescued from flooded homes. The school, only 200 feet from the floodwaters’ edge, served as a staging area for rescued families. It was an experience Michael and I will never forget. We were overwhelmed to see our schools’ teams and families mobilize when our community was in need. This went on for days. We were proud of our team and the shared commitment to giving to the community that was evident.

What leadership qualities are most important to you and your team? First and foremost, we look for leaders who are people of good character.

Additionally, we value leaders who are collaborative, have a love for children and families, and have strong communication skills.

2018 MVP AWARDS

BY HELEN BOND

Striving for Perfection

B

4 brands, 42 restaurants, and off to Canada!

ob Middleton has never been a status quo kind of guy. “I have always tried to improve and be the best I can,” he says. “Having that mindset has created unexpected opportunities throughout my career. Striving to be the best in all you do is essential to being successful.”

Middleton, 2018 winner of our MultiBrand Growth Leadership MVP Award, operates four brands with 42 restaurants in Michigan and Canada. The franchising veteran’s goal is to improve the performance of each of his brands—Del Taco, Jersey Mike’s Subs, Little Caesars Pizza, and Sonic Drive-In—separately.

“Each brand has a different culture, a different heartbeat, and you need to keep the brand culture pure to maximize the best performance the concept can be operationally,” he says. “You can share the accounting, real estate, and HR people to create cost-saving synergies, but in my opinion you cannot share

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the operational people between brands.

Each of my brands is also run by one of my hand-picked partners, so every brand I operate is basically run by an owner.”

These days, Middleton is gearing up for growth as part of a joint venture with Jersey Mike’s parent company to expand the fast casual sub brand in Canada.

Middleton presently has no plans to add a fifth brand, saying he is happy and having fun with his current portfolio.

But never say never, he adds, preferring to diversify with brands that have solid unit economics and have been around a while, rather than the “new hot thing.”

“I want to see that a brand has been through tough times and survived to come back stronger,” he explains. “I pay very close attention to cash flow. I personally like concepts that can be financed with a traditional 5-year loan. The real estate piece is not as important to me. Any of my brands exceeding a 3.5x EBITDA valuation I will grow, and keep growing.”

NAME: Bob Middleton TITLE: Multi-brand franchisee COMPANY: OTB Pizza Company

(Little Caesars); Sharing the Bread (Jersey Mike’s Subs); PRG-SD (Sonic Drive-In); Providential Restaurant Group (Del Taco) NO. OF UNITS: 19 Little Caesars,

18 Jersey Mike’s Subs, 3 Sonic Drive-In, 2 Del Taco AGE: 57 FAMILY: Wife Dawn; two sons,

Ryan and Zach YEARS IN FRANCHISING: 27 YEARS IN CURRENT POSITION: 27

2018 MVP AWARDS “Wealth is built by focusing on one thing and doing it well; wealth is preserved by diversifying.”

PERSONAL Formative influences/events: Having so many wonderful influences early in my restaurant career—people who believed in me, in my potential. Eventually being guided toward the franchise business model.

Key accomplishments: Being invited to serve on several National Advisory Councils and President’s Councils for different brands I operate. Earning awards at multiple brands for sales, marketing, and service excellence. Being named Franchisee of the Year by Jersey Mike’s Subs in 2016. Receiving the MVP Award for Multi-Brand Growth Leadership this year at the Multi-Unit Franchising Conference.

Work week: When you love what you do, it is not work. When you are an owner there is no such thing as a normal work week. You need to make sure you balance your work week, spend quality time with your family, and take care of your health.

Having a balance is very important.

What are you reading? A History of the United States in Five Crashes by Scott Nations.

Best advice you ever got: Wealth is built by focusing on one thing and doing it well; wealth is preserved by diversifying.

What’s your passion in business? Seeing people in my company develop and grow. I am passionate about giving back and giving my general managers the opportunity that I had, which was to become a franchisee.

MANAGEMENT Business philosophy: Spend a lot of time up front researching the franchise you want to go into business with. Once you go into business, focus on executing the business model, not changing it.

Management method or style: Focus on the culture, mentor, train, communicate the expectation, and get out of the way. Let managers manage.

Greatest challenge: Not trying to control everything.

How do others describe you? Passionate, focused, energetic, and determined.

How do you hire and fire? We are always looking for talent and use all of the usual vehicles for recruiting, but our most successful approach has been to develop organically when possible. We try to hire right so that we keep firing to a minimum, but when the fit is not right, or someone does something to be fired, we try to be honest, fair, quick, and move on.

How do you train and retain? Each brand has its own training programs. We work on executing the program. I have found that the better you train, the longer they stay. Better training gives your team members more opportunity for advancement. We are always looking for ways to get better at training and retaining. It is one of the things we track closely, especially in the brands that are growing.

BOTTOM LINE Annual revenue: $30 million-plus.

2018 goals: Open 5 to 6 new restaurants.

Growth meter: How do you measure your growth? By same store sales comps, same store transaction comps, same store income comps, EBITDA (cash flow valuations), and unit counts.

Vision meter: My vision is a leadership team that continuously develops our people, with a focus on growing our brands profitably to create more opportunities for our best general managers to become franchisee partners with us.

Where do you want to be in 5 years? 10 years? During the next 5 years, I would like to keep growing all of the brands we operate, adding units when it makes financial sense. My biggest focus will be bringing Jersey Mike’s Subs to Canada in a joint venture with the parent company. I hope to help grow the brand in Canada over the next 10 years.

What kind of exit strategy do you have in place? I am working hard on succession planning. I have family in the business and I do not plan to exit for a very long time. I love what I do, and I am focused on developing the current leadership team to carry on long after I’m gone.

2018 MVP AWARDS

Multi-Brand Growth Leadership Award Why do you think you were recognized with this award? First of all, I was lucky enough to be nominated by Jersey Mike’s. They have been exceptionally good to me. Second, my partners and I have been able to double the size of our companies since 2007, during the Great Recession, going from one to four brands in that time. We did all this by opening new stores, not through acquisitions, and with traditional bank financing. It was quite amazing, and I am so proud of my team. We created a ton of new jobs and incredible opportunity for our team members.

How have you raised the bar in your own company? By never settling, continuously improving, and growing. We spend a lot of time talking about the culture in each brand and developing leaders. We don’t try to change a brand.

We try hard to execute each individual brand to that brand’s highest standards.

What innovations have you created and used to build your company? We have a program that helps our general managers earn non-ownership

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shares in the store they operate. This creates value they can use to become a franchisee one day, if they choose.

What core values do you think helped you win this award? I have a hard work ethic and passion for what I do. Being able to serve others, creating opportunity for employees, and helping my general managers achieve the American Dream of owning their own business.

How important is community involvement to you and your company? Jersey Mike’s founder, Peter Cancro, has a great philosophy of giving back that is part of the brand’s DNA. We give to give, and that is an incredible feeling for the owners, employees, and community. What is so great is that every franchisee gets to decide what they are passionate about supporting in their community.

What leadership qualities are most important to you and your team? We value hard work, teamwork, giving back, integrity, trust, and a desire to be the best we can.

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2018 MVP AWARDS

BY HELEN BOND

Spirit of Franchising

S

“The purpose of business is greater than business”

econd-generation McDonald’s franchisee Paul Booth, Jr., is living up to his family legacy in more ways than one. Booth, our 2018 Spirit of Franchising MVP Award winner, is a true brand ambassador. He is the face of McDonald’s in every community his restaurants serve, representing the brand and his company in leadership roles on the local, regional, and national levels.

The multi-faceted Cincinnati entrepreneur is also a sixth-generation minister and the founder and lead pastor of Legacy Pointe Church. “I believe that the purpose NAME: Paul Booth, Jr. TITLE: CEO, Momentum Restaurants NO. OF UNITS: 8 McDonald’s AGE: 36 FAMILY: Daughter, Laila Marie

Booth

YEARS IN FRANCHISING: 10 YEARS IN CURRENT POSITION: 5

of business is greater than business,” says Booth, CEO of Momentum Restaurants, which operates eight McDonald’s restaurants. “That is the lens from which I lead.”

Booth, who worked in the family business in high school and college, follows in the footsteps of his parents, Cynthia and Paul Booth. Armed with two college degrees and corporate experience, he applied to McDonald’s program for training and approving next generation franchisees.

“My mom started in franchising after a 20-plus-year career in banking, where she was the highest-ranking female,” says Booth. “I approached my parents to apply for the second-generation McDonald’s owner-operator program—an intense program and not everyone is approved.”

Today, Booth honors his family and serves others every chance he gets. He is an advocate for education who aims to “touch every school” in each restaurant community through area fundraisers, student hiring, and college scholarships for employees. He also provides countless sponsorships to groups and nonprofit organizations and continues his family’s

active support of Cincinnati’s Midwest Regional Black Family Reunion. The Booth family is a past Family of the Year honoree and founding sponsor of the annual event, which celebrates the historic strengths and values of the black family.

PERSONAL Formative influences/events: Throughout my professional career I have held several leadership positions that have strengthened my capacity as a leader. I held an office in student government at DePauw University, earned a master’s degree from Emory University, and completed several executive-level leadership development programs, including the Harvard Summer Leadership Institute and C-Change (Cincinnati Chamber of Commerce).

I am also finishing up an executive Ph.D. program in business from Benedictine University. Last, my engagement in the business early on and the extensive training I have received as a second-generation McDonald’s owner-operator has greatly influenced how I lead my organization today.

Key accomplishments: My greatest accomplishment to date is the legacy I am building for my family through my business and the leadership posts I hold in my community.

Work week: Very fast-paced! I split my time between our corporate office and the stores, meeting with mid-management and our restaurant teams who help to drive our business every day.

What are you reading? Harvard Business Review and Outliers by Malcolm Gladwell.

Best advice you ever got: Build your business for where you want to go, not where you are. From my parents: What you do on the other side of your desk (community) is just as important as what you do behind your desk. From mentors: Work-life synergy is vital to your personal and professional success.

What’s your passion in business? People.

Developing the people behind the counter is the key to delivering the experience our customers have come to expect from the McDonald’s brand.

Second, I am passionate about any innovation that keeps our brand relevant and engaging for future generations, such as Gen Z.

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FAST FACTS: FRANCHISING SINCE: Founded in 1916, franchising since 1960 MULTI-UNIT FRANCHISEE OPERATING UNITS: 15% TOTAL OPERATING UNITS: 300 COMPANY OPERATING UNITS: 5 CAPITAL INVESTMENT: $62,500 to $200,000+, excluding real estate & construction costs FRANCHISE FEE: $30,000 for full menu restaurant; $15,000 for limited menu ROYALTY FEE: 5.5%

OPPORTUNITY DESCRIPTION While rich in history and tradition, Nathan’s Famous is a company forever looking forward. From a single restaurant on Coney Island, Brooklyn in 1916, Nathan’s has grown into an international corporation serving all facets of the food service industry. Today, Nathan’s reaches millions of customers through traditional and captive market restaurant operations. Nathan’s proudly serves the highest quality, world famous beef hot dogs, golden crinkle cut fries and a wide variety of menu items.

ADVERTISING FEE: 2% EARNINGS CLAIMS: Yes BUILD-OUT OPTIONS: Free-standing, inline, malls, travel, non-traditional, food trucks and carts AVAILABLE TERRITORIES: Northeast, southeast, midwest, mid-atlantic, southwest, west

CONTACT | DWAYNE HOFFMAN | Senior Director of Franchise Development (516) 338-8500, ext. 306 | dhoffman@nathansfamous.com | nathansfamous.com/

2018 MVP AWARDS Booth leads by example to encourage his team to lend their time and talent to help “shape and grow the communities we serve.” He sits on the Forest Park Economic Development Commission, Cincinnati’s Human Services Advisory Committee, and the advisory board of the hospitality management program

at Cincinnati State, where he wants to help create a curriculum and program to develop future leaders in the QSR space.

“We serve Big Macs, fries, and Cokes,” Booth says. “But at the end of the day, this is very much about people who have a heart for service and a heart for serving others.”

MANAGEMENT Business philosophy: If you take care of your team, they will take care of the customer.

Management method or style: Servant leadership: 1) “The first and most important choice a leader makes is the choice to serve, without which one’s capacity to lead is severely limited.” (Robert Greenleaf); and 2) “The companies that survive are the ones that work out what they uniquely can give to the world—not just growth or money, but their excellence, their respect for others, or their ability to make people happy.” (Charles Handy) Greatest challenge: Managing the growth of our organization while keeping up with the demands of a rapidly changing marketplace and workforce.

How do others describe you? Servant leader, innovator, collaborator, visionary, and relentless.

How do you hire and fire, train and retain? We are in the people business. In our hiring process we look for people who exude passion, hospitality, strong communication skills, and are high energy. From crew to management we are looking for leaders who can drive the business every day. We use these performance indicators on a scorecard to determine who are performing and who are in need of coaching or are no longer a fit for our team. In the near future, to be more intentional about our hiring practices, we will be implementing personality tests as we review management candidates. To retain, we reward and praise for performance through incentive plans, training classes, and Archways to Opportunity (McDonald’s scholarship program), as well as scholarships we give to college students. We aim to retain the best talent.

BOTTOM LINE Annual revenue: Not disclosed.

2018 goals: Develop stronger management teams to keep up with the growth of the organization. Acquire two to four more locations and continue to increase sales and transactions. Have a greater impact in the communities with key civic partners that serve our customers, such as schools, law enforcement, and faith communities.

Growth meter: How do you measure your growth? Three things: the growth of our people, same store sales and additional acquisitions, and community impact. We see ourselves not only as a business in the community, we want to be a stakeholder in the community. Every year we look for an increase in our community impact.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, 15 locations. We also want to increase our corporate and mid-management staff at headquarters to support growth. In 10 years, double our size and continue to take advantage of new opportunities.

What are you doing to take care of your employees? Incentive and bonus plans when they meet certain metrics and performance goals. We provide college scholarships for employees from our personal organization, separate from the educational support McDonald’s offers. Other educational initiatives include online high school and management courses that count for college credit. We also provide all of our employees with a meal every single day. When we look at that line on our P&L it is pretty substantial.

What kind of exit strategy do you have in place? I’m not looking for an exit strategy now. I want to continue to excel and grow the business.

2018 MVP AWARDS

Spirit of Franchising Award Why do you think you were recognized with this award? I think because as a Millennial business leader in franchising, I have tried to exude a focus on the triple bottom line—people, profit, and planet—and running the business from that vantage point. Second, because I’m a second-generation owner-operator, it demonstrates an influence of a legacy in this business.

How have you raised the bar in your own company? We have a saying in our company, “It’s all about the people.” You can have the greatest products in the world, but if you don’t have the people to serve the customers it doesn’t matter. We focus on hiring, training, and retaining the right people to provide what I call a Star Experience, which I developed. It stands for Stellar service, Timeliness, Accuracy, and Repeat visits to continue to build sales and grow transactions. We make sure we embed what it means to give the customer a Star Experience in everything we do. We are also investing and reinvesting in the business to modernize our physical plants and give our customers a new experience with technology and new product offerings as part of McDonald’s Vision 2020.

What innovations have you created and used to build your company? We are always trying to get better at being better. As we grow as a multiunit franchisee, we look for ways to streamline processes and find effective ways

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to communicate all the key initiatives throughout our organization. We hire people and put them in the right positions to drive the business.

What core values do you think helped you win this award? I lead my company from a values-driven perspective. The ethos of our organization includes people first (crew and customers), integrity, and meritocracy. Integrity is everything. For us meritocracy means we want to always be a company open to hearing the voice of the people throughout the company, no matter what level they are. If someone has a good idea as a crew person to make things better, we are going to listen. Last, service. We are in the service business.

How important is community involvement to you and your company? We are not just a business in the community, we are a stakeholder in the community. We demonstrate this every day, not just by serving our customers, but in how we touch the communities we are located in.

What leadership qualities are most important to you and your team? In addition to the core values I mentioned above, it is also about being versatile and adaptable to drive the business in an ever-changing marketplace.

Positivity and optimism also help create a culture in the restaurants where people believe that anything is possible if they put their mind to it.

WE’RE GROWING AND WE’RE

TAKING YOU WITH US With new menu items, updated décor and building prototypes, Jack in the Box is offering a unique opportunity to franchise with one of the most popular and innovative brands in the quick-serve restaurant (“QSR”) industry. If you’re a multi-unit franchise operator of a non-competing brand, or a chain restaurant professional seeking a financial partner -- contact us!

Jack in the Box was founded in 1951 and has more than 35 years of franchising experience.

Franchise Business Development 858-571-4044 franchising@jackinthebox.com jackintheboxinc.com © 2018 Jack in the Box Inc. This is not an offer to sell a franchise. Jack in the Box is a registered trademark of Jack in the Box Inc.

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3/13/18 1:58 PM

2018 MVP AWARDS

BY HELEN BOND

Cricket Anyone?

S

Jay Pandya follows his passions to success

ince immigrating to the U.S. from India at age 14 with “pockets that did not run very deep,” Jay Pandya would discover a wealth of opportunity awaiting him in his new home. “Since I was young, I only focused on things that I felt passionate about,” says Pandya today. “Luckily, business fell into that category and I started my own company at the age of 19.”

These days, Pandya, winner of the 2018 Mega Growth Leadership MVP Award, presides over a commercial real estate, retail, and construction empire as the founder and chairman of Philadelphiabased Rohan Group. Pandya, who has made his mark in franchised QSR brands, is the largest franchisee of Checkers &

NAME: Jay Pandya TITLE: Founder/chairman, Rohan

Group

NO. OF UNITS: 57 Pizza Hut, 46 Checkers & Rally’s, 10 Dunkin’ Donuts AGE: 41 FAMILY: Wife and two children YEARS IN FRANCHISING: 18 YEARS IN CURRENT POSITION: 16 Rally’s in the U.S., and of Pizza Hut in Pennsylvania.

More recently, the sports enthusiast has also made headlines for his quest

to help Americans fall in love with the popular international game of cricket.

Pandya is a die-hard cricket fan, backing the launch of a professional cricket league in the U.S by 2020. In addition to owning the St. Lucia Stars, a team in the Caribbean Premier League, he is chairman of Global Sports Ventures and Royal Sports Club.

PERSONAL Formative influences/events: Eating at a Pizza Hut when we moved from India to Philadelphia. Now owning every Pizza Hut in Philadelphia is a dream come true. I have also been influenced

by Steve Jobs and India’s Prime Minister Narendra Modi. Jobs has inspired me with his innovations and all the changes he brought to the world. Modi was previously chief minister of Gujarat, where I am from, and the changes he brought to the state inspired me to step up and be successful.

Key accomplishments: Becoming the largest Pizza Hut franchisee in Pennsylvania and the largest Checkers & Rally’s franchisee in the country.

Building a company with over 25,000 employees.

Creating jobs and economic development with the planned construction of cricket-centric, multi-purpose stadiums throughout the U.S. Work week: Monday through Friday, 12 to 13 hours a day. Occasionally on weekends, depending on my schedule and travel plans.

What are you reading? Magazines and newspaper articles. I don’t get a chance to watch much television, so I read the Times of India, Bloomberg, CNN, and local newspapers online.

Best advice you ever got: The best advice I have received—and try to live by—is to be positive and confident in yourself.

What’s your passion in business? My passion is people. I love meeting our guests, vendors, and suppliers throughout the U.S. from different localities. I work with so many different people from throughout the nation. It is such a wide spectrum throughout our beautiful country. I wouldn’t trade it for anything.

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2018 MVP AWARDS To help bring cricket to the U.S., Pandya helped negotiate a $70 million licensing agreement between Global Sports Ventures and the United States of America Cricket Association in 2016, with plans to build multi-purpose “cricket-centric” stadiums in franchise cities throughout the nation.

“I always had a desire for the sport of cricket,” Pandya says.

“As I grew older, so did my love for the sport. By purchasing the St. Lucia cricket team, not only have I opened doors for business opportunities, but I also fulfilled my long love for the fantastic sport.”

Pandya recently became part owner and U.S. master franchisee of Smaaash, a Mumbai-based chain of virtual reality and family gaming and dining centers, which he says has “phenomenal numbers.” He also expects to partner for expansion with other global restaurant brands and eventually take his company public.

Pandya admits that, at times, he may take on too many passionate projects, but he wouldn’t have it any other way.

MANAGEMENT Business philosophy: Executing and taking the proper action to get things done quickly. If something needs to get done, we will do it. We are innovative through our ideas and the use of technology. We are early adopters of new technologies. We bring the efficiencies from these technological advancements to our bottom line to provide cost savings to our customers.

Management method or style: I am all about connecting. Face-to-face, heart-to-heart connections with other people have really helped me get to where I am today.

Greatest challenge: Finding more time to really help society. It is difficult for me to instill patience when it comes to my company’s growth. At times I have a tendency of taking on too many passionate projects.

How do others describe you? Positive and a family guy. Convivial and dedicated.

How do you hire and fire, train, and retain? We hire people on their ability and based on their merits. We have great employees. We usually look to hire from within; however, we do expand our wings and recruit people from the outside. We have a great benefits and bonus program and are very competitive in the marketplace. The brand names we have throughout the region offer people many opportunities to be in a lot of different positions.

BOTTOM LINE Annual revenue: NA. 2018 goals: Build and develop between 10 and 15 restaurants across our brands.

Growth meter: How do you measure your growth? Year-over-year sales and customer counts.

Vision meter: Where do you want to be in 5 years? 10 years?

I am looking to expand by building and acquiring more restaurants. We want to keep doing what we are doing, keep progressing. We also plan to build 20 Smaash centers in the U.S. over the next three years. Each is going to be approximately 20,000 square feet. We are also looking forward to being part of the successful global brand Arby’s. We are looking to expand our wings with other food chains and are also eager to get involved with other different fields of business.

What are you doing to take care of your employees? Our relationship with our employees is already immensely close. We are looking for our people in the field to eventually have ownership in the company. We want to work toward taking our company public.

What kind of exit strategy do you have in place? I am very passionate about the brands I am involved with. The day I stop feeling satisfied with a brand and my passion for it is lost is the day I will look to exit.

2018 MVP AWARDS

Mega Growth Leadership Award Why do you think you were recognized with this award? Checkers was very kind to nominate me. It is not my award, it is the company’s award, and we are honored and grateful for receiving it. We strive to grow, elevate, and partner with each brand to be the best that it can be. I am enthusiastic about everything I do, whether it’s sports, franchising, or giving back to our community.

How have you raised the bar in your own company? I live by a set of principles, and that same ideology has spread throughout the company. Also, through my willingness to take risks and try new ideas and technologies early on.

What core values do you think helped you win this award? Trust

and dedication—not only in our people, but also their decisions. I am proud to own a company that has employees who have made the company itself successful.

How important is community involvement to you and your company? We are part of every community our Dunkin’ Donuts, Checkers & Rally’s, and Pizza Hut restaurants serve. We are very involved with fundraisers and events and connecting with our police and firefighters in each community.

What leadership qualities are most important to you and to your team? Integrity, loyalty, customer-centric, staying positive, and eager to grow and lead.

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RECONNECT

BY KERRY PIPES

Singularly Diverse Feed the tigers, ride the horses, shoot the dogs

O

ne thing we’ve learned about Greg Cutchall over the years is that when it comes to his business dealings, he never sits still. The founder, president, and CEO of Omahabased Cutchall Management Co. has never been afraid to jump into franchise brands with both feet, test drive them, and then either grow or divest units.

When we last profiled him in 2013, his company was doing about $55 million in annual revenue. Today he’s riding along at $75 million.

“Mostly due to our growth in Domino’s, First Watch, and Jams American Grill,” says the 66-year-old multi-brand operator, naming just a few of the endeavors he’s been involved with since last we spoke.

Cutchall was one of the largest Famous Dave’s franchisees for a time, but has since sold or converted all but one of his units. Likewise, he’s sold back his NAME: Greg S. Cutchall TITLE: President, CEO, founder COMPANY: Cutchall Management

Co. NO. OF UNITS: 13 Sonic Drive-In, 12 Domino’s, 8 Paradise Bakery & Café, 5 First Watch, 2 Jams American Grill, 1 Lo-Lo’s Chicken & Waffles, 1 Famous Dave’s, 1 Salty Senorita, 1 Kith & Kin Southern Kitchen AGE: 66 FAMILY: Wife Molly, children

Cory, Cydney, and Chase; 4 grandchildren YEARS IN FRANCHISING: 45 YEARS IN CURRENT POSITION: 30

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MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

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RECONNECT “Pick best in-class-brands, hire the best people you can, pay them as much as you can, and share the wealth with movers and shakers!”

Twin Peaks locations. “I’m still a big fan of both brands, but there were good reasons for me to exit them,” he says.

Elsewhere, he converted his own creation, Burger Star, into a First Watch location. “Sales increased 300 percent over the following two years and we close at 2:30 p.m. every day,” he says. “Maybe the best mistake I ever made.” He’s high on the First Watch brand and now owns five locations with plans for two to three more.

He also purchased a 30-year Omaha legacy restaurant called Jams, an American Grill. He then converted his Rock Bottom location to a second Jams restaurant in Omaha’s The Old Market historic neighborhood.

Another recent move has been the addition of nine more Domino’s. Through a process of conversions and local buyouts, he’s now up to 12 and says, “I love this brand, and our timing could not have been better: double-digit sales increase year over year over year and no sign of slowing down.”

He says some of his moves over the past five years have been “golden opportunities,” while others were made strictly to tighten up and centralize his business around the Omaha market. In addition to his franchising and restaurant ventures, he and his wife Molly are partners in the Omaha Design Center, a venue for local events such as Omaha Fashion Week.

Who knows what brands or new adventures he’ll be into— or out of!—when we next check in with him?

PERSONAL First job: Worked at my father’s A&W Root Beer stand when I was 8 years old.

Formative influences: Father Ray, mother Kathrine, and my Uncle Bob. Formative events: Helped develop national catering program for KFC. Left that position as 20 percent owner and president of a KFC franchise to start my own company in 1989.

Key accomplishments: Made the Inc. 500 Fastest-Growing Companies list three years running. Omaha Restaurant Hall of Fame. Chairman of the 2019 Multi-Unit Franchising Conference.

Biggest current challenge: Staffing restaurants.

Next big goal: Pay down company debt, take fewer risks.

First turning point in your career: Organized leveraged buyout of 12 KFCs in 1986. Left after three years to form my own company Cutchall Management Co. Best business decision: I’ve had a few: buying and developing Popeyes, Sonic, Domino’s, and First Watch. Also, hiring my Sonic/Domino’s operating partner Tim Griggs and First Watch operating partner Daniel Kavan.

Hardest lesson learned: Forcing new locations (mostly out of state) to maintain aggressive development agreement.

Work week: Usually starts at in-home office at 8 a.m. I then go to the main office by noon, visit restaurants, or look for sites in the afternoon. Back to restaurants when possible until 7 or 8 p.m.

What’s your passion in business? By my multiple brands it may be obvious I like variety and challenges. Although I did develop a few restaurants in Dallas, Utah, and Phoenix, I would prefer to have three to four strong brands in one market than one brand in five markets.

Best advice you ever got: Own the real estate whenever possible.

Guilty pleasure: A good cigar and a great whiskey.

Favorite book: I don’t find much time to read. I prefer to watch a good movie.

Favorite movie: Too many to pick just one.

What do most people not know about you? I planned to be a professional photographer.

Pet peeve: Poor follow-through and lack of details. It drives me crazy, even though I can be guilty of it. That’s why people around me need to be good at it!

What did you want to be when you grew up? Happy and rich.

Last vacation: Four days in Aspen in September 2017.

Person I’d most like to have lunch with: My dad. He died when I was in my 20s. Living? Warren Buffet. He used to stop in one of my places near his office. Great guy. It was a neighborhood bar and grill and a Pepsi house, but we always had Diet Cherry Coke in the cooler for his visits!

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MULTI-UNIT FRANCHISEE ISSUE III, 2 0 1 8

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6/6/18 4:43 PM

RECONNECT “When people ask me how many restaurants I have now, I say 48.

When asked what my goal is, I jokingly say 24.”

MANAGEMENT Business philosophy: Pick best in-class-brands, hire the best people you can, pay them as much as you can, and share the wealth with movers and shakers! As my dad used to say, “Feed the tigers, ride the horses, and shoot the dogs.”

Management method or style: When rolling out a new concept or brand I want to be very hands-on, set up for success, and then try to get out of the way—not too far that I don’t have a pulse on the place, but far enough to let management succeed and make a few mistakes on the way.

Greatest challenge: I have been fortunate to attract and keep some of the best people in the business, but maintaining that as you grow fast becomes our biggest challenge. I have made some very bad hires over the years… and some very good ones.

How do others describe you? I guess multitasker would be an understatement. It’s a blessing and a curse. But it keeps my brain engaged and motor running. While some may say multitasker, I prefer diversified.

One thing I’m looking to do better: More family time focused and not distracted. And golf!

How I give my team room to innovate and experiment: I have a sweat equity partner in my QSR division (Sonic, Domino’s), my COO Tim Griggs. He has been with me for 14 years and I trust his judgment. He is really hands-on and works as hard or harder than anyone in my company. He takes all the bullets for me in those concepts. I am involved in new store development, acquisitions, and marketing, but he really runs those restaurants as he sees fit and has earned my trust in his decisions by producing good results year after year. Same goes for my First Watch sweat equity partner Daniel Kavan. Neither of these guys needs much direction, but know I am here when they need me.

How close are you to operations? I am very close to operations of brands where I don’t have an operating partner. But in those cases I want them to feel and operate as presidents of their divisions. I am always available when they need me and still approve and negotiate new locations, but the day-to-day is their baby.

What are the most important things you rely on from your franchisor? Great purchasing contracts, training, site selection, solid R&D for new products, and a good marketing plan.

What I need from vendors: Honesty, stick with agreements, reliable supply chain, and timely delivery.

Have you changed your marketing strategy in response to the economy?

How? This is a little different in different concepts. Sonic and Domino’s both have a huge national advertising budget so we have to do little but some coupon drops. For my other brands that have smaller media budgets, we continue to improve our social media attacks. Social media is huge but it is getting saturated. Everyone has a loyalty card. That’s great, but you will need to stand out without abusing the guest or they will unsubscribe. At some point people will be very picky who gets their email address; many already are. It is the perfect vehicle for retaining loyal guests, but you still need other ways to attract new guests.

How is social media affecting your business? Social media has become an animal— people are overwhelmed with social media. However, it still remains the most cost- efficient way to reach customers. You have to stand out, but not overdo it.

How do you train and retain? It is the hardest part of our business. We have a full-time HR manager who is constantly recruiting. We post on most all sites available and offer good benefits along with profit sharing for key people.

Fastest way into my doghouse: Leaving out details and not following through, hoping I will forget. I don’t forget.

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BOTTOM LINE Annual revenue: $75 million.

2018 goals: Growth has been hampered by a lack of available staffing, but we will continue to grow as our support team grows.

Scale back on out-of-state holdings, including not renewing some leases at average or below-average locations. Fortunately those are very few.

Growth meter: How do you measure your growth?

Bottom line.

Vision meter: Where do you want to be in 5 years?

10 years? When people ask me how many restaurants I have now, I say 48. When asked what my goal is, I jokingly say 24.

That never seems to happen but I have opened, developed, or acquired more than 115 restaurants since I got into the business. I love the business, and if I have the people talent to operate them I will continue to evolve and grow revenue. In 10 years, fewer locations/concepts, but with higher volumes and more real estate.

How is the economy in your region affecting you, your employees, your customers? The economy has always been strong in our markets, and we are not affected by the economy in general. Increased competition and lack of workforce has always been our biggest challenge. New restaurants far outpace population growth in our markets.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We have developed great relationships with locally owned and operated banks. One bank, Security National, has about 85 percent of all debt. They know and trust me, as I do them. Real estate financing is easy, but not every bank understands our business. These guys get it. I would not rule out VC or the big banks for a large acquisition, but we have none on our radar right now.

What are you doing to take care of your employees? Our key people all share in profits. As far as benefits, we are competitive but I wish we could do more. Health insurance is out of control, but we have minimized the damage by going to a self-insured health plan five years ago. We have saved thousands and actually lowered the premiums our employees pay for their 30 percent share. We also brought back a matching 401(k) plan a little over a year ago.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Unlike many other companies, we are not rushing to drop our longer-term, hard-working, loyal employees to under 30 hours a week to avoid the health care cost coming in the future. However, we will not be hiring any new part-time employees for over 30 hours a week.

What kind of exit strategy do you have in place?

That will not occur until I die. However, we will explore divesting some holdings over the next five years to spend more time with friends and family.

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UNDER 30

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Call of the Entrepreneur Young Jersey Mike’s Subs operator is one of their best

C

hris Rigassio is a Jersey boy who grew up loving Jersey Mike’s sandwiches and the brand’s unique culture. He always wanted to be an entrepreneur—something he confirmed during an internship at a financial planning company when he was still in college.

“That was one of the worst experiences

of my life and showed me that there was no way that financial planning was for me,” recalls the 29-year-old today. “Entrepreneurship was still calling.”

Fresh out of college and just 22, he approached Jersey Mike’s about franchising.

The brand was skeptical because of his age and inexperience, but Rigassio was

persistent. He asked the development team time and again for a shot. Finally, his determination paid off: the company gave him an opportunity to work as a crew member at one of their top locations in California to see if he had what it took to be a franchisee.

“I passed the test,” says Rigassio.

Today, he is one of the brand’s most successful multi-unit operators, with 9 Jersey Mike’s locations up and plans for 16 more. But Rigassio is more than just a successful franchise operator. He also serves as director of operations for North New Jersey, where he oversees the development and growth of more than 30 other Jersey Mike’s franchisees.

Of his success so far, Rigassio says, “I just kept my head down and continued working toward my goal to prove everyone wrong, and it has worked.”

Rigassio says his next big goal is to open and operate 25 stores of his own.

He knows it will require more hard work, and he’s up for the challenge. With the help of a business coach, the young entrepreneur says he has learned to work on the business rather than in it. This, he says, will be one of the keys to taking his operation to the next level.

NAME: Chris Rigassio TITLE: Multi-unit franchisee; director

of operations, North New Jersey COMPANY: Jersey Mike’s Subs NO. OF UNITS: 9 AGE: 29 FAMILY: Wife-to-be Nicole, French

Bulldog Drake YEARS IN FRANCHISING: 8 YEARS IN CURRENT POSITION:

4 as franchisee and director of operations

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MULTI-UNIT FRANCHISEE ISSUE III, 2 0 1 8

UNDER 30 Today, Rigassio is one of the brand’s most successful multi-unit operators, with 9 Jersey Mike’s locations up and plans for 16 more.

PERSONAL First job: Lifeguard, Mantoloking Beach, N.J.

also run two times per week and Peloton bike two times per week.

Formative influences/events: I always wanted to be an entrepreneur.

When I was in college, I didn’t know how realistic that was so I took an internship at a financial planning firm/stock advisory and it was a real eye-opener.

The internship was one of the worst experiences of my life and showed me there was no way financial planning was for me. That moved me in the direction of entrepreneurship.

Best advice you ever got: Ice cream now or ice cream later. Put in the work now to enjoy the benefits later.

Key accomplishments: First million-dollar location: Rochelle Park, N.J.; still actively in the top 30 stores in the country out of more than 1,300 locations.

Biggest current challenge: Keeping up the pace and momentum of opening stores and overall development of the company.

Next big goal: To operate 25 stores.

First turning point in your career: Partnering with investors and forming Prospect Capital Restaurants, LLC.

What’s your passion in business? Growth, Growth, Growth. I’m passionate about constantly growing our company with some of my closest friends, family members, and great employees I have picked up along the way. It is pure joy to see how far everyone has come and exciting to see where we can take this business.

How do you balance life and work? I have a business coach who has helped me understand the importance of this over the last two years. Like any entrepreneur it was all work, and I mean all work at one point, and no life.

Since then I have put trust in three of my top employees to oversee the operations and marketing of our company, and I have started to work (as my coach would say) on the business not in the business. However, as an operations manager, I will never give up the daily operations.

Best business decision: Never giving up. I’ve been denied and underestimated a million times in my career. I just kept my head down and continued working toward my goal to prove everyone wrong, and it has worked.

Guilty pleasure: Traveling. I try to travel at least two to three times a year.

Hardest lesson learned: Starting my own business takes a village. Creating a successful business takes a lot of hard work and you have to make compromises along the way. The realization of success doesn’t happen overnight. It takes a lot of long hours and many sleepless nights.

Favorite movie: “The Wolf of Wall Street.”

Work week: On the phone with my director of operations at 6:30 a.m. to brief what’s in store for today and review the previous day. I get my workout in around 7 a.m. After that, I’m in the office making calls from 8:30 to 10:30 or 11 a.m. Once that’s complete, I’m on the road visiting my stores and/or have days in the office until 6:30–7:00 p.m.

Exercise/workout: 5–6 days a week. I’m usually in the gym by 7 a.m. I

Favorite book: Trump: The Art of the Deal.

Pet peeve: Unmotivated people.

What did you want to be when you grew up? Since I can remember, I wanted to be a business owner. I used to come up with the craziest ideas when I was kid, whether it was moving to the islands and opening jet ski rental businesses or online ordering platforms. I really wanted to own a local surf shop in a beach town community.

Last vacation: Costa Rica.

Person I’d most like to have lunch with: Jeff Bezos.

UNDER 30 How did you get into franchising at such a young age? Graduated from West Virginia University and wrote a college paper on Jersey Mike’s vs. Subway. I interviewed franchisees for the paper and started to become more and more interested in it.

Was becoming a franchise something you’d planned on? Yes, I’m from New Jersey and grew up eating Jersey Mike’s subs. I figured I couldn’t get a good sandwich away from school and it sparked an interest for me to get into franchising and open a Jersey Mike’s. The seed was always planted, I had the idea, and it’s something that kept getting bigger and bigger.

that comes at you from many different directions. You can’t bring your emotions into it, but rather have to think the process through.

What kinds of obstacles did you face in franchising at such a young age? Not choosing the best location for my store. I’ve had a couple tough situations, but we’ve learned from our real estate mistakes. There’s a lot of stress put on the company when you kind of miss the ball there.

Did you have a mentor or inspiration for getting into franchising? No.

How would you describe your generation? In-between. I feel like the younger generation is so technology-driven and inherited a different work ethic.

Some of my business partners are older and do things a bit differently and a bit more old school. I feel that our generation is stuck in between, as we have gathered a little bit of both sides of the spectrum.

What jobs, skills, and experience have helped you operate a franchise business? Keeping calm under pressure. There is a lot of pressure

Do you see franchising as a stepping-stone or a career for you?

I would say it’s a career. The next step is to be a franchisor.

MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

51

UNDER 30 “Our staff believes that Jersey Mike’s is not just a job, but also a career path, and that’s a testament to how we train and prepare.”

MANAGEMENT Business philosophy: Always striving for more. Never be satisfied with just enough.

Management method or style: Perfectionist. Never settle.

Greatest challenge: Over-committed. I have a problem saying no.

How do others describe you? Relentless. I get an idea and won’t give it up until it’s achieved. “Dog with a bone.” Driven.

One thing I’m looking to do better: Not to forget work/life balance.

Also, it’s very important to me to increase the overall health of my company.

How I give my team room to innovate and experiment: Always based on proven productivity and results. Will give it to them if and when they earn it.

How close are you to operations? I have conference calls with my key team at 6:30 every morning before they start their day. We go over a recap of yesterday, what’s in store for today and this week, and review daily labor and food cost numbers of managers and stores.

What are the two most important things you rely on from your franchisor? Food safety best practices and marketing and social media tactics.

What I need from vendors: We don’t have many vendors, so the biggest thing is to just be on time. Quality of product is also important and for it to be in great condition.

Have you changed your marketing strategy in response to the economy? How? We have improved our marketing strategy based on the increase in the economy; creating new revenue streams with stronger marketing.

How is social media affecting your business? Positive. It gives us an opportunity to hit a larger target audience with more bandwidth.

How do you hire and fire? It’s extremely challenging to hire talented and energetic individuals willing to work the demands and hours of the hospitality industry. We interview and assess every potential employee’s strengths and skills and use that as a way to find lasting candidates and employees who fit the mission of Jersey Mike’s Subs.

How do you train and retrain? Our employees go through extensive on-the-job training that sets the bar for operational excellence. Our employees are prepared and we are able to retain them by creating a fun atmosphere that encourages camaraderie and banter with the customers. The training we receive as franchisees gives us the tools to pass that training down to our managers, setting up each employee for long-lasting success. Well-trained franchisees and managers create successful stores, which encourages employee retention. Our staff believes that Jersey Mike’s is not just a job, but also a career path, and that’s a testament to how we train and prepare.

52

BOTTOM LINE Annual revenue: $8.5 million.

2018 goals: Open two new locations and earn more than $10 million in revenue.

Growth meter: How do you measure your growth? Same store sales increase, annual revenue, unit count.

Vision meter: Where do you want to be in 5 years? 10 years?

50 stores in 5 years; 100 stores in 10 years.

How is the economy in your region affecting you, your employees, and your customers? It’s trending up. We are out of the recession and it seems like people are eating out a bit more, as our transactions are up.

Are you experiencing economic growth in your market? We are growing by 18% on the high end. Our average would be 8–9%.

How do changes in the economy affect the way you do business? I haven’t experienced too much of that yet.

How do you forecast for your business? Keep pushing forward. In 2019, we want to get at least 4 stores open. That should put us around 13 or 14 total. I’d like to keep that pace of 4 or 5 stores opening each year.

What are the best sources for capital expansion? I have three business partners who are experienced in private equity and investment banking.

They used to work for Barclays in New York and all have started new companies.

They do most of the groundwork for acquiring financing. We have a relationship lender with a local bank and they pretty much provide us with a $1.5 million credit line to open Jersey Mike’s.

Experience with private equity, local banks, national banks, and other institutions? Why/why not? See above.

What are you doing to take care of your employees? We give quarterly bonus incentives, 10 percent profit-sharing with the managers, Christmas parties, and provide health care benefits to our employees. We help people if they need to relocate, get cars and provide short-term help.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? The only way you can handle it is to increase your prices. If minimum wage goes up, we have to increase our menu pricing by whatever percentage that is. We don’t incur the costs, but rather have to pass it off to the customer.

How do you deal with problem employees? I rely on my key management team who are in the thick of things when the bullets are flying to deal with any issues that may arise with employees.

How do you reward/recognize top-performing employees? We have two parties a year (summer and Christmas). We created them as an inviteonly, and we give prizes and MVP awards that include best operating manager and other categories. The prizes can include trips, vacations, sporting event tickets, etc. We do company trips together and team-building activities as well.

Fastest way into my doghouse: My expectations of others. I expect everyone to have the same drive and commitment that I do.

What kind of exit strategy do you have in place? I don’t really have one. I’m just trying to focus on growth.

MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

EXPERIENCE

growth GROW YOUR TERRITORY WITH DEL

In my 19 years as a Del Taco Franchisee, I’ve developed 40 restaurants across Phoenix and Colorado. I can say that there’s never been a more exciting time to be a Del Taco franchisee.

Brent Veach Franchisee since 1999 40 Stores

DEVELOPMENT INCENTIVES AVAILABLE OFFERING REDUCED FEES $1.497MM AVERAGE

UNIT SALES*

24% AUV GROWTH SINCE 2013** OVER 560 RESTAURANTS IN 14 STATES

50+

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GROW WITH DEL TODAY

DELTACOFRANCHISE.COM

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*See Item 19 of the 2018 FDD for details. Figures reflect average sales and certain other operating figures for the freestanding company-owned restaurants as of the end of the 2017 fiscal year. ** Figures are for freestanding franchisor-owned restaurants. In FY 2013, 147 or 51% had average sales ≥$1,207,784; in FY 2014, 144 or 51% had average sales ≥ $1,278,853; in FY 2015 143 or 51% had average sales ≥ $1,376,622; in FY 2016, 137 or 48% had average sales ≥ $1,459,541; and in FY 2017, 139 or 48% had average sales ≥ $1,497,155. See Item 19 of our May 2018 Franchise Disclosure Document for more information. There is no assurance that you will do as well, a new franchisee’s results may differ from the represented results.

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 in your jurisdiction. Contact Del Taco LLC, 25521 Commercentre Drive, Lake Forest, CA 92630 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 - 5365

The2018Multi-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 35 36 37 37 39 39 41 41 43 44 45 46 47 48 49 49 50

SUBWAY MCDONALD’S DUNKIN’ DONUTS THE UPS STORE AFC (ADVANCED FRESH CONCEPTS) LIBERTY TAX SERVICE LITTLE CAESARS H&R BLOCK DQ GRILL & CHILL/DQ TREAT GREAT CLIPS HEALTH MART PHARMACY ACE HARDWARE DOMINO’S PIZZA FIREHOUSE SUBS BURGER KING BASKIN-ROBBINS VISION SOURCE JIMMY JOHN’S HISSHO JACKSON HEWITT TAX SERVICE CENTURY 21 TACO BELL SPORT CLIPS KFC ANYTIME FITNESS WENDY’S PAPA JOHN’S EDIBLE ARRANGEMENTS PAPA MURPHY’S COLDWELL BANKER SUPERCUTS JERSEY MIKE’S SUBS CHICK-FIL-A GNC FANTASTIC SAMS SONIC DENNY’S PIZZA HUT COLD STONE CREAMERY ZAXBY’S AUNTIE ANNE’S MIDAS ARBY’S EUROPEAN WAX CENTER SMOOTHIE KING WINGSTOP JIFFY LUBE CULVER’S HUNTINGTON LEARNING CENTER POPEYES LOUISIANA KITCHEN MIRACLE-EAR

MULTI-UNIT FRANCHISEES

SINGLE-UNIT FRANCHISEES

TOTAL FRANCHISEES

4,151 1,996 1,042 818 784 732 725 668 625 580 574 530 522 494 473 451 433 426 418 413 355 343 320 302 279 273 272 262 250 247 240 234 222 218 213 210 181 181 177 177 175 175 172 161 159 155 151 149 147 147 144

3,773 385 519 2,311 1,727 939 92 771 1,807 350 3,030 2,544 272 18 389 817 2,263 343 17 145 848 344 139 461 1,523 152 443 297 263 542 140 191 1,348 246 308 282 326 117 407 26 319 286 276 104 226 132 160 242 37 606 19

7,924 2,381 1,561 3,129 2,511 1,671 817 1,439 2,432 930 3,604 3,074 794 512 862 1,268 2,696 769 435 558 1,203 687 459 763 1,802 425 715 559 513 789 380 425 1,570 464 521 492 507 298 584 203 494 461 448 265 385 287 311 391 184 753 163

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

54

MULTI-UNIT FRANCHISEE ISSUE III, 2018

The2018Multi-Unit50 Top 50 Brands by Percentage of Multi-Unit Franchisees RANK

BRAND

% MULTI-UNIT FRANCHISEES

MULTI-UNIT FRANCHISEES

SINGLE-UNIT FRANCHISEES

TOTAL FRANCHISEES

1

PANERA BREAD

100.00%

27

0

27

2 3

FIVE GUYS BURGERS AND FRIES GATEWAY NEWSTANDS

98.37% 97.33%

121 73

2 2

123 75

4 5

FIREHOUSE SUBS PANCHERO’S

96.48% 96.43%

494 27

18 1

512 28

6

HISSHO SUSHI

96.09%

418

17

435

7 8

HWY 55 BURGERS SHAKES & FRIES JACK IN THE BOX

94.44% 92.38%

51 97

3 8

54 105

9

CAPTAIN D’S

90.91%

60

6

66

10 11

PALM BEACH TAN APPLEBEE’S

89.66% 89.19%

26 33

3 4

29 37

12

LITTLE CAESARS

88.74%

725

92

817

13 14

MIRACLE-EAR ZAXBY’S

88.34% 87.19%

144 177

19 26

163 203

15 16 17

THE LITTLE GYM MCDONALD’S HUNTINGTON LEARNING CENTER

86.54% 83.83% 79.89%

135 1,996 147

21 385 37

156 2,381 184

18 19

AARON’S PLANET FITNESS

79.38% 78.74%

77 137

20 37

97 174

20 21 22

GRANDY’S BARBERITOS HERTZ

77.78% 77.42% 76.74%

21 24 33

6 7 10

27 31 43

23 24 25 26

DUTCH BROS. CARL’S JR. FRONTIER ADJUSTERS JACKSON HEWITT TAX SERVICE

76.32% 75.86% 75.00% 74.01%

58 88 123 413

18 28 41 145

76 116 164 558

27 28 29 30

PENN STATION EAST COAST SUBS FRESHII GODFATHER’S PIZZA BOJANGLES’

72.15% 71.70% 71.67% 71.05%

57 38 129 54

22 15 51 22

79 53 180 76

31 32 33 34

VALVOLINE INSTANT OIL CHANGE SPORT CLIPS RALLY’S BUDDY’S HOME FURNISHINGS

70.37% 69.72% 69.70% 68.97%

57 320 23 20

24 139 10 9

81 459 33 29

35 36 37 38 39 40

DUNKIN’ DONUTS PACLEASE DOMINO’S PIZZA AVIS DEL’S LEMONADE

66.75% 66.67% 65.74% 65.31% 64.52%

1,042 42 522 32 20

519 21 272 17 11

1,561 63 794 49 31

41 42 43 44 45 46 47 48 49 50

WENDY’S BETTER HOMES AND GARDENS REAL ESTATE COST CUTTERS FAMILY HAIR SALON CHECKERS SUPERCUTS HARDEE’S ARMSTRONG MCCALL GREAT CLIPS ZPIZZA TWO MEN AND A TRUCK EUROPEAN WAX CENTER

64.24%

273

152

425

63.86%

53

30

83

63.77% 63.55% 63.16% 62.99% 62.50% 62.37% 62.16% 61.15% 60.75%

44 68 240 80 40 580 23 85 161

25 39 140 47 24 350 14 54 104

69 107 380 127 64 930 37 139 265

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

MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

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BY SARA WYKES

REWARD LOYALTY! And increase traffic, frequency, and ticket size C

raig and Dianne LeMieux, area developers and franchisees for Tropical Smoothie Cafe, couldn’t be happier with their brand’s loyalty program. The couple have opened 75-plus locations in Northern Ohio, Michigan, and Colorado, have nearly 50 more sold and in various stages of development, and, with partners, own 10 cafes themselves.

The debut of the Tropical Smoothie Reward app in July 2016 has made a significant difference in sales, says Craig LeMieux, who spoke with us for this article.

“That reward system for loyalty brings our customers back more often and increases transactions. It’s a key part of our business model,” he says. The app, which works at any Tropical Smoothie store, is not the only customer loyalty tool they employ to increase repeat business.

On an average of once a week, their franchise locations send text messages offering special incentives. Individualized for each location, the messages often are sent on days when the weather at those locations might be a barrier to seeing customers come through their doors.

“Customers today want to know that the brand notices their loyalty and are rewarded for it,” says LeMieux. He and his

Dianne and Craig LeMieux

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MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

wife also know their customers. “I’ve seen some brands reward their customers with cookies after making a certain amount of purchases. A customer at Tropical Smoothie Cafe may be a little more health-conscious than your average quick service restaurant customer. That’s why we offer something that we know definitely our customer wants.

Often it is money off or a free smoothie, depending on the offer.”

The brand’s tactics are a capsule portrait of three ideas now producing powerful customer loyalty success for franchises: 1) listen to what your customers say they want and like; 2) begin locally and, if possible, expand to national; and 3) make it easy as possible for customers to join the program and be frequent patrons.

Community involvement The act of listening, broadly defined, is also proving effective for brands that appeal to their customers’ better instincts. Positive customer response to community-based charitable contributions and sponsorships is telling franchisors and franchisees alike that customers appreciate them thinking beyond the buck.

“Customer loyalty is a long game,” says George W. Tinsley, II, vice president

and managing partner of Tinsley Family Concessions, a fast-growing company currently managing 40 locations in the Miami and Tampa International airports.

“Anybody getting into it should be in it for the long haul.”

The family business, founded in 1982

by Tinsley’s father, George W. Tinsley, Sr., includes holdings in KFC, TGI Fridays, Starbucks, Pizza Hut, Jose Cuervo Tequileria, Quiznos, and more. The senior Tinsley opened his first franchise in 1984, a KFC (see his profile in MUF, Q2 2017).

For Tinsley and his father, one example of the long game is honoring any brand offers made by KFC. “But what we found worked best was being actively involved in the community our customers come from—people need that to build a loyalty.

Inside the store, it’s about building a team that’s actively recognizing and truly enjoys serving our customers.”

So the Tinsleys seriously embraced community involvement. It began early, with the senior Tinsley supplying enough chicken dinners to feed a whole school, and has since expanded to attending school awards ceremonies for employees and their children. It all builds an employee culture that encourages deep customer familiarity, says the younger Tinsley.

“We look at everyone as stakeholders in our business. In our KFCs, employees can predict the order for 50 to 70 percent of our customers,” he says. That commitment also includes college scholarships for employees. The Tinsleys also build partnerships with sports teams, catering meals when the teams fly. The results of this approach speak for themselves: while KFC’s average frequency of purchase is 60 to 65 days, the Tinsley-run locations average is every 10 days.

What works for one franchise brand or industry might not work for another, but the same three principles (listening to customers, focusing locally, and making the program easy to join and use)—customized to individual circumstances—remain the same.

REWARD LOYALTY!

John Helm Community giving Jersey Mike’s Shore Points Rewards program is successfully encouraging customers to accumulate and redeem points, but the brand’s loyalty program really begins before a new store even opens. In the days leading up to a grand opening, employees of the new store visit neighboring businesses to let them know that during the store’s first five days they will receive a free sub if they make a donation to a local school.

This approach, says John Helm, who owns 15 Jersey Mike’s Subs in New Jersey, has resulted in “lines out the door for five days straight. People are filling their stomachs and we’re raising thousands of dollars for local schools.”

Beyond that local emphasis is Jersey Mike’s national “Month of Giving” every March, culminating in a “Day of Giving” where this year 1,360 restaurants donated 100 percent of sales, contributing more

Rich Hope

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MULTI-UNIT FRANCHISEE ISSUE III, 2 0 1 8

than $6 million to 170 charities nationwide. Closer to home, the campaign raised $377,492 this year for Make-A-Wish New Jersey.

“That day there are no discounts,” Helm says, “but the community comes in and supports what we’re doing. Sales are triple that day.” The community goodwill that begins with local charities and community organizations feeds into daily sales, too, Helm says.

Jersey Mike’s loyalty program began in classic punch card form, but the cardbased system was vulnerable to abuse, so much so that it was discontinued for a time, says Rich Hope, Jersey Mike’s chief marketing officer. With its format updated—it’s now available as an app—Shore Points Rewards is a great success. Fortyfive percent of the brand’s customers are part of the program, more than twice the level considered worthwhile for a customer loyalty program, Hope says.

During grand openings, Jersey Mike’s employees don’t push customers to enroll in the program, but they are given information about it. Signing people up during their orders proved to add too much time to a transaction, so the program is now available with a simple text message and downloadable app. The response has been tremendous: the Shore Points program has more than 9 million members and is adding 35,000 new ones weekly, says Hope.

“Our rewards program is simple, easy to get started with, and it’s easy to redeem points,” he says. “Over 50 percent of our sales are from our loyalty program. At our best stores, three of every four customers are loyalty program customers. Now we have a huge base of people who are marketing for us, telling our story for us.”

Earning trust Pearle Vision EyeCare Centers, founded in 1961, has a different kind of customer loyalty challenge than the typical QSR (price, quality, customer service, for example). The hurdle instead is educating its customers that the brand’s franchisees do more than provide eyeglass frames and lenses, even though those products represent the majority of its revenue.

Multi-unit Pearle Vision franchisee Chris Butcher, doctor of optometry and COO of several locations in Florida, has been sending a dedicated team to community events. His goal is to give the public a chance to appreciate what the brand can do by offering a free color vision or eyesight test, or answering ques-

George W. Tinsley, II tions about insurance, eyeglasses, or how to maintain healthy eyesight for all family members—and perhaps have them make an appointment to come in. Once that first appointment has been made, Pearle then emphasizes its experience as a healthcare provider and its ability to do more than just sell glasses.

“We are earning the trust of the patient,” says Butcher, “and we want the experience they have to be memorable enough so they come back in a year. You may need glasses, but the piece that’s lasting is eye health.”

Going out to meet people by participating in community events to share his stores’ eye health expertise, he says, “is a way to interact with people where they’re at.”

Listen to your customers For more than 30 years, Taco John’s has deployed a reliable tactic to spur customer loyalty and foot traffic: Taco Tuesday. “It’s a classic form of customer loyalty program,” says Tamra Kennedy, a nine-unit Taco John franchisee whose franchising career began in the franchise’s corporate offices in 1984.

“We have built trust with our customers through the humble taco,” says Kennedy, “and we do see some customers only on Tuesdays. But we can count on that, and we appreciate it.”

A few years ago, customers asked if Taco Tuesdays could include soft shell tacos too.

The brand listened and responded with a yes. Customer response was huge, says Kennedy, with soft shell tacos outselling crispy by two to one. “They appreciated that we responded to what they really wanted,” she says.

Taco John’s has also paid attention to the digital skills—or lack thereof—of some of its customers, whose generational experi-

REWARD LOYALTY! given free bags of nacho chips to encourage them to head to the salsa bar. Nor does she miss an opportunity to chat up and share information with customers.

“We talk to people about what’s on the horizon, even at the drive-through window, and we put samples on people’s trays,” she says. “Most people want in on the secret, and they’re going to be upset if you don’t tell them.”

Tamra Kennedy ence still leans toward using cell phones as phones. The brand still has a paper punch card for breakfasts, but it also has an app with a reward system, and it’s working. “We know that, generally speaking, our guest check average is higher when it includes reward items—and that they feel okay about ordering other items. It’s all part of the overall picture,” she says.

Kennedy has learned that customer loyalty is “a marriage between understanding customers and fulfilling their needs. Everybody wants a good deal, and if there’s a way to save a couple of bucks and have a great meal, then I want to be the place you think of first. It becomes a question of strategically choosing what to discount and how to market that discount.”

And during new menu item launches, she’s generous with samples. New steak burritos were first presented on the house, and when salsa bars debuted, guests were

Kerry Goebel

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MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

Data trove Pie Five Pizza is just five years out of the gate, though it is part of Rave Restaurant Group, whose Pizza Inn brand has been franchising since 1963. Its customer loyalty program, Circle of Crust, has been out front from the start. The app, which replaced a card-based program, offers upgraded rewards, online ordering, and automatically adds reward points, among other features. Customers earn a point for every dollar spent and are rewarded with $10 when they reach 100 points.

Kerry Goebel, one of Pie Five’s founders, is seeing higher check averages for Circle of Crust members, but he’s just as excited about the useful data to be harvested about what his customers are ordering.

“We can see spending and buying habits and answer questions like, ‘Is this what you want?’ We can introduce something and watch how our loyal customers react,” he says. Recently, Pie Five debuted a cauliflower crust as a limited-time offer at a couple of locations. “It was selling so much we couldn’t keep it in stock,” Goebel says.

“Now, people are coming every week for this crust and it will become a permanent addition to the menu.”

The information gained from the app’s users is vital to the brand’s continuing success and future growth, he says. “We are innovative, but we have to stay with what’s valued by our customers. We can be more disciplined about what we roll out with an interactive program that’s mutually beneficial.”

Loyalty accounts now tally about 30 percent of transactions, a percentage that is growing at Pie Five’s 78 locations in 20 states. Goebel, along with his brother, sister, and father (Dave Goebel, former Applebee’s CEO; profiled in MUF Q4 2016), also owns 12 Pie Five locations in Kansas and Missouri.

Cross-brand perspective If anyone understands the differences and interactions between franchise brands, it’s Rahul Marwah, who manages operations

and development for the Denco Family of companies. His parents bought their first franchise, a 7-Eleven, in 1983. Today the Denco Family owns 25 Denny’s, 10 Subways, 7 Popeyes Louisiana Kitchen, and 3 7-Eleven stores, as well as Marriott, Hilton, Choice Hotels, and InterContinental Hotel Group hotels.

With this big-picture perspective, Marwah, who calls himself “technically a Millennial,” is a bit of a skeptic on the value of loyalty programs, at least in his own life. “I participate in all of them,” he says, “but it really doesn’t drive my decisions.”

And he sees some lag in the switch from paper to digital—a problem, he says, “because people have stopped wanting to carry cards and coupons, and I think a lot of brands haven’t figured this out

Rahul Marwah yet.” Hotel brands, whose franchisors compensate franchisees for rooms given away with earned points, do drive repeat business with such programs, however.

What he does see as a useful approach are networks of retailers that collectively participate in a rewards program—such as Plenti, a 3-year-old rewards program from American Express that let members earn points in one place and use them at another—until AmEx shut it down on July 10.

For a rewards or loyalty program to be effective, the price point has to be right, he adds. “If you’re talking about a meal with an average ticket of $28 to $40, I don’t think you’re going to choose that same full-service dining location more than once a month. But if you are able to participate in a network with multiple brands, then it’s an opportunity for all boats to rise.”

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Finders and Keepers Retaining employees in today’s tight job market

“In America, the way people are treated at companies is despicable.”

—Richard Branson

S

o how do we do better? Especially today, in a time when record low unemployment and rising wages are prompting employees to at least consider improving their job situation, if not downright jumping ship. In the competition for employees, what can a franchisee do to become an employer of choice in their market? We asked around.

Here’s what we found.

Being there Don Robinson, the largest franchisee of Penn Station East Coast Subs, employs around 330 people at his 18 stores in the Louisville market. “Turnover in this industry is 100 to 150 percent. Last year our turnover was 84 percent,” says Robinson.

So how did he do it?

About 9 years ago, he made some changes in how he hires and trains his employees.

For Robinson, it’s all about culture, “being present,” and following through. “It’s people first. What we do is we don’t forget about them,” he says.

This starts immediately. After the initial paperwork, entry-level employees are not sent to a back room to watch training videos. “We spend a ton of time with them early on,” says Robinson. “The most important thing we’re doing is setting the foundation of our company from Day 1.”

This is just one way he differentiates his restaurants from the competition.

He also educates each new employee on why they are important to the brand.

“The district managers, or operations directors, build the relationship from Day 1,” says Robinson. He also makes it a point to speak with the new employees himself.

This personal attention continues after an employee is through orientation and working in one of his restaurants. He asks his operations directors to make a monthly

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MULTI-UNIT FRANCHISEE I S S U E I I I , 2 0 1 8

visit to the store to see how each new employee is doing. “The number-one thing is checking up on the training and development of that employee. If they’re behind, we ask the manager what’s going wrong,” says Robinson. “Is it the employee or the GM? Where is the breakdown happening, and how can we get them there?”

Nowadays he continues the personal touch himself. “I spend more time in the stores today than I have in the past to get to know the employees more, talking about anything, trying to be more engaged,” says Robinson, twice named Penn Station’s franchisee of the year.

“This generation’s a little different,” he says. “Money doesn’t motivate as much as it used to. I think it’s about experiences now—free time, what they’re doing outside of work.” So he does his best to understand them and meet their expectations, as well as encourage them to meet his.

“We try to do ‘surprise and delight’ things—a GM will buy ice cream, or at random buy pizza for the staff.” Or he’ll drop off a box of Krispy Kremes himself.

“We’re doing small things more frequently; our competitors are not.”

This year, for the first time, he closed his stores on the Fourth of July and took

Don Robinson

265 of his employees to an area amusement park. One unexpected result—even before the trip—was a spike in applications from employees at other area businesses.

“I hadn’t really thought about that. The referral was amazing, kids telling their friends. We were just taking care of our employees.” And every Christmas he buys employees a little gift.

Asked about those much-ballyhooed “generational differences” of today’s entrylevel workforce, Robinson said, “When I was 15 or 16. I remember my boss said, ‘You kids don’t have any work ethic today.’

We hear this all the time. You’ve got to learn and adapt.”

And he has. “I’ve been at Penn for 18 years building this market and I’m running into kids who used to work for me and have families now. It’s so rewarding when one of them gives me a hug, or tells me what they learned working for me.”

Reasons, not rules “Everything we do in our company, we try to keep it as simple as possible,” says Charles Keyser who, with his brother Jesse, operates 20 Sport Clips, 6 OxiFresh, and 5 Little Caesars locations.

When it comes to retaining employees, “It boils down to two things,” says Keyser: 1) continuing to grow the company, and 2) focusing on the why of what they’re doing.

On the first point, company growth means opportunities to advance for frontline employees and managers alike. “The number-one thing I keep hearing is, ‘Where I’m at currently they’ve just been stagnant for a while,’” says Keyser. “People want to be around something that’s moving forward. Progression is the remedy to most ills.” Even if their part of the company is not growing, he says, growth elsewhere in the organization is infectious and tends to make people want to stay.

Second, he says, “We focus on the why of what we’re doing, not necessarily the how. Of course, he says, for front-line em-

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Finders and Keepers and set an interview for Monday and the probability of them showing was high.

Now if we talk to them on a Wednesday, we get them in on Thursday because they probably have five, six, or seven interviews lined up, where years ago they might have had two.” This is so important, he says, that his area managers adjust their schedules accordingly. “It’s really helped,” he says.

When it comes to employee retention, rewards and recognition are huge, says Keyser. “But it has to be genuine, and done in a way that is genuine. Like anything in business, it can get routine. If the leaders in the organization truly want to recognize and make it a priority, it is incredibly impactful, but it has to be a priority.”

Charles Keyser ployees the how is critical. But that’s table stakes, the minimum of what every other employer must provide. Focusing on the why before letting new employees in front of customers makes a qualitative difference.

“It gives a purpose to everyone, a little bit higher than just a paycheck. They feel they have a more important role in the company, almost a bit of a higher meaning, when they come in to work,” says Keyser.

This is equally true on the back end for administrative staff, he says. “They also need to know why.” For example, if the air conditioning goes out in a store, they should feel the urgency to fix it as soon as possible—not only so the customers aren’t baking, but also for the employees.

It’s important, he says to show the company cares a lot about the employees, so they’ll care about the customers.

“We’ve always stressed overdevelopment of the individual from the level they’re on.

Even if they don’t necessarily have the skill sets to advance, they can get better at what they do,” he says. He’s made it a priority across his brands to make time to coach and develop his employees, or simply to ask how things are going. It’s easy for that kind of employee nurturing to be lost in the day-to-day, he says.

One big change he’s made in response to the tight job market is shortening the time between a front-line applicant’s initial inquiry and a face-to-face meeting. “A year ago, we could call on a Wednesday

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Focus on development “It’s a scarce labor market and probably getting scarcer,” says Susan Rather, who with her husband Jeff Tews, operates six BrightStar Care businesses and one BrightStar Senior Living facility, with a second opening in August. This means having to find two different groups of employees, as the former provides home care services and the latter work in an assisted living facility. Another wrinkle is that some medical care staff must be certified, but Rather says that hasn’t really been a problem, although finding management staff has been a little tougher this year than last.

In all, they employ about 60 managers to run day-to-day operations, and about 700 home care staff in the field. For the managers, “Retention is about as good as we’ve ever seen,” she says. “In the last 2 years we’ve done a lot of work revamping our personal development program.”

Part of that work, she says, is modeled on Google’s Project Oxygen, which focuses on what behaviors make a great manager.

Before the revamping, she kept running into situations where a talented manager would work hard for a couple of years, and say, “What else?” Their job was managing the direct care staff, so there really was nowhere to promote them to. “So we put a lot of focus on telling them, ‘We can’t give you a promotion, but we can offer you special projects,” she says.

“They were still doing their other job, but at the end of a project we’ll award them with a bonus if it worked well,” she says. For example, a group of four managers worked together to digitize the onboarding process for training new employees. “Working on a special project allows them to get re-engaged if they’ve mastered their job.”

Another way to provide growth—and

retention—for managers came when they expanded by taking over two BrightStar home care businesses and replaced the existing management with their own managers. “We haven’t lost anybody in the last 2 years because they were looking for shinier, brighter opportunities,” says Rather. “It’s not about a new title or more money, but we can afford to bonus them.”

In the past, she says, “We always struggled with how do we develop our staff.” Now they are taking a more active approach, and the results are paying off. One lesson that surprised her was learning that not everyone on the management side wants more. “Some were completely comfortable doing what they’re doing. That was a new realization for me,” she says. “People are individuals. What will work for engagement and retention for one doesn’t necessarily work for another.”

They’ve also made improvements on how they manage their direct care staff of 700, the ones “actually doing the work,” she says. Two years ago they began using employee engagement surveys from Home Care Pulse, which makes telephone calls to about 10 percent of both clients and employees every month. “It’s really good feedback,” she says. “We can see how one office is knocking it out of the park and another is struggling a bit, and then use our experts to help them improve.”

Front-line supervisors now meet with direct care staff in the field more frequently, and training has been enhanced on the front end. “We used to hire, train for two hours, and send them out. Now it’s 10 hours working with a mentor,” says Rather. And

Susan Rather

Finders and Keepers they’ve added more touchpoints between supervisors and staff after a shift, and after the first meeting with a new client about how to follow up and what the client said about the care provider.

All of this, she says, has brought employee engagement scores up significantly.

Ear to the ground Luke Millikin gets around. As senior vice president, global commercial banking for Bank of America Merrill Lynch, he spends most of his time in the field with the bank’s restaurant operator clients, seeing their business up close and hearing about their challenges. Based in Scottsdale, he covers most of the western region of the U.S. And yes, hiring and retaining employees in 2018 is a real problem.

“All my colleagues in the restaurant group have the same experience,” he says.

Asked about how the historically low unemployment rate is affecting those clients, many of them multi-unit franchisees, he sorted his response into five areas.

1) Demographic changes. The decline in the teenage labor participation rate is the number-one challenge for QSR franchisees. Reasons include higher school enrollment, summer school, and competition from older workers. Teens also seem to be less interested in finding work, with the percentage of non-working teens seeking a job about half what it was two decades ago.

“When these teens do want a job, they want something differentiated, companies with a purpose, that they can be proud of,” says Millikin. For many teens today, he says, a desirable job boils down to three things: culture, having a purpose and connection to a larger community, and an opportunity for growth and a career path.

Large, successful multi-unit operators, he says, place a lot of focus on disseminating their culture from top management to regional managers to district managers to store managers—and on following through on promises and being consistent at the store level, he says. “This is what I’ve been hearing from best-in-class operators.”

2) Finding employees. As workforce shortages continue to grow, employers will have to get creative in how they seek talent, he says. For restaurant operators, the growth in the number of seats nationwide has added another level of difficulty, intensifying competition for the best employees, whether managers or front-line staff. Success here also comes back to culture, he says. “It’s tougher for franchisees to find employees if their cul-

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ture is stagnant, or if the company is not growing or is in decline and doesn’t have positive momentum.”

After a new hire, follow-through and ongoing communication are critical. “It’s what employees need or demand right now,” he says. A problem with new hires that happens all too often, is that a new employee is told what to expect and what the job will look like, but then they show up on their first day and have problems clocking in, or the trainer’s not there, or they’re not on the schedule. “Almost right away there’s a lack of trust. This has been pointed to as a driver of dissatisfaction,” says Millikin. To avoid this, he suggests getting someone on board to ensure a smooth entry and ongoing follow-through.

Luke Millikin 3) Invest in technology. To counter the shortage of qualified employees, restaurant franchisees must take advantage of new technology that can streamline processes and do the work that humans once did, says Millikin. In considering whether to use robots to automate some tasks, “I would encourage people to think about technology as an enabler of 1) a better customer experience, and 2) a better employee experience,” he says. “If you position technology to your employees as something that makes their life better and easier, that’s a more productive lens to see the technology through.”

Whether it’s Flippy the burger-flipping robot or customer-facing technology such as kiosks, tablets, and mobile apps to order and pay, it’s essential to present it to employees in a positive way, such as

eliminating repetitive or routine tasks.

Also, he says, ensure your restaurant staff is trained in how to use any new tech, or it could create more problems than it’s supposed to solve.

4) Generational differences. Millikin says the restaurant operators he spends time with tell him that today’s younger workers value purpose-driven companies, authenticity, connection, are more focused on communities than on loyalty to a specific company or career, like to solve problems, and are used to things happening faster, almost on demand. Whereas older generations might be more focused on being able to get their paycheck on time, healthcare benefits, and predictable schedules.

While a lot of focus is placed on Millennials and with Gen Z right behind, “What shouldn’t be lost is that these older generations are still working in these restaurants and have their own sets of needs and desires. Everybody wants to be treated with respect and dignity,” he says.

5) Employee benefits. Providing comprehensive employee benefits is a challenge, especially with increases in both healthcare costs and minimum wage. The challenge for employers is to meet employee expectations and compete without sacrificing profitability.

“We hear that people are leaving for more pay, promotion, and benefits,” says Millikin. Competing outside of compensation is one way to win this battle, he says, and points to three themes: • Try to understand what people want or need to feel appreciated and engaged.

This could include recognition of punctuality, anniversaries, connection to community, etc.

• Sit down with employees and map out what they want from their job and in their career—especially important with today’s transient, younger workforce. Make a better connection with them by helping them toward their goals. Working with employees who want to grow will help keep them on board.

• Offer innovative, useful benefits to help them with their lives outside of work.

One example is what Millikin calls financial wellness programs. These can include topics such as anatomy of a paycheck, how to fill out a 1040, buying or leasing a car, and the value of starting a retirement fund when young. Major banks, including Bank of America, he says, do this for companies who make it available to employees at no cost—and online, making it easy and familiar to younger workers.

BY KERRY PIPES & EDDY GOLDBERG

TAKING CARE OF BUSINESS

2018 Multi-Unit Franchising Conference gets it done!

The annual Multi-Unit Franchising Conference drew more than 1,600 attendees to Las Vegas this past April. Nearly 700 of them were multi-unit and multi-brand franchisees whose aggregate revenue topped $10 billion—and who plan to open a total of more than 2,000 new locations in the next two years, and 11,000 in the next five years. Quite a group!

F

ranchisees, franchisors, and suppliers gathered at Caesars Palace for the nation’s largest multi-unit franchising event. Education, networking, and a packed Exhibit Hall provided ample opportunity for attendees to gain insights about their business, rekindle friendships, build new ones, and head home armed with valuable takeaways to help their organizations rise to the next level.

“The content of the conference was the best ever,” said Therese Thilgen, CEO of Franchise Update Media, which hosts the yearly gathering. “Each year we strive to provide attendees with informative programs that will help them improve and grow their businesses.” And thanks to input from the all-volunteer Conference Advisory Board, the programs were packed with strategies, tactics, and “war stories” about challenges and how to overcome them. Platinum sponsors this year were Inspire Brands and Jersey Mike’s Subs.

Pre-conference On Tuesday morning, a day before the conference sessions began, about 80 attendees boarded two buses for the annual Charity Golf Tournament at the Arroyo Golf Club. The yearly scramble-style event not only provides an informal setting for networking and some fun in the sun, it also serves as a charitable fundraiser. After a spectacular day in the desert, golfers returned to Caesars Palace to link up with their peers at a franchisee-only opening social at Carmine’s in the Forum Shops. Hour one was reserved for first-time attendees, who got to meet Conference Advisory Board members up-close-and-personal before the room filled to the brim with franchisees for the next two hours.

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CONFERENCE BY THE NUMBERS Aggregated statistics from the 2018 MUFC. • Attendees1,600+ • Franchisees 670 • Units 11,000+ • Exhibitors 250+ • Revenue $10 billion+ • Seek new brand 75%

2018 Co-Chairs Joe and Cheryl Robinson

Day 1 keynote The conference proper kicked off the next morning with a welcome from 2018 CoChairs Cheryl and Joe Robinson, Supercuts multi-unit franchisees. They presented a plaque to 2017 Conference Chair Guillermo Perales, thanking him for his hard work and contributions last year.

George Will, Pulitzer Prize-winning columnist, author, and political commentator, next took the stage as the day’s keynote speaker. Characteristically, he applied his wit, deep knowledge of history, and insightful observations to everything from the bitter partisanship in Washington, D.C., to the “angry discord in this country.”

Will spent some time dissecting the entitlement culture and the “welfare promises we’ve made but can’t keep.” He told the group not to worry about socialism. “We’ve already got it,” he said. “Just look at government regulation and the redistribution of wealth.”

Addressing the spend now and worry later mentality currently reigning in the country, he said, “Today we’re borrowing from the future. We used to borrow for the future.” The real problem, he said, is in medicine as the U.S. ages and becomes what he called a gerontocracy, and healthcare businesses become larger and more powerful every year. “Longevity has become a problem. It’s wonderful, but very expensive.” Sparing no one, he said that much of the associated costs are from voluntary bad behavior resulting in obesity, Type 2 diabetes, and cardiovascular disease. “We have to make better choices,” said the 76-year-old.

But it wasn’t all doom-and-gloom from the often acerbic observer. Will said the “entrepreneurial mind” has the power to change the U.S. “It’s our choice, we can

George Will, keynote speaker have a government-driven society or a market-driven society,” he said.

After taking shots at the immigration bill, the federal tax structure, and the government’s regulatory overreach, he summed up his presentation by lauding the free market. Economic growth continues, he said, “in spite of our best efforts to stop it. Capitalism doesn’t just make us better off, it makes us better.”

Social media panel Will was followed by a general session panel focusing on the challenges and opportunities social media presents. Cheryl Robinson moderated a panel consisting of Adam Pierno, chief strategy officer at Santy Marketing, Seth Mattison, generational workforce expert, and John Carroll, manager of business outreach at Yelp.

The panelists discussed both their successes and failures with social media and how franchisees can better use it to build brand awareness, engage a targeted audience, and create new customer relationships. The discussion covered everything from how different generations use and respond to social media, to the popularity of user-generated content and how it’s reported to be outperforming brandgenerated content.

In fact, Pierno cited a study showing

that user-generated content is creating almost 7 times the engagement of posts originating from brands. He also cited another study showing that three of four Millennials and Gen Z respondents objected to being targeted with ads and are moving to other forms of online interaction. So where are they going? To platforms, apps, and online vehicles offering conversational, 1-to-1 relationships with other social media users, he said.

Yelp’s Carroll said big brands understand the value of direct feedback, pro or con. And while Yelp thrives on such feedback as users post comments online, he also pointed out the importance and value of what he called “indirect feedback.” He said Las Vegas buffets are a great provider of indirect feedback: what food is left on the table or thrown away (vs. what was loaded onto consumers’ plates) can tell you a lot—if you’re looking. So is feedback from employees who deal face-to-face with customers. The key is to learn what to look for, how to gather that information, and adjust. “Small changes ultimately impact your business the most,” he said.

Mattison focused on employee engagement and provided six drivers for creating it. He also spoke on the importance of culture to a brand’s long-term success.

“The customer and employee experience

John Carroll, Yelp

are a reflection of culture, and culture is a reflection of leadership,” he said.

Lunch and breakouts Separate franchisee-only and franchisor/ supplier-only lunches followed before attendees got their first choice of breakout sessions. Topics included “Franchisee Case Studies—Real Solutions to Real Problems,” “Protect Your Bottom Line,” “Developing Multi-Unit Leaders,” “Develop Leaders to Support Your Growing Enterprise,” “Going from Management to Leadership,” “Tough Lessons: MultiUnit Franchisees Share Their Biggest Mistakes,” and “Preparing for SecondGeneration Franchisees.”

The variety of topics drew packed rooms as multi-unit operators sought out lessons from the expert panelists and speakers. “I have been to this conference for the last five years and I find the content relevant, useful, and timely,” said Rodney Shaver, a La Madeleine French Bakery franchisee. “The breakout sessions allow you to pick the topics that best support the needs you have.”

The popular Money Room and Law Room were back again this year. The Money Room offered an opportunity for franchisees to meet one-on-one with potential lenders to discuss financial options suitable to their present stage of growth and goals for expansion. This year’s sponsors were ApplePie Capital, Bank of America, Merrill Lynch/The Horowitz Group, Spirit Realty Capital, Sterling National Bank–Franchise Finance, TD Bank–Restaurant Franchise Finance Group, Texas Capital Bank, and West Star Capital.

Legal advice was freely available in the Law Room, where franchise attorneys provided one-on-one consultation on legal questions and concerns in a personal, confidential setting. Law firm sponsors were Einbinder & Dunn, Marks & Klein, Monroe Moxness Berg, Paris Ackerman, and Stark & Stark.

With the day’s educational sessions and panels concluded, attendees headed to the grand opening of the Exhibit Hall.

Exhibitors offered everything from new franchise opportunities to products and services aimed at benefiting franchisee organizations. Whether simply in search of refreshment after a long and thirsty day, or seeking solutions in technology, HR,

MULTI-UNIT FRANCHISEE I SSU E I I I , 2 0 1 8

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Darrell Johnson, FRANdata CEO financial management, public relations, social media, and more—it was all there for the taking.

“Excellent networking opportunities, generous people willing to share about their success and experience franchising,” observed Daisy Meyer, a Supercuts multi-unit franchisee.

Day 2, the economy The second day began with the annual

MVP Award winners on the big stage

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economic outlook report from FRANdata CEO Darrell Johnson. With the aid of complex graphs and charts, he said the economic cycle was in a “Goldilocks period—not too hot, not too cold.” The U.S., he added, should be able to weather any economic shocks that may come in the next year or two… although he did point out that the market is long overdue for a correction.

The global economic outlook is “pretty smooth,” he said, adding that it’s rare to have so many national economies humming along together like this, with steady GDP growth across the board. However it’s not all roses, and never is. “Capitalism has recessions. It just happens, and maybe we’re due for one,” he cautioned.

Good news, said Johnson, is that consumer confidence is at its highest level since November 2000, driving increases in consumer spending, which accounts for 70 percent of the U.S. economy. Notso-good news is that this spending also is driving “pretty high levels” of credit card and household debt. Yet, while these storm clouds are beginning to appear on the economic horizon, he doesn’t see them raining on the parade for a couple of years.

“Small business optimism remains high,” he said, while also pointing out that unemployment is low and minimum wages are rising. He noted the continued growth of multi-unit franchising and told attendees, “Emerging brands are a great opportunity for you.”

Today’s tight job market, with unemployment at its lowest level since January 2001, is “perhaps one of the most powerful opportunities for the franchise community to change its perception in the public eye,” he said. Elaborating, he contrasted public perception of fast food jobs as minimum wage, dead-end jobs with the reality that they are job training centers for first-time workers, building foundational skills for career development.

Johnson challenged the franchisees in the audiences asking, “What if we had a standardized certification program of 6 or 12 months?” With such a program, he said, franchising would become recognized by the public—and by elected and appointed government officials—as the largest jobs training program in the U.S. It also would very likely reduce turnover, he added.

MVP Awards Next up was the highly anticipated presentation of the annual Most Valuable Performer (MVP) Awards. These awards honor franchisee excellence in a number of categories. This year’s winners are Angelo Crowell, Pro Athlete Influencer; Shahin Urias, American Dream; David & Joye Griffin, Single Brand Leadership; Alexander C. Johnson, Community Involvement Leadership; Joe Brumit, Noble Cause; Michael & Lou Ann McLaughlin, Influencer Award for Husband & Wife; Robert Middleton, Multi-Brand Growth

SAVE THE DATE MAR, 24-27, 2019

Sponsor Info 800.289.4232 ext. 202 www.multiunitfranchisingconference.com

CAESAR’S PALACE, LAS VEGAS

Presented By @2018 Franchise Update Media. All rights reserved

Steve Young, keynote speaker Leadership; Paul Booth, Jr., Spirit of Franchising; and Jay Pandya, Mega Growth.

(See full coverage beginning on page 10.)

Steve Young wows ’em!

The day’s main keynote speaker was NFL Hall of Famer, two-time MVP winner, and Super Bowl MVP Steve Young. An attorney, motivational speaker, and managing director of private equity firm HGGC, he wowed the crowd with his humorous, inspiring talk on leadership and success, including personal tales his own difficulties getting there.

“When I realized I was too short to see over the offensive line and down to my receivers, I had to find a way to overcome and develop a gut instinct approach,” he said. He also talked about how important it was to “take responsibility and accountability when things go wrong.

Don’t mitigate the failure,” he said. “How good do you want to get? Do you want to find out?”

Joe Montana was a tough act to follow—for anybody—even the guy who spent years learning from “Joe Cool” as his backup quarterback. After taking over from Montana, Young had to endure cries of “Where’s Joe?” and “What would Joe do?” for years and struggle inwardly before gaining confidence, coming into his own, and winning over the 49ers fans.

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On successful people in life, on or off the field, he said, “If I could teach my kid one thing: if they mess up, they stand for it and they fix it.”

They have the meats (and the hats)

Regulatory panel The morning closed with a general session on “The New Normal—Legislation & Its Impact on Franchisee Business.”

Gary Robins, a Supercuts franchisee, facilitated a panel consisting of Rob Branca, a Dunkin’ Donuts franchisee; Michael Lotito, an attorney with Littler Mendelson and labor counsel to the IFA; and David Barr, a multi-brand franchisee, investor, and IFA Secretary.

Panelists discussed external threats to the franchise business model, including the new tax law, the NLRB’s joint employer rulings, new overtime rules, the growth of predictive scheduling, and minimum wage laws—and their actual and potential effects on franchise businesses across the country. They encouraged attendees to take their concerns to Capitol Hill, but also advised them to participate in local and state government policy-making and build relationships with their legislators at all levels. “Legislative awareness is as vital today as capital,” said Robins.

Following this most sobering of presentations, attendees flocked once again to the Exhibit Hall for lunch, decompression, and more business before one last

afternoon of breakout sessions. Topics included “Attract & Recruit the Best Talent for Your Franchises,” “Retain & Grow the Best Talent for Your Franchises,” “Build Digital Media Into Your Local Marketing Plan,” and “Franchisees & Franchisors Working Together to Resolve Differences.” (“Yes, really,” cracked one wag.)

Bookending the afternoon, the Exhibit Hall opened again for the Closing Networking Reception, serving refreshments and opportunity to all.

Day 3, get involved!

Thursday morning’s closing session, “Franchisee Action Plan for Legislative & Advocacy Efforts,” was a call to action by the IFA urging franchisees to get involved in educating their elected officials and shaping future legislation. Erica Farage, IFA’s vice president of political affairs and grassroots advocacy, facilitated a panel consisting of Jeffrey Tews, Brightstar Care and Brightstar Senior Living franchisee; Tamra Kennedy, a Taco John’s multi-unit franchisee who serves franchising through her participation on the IFA board, as vice-chair of the Franchisee Forum, as a member of the Franchise Relations Committee, and as

“One Superfood Protein and a Beet Pomegranate to go, please” Minnesota’s state captain for the Franchise Action Network (FAN); and Tom Baber, a franchisee of IHOP and Money Mailer, serving on the Franchise Relations Committee and Franchisee Forum.

The panelists shared their own experiences of how they learned to participate in local and national politics, offering tips and advice on how other franchisees

could get involved. The discussion made its way from NLRB joint employer issues and frivolous ADA lawsuits, to the critical labor shortage and rising minimum wage.

The 2019 Multi-Unit Franchising Conference will be held March 24–27 at Caesars Palace in Las Vegas. For more information, visit www.multiunitfranchisingconference.com.

The place to be!

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CustomerService B Y

JOHN DIJULIUS

Word of Mouse Online reviews can make or break you

O

ne of my close friends called me and said his son, who had recently graduated college, was looking for a good financial services firm he could do business with in the city where he was living.

He remembered that I had a client in that city and wanted to know if I could help his son. I immediately introduced him through email to the vice president of that financial services company. What could be better than a solid, warm introduction to a senior VP by a family friend?

Case closed. Or maybe not.

A few days later I asked my friend how things were going with his son and the company I referred him to. I was expecting him to tell me how great everything was and to thank me for the introduction.

Instead, he told me that his son never followed up with the VP after the introduction because he went online and didn’t like some of the negative reviews this company had. Word of mouth is no longer the #1 marketing vehicle.

The customer rebellion Companies spend millions of dollars every year creating and advertising their brands, yet the customer’s experience is what drives customer perception. Consumers have less patience and are more outspoken than ever before.

Customers are no longer tolerating subpar service, indifference, and un-empathetic businesses, and they are standing up for themselves. They won’t take it any more, which has resulted in the “customer rebellion.”

Word of mouse For hundreds of years, the best form of advertising was word of mouth. Today, it is word of mouse. Social media represents a gigantic power shift

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You are creating either brand ambassadors, or brand terrorists doing brand assassination.

back to the consumer. Now consumers can share their displeasure with thousands of others with just a click of a button.

According to a report from FleishmanHillard, the company found that 9 of 10 consumers (89 percent) turn to online reviews to find information on products, services, or businesses before making a purchase. What you do well—and not so well—will be broadcast to hundreds, if not thousands, of potential customers.

They expect your company to be easy to contact and quick to respond.

Conclusion Customers no longer trust just what someone tells them. Instead, they will go directly online to see what hundreds (or thousands) of customers are saying about the experience your company delivers. Too many companies think the only answer is to get as many people as possible to share positive reviews. That helps, but it doesn’t fix the root of the problem.

To do that, you need to focus on making sure that every person you do business with walks away with a positive experience— and if they don’t, do your best to fix it. To compete in today’s online world, where word of mouse has replaced word of mouth, you must make it easy for customers to share their feedback with you. Most important, follow up, make it right, don’t be defensive, don’t make excuses, trust what your customer is telling you, and be a zero-risk company to do business with.

Your customers will appreciate it—and so will your bottom line.

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, Chick-fil-A, RitzCarlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or info@ thedijuliusgroup.com.

1-800-485-9570

frandata@frandata.com

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People BY PETER HARRISON

New Approaches Are Needed Now 5 important trends affecting your workforce

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e recently wrapped HourMinds 2018, Snag’s annual customer conference, where we hosted more than 350 brand and thought leaders to talk about the now and next of hourly work. After three days, 20 sessions, and countless side conversations, one thing was clear: there are some monumental changes coming to your multi-unit workforce this year.

So, what are the big issues you need to prepare for right now? And what are best-in-class franchise brands like KFC, Wendy’s, and Pizza Hut doing to stay ahead?

Here are five up-and-coming trends changing how your multi-unit business will recruit and retain hourly workers in the second half of 2018.

1. Flexible work i s h e r e t o s t ay.

HourMinds kicked off with the theme “Leading in the Era of Flexible Work,” reminding everyone that in the age of Uber and Lyft, the gig economy continues to grow. Workers are leaving brick-andmortar employers in growing numbers to participate in the gig economy or flexible work. Businesses increasingly need to look for ways to make their work as accessible as ordering a pizza or a Lyft. Businesses using Snag Work or similar platforms to staff shifts with on-demand employees agree that there are some growing pains.

But they believe it’s the right battle to fight to reclaim this growing workforce, already estimated at almost 20 percent of all hourly work. Is your business ready?

2. Underemployment is more than a trend—it’s a crisis. After surveying 2,000 hourly workers earlier this year, we discovered just how much underemployment was growing: almost 50 percent of hourly workers said they need more hours, and employers are realizing that tapping into

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the underemployed is increasingly more fruitful than seeking the unemployed.

And now employers are developing their own tactics for ensuring their employees are getting enough shifts. From offering extra hours as a perk to testing out flexible scheduling techniques, employers are learning that tackling underemployment is key to solving its symptoms, such as high turnover and low application flow. (Learn more about this trend on our website and how Chipotle and Five Guys are trying to solve it.)

3. Data is your secret recruiting weapon. When it comes to keeping all of your locations fully staffed, having the right data can make all the difference. We heard firsthand how multi-unit operators are diving into their recruiting funnel metrics—including time to fill, retention rate, etc.—to improve their recruiting processes.

Being able to hone in on where their process needed the most attention gave major brands such as Captain D’s the chance to cut down on applicant drop-off and give their location managers better tools to find the best people. Focusing on the most relevant information for your business can give you more control over how your teams hire.

4. Stand out with better employer

branding. Employees are the heart of every franchise business, no matter what industry you’re in. The equation is simple: happier workers means happier customers.

Forging a connection between employees and your brand, from the first training session and throughout the rest of their employment, keeps them engaged and invested in the success of your business.

Those same enthusiastic employees are also great allies as you continue recruiting for great talent. As Scott Colosi, president and CFO of Texas Roadhouse, put it: “If you’re proud to work for any organization, you’re going to be more engaged.” Over and over, we heard how multi-unit operators are doubling down on the value of their employer brand for recruiting and retention.

5. Timing is everything. Snag found that more than 80 percent of hourly workers expect to complete job applications from their phone, and 25 percent of them are hired within 24 hours of submitting their application. A growing number of employers are complaining that the quality of candidates is declining because so few respond. The new reality is that in this labor market, unless you respond to an application within 24 hours, you’re highly likely to miss the boat. Also, if your application can’t be found easily and be completed within 5 minutes from a mobile device, you’re going to experience significant dropoff and lose out on some of the best candidates.

We heard from one employer after another that they were removing steps from their application process, including assessments, and doing everything they could to ensure they were not just mobile-friendly, but “mobile-first.”

Midway through 2018, we’re already noticing a lot of these changes taking place.

Looking to the future, we’ll continue to see these trends and more. Is your business ready?

Peter Harrison is CEO of Snag (renamed from Snagajob in April). Learn more at www. snag.co.

20 YEARS STRONG

FRANCHISE LEADERSHIP & DEVELOPMENT CONFERENCE

SocialMedia B Y

ADAM PIERNO

Mass Migration?

Keeping up with today’s social media trends

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ocial media changes so quickly that during the course of writing this column Facebook became embroiled in an international privacy scandal, was dragged before the U.S. Congress, had millions of users delete their accounts—and then announced their stock had jumped to a record high after smashing earnings estimates.

All this is to say that social is anything but static or predictable. Still, if you are counting on investments in social media to drive business, or are committing your marketing and local advertising funds to it, there are some trends worth following.

A study released this year by Edison Research showed that people are using social media less than they were a year ago. Self-reported users of social media fell from 80 percent of U.S. respondents aged 12+ in 2017 to 77 percent in 2018; Facebook usage declined from 67 percent to 62 percent in the same study.

Why are people moving away from social? Because they resent advertising: 74 percent of Millennials and Gen Z users objected to being targeted with ads in social; and 56 percent said they planned to reduce usage of social media platforms because of incessant brand messaging (Harris Poll, conducted on behalf of Lithium Technologies, May 2018).

This should scare you if you are counting on social platforms to drive customers into your locations.

Are ads still working?

Anecdotally we’ve seen a reduction in the effectiveness of organic content for many clients. Why? Because the social platforms have throttled brand content to encourage the adoption of paid programs. Some reports have organic content

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reaching 2 percent of the followers of a brand account. Yikes.

Even for paid content, peer and influencer content is dramatically outperforming ads. In one study, user-generated content outperformed brand content nearly seven times over (“The 2017 Facebook User-Generated Contact Benchmark Report” from Mavrck). User-created content about a brand earned 26 percent more engagement than content by that brand! People don’t like ads and they’re making moves to avoid them.

Less public, more private Where are Facebook and Twitter users going? It’s not as if there are scores of successful new platforms. comScore has been reporting a growing segment of mobile users who have downloaded zero apps per month since 2016 (“The 2017 U.S. Mobile App Report”). People are finding new ways to relate in existing tools. First, those staying on social platforms are moving to the more visual networks like Instagram (owned by Facebook) and Snapchat. There are fewer ads and less drama. They are also spending more time on messaging services like WhatsApp (also owned by Facebook).

These users are looking for more direct communication with their networks, communication that feels more private and less broadcast.

This direct style of communication reflects how customers are now using social to relate to brands. They’re using tools like Twitter and Facebook Messenger to speak directly to the brand—sometimes as a complaint, sometimes as praise, and sometimes in a playful way.

The brands that win, as ever, are those that quickly adapt to the ways consumers want to engage. The mass migration from public platforms to messaging networks tells us that they prefer one-to-one communications. This is great when it works, but it rarely scales well. For years, brands have been asking consumers to “join the conversation” on social. Now it seems they may be ready to have their own.

Adam Pierno is chief strategy officer at Santy Marketing, where he helps clients drive positive change by bringing together media, social media, digital, mobile, and product-based thinking and audience understanding. Contact him at 888-679-3685 or www. santy.com.

SEPTEMBER 5-7, 2018 // JW MARRIOTT // WASHINGTON, D.C.

Your voice matters.

TAKE ACTION. The International Franchise Association (IFA) is working to inform Congress about the positive impacts of the franchise business community, but we need your help. Members of Congress don’t want to just hear from the IFA—they want to hear from real business owners like you.

So if you care about your business and the franchise community, you need to attend this event.

At the Franchise Action Network Annual Meeting, IFA will set up meetings with you and your representatives in Congress, allowing you to tell your story and express your concerns. Your voice does matter.

Register today at franchise.org/fan.

SEPTEMBER 4-7, 2018 | JW MARRIOTT | WASHINGTON, DC

FREE FOR FRANCHISE OWNERS

Finance BY ROD BRISTOL

Funding Unit Growth ApplePie Capital grows as a franchise lender

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ccess to capital continues to be one of the deepest challenges facing a competent, growth-minded multi-unit franchisee. Historically, access to capital was through a local lender who knew you, understood your business, and perhaps even was a client or customer.

With the dramatic consolidation of commercial banks, combined with the decrease in the number of community banks serving a franchisee’s local markets, access to capital has become more challenging. However, many new financing resources, largely enabled by advances in technology, are available to provide unique opportunities to finance the growing franchisee. One such resource among the expanding crop of so-called alternative lenders is ApplePie Capital.

ApplePie was founded in 2014 with the goal of serving the franchise community, and does so exclusively. ApplePie’s leadership team consists of some of the most respected finance professionals in the franchise community, including Ron Feldman who joined ApplePie in April 2017; and Randy Jones, whose company, Funding Solutions, was acquired

by ApplePie that same month.

“ApplePie is transforming franchise finance using technology and franchise data in new and innovative ways to make financing simple and predictive,” says Feldman.

the borrower’s franchise network. This account manager is available for any franchisee in that system, anywhere in the U.S., and works with the franchisee throughout the lending process.

Different approach As an online lender, ApplePie has developed a unique evaluation tool they make available to franchise partners in their system. This tool enables profitable, existing franchisees to quickly calculate what their borrowing capacity is through the company’s lending network.

Once a franchisee’s borrowing capacity is determined, there are multiple lenders and loan types available through a single account manager who serves

This is a very different model than the typical commercial bank, which may have a national contact, but then the actual lending process is through a local business banker. This can significantly complicate the process and dramatically extend the timeline between application and funding.

If you are a multi-unit owner who has signed a development agreement with your franchisor and are behind on your development commitments,

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Many new financing resources, largely enabled by advances in technology, are available to provide unique opportunities to finance the growing franchisee.

ApplePie offers another service. This is their “Guided Growth” process, in which they work with the multi-unit franchisee to develop a financing plan that provides the liquidity necessary to open new units on schedule, with multiyear, multi-unit commitments that provide the franchisee with the certainty of funding their ongoing growth. Of course, the brand must show continued strength, and operational and profitability expectations must be met; but when achieved, financing is assured.

Camp Bow Wow

In 2003, with only 10 units, Camp Bow Wow begin a relationship with ApplePie (at the time, Funding Solutions). Because the brand was new and an unusual concept for lenders, funding new units proved extremely difficult.

I can remember so vividly the funny stories told by Christina Russell, Camp Bow Wow’s former CEO, about the franchise’s early days, when she tried to convince local bankers not only that pet owners would actually pay money to send their dogs to “doggie daycare,” but also that landlords would agree to lease space to a business where dogs actually pooped in their buildings.

Despite this, Camp Bow Wow has now grown to more than 140 camps, and a significant portion of that growth— more than 80 percent of their franchisees—has been financed by resources made available through ApplePie. Obviously, there are many financing resources, both traditional and alternative, available to multi-unit franchisees.

Here I have highlighted one source that is starting to make a significant contribution to growth in the franchising community. I hope this has been helpful.

Rod Bristol is business development manager at Fastsigns International. Previously he was executive vice president at Profit Mastery.

Contact him at 214-3465637 or rod.bristol@fastsigns.com.

AdIndex American Family Care 59 Annual Franchise Development Report 83 ApplePie Capital 35 Blink Fitness 23 based on both their technical attributes and Bojangles’ Restaurants, Inc. 11 also their disposition to making a buying Brixx Wood Fired Pizza 47 decision now.” n Broken Yolk Cafe 65 Captain D’s 1 William Edwards, CEO of Edwards Global Del Taco Inc., has 45 years of international 53 Services, businessPoint experience. He has lived in 7 counDiscovery 39 tries, worked on projects in 72, and has Dogtopia 33 advised more than 40 U.S. companies on Dunkin’ Brands 25 international development. He has been Entrepreneur Media, Inc. 67 an international master licensee in 5 counFazoli’s 9 tries and a U.S. franchisor senior executive.

FCMC 2019 Save the Date 87 Contact him at 949-375-1896 or bedwards@ edwardsglobal.com.

Firehouse Subs 59 FLDC 2018 Save the Date 78-79 Franchise Update Conference Calendar 85 FRANdata Corporation 75 Freshii 3 Golden Corral ere Buffetare & Grill 45 a few more instances Huddle House,ofInc. 57 how technology is changing Hungry Howie’sthe Pizza 27 way franchisors do businessBrands around the world.

Inspire 5 China.

In 2016, China’s mobile payInternational Franchise Association 81 ments reached US$5.5 trillion, about 50 Jack in the Box 41 times the size of America’s $112 billion Jersey Mike’s Franchise Systems Custom Insert market, according to consulting firm iRela Madeleine Bakery & Café 29 search. InFrench China this year mobile phone Liberty Tax Service 31 payments using networks like WeChat will surpass credit companies like London Conference Savecard the Date IBC Visa andDeli Mastercard in total global transMcAlister’s 15 actions per day. Today it is not culturally MFV Expositions 88 savvy to pay for your meal at one of the Focus Brands 17 almost 5,300 KFC restaurants in China MUFC 2019 Save the Date 71 with a credit or debit card.

Nathan’s Famous HotAccording Dogs 39 Delivery. to a recent & Company study, global Old McKinsey Chicago c/o Craftworks Restaurants and the Breweries IFC market Panini Kabobfor Grillfood delivery has topped 65 or 1 percent of the total PJ’sUS$100 Coffee ofbillion, New Orleans 37 food market and 4 percent of food sold Saladworks 53 through restaurants and fast-food chains, Schlotzsky’s 21 with an annual growth rate estimated at Scooter’s Coffee for the next five years—all 61 3.5 percent Smoke’s Poutinerie 61 enabled by relatively new technologies.

Denny’s Alexa. An example The Coffee Bean & and Tea Leaf 47 ofCenter a U.S.forfranchisor Titus Franchising using technology 77 to better serve its customers, in March TPx Communications 49 Denny’s announced it has partnered with TrueAmazon REST Float Spa 63 to further expand its digital orTuneUp Salon 41 dering network (Denny’s on Demand, Twinlaunched Peaks Restaurant Franchise, LLC Alexa7 in 2017) to Amazon voiceFresh ordering.

Uberrito Mex The introduction of the 45 skill for Amazon Alexa voice ordering at uBreakiFix Back Cover Denny’s is among the first from a family Wetzel’s Pretzels 49 dining brand, as Denny’s builds its role Wienerschnitzel 57 as a restaurant “omnichannel” innovator.

ZIPS Dry Cleaners 63

But Wait, There’s More!

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InvestmentInsights BY CAROL M. SCHLEIF

Settling into Volatility Uncertainty reigns as the mid-terms near

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s we know, markets hate uncertainty, and the current environment has plenty to go around—despite continued positive progress from the economy and many of its components. If, as Mark Twain quipped, “…statistics are pliable … and all generalizations are false,” what touchstones could we as investors cling to as we seek to position portfolios for maximum resiliency in the days ahead?

Take the current earnings season for example. Earnings reports for Q1 2018 appeared to be coming in quite positive.

More than 80 percent of the S&P 500 companies had reported as of this writing; of these, 86 percent managed to meet or beat bottom-line conseansus forecasts (versus the historical average of 77 percent). Indeed, we feel that current expectations are that when the books are closed, earnings will have registered year-over-year growth solidly in the upper teens.

Yet, some notable commentary on individual calls prompted investors to wonder if this was as good as it gets, and to punish the reporting company—even if the earnings were better than expected.

Management’s commentaries on investor calls were scrutinized as much for what was said as what wasn’t, especially as it related to cost inputs, pace of business, and ability to stay fully staffed. Interestingly, it appears that most hiccups either in broad economic numbers or in most individual sectors seem to be related more to supply chain bottlenecks than to slack demand.

Similarly, economic statistics are being subjected to scrutiny that is even more intense than usual, as market participants seek to infer what each report portends for inflation’s progress. Inflation (real or suspected), in turn, has implications for the pace of Fed increases and investor angst relative to whether that pace ends up being too fast, too slow, or just right. Adding to the stew are conflicting reports such as the April jobs report from the Bureau of Labor Statistics. It showed a decline in the unemployment rate to an historically low level of 3.9 percent, but the actual number of jobs created was a bit lower than analysts expected, and average hourly compensation

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(at a 2.6 percent YOY run rate) was well within pundits’ expectations of “reasonable.” Markets initially didn’t know how to interpret this, but ended the day with a solid gain—seemingly coming down on the side that the economic progress is “just right” and the Fed is playing its hand well so far.

Looking longer term It’s tempting to get caught up in the day-today machinations of market worries, especially with the breadth of news out there. As numerous behavioral finance studies have shown, we are wired to be drawn toward the fray with the same impulse that makes

We are wired to be drawn toward the fray with the same impulse that makes rubber-necking an accident nearly irresistible. rubber-necking an accident nearly irresistible—and just as unproductive. For many of us investing for the very long term, it would seem much more productive to turn our attention to what current events may be indicating about the way things could play out in the intermediate to long term.

Granted, many unknowns (geopolitics, outcomes of the mid-terms) may influence those time periods in a marked way... or maybe not. After all, we do have a nearly $20 trillion economy, which does not turn easily in either direction. Then too, certain things such as demographics, technological progress, law/regulatory changes, and key long-term spending plans don’t shift in a matter of months either. To that end, several trends seem to be relatively firmly established that would augur for a muchneeded and long overdue return to more “normalized” levels of economic progress.

• Inflation. A modest amount of inflation is healthy for an economy as it allows for moderate wage gains and corporate pricing power. Over the very long term, inflation has averaged close to 3 percent.

The Fed is targeting 2 percent and, as dis-

cussed in a press release, is willing to allow for an “asymmetric range” around 2 percent—indicating, we suspect, their ability to let it run a tad above 2 percent as long as economic statistics remain reasonable, in much the same way they let it run below 2 percent for an extended period.

• Regulatory equilibrium. A delicate balance between necessary rules, laws, and regulations to set the guardrails for a variety of business activities (particularly in new technologies), while not overly stifling new business creation, is often tough to get right. Perspective necessarily changes from the regulated to the regulator, and working through issues takes time and collaboration. While we as a country arguably have a great deal farther to go on this front, the pace of business initiation, reinvestment, and domestic growth does appear to be healthier than it has been for many years.

• Fed balance sheet repair/interest rate normalization. The Fed is in the midst of unwinding the $4 trillion balance sheet it accumulated in the wake of the 2008 financial crisis. In so doing, excess liquidity is being withdrawn from the markets and short-term interest rates are being taken higher. Letting the economy stand on its own and letting rates drift a bit higher theoretically gives the Fed more maneuvering room when the economy enters its next inevitable softening phase.

We realize using the word “normal” (or “normalization”) is potentially controversial and has a hint of subjectivity to it. Then too, what constitutes “normal” levels now, after nearly a decade of overt, historic, and unprecedented central bank intervention in the wake of the financial crisis, is apt to look a little different than previously.

Getting the economy on an even footing may or may not translate into hospitable markets, of course, and it could lead to a continuation of the more volatile markets we’ve had since early February as investors, businesses, and consumers adjust portfolios and behaviors to adapt to new realities.

Carol M. Schleif, CFA, is deputy chief investment officer at Abbot 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.

FranchiseMarketUpdate BY DARRELL JOHNSON

Pick a Winner!

Evaluating new unit growth potential

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hether you’re a buy-andhold investor or looking for a quicker return building a new unit and selling it, the ability of a brand to expand over time obviously influences your investment decision. But how do you evaluate that ability? Is there a way to determine which brands have the best opportunity to grow and which might struggle?

The sales-to-initial-investment ratio (S-II ratio) might hold the key to forecasting future growth. The S-II ratio is a simple equation that combines both the risk and reward of starting a unit into a number that’s easy to understand.

As part of a recent client analysis, one of our senior analysts, David Swift, examined the relationship between the S-II ratio and new unit development (as a percentage of existing units) to serve as a proxy for brand growth. Any investor would expect that unit sales and expenses will affect the likelihood that a potential franchisee would want to buy a unit.

However, we found that relationship is more complex than it appears.

What the numbers show We looked at 70 QSR and sit-down restaurant concepts for this analysis. Brands had to have at least 10 existing units to be included. While there was always a positive relationship between the S-II ratio and new unit development, the slope of that line and the accuracy of that relationship were very much dependent on the size of the initial investment.

The statistical baseline showed a positive slope of 0.044 with an R2 of 0.18 and p-value of 0.16. What this means is that

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while there is a positive relationship, it does not explain much about the ability to sell a new unit, and we can’t be confident in its predictive value. To understand the power of this ratio we need to find something more to explain the relationship if

economic common sense is to prevail.

Perhaps rationality is affected by the investment level, the theory being that the higher the initial investment, the likelihood that economic rationality will reveal itself, while lower investment levels might be more prone to emotional decisions. We split the brands into two sets around average initial investment: those with higher average initial investments and those with lower average initial investments. The dividing line was approximately $1.4 million.

For the high investment group, the slope increased 0.16, while the R2 increased to 0.41 and the p-value decreased to 0.06—all of which means that we now can associate standard economic investment logic for nearly half of the new unit investment decisions and are more than 90 percent confident the logic is valid.

Finally, we looked at a smaller subset of the high investment group, looking only for comparable brands that might compete for potential franchisees.

These 20 sit-down brands have average initial investments of approximately $1.5

million with a low estimate of $150,000.

(Any purchase of land and buildings was removed to make initial investments across brands more comparable.)

The resulting regression gives us a slope of 0.17, an R2 of 0.62, and a p-value of 0.007. While the slope hasn’t changed much, the value of the S-II ratio now informs more than 50 percent of the decision to buy, and we can be more than 99 percent confident in the relationship.

What it means Simply put, all this math means that the higher the S-II ratio, the more units these brands were able to add, and brands with an improving S-II ratio are poised to increase new unit sales the most.

As an example, imagine two brands, both with 100 units and the same initial investment of approximately $1.5 million.

Brand X has an S-II ratio of 1 while Brand Y has a S-II ratio of 1.3. Based on actual performance of 70 brands in this analysis, the S-II ratio equates to Brand Y adding 5 more units in the next year

than Brand X. Over time this advantage would grow at an increasing rate as the gap in units increased.

There you have it. Unit performance matters and can be measured in actual system growth differences. “How much can I make?” really does matter, and the differential impact isn’t just related to how good a franchisor’s CDO is at selling.

Darrell Johnson is CEO of FRANdata, an independent research firm. Contact him at 703-740-4700 or djohnson@frandata.com.

FCMC

2019

THE 9TH ANNUAL

FRANCHISE CONSUMER MARKETING CONFERENCE

CAPTIVATE & CONNECT The only marketing event that ties current industry trends to your customers in franchising.

JUNE 18–20, 2019 InterContinental Buckhead Hotel in Atlanta, GA

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YOUR BIG BREAK Avg. Second Year Total Revenue for Top Quartile

$656K

Avg. Second Year Net Income for Top Quartile

$108K

Contact Brynson Smith

877-224-4349 Franchising@uBreakiFix.com *As published in Item 19 of our FDD dated May 16, 2018, these figures represent the average total revenue and net income (total revenue, minus cost of goods sold and minus expenses excluding interest, income taxes, depreciation and amortization) for the top quartile of 134 out of 326 franchise-operated UBREAKIFIX stores that submitted unaudited profit and loss statements. Median second year total revenue for top quartile of stores was $654,665. Median second year net income for top quartile of stores was $90,493. The data presented is from Jan. 2014 through Dec. 2017. Of the stores included in the top quartile for the second year, 15 (or 50%) attained or exceeded the average total revenue and 9 (or 30%) attained or exceeded the average net income. The bottom quartile year-2 average total revenue was $320,602 (median $349,890), and average net income was ($437) (median $15,545), with 20 stores or 63% of those in the quartile exceeding both averages. You should review our FDD for details about these numbers. Your results may differ and there are no assurances you will do as well and 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 that applicable pre-sale registration and disclosure requirement in your state.

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. 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 Business Oversight nor a finding by the commissioner that the information provided herein is true, complete and not misleading. Minnesota Department of Commerce File No. F-7063.

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