Multi-Unit Franchisee magazine - Issue IV, 2019

NICK CROUCH (left) and GLEN JOHNSON

Q4 | 2019

2019 DOMINATORS

Franchising’s largest MSAs and operators pg. 38

PARTNER POWER! LEARNING TO LEAD

Transitioning from manager to leader pg. 42

SUCCESSION PLANNING

Insights and advice on passing it on pg. 48

COME GROW WITH US inspirefranchising.com

CONTENTS Multi-Unit Franchisee | Q4, 2019

26

04 CHAIRMAN’S NOTE

2020 MUFC: Knowledge and networking are the keys to success

06 ONLINE

What’s online @ mufranchisee.com

08

MU PROFILES

HARSH GHAI – RECONNECT For Harsh Ghai, the sky’s the limit!

30

MU PROFILES

MU PROFILES

CRAIG BRAZELL – PRO ATHLETE Former MLBer scores big in franchising

ROBERT WIGGINS Rocketing to success with 8 brands

34

MU PROFILES

ANDREW JONES – UNDER 30 Just 29, with 2 brands and 6 units

38

RANKINGS

2019 DOMINATORS Franchising’s largest MSAs and operators

Chris Benner

12

MU PROFILES

CHRIS BENNER Captain D’s largest franchisee has big plans!

18

Kimberly Crowell

MU PROFILES

GLEN JOHNSON & NICK CROUCH

42

Targeting 100 units and $100 million in sales

2

Multi-Unit Franchisee

ISSUE 4, 2019

FEATURES

LEARNING TO LEAD Transitioning from manager to leader

CHAIRMAN

48

FEATURES

PLANNING FOR SUCCESS-ION Insights and advice on passing it on

Gary Gardner

CEO

Therese Thilgen

EXECUTIVE VP OPERATIONS

Sue Logan

SVP, CHIEF CONTENT OFFICER

Diane Phibbs

VP BUSINESS DEVELOPMENT

Barbara Yelmene

BUSINESS DEVELOPMENT EXECUTIVES

Krystal Acre Judy Reichman

Jeff Katis

EXECUTIVE EDITOR

Kerry Pipes

MANAGING EDITOR

Eddy Goldberg

CREATIVE DIRECTOR

Cindy Cruz

GRAPHIC DESIGNER

Kit Anderson

58

CUSTOMER SERVICE

THE RELATIONSHIP ECONOMY Making a deep connection with customers

62

PEOPLE

HOLIDAY HIRING 3 tips for finding the best employees

DIRECTOR OF TECHNOLOGY

Benjamin Foley

WEB DEVELOPER

Don Rush

WEB PRODUCTION ASSISTANTS

Esther Foley

Juliana Foley

DIRECTOR OF EVENT OPERATIONS

Christa Pulling

SENIOR MANAGER, EVENTS & PRODUCTION

Katy Coutts

SENIOR SUPPORT MANAGER

Sharon Wilkinson

PROJECT MANAGER, CLIENT ENGAGEMENT

Joanne Peralta

64

FINANCE

SENIOR SUPPORT COORDINATOR FRANCHISEE LIAISON

MANAGEMENT MINDSET

Leticia Pascal

5 keys to multi-unit success

Greg DelBene

VIDEO PRODUCTION MANAGER SPEAKER LIAISON

Chelsea Weitzman

66

INVESTMENT INSIGHTS

DIFFERENT DECADE New models needed for a new world

CONTRIBUTING EDITORS Rod Bristol Carty Davis John DiJulius Darrell Johnson Carol Schleif Mathieu Stevenson CONTRIBUTING WRITERS

Helen Bond

68

EXIT STRATEGIES

PREPARING FOR A SALE How to maximize returns in a liquidity event

Sara Wykes

ADVERTISING & 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

70

FRANCHISE MARKET UPDATE

WANTED: TOMORROW'S MULTI-UNIT OPERATORS Where will they come from?

MULTI-UNIT FRANCHISEE MAGAZINE IS PUBLISHED FOUR TIMES ANNUALLY

Annual Subscription rate is $39.95 (U.S.)

SUBSCRIPTIONS

subscriptions@franchising.com 408-402-5681

REPRINTS

Foster Printing at 800-382-0808 www.fosterprinting.com

Multi-Unit Franchisee

ISSUE 4, 2019

3

Chairman’s Note

Knowledge & Networking Are the Keys to Success

Facebook, Twitter News, Google Alerts, magazine and industry subscriptions, franchisor communications, newspapers, and texts from our associates and acquaintances seem like a never-ending source of information. It is almost impossible to remain focused on relevant information for our businesses as we are inundated with it from various sources.

While technology makes information more readily available, it is received without prompting and often causes us stress and uncertainty. Hours upon hours in a week are wasted in reading and keeping up with emails that are not prompted by us. Often these emails contain information that is not relevant to us or our businesses, including opinions that conflict with one another, making matters worse when we must make investment decisions.

Similarly, few of the people we meet in our daily lives prove to be beneficial sources as we navigate our way in making business decisions. It is rare to meet folks with similar backgrounds and interests in the franchise business. The Multi-Unit Franchising Conference (MUFC), held annually in Las Vegas, is the perfect place to establish relationships with those who share in our interests and are willing to share their knowledge and experience.

Many of the conference attendees provide invaluable feedback about their lessons learned, as well as their best practices

4

Multi-Unit Franchisee

ISSUE 4, 2019

for growth, financial planning, and employee retention. This exchange of information occurs in a well-designed setting, allowing those who have done it to share with others who aspire to do the same in growing their companies and businesses.

The format allows for roundtable discussions, a question-and-answer session with presenters, and a wide variety of topics addressing the overcharged business environment we must deal with or overcome to grow. Additionally, the conference and its leadership always attract some of the best motivational speakers who will leave attendees inspired to overcome the obstacles they may face from time to time.

I have been attending the MUFC for 13 years, and each year I leave having met some of the very best in the franchise business, many of whom have become dear friends. The 2020 MUFC is especially unique for me as I have the honor of chairing it, and in doing so to continue the hard work of those before me in adding value to a program that is already the best.

I encourage all franchisees in the various franchising segments who aspire to grow, develop better networks, and learn from those who have done it to attend the 2020 MUFC in Las Vegas, April 14-17, 2020. See you there!

Tony Lutfi

“The non-standard insurance industry, it’s huge. We are tapping into it and if you’re not aggressive and hungry, someone else will come and eat your lunch.”

Manuel Ordaz, Multi-unit Franchise Owner

HISPANIC AMERICANS’ PURCHASING POWER HAS QUADRUPLED IN THE LAST 20 YEARS.

$2.5T

Hispanic American purchasing power

AT PRONTO INSURANCE, WE BELIEVE IN SETTING YOU UP FOR SUCCESS.

$40B

56%

size of non-standard insurance industry

of Hispanic Americans live in our territories

Top-notch Training

Laser-focused Marketing

Best-in-Class Support

NEARLY

300

Pronto Insurance Locations

Backed by RPS/Arthur J. Gallagher & Co. Group

FRANCHISE WITH PRONTO INSURANCE.

prontofranchise.com 855-687-7088

Proud to be part of the RPS/Arthur J. Gallagher & Co. Group, one of the largest insurance brokers in the world.

The franchise sales information here does not constitute an offer to sell a franchise. This offer of franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Certain states require that we register the FDD in those states. The communications here are not directed by us to the residents of any of those states. Moreover, we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law. ©2019 Pronto Insurance. All rights reserved.

Dot.com CONFERENCES

Franchise Update Media now hosts 4 annual conferences!

Multi-Unit Franchising Conference

2020

European Master & Multi-Unit Franchising Conference

April 14–17, 2020, Las Vegas

January 28–29, 2020, Vienna, Austria For those interested in franchise expansion in Europe, this is a golden opportunity to meet like-minded franchising pros from across the pond. Join industry leaders, franchisors, franchisees, and master developers as they address common issues and solutions relating to European expansion.

The annual Multi-Unit Franchising Conference is the premier event for multi-unit franchisees in the food, hospitality, retail and service sectors— along with developers, chain store operators and private investment groups looking to build and expand multi-unit operations. This is the ultimate dealmaking event for franchisors, multi-unit franchisees, and service providers.

Franchise Marketing Leadership Conference

Franchise Leadership & Development Conference

June 16–18, 2020, Atlanta

October 14–16, 2020, Atlanta

The only industry event focused solely on the topics most #FMLCon important to franchise marketers, brings franchisor CEOs,

June 18-20,CMOs, 2019 and top marketing executives together presidents, Atlanta, GA for 2½ days of speakers and presentations with peer-to-peer problem-solving workshops and roundtables.

An exclusive event for franchisor CEOs, presidents, COOs, CDOs, and franchise development executives. The advisory board of experienced franchise leaders directs the programs and content, focused on recruitment, sales, and development, as well as professional leadership—and the annual STAR Awards honoring the best franchise development teams.

Rankings

Franchise Opportunities

This issue contains our annual Dominators list, which ranks the MSAs with the most franchise units and the largest franchisees by state and by region. To see our Mega 99 rankings of the largest multi-unit organizations and their most popular brands, go to https://bit.ly/2lNbafZ

Looking for your next franchise opportunity? Have we got the tools for you!

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

Publications

Quicklink

“Don’t just survive, thrive!” Franchise Update Media’s 2019 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 https://bit.ly/2IEBti8

For a one-click link to articles in this magazine and to past issues of Multi-Unit Franchisee magazine, visit https://bit.ly/2ZhBz4Z

ONLINE Multi-Unit Community Check out our community-based website for multi-unit operators. It’s your exclusive look into the world of multiunit franchising, your one-stop shop to find: • New brand opportunities • Networking opportunities • Online edition and archives

• Exclusive interviews • Operator profiles • Financing resources

www.franchising.com/topics/multiunit_franchising

6

Multi-Unit Franchisee

ISSUE 4, 2019

ˮ

Your guest is never, ever going to have a better experience than the people who work for you. You constantly have to improve the experience of the people working for you.

Harsh Ghai

110 Burger Kings, 33 Taco Bells, 7 Blaze Pizza, 1 Denny’s

Regus – Business lounge & Coworking

JOIN THE GLOBAL WORKSPACE LEADER AN EXCITING NEW MULTI-SITE FRANCHISE OPPORTUNITY IN A FAST-GROWING INDUSTRY. By 2030, flexible workspace will account for 30% of the real estate footprint of a large company. – JLL research IWG is the world’s number one provider of flexible workspace, connecting millions of like-minded professionals and enabling them to be more productive. Our customers include some of the world’s most successful entrepreneurs and individuals, and 90% of Fortune 500 companies partner with us.

Across our global network of workspace and coworking spaces, we are able to provide solutions to match every kind of business, work style and price point through our portfolio of brands: Regus, Spaces, HQ and Signature by Regus.

With demand for flexible workspace growing at an exponential rate, we are looking to rapidly expand our network of centers through a global franchise program.

It has created a unique investment opportunity in this fast-growing business sector, allowing our franchise partners to benefit by leveraging our scale, leading platforms and our proven business model.

If you have the drive, resources and commitment to be part of our global growth story,

visit franchise.iwgplc.com today or email us at franchise.USA@iwgplc.com

This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. If you are a resident of a U.S. state that regulates the offer and sale of franchises, are receiving this message in one of those states, or intend to operate a franchise in any of those states, we will not offer you a franchise unless and until we have complied with any applicable pre-sale registration and/or disclosure requirements in the applicable jurisdiction.

Diversification Rules!

Rocketing to success with 8 brands Written By KERRY PIPES

O

ne glance at Robert Wiggins, Jr.’s portfolio and you’ll quickly see that diversification is a big part of his business strategy. His Rocket Enterprises organization operates Arby’s, Huddle House, Checker’s, Pizza Inn, Captain D’s, Dick’s Wings & Grill, Bubbakoo’s Burritos, and Sleep Inn locations throughout the Southeastern U.S. And he has two more units under construction along with development agreements for five more.

After graduating from college, Wiggins learned the ropes of franchising working alongside his father to grow the family business from a single Hardee’s franchise to 26. “We sold all but two of those units, and I went into business by myself and began building my own franchise operation,” he says.

Wiggins likes to open units in smaller communities like Baxley, Douglas, Hazlelhurst, and Jesup, Georgia. It’s something he connects with on a very personal level. “I grew up in, and have always lived in, a small town,” he says. “Small communities need gathering places and we try to bring that with our restaurants.”

Wiggins says he likes to purchase his own real estate and do his own building, but says restaurant operations is what counts.

“If you operate them correctly and take care of your customers, the financial success will follow,” he says. “Plus knowing you’re satisfying your customers and getting that instant feedback gives you a good feeling.”

Today he works alongside his wife and business partner, Pam. They have two sons, Trey, a United States Naval Academy graduate and pilot in the Navy, and Kyle, a Valdosta State University graduate. And he’s worked with his operations manager, Shiela Foley, for 35 years.

I grew up in, and have always lived in, a small town. I believe that influenced many of the beliefs and values I have today. I was always taught the importance of hard work and in trying to do my best in all that I attempted.

8

Multi-Unit Franchisee

ISSUE 4, 2019

Robert Wiggins, Jr.

Robert Wiggins, Jr., 59 Owner/CEO

Hardest lesson learned: At times what you see as a failure is actually an opportunity for success.

No. of units: 3 Huddle House, 2 Checker’s, 2 Dick’s Wings &

Work week: Fortunately, I have surrounded myself with great management, but I am still in at least one of our units or at my office six days a week. I try to take off Sundays.

Family: Wife of 36 years, Pam Wiggins; 2 sons, Trey 35 and Kyle 31; daughter-in-law Alex and 2-year-old granddaughter, Crosby Jean

Exercise/workout: I wake up at 3:30 a.m. five days a week to work out at one of our local gyms. I enjoy doing cardio and weight lifting. I competed in bodybuilding between the ages of 50 and 55. During that time I won Mr. Southern Isles and was second runner-up in the State of Georgia Competition. I plan to compete again next year when I turn 60.

Company: Rocket Enterprises

Grill, 1 Captain D’s (2 in development), 1 Bubbakoo’s Burritos (1 in construction, 2 in development), 1 Arby’s (1 under construction, 1 in development), 1 Pizza Inn, 1 Sleep Inn

Years in franchising: 23 Years in current position: 23

Wiggins has enjoyed his career in franchising. Next up for him is opening another Bubbakoo’s, Arby’s, and Captain D’s over the next 8 months. One day, when he’s ready to hand over the reins, he hopes to keep it all in the family by bringing in his older son to take charge. He says a third generation in the family franchising business has a nice ring to it.

PERSONAL First job: Picking tomatoes for a local farmer. I received 25 cents per foot tub and usually made about $10 per day.

Formative influences/events: I grew up in, and have always lived in, a small town. I believe that influenced many of the beliefs and values I have today. I was always taught the importance of hard work and in trying to do my best in all that I attempted.

These qualities have stayed with me throughout my life. After I graduated from college, my father and I grew our Hardee’s franchise from one unit to 26 units, with me serving as the director of operations. After my father decided to sell the units, I knew it was time to take a chance and start my own franchise. What I thought was devastating turned out to be the beginning of my business career.

Key accomplishments: My greatest accomplishment in life is my family. My wife has always been supportive and continues to serve as our office manager, doing payroll for all our units. My greatest career accomplishment was building a new business from the ground up after my father sold our 26 unit Hardee’s franchise that we had built together. I had a family with two young sons and was completely starting over. With the support of my wife, I built three successful units with the Hardee’s franchise before selling out. This allowed me the opportunity to start expanding with other franchises.

Biggest current challenge: The rising cost of healthcare. Also hiring and retaining qualified, hardworking employees who realize that great customer service is vital for our success.

Next big goal: Successfully opening one unit each for Bubbakoo’s, Arby’s, and Captain D’s in the next 8 months.

First turning point in your career: My father selling out our franchise without consulting me and forcing me to start over on my own.

Best business decision: Selling my three Hardee’s franchises and expanding my franchise portfolio.

Best advice you ever got: Never be scared to take a chance.

What’s your passion in business? To always impress our customers and to strive to be the best of the best.

How do you balance life and work? I try to focus on the people and activities that are most important to me. My priorities in life are “God, Family, Work.” God has blessed me in so many ways and I find comfort in worshipping him. One of those blessings is my family, so I make sure to spend quality time with them.

Since my wife and I have become “empty nesters” we have started traveling. Our favorite thing to do is spend time with our granddaughter. Of course, none of this would be possible if I didn’t set short- and long-term business goals and dedicate the time to accomplishing them.

Guilty pleasure: Ice cream, cheesecake, and traveling.

Favorite book: I honestly don’t have time to read much so I usually just read business magazines. The one book that I do read is the Bible. I feel it has answers to all of life’s questions.

Favorite movie: “Rocky.” I know it’s a movie about boxing, but it is also about a man that set his goals, worked hard, overcame tremendous obstacles, and accomplished his dream.

What do most people not know about you? I met my wife when I hired her at one of our restaurants. She was off for a quarter from college and wanted to work while she was home. Her dad made her quit as soon as we started dating!

Pet peeve: Employees not recognizing the importance of every customer who walks through our doors.

What did you want to be when you grew up? A doctor, but after shadowing a doctor for a day I realized it wasn’t the career for me!

Last vacation: A Baltic Sea cruise this past July.

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

It takes a team to achieve success. A great leader will surround himself with a great team who are motivated to always provide outstanding service and strive to build a better company.

Multi-Unit Franchisee

ISSUE 4, 2019

9

Robert Wiggins, Jr. I have fast food, casual dining, pizza, Mexican, and hotels. I feel it’s important to always be diversified in your business ventures.

Fastest way into my doghouse: Inappropriate customer service and stealing.

MANAGEMENT Business philosophy: “Our rewards will always be in exact proportion to our service.” (Earl Nightingale) It takes a team to achieve success. A great leader will surround himself with a great team who are motivated to always provide outstanding service and strive to build a better company.

Growth meter: How do you measure your growth? By unit sales increase over the previous year, not by the number of units added.

Management method or style: Our management method is a pyramid style. We start with the CEO to the area manager to the manager to assistant managers to shift leaders to frontline members.

Greatest challenge: Hiring and retaining qualified managers and employees.

How do others describe you? Hardworking, driven, energetic, honest, and a risk taker. I also hope they would say I’m fair and compassionate.

One thing I’m looking to do better: Concentrate more on quality training of management and employees.

How I give my team room to innovate and experiment: I think it’s important to let the managers make day-to-day decisions that will improve their units.

How close are you to operations? I’m closely involved with all the operations of our units, including the day-to-day operations.

What are the two most important things you rely on from your franchisor? Product development and training.

What I need from vendors: Good quality products and on-time delivery.

Have you changed your marketing strategy in response to the economy? How? Yes. We rely more on social media and digital marketing.

How is social media affecting your business? I’ve had to learn to market our products differently and to communicate with customers in new ways. Social media influences the way customers perceive a brand, both in a positive and negative way.

How do you hire and fire? We look for good communication skills and friendliness. We do our best to promote a positive and healthy work environment. The employee must be willing to be a team player and meet our expectations taught during training.

How do you train and retain? We use the franchisor mandatory training programs for all employees and reward our employees with incentive raises and bonuses.

How do you deal with problem employees? The manager is in constant contact with all employees. We use a three-warning concept for problem employees. After the third warning the employee is relieved of their job.

10

Multi-Unit Franchisee

ISSUE 4, 2019

BOTTOM LINE Annual revenue: $11.5 million (2019 goal).

2019 goals: To increase sales and expand our company. Also to welcome our older son into the business after he leaves the military.

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

In 5 years I would like to have around 15 restaurants with strong management. In 10 years I hope to have turned over our business to our son and that my wife and I are traveling the world.

Do you have brands in different segments? Why/why not? Yes, I have fast food, casual dining, pizza, Mexican, and hotels. I feel it’s important to always be diversified in your business ventures.

How is the economy in your region affecting you, your employees, your customers? The economy has had a positive effect on our area. People are spending more and traveling more.

We are able to hire more employees at a higher salary.

Are you experiencing economic growth in your market? Yes. How do changes in the economy affect the way you do business? I try to manage labor costs closely.

How do you forecast for your business? I look back on the same month in the previous year.

Experience with private equity, local banks, national banks, other institutions? Why/why not? I have always used local banking institutions for building and expansion. It helps our communities, and our working relationships are always more personal.

What are you doing to take care of your employees? Aboveaverage compensation, paid vacations, performance rewards, and bonus programs. We also promote from within our companies as often as possible.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? By cutting fi xed expenses and passing the savings to the employees.

How do you reward/recognize top-performing employees?

Quarterly bonus program, a daily text recognizing great performers, and a Manager of the Year Award that is rewarded with a cruise.

What kind of exit strategy do you have in place? I plan to turn over our operations to my older son within the next 3 to 4 years. T

THERE’S !

STILL TIME OUR ASK ABOUT E INCENTIV PROGRAM

Join the Premium Italian QSR $1,567,893

Average Net Revenue Company of the Year Food & Beverage

Top 3rd of Franchised Restaurants*

859.825.6212 Steve Bailey

OWNAFAZOLIS.COM

Senior Director of Franchise Sales *As shown in Item 19 of the current Franchise Disclosure Document of Fazoli’s Franchising Systems, LLC, for the 12 months ending March 28, 2018. There is no assurance that a franchisee of Fazoli’s will sell or earn as much.

OFFICER ON DECK Captain D’s largest franchisee has big plans!

Written By KERRY PIPES

C

hris Benner, along with partners Ed and Tim Stokes, has sailed full-speed ahead into the top spot as Captain D’s largest franchisee. Their company, Trident Holdings, signed its fi rst development agreement with the fast-casual seafood brand in 2015, and by the end of their second year had become its largest franchisee. In 2018, the company, which operates 33 Captain D’s restaurants in 7 states, was named the brand’s Developer of the Year. They have 3 more in development, a deal to develop 10 Grandy’s, and are looking for a third brand.

Benner seemed headed for a successful business career early on. “I was hired as a cashier and ice cream server at BaskinRobbins, and ended up with the keys and closing up the shop when I was just 14 years old,” he recalls. At the same time, he also was mowing yards and had two paper routes.

With nearly 30 years of food service management under his belt, Benner primarily handles operations, HR, and development for Trident. Previously he was a general manager and area director at Famous Dave’s of America, and in 2001 became director of operations for a Famous Dave’s franchisee in Tennessee until 2015, when he teamed up with Ed and Tim Stokes to become Captain D’s franchisees.

Benner says his main challenge as a franchisee today is balancing the growth and development of his organization with the growth and development of his people. He’s big on giving his area directors the autonomy to make their own decisions at their restaurants. To inspire and motivate both managers and crew, he relies on incentive and recognition programs—everything from cash awards to recognition to paid vacations at the company’s condo in Destin, Florida.

The future looks busy for Benner and his partners. In addition to the three Captain D’s currently under development, Trident has agreed to develop those 10 Grandy’s (which Captain D’s

12

Multi-Unit Franchisee

ISSUE 4, 2019

acquired in 2011) over the next 5 years. “We are close to getting our first location under development. We have also been searching for another brand that is a good fit for us,” he says.

In 5 years, Benner says, he’d like to be at 100 locations with two to three brands and annual revenue topping $100 million.

We can’t wait to catch up with him a couple of years from now!

PERSONAL First job: I had three jobs all at the same time in my life. I was hired as a cashier and ice cream server at Baskin-Robbins and ended up with the keys and closing up the shop when I was just 14.

I also mowed lawns and had two paper routes at the same time.

Formative influences/events: I grew up as a missionary kid in the war-torn country of El Salvador in the 1980s. My dad was born into the Great Depression and served in World War II. He became a very wealthy and successful man by his early forties. When he was 50 and I was 5, he sold and gave away everything to become a missionary and spend the last 40 years of his life serving others.

His work ethic, patriotism, faith in God, and generosity are the “gold standards” for my own life.

I’ve worked every part of the restaurant business, so my career has had many transitions, from employee to manager to executive, and finally, to owner. With each transition there was a new set of ground rules I needed to learn and adapt to.

Chris Benner

Chris Benner, 49

Owner, VP of Operations, HR, and Development Company: Trident Holdings No. of units: 33 Captain D’s with 3 under development; 10-store development deal for Grandy’s Family: Married to Tracey for 21 years this October. We have a 20-year-old-son Garrison and a 13-year-old daughter Gracie Years in franchising: 4.5 Years in current position: 4.5

Key accomplishments: In 1997, I was brought into Famous Dave’s of America as the general manager of their 14,000-sq. ft. “BBQ & Blues” big box venue in Minneapolis—a $5 milliona-year operation with a 35 percent alcohol sales mix. I was later promoted to area director for the brand and had four locations in Minneapolis while opening a new location in Vernon Hills, Illinois, a suburb of Chicago. I opened another Illinois location, in Yorktown, and finally moved to Chicago. There, my area included the Famous Dave’s BBQ & Blues venue on Clark St. in downtown, along with four locations in surrounding suburbs. In 2001, I left Famous Dave’s to join the brand’s former senior vice president of operations, who had become a franchisee in Tennessee. I was his director of operations from 2001 until 2015. Then I ventured out on my own as a franchisee for Captain D’s along with my two business partners, Tim and Ed Stokes. At Captain D’s we became the brand’s largest franchisees by the end of our second year, and in 2018 were named Developer of the Year.

Biggest current challenge: Finding friendly, hardworking folks to join our restaurant teams.

Next big goal: Reach revenue of $1 million a week.

First turning point in your career: I was recruited and hired by Brinker International as a manager for its Grady’s American Grill concept. It was like making it to the big leagues.

Best business decision: Joining my partners Tim and Ed Stokes to acquire our first four Captain D’s restaurants.

Hardest lesson learned: I’ve worked every part of the restaurant business, so my career has had many transitions, from employee to manager to executive, and finally, to owner. With each transition there was a new set of ground rules I needed to learn and adapt to. One of the biggest lessons for me was learning to find the balance between being an effective manager and being someone’s friend.

Work week: 24/7.

Exercise/workout: Jump on the Peloton bike in my office whenever possible and walk 18 holes of golf at least once a week.

Best advice you ever got: As you move up in status/authority the impact of your actions and words gets magnified exponentially; and the more you move up in status, the more intently everyone is watching and listening.

What’s your passion in business? Growth and creating opportunities for our people.

How do you balance life and work? I am able to spend quality time with my family and doing things I enjoy by empowering, developing, and trusting our top leaders to make their own decisions and be the CEO of their region.

Guilty pleasure: Captain D’s Giant Fish Sandwich.

Favorite book: The Bible. It never gets old.

Favorite movie: “Dances with Wolves.”

What do most people not know about you? That I’m a man of faith, a workaholic, and a golf nut.

Pet peeve: The use of any profanity anywhere in the workplace.

What did you want to be when you grew up? FBI agent.

Last vacation: Hawaii, the island of Maui in June.

Person I’d most like to have lunch with: My dad. He passed away in 2014 at age 90.

I abstain from giving any of their managers or crew any direction...

I want them to have 100 percent authority over their regions. I never want them to give away their authority by telling a manager or employee that they have to check with me first before making a decision.

MANAGEMENT Business philosophy: “Customers will never love a company until the employees love it first,” from Simon Sinek. I believe this a cornerstone for running a business.

Management method or style: Treat others better than they expect to be treated.

Greatest challenge: Balancing the growth and development of our organization with the growth and development of our people.

How do others describe you? Friendly, cheerful, outgoing, upbeat, and energetic.

One thing I’m looking to do better: People development.

How I give my team room to innovate and experiment: Our area directors are the CEOs of their regions. They have autonomy to make decisions about their people, about wages, and about maintaining the physical plant for each of their locations. I abstain from giving any of their managers or crew any direction (unless a guest’s or employee’s experience would suffer). I want them to have 100 percent authority over their regions. I never want them to give away their authority by telling a manager or employee that they have to check with me first before making a decision.

Multi-Unit Franchisee

ISSUE 4, 2019

13

Chris Benner How close are you to operations? I do not cover or work shifts at our restaurants, but I do visit all of our locations and I am a cheerleader at our restaurants. I listen to our managers and crew, I observe and listen to our guests, and I am engaged in the dayto-day operations in some way, shape, or form 363 days a year.

(We are closed on Thanksgiving and Christmas.)

What are the two most important things you rely on from your franchisor? Great national pricing contracts and compelling limited time offers combined with excellent TV and printed marketing.

What I need from vendors: We really deal with only one main vendor for 100 percent of our food, paper, and supplies. Timeliness and accuracy of deliveries is what makes us happy customers.

Have you changed your marketing strategy in response to the economy? How? Not really. We engage in local store marketing regardless of how good or bad the economy is.

There are standard practices that we follow for local store marketing. We visit nearby businesses with food samples and coupons, sponsor high school sports and cheerleader squads, and provide awards (free kids meal certificates) for all nearby elementary schools. We offer fundraiser programs for churches that are near our restaurants. We are always an active presence in our communities.

How is social media affecting your business? We are using social media for recruitment and it has actually been one of our most effective tactics.

How do you hire and fire? We are very cautious about employee terminations. There’s always plenty of documented counseling and attempts to improve behavior. We try to hire for friendliness and character. We can teach people to cashier, cook, and be leaders but we can’t teach friendliness and high moral character.

How do you train and retain? We direct our teams to follow the formalized Captain D’s training programs, which are excellent. We retain by paying competitively, and we strive to be very competitive with benefits. Most important, we dedicate tremendous time, energy, and costs toward developing the leadership capabilities of our general managers. Most of the time a retention problem has a direct correlation to a general manager with deficient leadership abilities.

We have pretty lofty expectations each year for sales growth. This is because we have grown our sales more than 25 percent each year since we started our organization.

This has been accomplished through acquisitions and new store development.

14

Multi-Unit Franchisee

ISSUE 4, 2019

How do you deal with problem employees? Documented counseling in an attempt to improve behavior and/or performance until we realize that they actually aren’t coachable. If someone is simply not coachable, we can’t use them on our team.

Fastest way into my doghouse: Berate, abuse, use sarcasm toward, or humiliate employees.

BOTTOM LINE Annual revenue: $34+ million for 2019 (projected).

2019 goals: Open three new locations. Acquire three or more locations. Secure real estate for our next three new locations to be developed in 2020. Introduce a new development program for our general managers that will elevate their leadership, training, recruitment, and marketing skill sets. Successfully implement new incentive and recognition programs to inspire and motivate our managers and crew. Identify another brand to diversify our holdings.

Growth meter: How do you measure your growth? We have pretty lofty expectations each year for sales growth. This is because we have grown our sales more than 25 percent each year since we started our organization. This has been accomplished through acquisitions and new store development.

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

In 5 years we would like to be at 100 locations across two to three brands with annual revenue well beyond $100 million.

Do you have brands in different segments? Why/why not? We have agreed to develop 10 Grandy’s locations in the next 5 years, which is Captain D’s sister brand. We are close to getting our first location under development. We have also been searching for another brand that is a good fit for us.

How is the economy in your regions affecting you, your employees, your customers? Our employee wages have grown significantly in the past 24 months. We have taken price increases three times in the past 24 months.

Are you experiencing economic growth in your market? We have locations throughout seven states. However, we would definitely say that there is economic growth in most markets where we have a presence. The economy is strong.

How do changes in the economy affect the way you do business? A strong economy causes us to have to increase wages and increase prices. A poor economy creates the opposite.

How do you forecast for your business? I spent years and years working for publicly traded companies that required forecasting and budgets. Every year we were required to forecast sales that we very seldom, if ever, reached. We were still under tremendous pressure to deliver the EBITDA on much less revenue. At Trident, we don’t play those games. We basically forecast sales to be flat or just slightly improved. Labor costs increase each year, so we are realistic about that, and food and paper costs are budgeted based on the forecasted pricing our franchisor has communicated for the forthcoming year.

What are the best sources for capital expansion? Flipping real estate either to REITs or through a broker out into the 1031 market.

Chris Benner Experience with private equity, local banks, national banks, other institutions? Why/why not? We don’t have any experience yet with private equity. Local banks are wonderful partners that do not hit us with all of the ridiculous fees.

National banks (Regions and BBVA USA) have been our “go to” partners funding our growth and development. REITs (Store Capital and Essential Properties) have been the biggest sources of capital to fuel our acquisitions.

What are you doing to take care of your employees? We don’t charge for uniforms and our “Shoes for Crews” program allows for the cost of shoes to be paid with payroll deduction, split between two pay periods. We offer a 401(k) with company match and medical benefits with Blue Cross Blue Shield with office co-pays and a reasonable annual deductible. All managers get a free shift meal, and they can also bring their immediate family to dine with them at the restaurant once a week. We offer payday cash advances that are as easy as a couple of clicks on a smartphone app, as well as very competitive pay at every level and a very rewarding bonus plan for management, paid 13 times a year. I personally send handwritten birthday cards with a $50 gift card to every manager in the organization. I also personally send a handwritten thank-you card with a $25 gift card to every manager who is a mom or dad and scheduled to work on Mother’s Day and Father’s Day. We close early on July 4th, Christmas Eve, and New Year’s Eve, and we open later on New Year’s Day. Through all of our rapid growth through acquisitions and new store development, we are creating lots of opportunities for advancement and always promote from within the organization.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We are paying more for both wages and healthcare costs. It has been unavoidable. To offset these rising costs, we have had to take price increases and abandon the brand’s longtime value proposition of various full meals for just $4.99.

What laws and regulations are affecting your business and how are you dealing with it? Competition for employees is so fierce now that minimum wage laws are of zero consequence.

There really aren’t any regulations that are burdensome to our day-to-day operations, but new store development costs are rising tremendously, mostly because of regulations about stormwater.

How do you reward/recognize top-performing employees? We have a sales contest every period that recognizes our top-selling cashiers. They are partnered with a cook, so if the cashier wins, the cook wins too. We have a “Catch Them Doing Something Right” program, where if a general manager or area director witnesses or is informed about an employee having an above-and-beyond attitude or performance, we reward the manager or employee with a lapel pin they can wear on their uniform.

These lapel pins can be saved up and traded in for a gift card to a restaurant or retailer of the employee’s choice. We also have a “Friday Night Fights” sales growth contest each week where the store with the greatest same store sales growth in their region each Friday wins a prize for all members of the management team. We have a large silver trophy cup we named the Trident Cup, which is passed around our company from store to store for the best overall performance for the accounting period. The winning stores are engraved onto plaques on the wooden base of the cup. We have an annual Christmas dinner at a very nice sitdown restaurant with our general managers. We have a lot of fun at this dinner and play “Dirty Santa” with Christmas gifts provided by the company. Our main program is our “GM of the Year” program. The two restaurants (one location with annual revenue greater than $1.15 million and another with annual revenue less than $1.15 million) with the best overall performance for the year will win GM of the Year. The two winning GMs are provided with an all-expense paid vacation at the company’s luxurious deluxe condo in Destin, Florida. Their supporting cast of managers all split $1,000. We also host an annual pep rally event where awards are presented to GMs for performances like “Most Sales Growth,” “Best Guest Satisfaction,” “Best 90-Day Employee Turnover,” “Best Cash Handling,” “Best Health Inspection Average,” “Best Profitability,” and each area director selects one of their GMs to win their “MVP” award for their region.

What kind of exit strategy do you have in place? None yet— enjoying what we do too much to think about exiting. T

16

Multi-Unit Franchisee

ISSUE 4, 2019

‘

STRIKE WHILE THE ‘STOVE

2019 GROWTH

IS HOT!

MULTI-UNIT DEALS Tampa, FL - Territory Sold The Carolinas - Territory Sold Las Vegas, NV - Territory Sold

PRIME MARKETS AVAILABLE NOW + TOP #

71 425 100

FRANCHISE 500

ENTREPRENEUR MAGAZINE 2019

LOCATIONS IN 34 STATES

2019 FRANCHISE OPENINGS Irvine, CA Rochester, MN Richmond, VA Charlottesville, VA Charlotte, NC Odessa, TX Harrisonburg, VA

RESTAURANT CHAINS

NATION’S RESTAURANT NEWS 2019

FOR A FRANCHISE KIT, CALL PETER ORTIZ ( PETER.ORTIZ @POTBELLY.COM (614 397-5811 (

THIS INFORMATION IS NOT INTENDED AS AN OFFER TO SELL, OR THE SOLICITATION OF AN OFFER TO BUY, A FRANCHISE. IT IS FOR INFORMATION PURPOSES ONLY. AN OFFER IS MADE ONLY

BY 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, OR WISH TO ACQUIRE A FRANCHISE FOR A POTBELLY SANDWICH SHOP TO BE LOCATED IN, ONE OF THESE STATES, WE WILL NOT OFFER YOU A FRANCHISE UNLESS AND UNTIL WE HAVE COMPLIED WITH APPLICABLE PRE-SALE REGISTRATION AND DISCLOSURE REQUIREMENTS IN YOUR STATE.

Cafes To Grow!

Targeting 100 units and $100 million in sales Written By KERRY PIPES

G

len Johnson and Nick Crouch are 30-somethings with 56 Tropical Smoothie Cafes, 30 more under development, 1,400 team members, and a role as area developers—and the brand’s largest franchisees.

Though Johnson and Crouch both have been in franchising for 8 years, it was only in 2017 that they merged their interests to form DYNE Hospitality Group. Today, with locations spread across Texas, Arkansas, Oklahoma, Georgia, and Florida, Johnson says they are only halfway to their goal of operating 100 units with more than $100 million in sales.

Crouch is the operations person, and Johnson handles larger projects such as putting deals together, overseeing labor processes, and planning for the future. But there’s no disputing what they believe are the two most important factors affecting the success of their business: operations and people.

“I love operations,” says Crouch, “but ultimately, I have to let our people handle that and be accountable for it.” The result, he says, is that employees get to make decisions and grow in confidence and ability, giving him more time for strategic planning and personnel development.

“We hire and develop the best people and empower them to lead and make great decisions,” says Crouch. “We try to let our leaders lead, and provide vision and guidance when appropriate,” adds Johnson.

Solid operations, dedicated people, and healthy infrastructure will be important as the duo looks ahead. “We want to grow to 75 cafes in the next 24 months,” says Johnson. Beyond that, Crouch adds, they are looking to develop another brand or concept. They also are expanding their commercial development company, with a number of construction projects on tap for 2020.

Says Crouch, “Growth and creating opportunity for our team is our #1 priority!”

PERSONAL First job: GJ: I painted and sold rocks when I was five for a quarter each. My grandma and her neighbors were my main buyers.

Then I sold hot dogs in front of The Home Depot when I got a little older. I was surprised to see how many people bought hot dogs at 8 a.m. NC: Selling rocks at the end of my driveway when I was five years old.

18

Multi-Unit Franchisee

ISSUE 4, 2019

Nick Crouch (left) and Glen Johnson

Glen Johnson & Nick Crouch

Glen Johnson, Nick Crouch Co-CEOs

Company: DYNE Hospitality Group No. of units: 56 Tropical Smoothie Cafes with 30 under development; plus 15 in our area developer territory operated by other franchisees Age: Glen 37, Nick 34 Family: Glen: wife Kirstin and 3 children, Amelia 7, Afton 5, Finn 2; Nick: wife Jessica and daughter Isabella 3 Years in franchising: 8 Years in current position: 8

Formative influences/events: GJ: I was raised by my mom who had to provide for our family by herself and raise three kids at the same time. I learned from her that by working hard, being creative, having a positive outlook, and focusing on solutions you can get through anything. NC: I believe that my time spent in the golf industry getting to know some very successful business professionals in my early twenties helped me realize a pattern with all of them: find your passion, understand it, and develop businesses around that passion. When you love what you do every day it never seems like work. I believe that is vital to success in business. You really have to love what you do to be successful.

Key accomplishments: GJ: My original goal was to have 25 cafes, so that was an exciting number to hit. Several of our team members and I are in leadership positions we have always wanted to have. As we have grown, those have been really exciting accomplishments.

I’d also add developing some of our own real estate. NC: Finding a way to buy my first cafe. My first acquisition started it all for me. I wouldn’t have been able to do that without the help from my family.

I am extremely grateful for the belief they had in me at a very young age. I had no money and they took a chance on me. I practically lived in that cafe so I would be ready to serve our early morning guests.

It was pretty extreme. I always wanted the cafe to look spotless and had a hard time leaving. I would also say a big accomplishment for me was when we surpassed 1,000 team members in the DYNE family. Our mission is to create opportunities for our team. We now have over 1,400 team members, and we are growing every day.

Biggest current challenge: GJ: Technology can be a challenge at times. Having the right systems in place can make our team more efficient and effective, which can have a big impact on our business. Updating technology is one of our team’s main focuses right now. NC: Rising labor costs and finding the best way to manage that ever-increasing expense through retention, strategic price increases, and cafe-level productivity.

Next big goal: GJ: Hit the 100 cafe mark. NC: $100 million in sales.

First turning point in your career: GJ: When I changed my perspective about how to measure success. When I started believing that success should be measured by the opportunities we can create for other people, it allowed me to think differently about business and life. NC: The first big turning point in my career

was when I met Glen Johnson, my business partner. I believe we were meant to build businesses together and we were going to do something really great. He is a very smart guy and I am extremely grateful to learn from him and his approach to life and leadership.

Best business decision: GJ: Partnering with Henry Investment Group and merging with Nick to form DYNE Hospitality Group.

NC: Deciding to get into franchising. I strongly believe in a systematic approach to business and multiplying something that is working. I think the franchise model is going to continue to grow and be a very attractive and healthy investment. Interest from private equity and other successful investment groups in the franchising space is a testament to the model and the success and returns you can achieve.

Hardest lesson learned: GJ: Going from six to 24 cafes in three states in two years was very hard to do the right way. I’m glad we scaled quickly, but looking back I put our team through an incredibly demanding two years. I realize we should have invested more on the “people side” ahead of time to make the growth more manageable. NC: That you cannot do it all yourself. At one point I had 10 cafes open and one person on my G&A corporate team. I handled real estate, operations, marketing, finance, lease negotiation, etc. I was stretching myself too thin and realized it was time to build a solid corporate support team. I was fortunate enough to understand this early enough, but it was certainly a lesson I wish I would have learned even sooner. Building infrastructure ahead of time to support growth is vital to long-term success.

Work week: GJ: Monday is usually a 14-hour-plus day for me.

If I don’t do that, I get behind from day one. Tuesday to Friday I try to get home by 6:30 p.m. so I can spend time with family.

Saturdays I usually work a half-day and then take Sunday off for church, family, and rest. NC: I am always connected and available to support our great team. I usually start very early in the morning and work until the job is done. I travel 10-plus days or so each month, so I am usually on the road visiting our cafes across the markets we operate in. I work full days Monday to Friday, usually a half-day Saturday, and take Sunday for church and family activities. Sunday night is the best time to catch up and prepare for the week ahead after my daughter goes to bed.

Exercise/workout: GJ: Four or five times per week with a mixture of cardio and weightlifting. Working out is a big stress reliever for me and helps me to be a better leader, husband, and father. NC: I am addicted to Peloton. If I am home, I Peloton every day. If I am traveling, I try to get into the hotel gym for at least 30 minutes at the end of the day. It is a little harder when I am on the road. I try to live by the saying healthy body, healthy mind. I feel my best when I get a good workout in.

Best advice you ever got: GJ: To focus on the success of other people and not just myself. Once I understood what that meant it made me much more energized and a better leader. NC: The team you work with is the most important component of a successful business. This is a people business and we have an awesome team here. I feel very lucky. I also got some great advice once to always stay humble, work hard, and treat every day like it’s your first day on the job. Remember where you came from.

What’s your passion in business? GJ: I absolutely love what I do.

I’m most passionate about the relationships that I have with my team and creating opportunities for people. I also love putting deals Multi-Unit Franchisee

ISSUE 4, 2019

19

Glen Johnson & Nick Crouch together, especially really challenging ones that you think can’t get done at first glance. NC: My passion is creating opportunities for our team. The only way to see our team members’ lives improve and provide advancement for them is to keep growing. Growth fuels everything and fulfills our mission which is to “Use our God-given gifts to create opportunities through operational excellence.”

How do you balance life and work? GJ: These are very intertwined for me. I try to prioritize things every week based on what is best for my team, family, and other relationships. I also combine work, life, and family as much as I can. I talk openly with my wife and kids about work, which I think helps with balancing things out because they feel a part of it. My family is very supportive of me and knows how passionate I am about work, so that helps a lot. NC: We call it a “blend” in our family. We believe that taking care of our businesses and spending time together as a family are both extremely important and necessary. My family supports me in all that I do, and we understand it takes some sacrifice to achieve the goals we would like for our business, team, and family.

Guilty pleasure: GJ: I love Domino’s Handmade Pan black box pizza. Sometimes I want to become a franchisee of Domino’s because it’s so dang good. NC: I love snacks. When I am not traveling and at home, after a long day you can usually find me in the pantry eating several different snacks.

Favorite book: NC: Life Wisdom from Coach Wooden.

Favorite movie: GJ: “Braveheart.” I love this movie because of the passion and sacrifice made for the good of others. It shows how powerful an idea and purpose can be. NC: I have a hard time sitting

You can be successful at almost anything if you have the right people, work ethic, and focus. After you have those things, focusing on the development of yourself and team, g iv ing them the freedom to operate, and always growing t o p r o v id e m o r e oppor tunities and maintain a strong culture are the keys to being successful.

Hire the best team you possibly can and trust them. I have learned that not being the smartest person in the room is a great thing, and I am continually learning from the great people I get to work with every day. We try to focus on the mission of our organization, and work hard to continue our growth and provide opportunities for our team.

through movies, so I don’t watch a lot of movies or TV. However, if I had to pick, I would say one of my favorite movies would be “Tin Cup.” What do most people not know about you? NC: I used to be in the golf industry before getting into franchising. I actually have a second degree in golf complex and operations management and worked at a high-end club in Del Mar, California for a few years. In my early twenties I learned from the very successful members that following a systematic approach to business and being the best at the business you choose to multiply was very attractive to me.

Pet peeve: GJ: Inefficiency. Whether it’s a meeting, process, or some other system. The feeling that I am wasting time is one of the worst feelings for me. NC: Excuses. Focus on the solution, not the problem.

What did you want to be when you grew up? GJ: I have always wanted to be a business owner of some type. I think that comes from my parents talking to me about it when I was younger. NC: Real estate mogul and business owner. I am very thankful I have had a chance to have a career in business and we are starting to develop a portfolio of commercial properties.

Last vacation: GJ: Costa Rica with my family and some friends.

NC: Atlantis in the Bahamas with my business partner, his family, and mine. It was a great trip.

Person I’d most like to have lunch with: GJ: Warren Buffet.

NC: John Wooden or President Trump.

MANAGEMENT Business philosophy: GJ: You can be successful at almost anything if you have the right people, work ethic, and focus.

After you have those things, focusing on the development of yourself and team, giving them the freedom to operate, and always growing to provide more opportunities and maintain a strong culture are the keys to being successful. NC: Hire the best team you possibly can and trust them. I have learned that not being the smartest person in the room is a great thing, and I am continually learning from the great people I get to work with every day. We try to focus on the mission of our organization, and work hard to continue our growth and provide opportunities for our team.

Management method or style: GJ: My style is to let our leaders lead, and provide a vision or guidance when appropriate. My job is to hire people who are better and smarter than I am at each role. I give them the freedom to operate and make decisions while holding them accountable to our culture and values. NC: Hire and develop the best people in the industry and empower them to lead and make great decisions!

Greatest challenge: GJ: My biggest challenge right now is deciding how quickly to grow and where to get funding from. Deciding what is best over the long term can be a little challenging at times.

How do others describe you? GJ: I’m described by my team as a hard worker, visionary, strategic thinker, competitive, and motivational. NC: Highly energetic and meticulous.

One thing I’m looking to do better: GJ: Learn how to lead daily through our culture and values so it becomes part of our company’s DNA. NC: Let our leaders lead and take on more of the

20

Multi-Unit Franchisee

ISSUE 4, 2019

FRANCHISE WITH OUR WORLD-CLASS BRANDS • Fresh and innovative store concepts

• Industry-leading Franchisee support

• Convenient, high-quality and affordable products

FRANCHISE OPPORTUNITIES IN

FRANCHISE OPPORTUNITIES IN

Denver, Texas, Florida, and North Carolina

Denver, Los Angeles, and Washington D.C.

Franchise opportunities available in other select markets throughout the United States

Learn more at dunkinbrands.com Contact us at 781-737-5530 | dunkinfranchising@dunkinbrands.com © 2019 DD BR IP Holder LLC. All rights reserved.

Glen Johnson & Nick Crouch day-to-day operation. I am very hands-on and love operations and all the details of the restaurant business. However, sometimes focusing on the details in our cafes can take me away from the big picture: operational strategy and people development. Both are very important and need a laser focus. I am working on how to approach this as we prepare for more growth, new brands and concepts, and reaching 100 units.

How I give my team room to innovate and experiment: GJ: Encourage them to come up with new ideas and let them know failure can be part of figuring out the best solution to a problem.

I like to ask them to think about what they see as the biggest opportunity that can have an impact on their area of the business.

NC: Everyone has an important voice and is encouraged to speak their mind and bring ideas to the table that can help improve our business. This is a large part of our culture.

How close are you to operations? GJ: Nick tends to handle cafe operations more closely. I work on larger projects with operations, like a new inventory system, labor processes, and long-term planning. NC: Extremely close. I’m an operator and love all the details of what makes restaurants successful. I am very hands-on. I like to work the food and smoothie line, help with a catering order when I can, knock out a deep clean for the team, etc. I believe I need to stay connected to cafe operations and continue to perform these roles as often as possible. It gives me real-life experience, which helps me come up with new ideas to improve the work environment for our team and elevate the overall guest experience.

What are the most important things you rely on from your franchisor? NC: Menu innovation, great national marketing, and brand presence and support, especially in new and emerging markets we are entering. We also look for the brand to use its buying power and help us improve the bottom line.

What I need from vendors: NC: Timely deliveries, great quality, and competitive prices.

Have you changed your marketing strategy in response to the economy? How? NC: We have not really changed our marketing strategy. We let our franchisor focus on national marketing and brand awareness, while we focus on the local level and stay heavily involved with the local schools and churches.

We believe in an old-school, beat-the-pavement approach to building business and host many fundraisers and community events in our cafes.

How is social media affecting your business? NC: We are heavily involved in social media. Our grand opening marketing for new cafes is almost entirely done on social media. You can grow a business and reach a very specific target market quickly through social media.

How do you hire and fire? GJ: We base all our people decisions on our culture and try to always use it as our guideline. In the hiring process, we are trying to see if someone is a great culture fit and figure out if they have the right attitude. When it comes to letting someone go, we look at ourselves fi rst and ask if we have done everything possible to make this person successful.

Before we consider letting someone go, we want to make sure we aren’t the real problem. NC: We always lead with our culture. If we hire with our culture at the forefront of all decisions then we

22

Multi-Unit Franchisee

ISSUE 4, 2019

can recruit and retain some great people. We believe in taking chances and investing in our team as much as we possibly can before terminating anyone. If we provide all the coaching necessary but the team member just doesn’t fit our culture, then it makes it hard for them to work for us.

How do you train and retain? NC: Training is done on the cafe level through the franchisor training programs. We have also developed some great internal training programs for our cafelevel leaders and multi-unit field leadership support teams.

How do you deal with problem employees? GJ: We try to get to the root cause of what the real issue is. If it is something we can help them through by investing in them, we will go to great lengths to do that. If the real issue is something we can’t help with or that they don’t want the help we can provide, then there is no path forward. NC: We do everything we can to invest the time and energy into seeing one of our team members be successful. If they just don’t fit our culture and don’t have the attitude necessary to succeed, then unfortunately we find it isn’t a fit on both sides.

Fastest way into my doghouse: GJ: Not hitting important deadlines. NC: Excuses. Focus on the solution.

BOTTOM LINE Annual revenue: NA. 2020 goals: GJ: Hit the 75-cafe mark in next 24 months. NC: Get to 75-plus Tropical Smoothie Cafes, develop another brand or concept, and strong YOY comp sales growth. We also have big goals for our team and look forward to more promotions and success stories. In addition, we are expanding our commercial development company, DYNE Development, and will have several projects under construction in 2020.

Growth meter: How do you measure your growth? NC: By unit count, comp sales growth, average ticket/transaction growth, AUV growth, etc. Most importantly, we measure our growth by the opportunities we have created for our team.

Growth fuels opportunity.

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

GJ: Over the next 10 years, we want to create a very strong brand of our own. We want to take what we have learned growing to 100 cafes within our current brand and implement it elsewhere. We have a desire to never stop growing and always be creating more opportunities for people. Ten years from now I think we will be known for our relentless pursuit of that. NC: I would like our company to be known as a leader in the industry and premier working environment. I would like to continue to instill how important our culture is in our existing new team members. We will have quite a few more Tropical Smoothie Cafe locations, additional brands/ concepts, and a substantial commercial real estate portfolio over the next 5 and 10 years.

Do you have brands in different segments? Why/why not?

GJ: We do not right now but that will probably change over the next few years. Right now, there is a tremendous opportunity with Tropical Smoothie Cafe, and we are solely focused on taking advantage of that. Once we get to a point where we have the capital and bandwidth to consider other options, we will. NC: We only own and operate Tropical Smoothie Cafes

THIS

!

T I O D E I W O H S I

OVER 8 YEARS

OF CONSECUTIVE SAME STORE SALES GROWTH*

Unavailable

Multi-unit Areas Available

SINCE 1973 564 STORES IN 21 STATES†

Existing Locations Areas Available

INNOVATORS OF FLAVORED CRUST® PIZZA

Carryout and Delivery Concept

OPEN A HUNGRY HOWIE’S® FRANCHISE

FRANCHISING.HUNGRYHOWIES.COM

248.414.3300

*Results measure company-wide same store sales figures for each calendar year over the previous calendar year. The measuring period is January 1, 2010 through December 31, 2018. Excludes store sales from the State of Florida, units which are not obligated to and do not report sales to Hungry Howie’s, and units which opened and/or closed during the measuring period. Not all individual stores experienced the same results. New franchisees may have results that differ. This advertisement is not an offer of a franchise. Franchises are offered and sold only through a Franchise Disclosure Document.

STATE OF CALIFORNIA: THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION, OR ENDORSEMENT BY THE COMMISSIONER OF CORPORATIONS NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE, AND NOT MISLEADING. STATE OF NEW YORK: THIS ADVERTISEMENT IS NOT AN OFFERING. AN OFFERING CAN ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. SUCH FILING DOES NOT CONSTITUTE APPROVAL BY THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. MINNESOTA STATE REGISTRATION NUMBER F-2873. †545 open stores in 21 states with an additional 19 agreements signed as of 12/18/2018.

Glen Johnson & Nick Crouch

We have had to be very creative on the real estate side of the business because of rent and construction cost increases. Costs have gone up across the board, so we have to look for creative ways to get deals done.

It hasn’t stopped us from growing, though.

Our goal is to provide a great experience for our guests in a clean, well-organized and efficiently run cafe.

We want to be as consistent as possible and ensure that our guests have a great visit each time they dine w ith us, and hopefully they will tell their friends and family to try us as well.

at this time. We just started discussing what is next and what additional concepts/brands we might add and start to develop.

How is the economy in your regions affecting you, your employees, your customers? GJ: Overall, we have growth in all our markets but are doing better in some areas where the local economy is stronger. Our transactions are up, average check is up, and employee wages are up as a percentage of sales. So that makes me think consumers are doing well and spending more.

At the same time, our team is making more because of increases in wages, so they are doing better as well. NC: I would say that we are very blessed in that we have had continued growth and success, not only through organic development or acquisitions, but also same-store comp sales growth, which has been strong over the past several years.

Are you experiencing economic growth in your market? NC: Yes! Some of our cafes are in very strong growth markets and continue to grow by double digits year over year.

How do changes in the economy affect the way you do business? GJ: We have had to be very creative on the real estate side of the business because of rent and construction cost increases.

Costs have gone up across the board, so we have to look for creative ways to get deals done. It hasn’t stopped us from growing, though. NC: We don’t really change our approach. Our goal is to provide a great experience for our guests in a clean, well-organized and efficiently run cafe. We want to be as consistent as possible and ensure that our guests have a great visit each time they dine with us, and hopefully they will tell their friends and family to try us as well.

How do you forecast for your business? NC: We forecast yearly and adjust when necessary. We have also started budgeting and reviewing monthly with our CFO, general managers, and district managers. Our CFO takes a lot of time to explain budgets versus actual with each district and help our cafe-level leaders understand the budget and financials.

24

Multi-Unit Franchisee

ISSUE 4, 2019

What are the best sources for capital expansion? GJ: Right now, our primary source of funding is a local bank that has been with us since day one and cash flow from operations. We are looking at different options, but those two sources have worked great for us so far. NC: We currently work with a local bank and have a relationship that has been great. We are very thankful for their partnership. That being said, we have explored all forms of capital for our growth but have decided to stick with our local relationship. It makes the most sense for us right now.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? NC: We do the best we can.

Managing rising labor costs and productivity is the number-one challenge in our business. We believe that growing sales and average unit volume is most important. If we can do that then we can pay well and afford to retain great talent. We also strategically evaluate pricing when it makes sense for us and the brand.

Experience with private equity, local banks, national banks, other institutions? Why/why not? GJ: Before our merger, I did a deal with a family office back in 2014 that really catapulted our growth. One benefit to being backed by private equity or a family office is it can give you credibility with lenders. I think it would be much harder for us to get the terms we have received with lenders if we didn’t have a really strong financial partner. It can reduce your equity up front, but create more value in the long term. It really is a case-by-case situation.

What are you doing to take care of your employees? GJ: We focus on creating as many opportunities for advancement as possible, having a great culture, and creative benefits. Focusing on promoting from within and investing in our team are priorities for us. We want our team to know if they stick with us there is a career path for them because we will never stop growing.

How do you reward/recognize top-performing employees?

NC: We try to compensate above industry average and have a substantial bonus program. We have recently added some new and unique benefits. One of our unique recognition programs is that our Top General Manager of the Quarter gets to drive a Tesla for three months! We just presented and surprised our first recipient with the Tesla in Q2 2019. It was an incredible moment and extremely exciting for our team.

What kind of exit strategy do you have in place? GJ: We have no exit strategy right now. We are asking ourselves how do we grow quicker, faster, and better? I don’t think that will change any time soon. NC: We are operators. We are just getting started and have no plans of any exit any time soon. Growth and creating opportunity for our team is our #1 priority! T

H I U AC Q D N I M

E V I SIT

ha i , G h rs a it!

H m i r l e Fo ’s th y k s the

arsh Ghai and his Northern California-based Ghai Management Services company have been on the grow, doubling the number of Burger Kings they operate (110) and more than tripling the number of Taco Bells (33) since we last profiled the now 34-year-old in 2015.

But that’s not all. As COO of the family business, Ghai has been behind the addition of Blaze Pizza and Denny’s over the past 4 years. Now the franchise power player is in the midst developing a 10-acre project north of Sacramento that will provide the family business with the opportunity to add even more units with Burger King, Taco Bell, Arco AM/PM, and a hotel. It’s easy to see why he says his pet peeve is complacency.

We caught up with Ghai shortly after his return from an international vacation visiting Spain and Morocco. Eager to get back into the swing of things building his family’s company, he generously took the time to share his thoughts on the past four years.

“We have grown through several large acquisitions. In 2016, we purchased 45 Burger Kings in California from a franchisee and then added 21 Taco Bells in Oregon through a refranchising deal, all within one week,” he says. Since then, the company has added another 20 Burger Kings in California and divested 20 other Burger Kings in the Midwest. “We are trying to focus on the West Coast, but we would always be open to expanding anywhere in the U.S. for the right opportunity,” says Ghai.

All of this growth has affected life at the home office. “We have expanded our support staff to meet the needs,” says Ghai.

“Our amazing people in HR, finance, risk, and development are instrumental in helping catapult our growth.”

On the personal front, Ghai has become a father since we last interviewed him. “My wife and I had our first daughter, Saanjh, almost 2 years ago, and have welcomed our nephew, Ronav, into this world.”

Asked about the future he says, “We have no desire to exit the business anytime soon.” Of course not, there’s so much more to do.

PERSONAL First job: Burger King.

Formative influences/events: My father. He started his journey as a restaurant manager in 1997. I watched him struggle and work hard to get what he did. It inspired me to join the family business.

Key accomplishments: Acquisition of several restaurants over the last 5 years.

Biggest current challenge: Staffing.

Next big goal: Growing to a half-billion-dollar business.

First turning point in your career: Back in 2000 when our company went from 13 restaurants to 25 restaurants in a matter of six months.

Best business decision: Becoming a Taco Bell franchisee.

Hardest lesson learned: Failure from developing into a new brand we are no longer in. While the concept is great, especially the food, the model did not translate well into franchising in a new market.

Written By KERRY PIPES

26

Multi-Unit Franchisee

Work week: 7 days with plenty of family vacations!

ISSUE 4, 2019

Harsh Ghai – Reconnect

Harsh Ghai, 34

Greatest challenge: Developing a new business/concept without an existing base.

COO

How do others describe you? Fun-loving and innovative.

Company: Ghai Management Services

One thing I’m looking to do better: I’m always striving to improve the guest experience in our restaurants.

No. of units: Burger King (110), Taco Bell (33), Blaze Pizza (7), Denny’s (1) Family: Sunny Ghai, father; Tina Ghai, mother; Gurbir Ghai, wife; Saanjh Ghai, daughter Years in franchising: 9 Years in current position: 7

Exercise/workout: Absolutely necessary in helping to blow off steam and stay healthy.

Best advice you ever got: “Your guest is never, ever going to have a better experience than the people who work for you.” You constantly have to improve the experience of the people working for you.

What’s your passion in business? My people! Our strength comes from the people who make us successful, and they help keep me driven.

How do you balance life and work? It’s important to make time for yourself and family. You have to rely on and surround yourself with people who support you well, as well as take care of them for doing so.

Guilty pleasure: Wine and sports.

Favorite book: Lord of the Rings. I am also a big fan of The Burger King: Jim McLamore and the Building of an Empire by James W. McLamore.

Favorite movie: I’m a huge “Star Wars” nerd!

What do most people not know about you? That I have a beautiful and charming daughter, Saanjh.

Pet peeve: Complacency.

What did you want to be when you grew up? Businessperson.

How I give my team room to innovate and experiment: Creativity is important in helping people succeed. I allow my team members to implement their own ideas. When they work we spread those practices. And when they don’t, it’s perfectly okay.

How close are you to operations? Very close. Being in the restaurants and engaging with the restaurant team is important. You might sometimes find me on a line or talking to guests in dining rooms.

What are the two most important things you rely on from your franchisor? Transparency and trust. The franchisee/franchisor relationship is tricky, and we attribute the recent success in our QSR business to phenomenal relationships we have with our franchisors.

What I need from vendors: Trust and service. We expect great service just like our guests do. We also have reached a point where we have several amazing vendors we love to work with and expect them to help maintain our trust in them. We have left vendors who have broken that trust very quickly.

Have you changed your marketing strategy in response to the economy? How? Spending is at an all-time high in our business and we are constantly developing fun and innovative things to help drive business. Our concepts are also doing a great job of providing a great value proposition to keep traffic flowing.

How is social media affecting your business? Our brands are doing a great job of engaging younger audiences on social media.

It has been a key driver for all of our concepts.

How do you hire and fire? Hiring is tough in this day and age and we use many online resources to draw from. We also offer a competitive package and growth opportunities. Hiring well is the key to not firing. Training our management to interview better is the key.

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

How do you train and retain? Training is the key to retention.

We found that the best training execution in restaurants leads to the highest level of retention. Staying engaged with the team on training is also key to keeping team members happy.

MANAGEMENT Business philosophy: Taking people with you. Growth should apply to everyone. Taking care of the people who work hard for you will lead to them taking care of guests, which is most important.

How do you deal with problem employees? Coaching and motivating is most important in ensuring there are no problem employees. Everyone has motivating factors. You just have to find what they are, especially with young kids.

Management method or style: Servant leadership.

Fastest way into my doghouse: Not following directions!

“Your guest is never, ever going to have a better experience than the people who work for you.” You constantly have to improve the experience of the people working for you.

Coaching and motivating is most important in ensuring there are no problem employees. Everyone has motivating factors. You just have to find what they are.

Last vacation: We just got back from 2 weeks in Morocco and Spain.

Multi-Unit Franchisee

ISSUE 4, 2019

27

Harsh Ghai – Reconnect Marketing to the current economy is important. We have seen brands flourish in tough economic times creating good value propositions and innovating.

2019 goals: Developing people for growth in 2020.

Growth meter: How do you measure your growth? Sales and EBIDTA are important of course, but growth is also measured by the growth of people. New restaurant development is also a big growth factor for us.

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

Our next big goal is to reach $500 million in revenue.

Do you have brands in different segments? Why/why not? Yes. QSR is our core, but fast casual also has a lot of potential. We are also engaged in family dining.

How is the economy in your regions affecting you, your employees, your customers? We are experiencing solid growth.

Are you experiencing economic growth in your market? The current economic conditions are working well for us. We see spending is at an all-time high, and high wages are helping drive sales and traffic.

How do changes in the economy affect the way you do business? Marketing to the current economy is important. We have seen brands flourish in tough economic times creating good value propositions and innovating.

How do you forecast for your business? Detail is important.

Each restaurant is its own individual business and you have to put detail into forecasting.

What are the best sources for capital expansion? Relationships with key people and lending institutions are important to us. We have stayed with lenders because of our relationship with people there and often left when they leave.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We have experience with many national banks, and also with local ones. The national banks have been key in our large-scale expansion and development, but local banks have helped us grow in fast casual and real estate. We love the small banks as much as large ones.

W hat are you doing to take care of your employees?

Growth opportunities are very important to our people. We also make sure to offer competitive pay and have a great benefits program.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Growing top-line sales is of the utmost importance in growing the bottom line while profitability Multi-Unit Franchisee

What laws and regulations are affecting your business and how are you dealing with it? Regulations are becoming increasingly burdensome, especially in development. It’s an everyday fight with municipalities, and you have to reiterate that you are creating jobs and helping support communities.

How do you reward/recognize top-performing employees?

Again, through growth. We make sure that we find growth opportunities for those who perform well.

BOTTOM LINE Annual revenue: $225 million.

28

is eroding. Luckily both our QSR brands have had strong sales comps this year.

ISSUE 4, 2019

What kind of exit strategy do you have in place? None. We have no desire to exit the business anytime soon.T

Hitting a Change-Up Former MLBer shifts into franchising Written by KERRY PIPES

30

Multi-Unit Franchisee

ISSUE 4, 2019

Craig Brazell – Athlete profile

W

hether facing a pitching change on the mound, switching his position from catcher to first base, moving across the world to live and play baseball in Japan, or starting a second career in franchising, Craig Brazell has been pretty good at making adjustments.

In 1998, the Montgomery, Alabama, native was a fifth-round draft pick for the New York Mets. Until then he’d been a catcher his entire baseball life. As he made his way through the minor leagues, he was asked to play first base. He debuted in MLB, the “Big Show,” in August 2004 for the Mets. Over the next few years he made his way through some other teams, including the Los Angeles Dodgers and Kansas City Royals.

He faced another life adjustment in 2009 when he signed with the Hanshin Tigers of Nippon Professional Baseball in Japan.

He and wife Lanie spent the next 7 years living in Japan before he retired from baseball at the end of the 2014 season. “I loved getting to play baseball, and I got to do it until I was 35 years old,” he says.

Brazell had always been into health and fitness when Lanie introduced him to Pilates toward the end of his baseball career.

That made it easier when he went looking for a second career.

Today, he and his wife Lanie, who also is his business partner, are raising three children and growing three Club Pilates in Alabama in Montgomery, Auburn, and Zelda. They opened their first location in 2017 and quickly grew to three in the 2 years they’ve been franchisees.

“Of all the fitness concepts we looked at, Club Pilates was definitely the right one for us,” he says. “I do a lot of the management of the studios and Lanie performs a lot of our sales and marketing initiatives,” he says. “We divide and conquer.”

PERSONAL First job: I was drafted by the Mets straight out of high school.

Formative influences/events: Two major influences in my life were pitchers Tom Glavine (who I had the opportunity to play alongside) and Al Leiter.

Key accomplishments: Playing professional baseball straight out of high school and continuing my career in professional baseball until I was 35 years old.

Biggest current challenge: Navigating this new life of franchising, boutique fitness, and most important, family. Baseball was our life for 18 years. Now we have three kids and three different Club Pilates that we learn to manage better every day.

Next big goal: We currently don’t have any major goals in the works. Life changes quickly and business changes quickly, so we would like to stay on the same path and maintain our integrity while we do that.

First turning point in your career: Being drafted. Now, I would say the most recent turning point would be franchising. We opened three studios in 2 years, which was a major goal of ours from the beginning.

Best business decision: Choosing to franchise with Club Pilates of all the fitness concepts we could have chosen.

Hardest lesson learned: You can’t be perfect, and you can’t do it all by yourself.

Craig and Lanie Brazell, 39 Owners

No. of units: 3 Club Pilates Family: Wife Lanie, who is my business partner; 3 children, 2, 4, and 9 Years in franchising: 2 Years in current position: 2

Work week: Most mornings I will take the kids to school. Lanie is usually up and working around 5:30 a.m. and heads into the studios around 8:30. I do a lot of the management of the studios and Lanie performs a lot of our sales and marketing initiatives.

Each day can be completely different, depending on the needs of the different studios. When the kids are done with school, one of us picks them up and that pretty much concludes a day. It sounds simple, but there are lots of late nights and tag-teaming different tasks throughout the week.

Exercise/workout: For most of my life, baseball was my workout.

Toward the end of my career, though, Lanie convinced me to try Pilates, and I’ve been doing it ever since. It definitely helped the longevity of my career.

Best advice you ever got: Two pieces of advice have stuck with me. One is to never settle for mediocrity. The second is to shoot for the moon because even if you miss, you land among the stars.

What’s your passion in business? I really love to network. I like going into our community and starting conversations with people. Lanie’s passion is more the marketing and sales side of things.

How do you balance life and work? We work as a team.

Sometimes our roles have to change and we are a team while they are changing.

Guilty pleasure: I love a Coca-Cola and candy.

Favorite movie: “The Natural.”

What do most people not know about you? My wife says I’m a softy. I might put on a hard exterior, but I truly do want the best for everyone.

Pet peeve: I would have to say punctuality.

What did you want to be when you grew up? I always wanted to be a baseball player and that came true. I’m very lucky.

Last vacation: We went on a trip to Disney World! We are Disney Club members.

MANAGEMENT Business philosophy: We believe that every experience our members have should be a luxury, premium experience. We try to treat everyone as kindly and fairly as we can.

Management method or style: Our management style is rooted in the ideas of being consistent and fair.

Multi-Unit Franchisee

ISSUE 4, 2019

31

Craig Brazell – Athlete profile Greatest challenge: Adjusting to the new lifestyle of franchising after so many years having been focused so much on baseball.

How do others describe you? People describe me as a good, fair guy and a great networker. Lanie is often described as bubbly and outgoing.

One thing I’m looking to do better: We want to get better at managing employee expectations. We want to be sure that we are maintaining a happy work environment.

How I give my team room to innovate and experiment: It is important for us to keep an open-door policy. If an employee sees room for improvement in a specific area, we want them to be able to tell us.

What are the two most important things you rely on from your franchisor? We really value the marketing and sales advice they provide. When we aren’t sure what to do surrounding a certain initiative or event, the corporate team is always willing to hop on a call or help us out. Xponential Fitness (Club Pilates’ franchisor) has been incredible.

What I need from vendors: Our two greatest vendors have been extremely punctual, accountable, and dependable, which is what we were really looking for. It’s one less thing we have to think about among all of our other duties.

Have you changed your marketing strategy in response to the economy? How? We are still learning how to navigate that. We are currently using marketing in a layering effect. For example, we use Facebook, but not everyone is on Facebook so we use other marketing tactics as well.

How is social media affecting your business? Social media is a huge part of our business. We place a lot of focus and attention on it to help grow our studios. Facebook, Instagram, etc. are all hugely important in the fitness world.

How do you hire and fire? A lot of our best employees have been found and hired through word of mouth. Firing on the other hand is never easy, nor is it ever our first choice. We put a lot of thought into that decision and give a lot of second chances before we decide to terminate an employee.

How do you train and retain? We do the best we can to accommodate schedules. The fitness space can sometimes be a bit tricky, as some of our employees are students and eventually will graduate and move into their own full-time careers.

How do you deal with problem employees? The most important thing we try to do is remain consistent. We’ll give them a few chances, but if they continue to fall short in the same area over and over or simply don’t have respect for us and the business, we sometimes have to part ways.

Fastest way into my doghouse: A lack of respect. I try to be as respectful as possible, so I expect the same in return. We also hate gossip and drama. This is a place where people come for a positive, fun experience and we don’t like when people try to poison that with gossip.

32

Multi-Unit Franchisee

ISSUE 4, 2019

SPORTS & BUSINESS Which do you find more competitive, sports or business? I would have to say sports.

Why did you choose franchising as an investment option?

We didn’t want to reinvent the wheel. We like that there was already a whole business plan established and support system rooting us on.

How did you transition from sports to franchising? After experiencing a second head injury on the field, I eventually retired. We were flipping houses when Lanie convinced me it could be a great opportunity to open a Club Pilates.

BOTTOM LINE 2019 goals: We would love revenue to be over $1.2 million by year-end.

Growth meter: How do you measure your growth? We are just now getting in the stages of owning our franchise to do that. We plan on measuring it through revenue, membership, and employee retention.

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

We just hope to still be open and our studios thriving like they are today.

How is the economy in your region affecting you, your employees, your customers? The South isn’t very fitness-centric so we have to work really hard to recruit members and maintain a sense of community. As the cost of living rises, employees expect to be paid handsomely for doing a small amount of work. Being a small business, we can’t always do that and we have to readjust expectations sometimes.

Are you experiencing economic growth in your market?

Auburn is definitely growing. The population is young and there are lots of businesses popping up. Montgomery does well too, but there can be challenges.

How do changes in the economy affect the way you do business? If the economy falters, we keep doing what we’re doing, but even better. Fitness will always be a part of people’s lives once they find an activity they enjoy, so we have to enforce that by continually providing hospitality and a welcoming community.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We hire well-rounded, skilled individuals who are prepared to work hard and jump in to help wherever and whenever necessary. If we can find an instructor who’s also willing to work at the desk, that maximizes our resources and also helps build community. For example, Lanie is not only a co-owner with me, she is an instructor. We also have to make sure we set expectations right from the minute we hire someone on wages, payroll, etc., and stay consistent among everyone. T

O w n THE PIZZA THAT MADE THE BROOKLYN BRIDGE FAMOUS.

JUST ANNOUNCED! FRANCHISE DEVELOPMENT OPPORTUNITIES NOW AVAILABLE. INFO: franchising@grimaldispizzeria.com

FRESHLY BREWED OPPORTUNITIES AWAIT

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

Want to Learn More?

(310) 436-5152 www.coffeebean.com

We’re proud to be an exhibitor at the Multi-Unit Franchising Conference in Las Vegas, NV!

Stores Domestically See you in 2020!

300

1200

LOCATIONS WORLDWIDE

300

LOCATIONS

1968

DOMESTICALLY

This advertisement does not constitute an offer to sell any “The Coffee Bean & Tea Leaf®” franchise in, nor is this intended to be directed to the residents of any jurisdiction requiring registration of the franchise before it is offered and sold in that jurisdiction. No ““The The Coffee Bean & Tea Leaf®” franchises will be sold to any resident of any such jurisdiction until the offering has been exempted from the requirements of, or duly registered in and declared effective by, such jurisdiction and the required Franchise Disclosure Document (if applicable) has been delivered to the prospective franchisee before the sale in compliance with applicable law.

Louisiana Jones Just 29 with 2 brands and 6 units Written By KERRY PIPES

A

s part of his entrepreneurship concentration at LSU, Andrew Jones took a course on franchising. The class and guest speakers piqued his interest—so much so that in 2015, still in their mid-20s, Jones and his business partner Teddy Amar, walked away from their jobs at Ernst & Young and straight into the world of franchising, signing on with Zaxby’s.

“The franchising model is tried and true and takes the risk out,” says Jones. “It also gives us the opportunity to grow in other markets and with other brands.”

That’s exactly what they did 2 years later, when they signed on as PJ’s Coffee franchisees. Jones liked that the brand was based in Louisiana and offered great potential for growth.

“We were looking for something that people can really get behind and that they already enjoy,” says Jones. “We also wanted to grow. We wanted more reach and more opportunity to get into different markets.”

Fast forward to 2019. Jones operates two Zaxby’s in Gonzales, La., and is still partnered with Amar in three PJ’s Coffee locations in Baton Rouge and Lafayette.

Now approaching 30, Jones says he truly enjoys operating franchised businesses and being connected to the local communities where his stores are.

“People go to places they are familiar with, especially a coffee shop,” he says. “You’ve got to be involved in the community and give back to the communities you’re serving. It’s important, especially in Louisiana. People like things local and they want that sense of the brand being part of Louisiana.”

Andrew Jones (left) and Teddy Amar

“You’ve got to be involved in the community and give back to the communities you’re serving. It’s important, especially in Louisiana. People like things local and they want that sense of the brand being part of Louisiana.”

34

Multi-Unit Franchisee

ISSUE 4, 2019

Under 30 – Andrew Jones

“We want our managers to be problem-solvers. Unless the decision is life or death, we ask that they make the decision themselves. After they make the decision, we can talk about it and see if it could have been done better. This allows them to have a managerial presence and not rely on us for every small thing.”

PERSONAL First job: Financial consultant, Ernst & Young.

Key accomplishments: Opening my first Zaxby’s location—a lot of moving parts and coordination.

Biggest current challenge: Managing time across five different businesses.

Next big goal: Currently looking to expand my PJ’s Coffee footprint. I would like to have 10 to 15 stores in the next 5 years.

First turning point in your career: Having our first restaurant start to see stable year-over-year growth.

Best business decision: Opening a PJ’s Coffee. Love for coffee and an intimate environment makes for a fun business.

Hardest lesson learned: Trusting and delegating to employees and key management.

Work week: Monday to Sunday, 5 a.m. to 11 p.m. on call.

Exercise/workout: Every weekday morning with PJ’s Coffee business partner.

Best advice you ever got: Do things right the first time and you will not have to do them again.

What’s your passion in business? People. Seeing employees grow into something they didn’t think they could do. Seeing them move on and go to college or start professional careers.

How do you balance life and work? I try to set things up to be somewhat free on the weekends. My wife and I enjoy keeping up with our one-year-old daughter Camille. Sometimes we have to play at one of the stores, though.

Guilty pleasure: Caramel Granita from PJ’s Coffee.

Management method or st yle: Personal connection.

Establishing a trusting relationship with your management team.

Make them feel a part of a family and they are more likely to feel prideful about your business.

Greatest challenge: Managing time across five businesses in different cities.

How do others describe you? Hardworking. I can never turn off my brain.

How I give my team room to innovate and experiment: We want our managers to be problem-solvers. Unless the decision is life or death, we ask that they make the decision themselves.

After they make the decision, we can talk about it and see if it could have been done better. This allows them to have a managerial presence and not rely on us for every small thing.

How close are you to operations? Very close. Sometimes that can be a downfall.

What are the two most important things you rely on from your franchisor? Marketing and new opportunities.

What I need from vendors: Fair pricing, quick response time, and resolution of issues.

How is social media affecting your business? We use social media with every business. It’s an easy and cheap way to connect with your guests.

How do you hire and fire? Hire for attitude, train the skill. We like to think that if we do the work on the front end (hiring), the work on the back end will be minimal.

How do you train and retain? Retention is a result of an effective culture. People want to work where they feel valued and comfortable.

Favorite movie: “Blue Streak.”

How do you deal with problem employees? We feel that people who don’t fit into our culture weed themselves out on their own.

Typically, they get the message pretty quickly before it gets too far down the road.

Pet peeve: Tardiness.

Fastest way into my doghouse: Be late!

Favorite book: Rich Dad Poor Dad.

What did you want to be when you grew up? Dentist.

Last vacation: Gulf Shores Beach.

Person I’d most like to have lunch with: Warren Buffett.

MANAGEMENT Business philosophy: Growth. Progression. If you’re not moving forward, you’re moving backward.

Andrew Jones, 29 Owner

No. of units: 3 PJ’s Coffee, 3 Zaxby’s Family: Wife Courtney, 1-year-old daughter Camille Years in franchising: 5 Years in current position: 5 Multi-Unit Franchisee

ISSUE 4, 2019

35

Under 30 – Andrew Jones

“I decided I wanted to do something on my own, and franchising is a fairly proven model. It takes some risk out of the entrepreneurial equation.”

UNDER 30 How did you get into franchising at such a young age? I decided I wanted to do something on my own, and franchising is a fairly proven model. It takes some risk out of the entrepreneurial equation.

Was becoming a franchisee something you’d planned on? I took a franchising class at LSU as part of my entrepreneurship concentration. It was very eye-opening, and we had some very influential speakers in this class.

Did you have a mentor or inspiration for getting into franchising? Robert Justis at LSU. What jobs, skills, and experience have helped you operate a franchise business? Working at Ernst & Young we were exposed to many different business processes. We were taught to assess analytically. We also learned how to communicate at a professional level, which is a very great asset.

What kinds of obstacles did you face in franchising at such a young age? Establishing your management style while managing people older than yourself. In most desk jobs, promotions and corporate hierarchy follows age.

How would you describe your generation? I think I’m on the tail end of the “old school” generation. Technology didn’t really boom until I was in high school. The next wave is so advanced technologically, and also exposed to so much more because of their connectivity.

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

BOTTOM LINE Annual revenue: $3.8 million.

2019 goals: See an average of 8 percent year-over-year growth across all stores.

Growth meter: How do you measure your growth? Year-overyear sales growth.

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

I want to own 10 more PJ’s within 10 years.

“Working at Ernst & Young we were exposed to many different business processes. We were taught to assess analytically. We also learned how to communicate at a professional level, which is a very great asset.”

36

Multi-Unit Franchisee

ISSUE 4, 2019

Do you have brands in different segments? Why/why not? Yes, coffee and restaurants.

How is the economy in your region affecting you, your employees, your customers? The economy is fairly strong. Oil and gas could be a little stronger, which would help.

Are you experiencing economic growth in your market? Yes. How do you forecast for your business? Trends and benchmark data.

What are the best sources for capital expansion? Cash flow.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We use a regional bank. It’s good to have a local connection with them.

What are you doing to take care of your employees?

Competitive pay and fun environment. We do competitions within stores with rewards.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Adjusting prices and making sure our labor dollars are very efficiently spent.

How do you reward/recognize top-performing employees?

We manage metrics: labor, speed of service, COGS, and customer satisfaction.

What kind of exit strategy do you have in place? Growth strategy for now. Eventually we would like to move into real estate and grow from there. T

2019 DOMINATORS Multi-unit, multi-brand operators continue to grow—and they’re getting bigger every year—a trend that continues to accelerate as these “dominators” grow their portfolios through acquisitions, new unit buildouts, refranchising, and scooping up successful units from retiring franchisees. Banking on their good credit, solid infrastructure, and proven track record, today’s Dominators are creating historically large franchisee organizations, as the rankings from FRANdata show.

Today’s dominators are sophisticated, savvy, and experienced at managing organizations with hundreds of units, often spread across several states, regions, or even the entire U.S. They also

understand that all success is local and about unit economics: one customer and one sale at a time.

They create jobs by the hundreds and thousands, hiring young employees and providing a career path for them to grow. They do business with local suppliers—lots of them! And they give back to their communities on a large scale, encouraging their employees to support local organizations and charities. No franchisee gets to the top without years of hard work, sacrifice, perseverance, and an unwavering desire to be the best. So congratulations to this year’s Dominators!

LARGEST FRANCHISEES BY STATE STATE (and D.C.)

LARGEST FRANCHISEE

Alabama

NPC INTERNATIONAL

Alaska

SUBWAY DEVELOPMENT OF ALASKA

Arizona

DESERT DE ORO FOODS

168

Arkansas

K-MAC ENTERPRISES

83

California

G & M OIL CO

Colorado

HARMAN MANAGEMENT

91

Connecticut

GREAT AMERICAN DONUT

Delaware

RYAN S GROUP; MITRA QSR

STATE (and D.C.)

LARGEST FRANCHISEE

105

Montana

MERIDIAN RESTAURANTS UNLIMITED

24

North Carolina

SPEEDWAY

189

North Dakota

FARMERS UNION OIL CO

27

Nebraska

CARPENTER CONCEPTS

48

Nevada

TERRIBLE HERBST

85

37

New Hampshire

PETER NAPOLI

32

15

New Jersey

BRIAD RESTAURANT GROUP

74

New Mexico

MERRITT GROUP SONIC

68

New York

METRO FRANCHISING COMMISSARY

137

Ohio

THE COVELLI FAMILY LTD PARTNERSHIP

140

Oklahoma

WING FINANCIAL SERVICES

95

UNITS

278

UNITS 21

District of Columbia

PANKAJ SETH; TEAM WASHINGTON

Florida

NPC INTERNATIONAL

175

Georgia

GPS HOSPITALITY

101

Hawaii

KAZI MANAGEMENT

40

Idaho

NPC INTERNATIONAL

37

Oregon

GBMO

60

Illinois

DHANANI GROUP

180

Pennsylvania

62

Indiana

FLYNN RESTAURANT GROUP

126

CARROLS GROUP; VALENTI MANAGEMENT

Iowa

NPC INTERNATIONAL

49

Rhode Island

THE JAN COMPANIES

27

Kansas

ROTTINGHAUS

172

South Carolina

PILOT TRAVEL CENTERS

36

Kentucky

FOURTEEN FOODS

61

South Dakota

VELARDE

23

Louisiana

GPS HOSPITALITY

122

Tennessee

SW DEVELOPMENT OF EAST TN

94

Maine

SUBWAY DEVELOPMENT OF MAINE

28

Texas

SUN HOLDINGS SIZZLING PLATTER

56 17

9

348

Maryland

DAVCO RESTAURANTS

101

Utah

Massachusetts

HK ENTERPRISES

70

Vermont

VERMONT DONUT ENTERPRISES

Michigan

FORWARD CORP; STARBOARD GROUP

65

Virginia

BODDIE-NOELL ENTERPRISES

177

Minnesota

BORDER FOODS

78

Washington

HEARTLAND AUTOMOTIVE SERVICE

95

Mississippi

NPC INTERNATIONAL

137

West Virginia

LITTLE GENERAL STORE

47

Missouri

FLYNN RESTAURANT GROUP

134

Wisconsin

WISCONSIN HOSPITALITY GROUP

65

Wyoming

HIGH PLAINS PIZZA

22

38

Multi-Unit Franchisee

ISSUE 4, 2019

FRESHEN UP YOUR

FRANCHISE PORTFOLIO 1,511,379

$

AVERAGE UNIT SALES*

55% LEADING BY EXAMPLE!

FRESHEST, MEXICAN QSR+ BRAND

OF OUR RESTAURANTS ARE COMPANY OWNED

DEVELOPMENT INCENTIVES

SAVE $20,000 ON FRANCHISE FEES | REDUCED ROYALTY FOR 3 YEARS

DELTACOFRANCHISE.COM

(949) 462-7379

* Figures are for freestanding company-operated Del Taco restaurants that we have operated for at least 12 months. At the end of our most recent fiscal year ended January 1, 2019, we had a total of 322 company-owned Restaurants. Of those, 319 constituted freestanding Restaurants and 295 of them have operated for more than one year. Of the 295 Restaurants, 143 Restaurants (48%) had sales in excess of the $1,511,379 average. See Item 19 of our May 2019 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.

ENTIRE U.S.

(50 states, Washington, D.C., Guam, Puerto Rico, and the Virgin Islands) FRANCHISED UNITS

MSA

MSA

FRANCHISED UNITS

LOS ANGELES-RIVERSIDE-ORANGE COUNTY, CA

19,371

NORFOLK-VIRGINIA BEACH-NEWPORT NEWS, VA-NC

2,474

NEW YORK-NORTHERN NEW JERSEYLONG ISLAND, NY-NJ-CT-PA

18,642

MILWAUKEE-RACINE, WI

2,382

CHICAGO-GARY-KENOSHA, IL-IN-WI

11,880

JACKSONVILLE, FL

2,212

WASHINGTON-BALTIMORE, DC-MD-VA-WV

SALT LAKE CITY-OGDEN, UT

10,654

2,110

OKLAHOMA CITY, OK

2,026

DALLAS-FORT WORTH, TX

10,085

HARTFORD, CT

1,927

GREENSBORO-WINSTON-SALEM-HIGH POINT, NC

1,847

WEST PALM BEACH-BOCA RATON, FL

1,825

HOUSTON-GALVESTON-BRAZORIA, TX

8,723

ATLANTA, GA

8,306

SAN FRANCISCO-OAKLAND-SAN JOSE, CA

7,954

RICHMOND-PETERSBURG, VA

1,807

BOSTON-WORCESTER-LAWRENCE, MA-NH-ME-CT

7,527

GREENVILLE-SPARTANBURGANDERSON, SC

1,732

PHILADELPHIA-WILMINGTON-ATLANTIC CITY, PA-NJ-DE-MD

6,909

NEW ORLEANS, LA

1,652

6,481

MEMPHIS, TN-AR-MS

DETROIT-ANN ARBOR-FLINT, MI

1,623

5,752

LOUISVILLE, KY-IN

PHOENIX-MESA, AZ

1,615

SEATTLE-TACOMA-BREMERTON, WA

5,226

GRAND RAPIDS-MUSKEGON-HOLLAND, MI

1,509

MINNEAPOLIS-SAINT PAUL, MN-WI

4,826

KNOXVILLE, TN

1,474

DENVER-BOULDER-GREELEY, CO

4,740

BIRMINGHAM, AL

1,449

MIAMI-FORT LAUDERDALE, FL

4,530

OMAHA, NE-IA

1,385

TAMPA-ST PETERSBURG-CLEARWATER, FL

4,324

TULSA, OK

1,289

3,911

DAYTON-SPRINGFIELD, OH

SAN DIEGO, CA

1,273

ST LOUIS, MO-IL

3,789

CHARLESTON-NORTH CHARLESTON, SC

1,242

CHARLOTTE-GASTONIA-ROCK HILL, NC-SC

3,629

SARASOTA-BRADENTON, FL

1,190

3,521

ALBUQUERQUE, NM

ORLANDO, FL

1,160

3,395

COLUMBIA, SC

PORTLAND-SALEM, OR-WA

1,152

3,367

TUCSON, AZ

CLEVELAND-AKRON, OH

1,149

3,080

LITTLE ROCK-NORTH LITTLE ROCK, AR

INDIANAPOLIS, IN

1,135

3,022

BUFFALO-NIAGARA FALLS, NY

SAN ANTONIO, TX

1,121

3,013

FRESNO, CA

SACRAMENTO-YOLO, CA

1,089

2,978

ROCHESTER, NY

LAS VEGAS, NV-AZ

1,074

2,940

FORT MYERS-CAPE CORAL, FL

CINCINNATI-HAMILTON, OH-KY-IN

1,065

2,934

COLORADO SPRINGS, CO

KANSAS CITY, MO-KS

1,055

2,899

BATON ROUGE, LA

RALEIGH-DURHAM-CHAPEL HILL, NC

1,035

2,883

BOISE CITY, ID

AUSTIN-SAN MARCOS, TX

1,014

NASHVILLE, TN

2,703

PITTSBURGH, PA

2,700

COLUMBUS, OH

2,526

40

Multi-Unit Franchisee

ISSUE 4, 2019

DES MOINES, IA

999

ALBANY-SCHENECTADY-TROY, NY

992

MOBILE, AL

976

2019 DOMINATORS LARGEST FRANCHISEES BY REGION MOUNTAIN WEST

WEST

(CO, ID, MT, UT, WY)

(AK, CA, HI, OR, WA)

UNITS

UNITS G & M OIL CO

278

NPC INTERNATIONAL

146

HARMAN MANAGEMENT

272

HARMAN MANAGEMENT

118

SOUTHERN CALIFORNIA PIZZA

258

FLYNN RESTAURANT GROUP

111

FLYNN RESTAURANT GROUP

200

SIZZLING PLATTER

80

TARGET

188

ALVARADO CONCEPTS

65

SOUTHWEST

PLAINS

(AZ, NV, NM)

(IA, KS, MO, NE, ND, OK, SD)

UNITS

UNITS

DESERT DE ORO FOODS

177

ROTTINGHAUS

330

MERRITT GROUP SONIC

119

FLYNN RESTAURANT GROUP

306

TERRIBLE HERBST

85

NPC INTERNATIONAL

259

STINE ENTERPRISES

73

K-MAC ENTERPRISES

146

SUBWAY DEVELOPMENT OF LAS VEGAS

64

LOVE’S TRAVEL STOPS & COUNTRY STORES

145

MIDWEST

SOUTH

(IL, IN, MI, MN, OH, WI)

(AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, TX, VA)

UNITS

UNITS 1,000

NPC INTERNATIONAL

FLYNN RESTAURANT GROUP

284 279 275

SUN HOLDINGS

482

CARROLS GROUP

KBP FOODS

420

DHANANI GROUP

MUY BRANDS

416

KBP FOODS

176

SPEEDWAY

363

MUY BRANDS

160

NEW ENGLAND

EAST

(CT, ME, MA, NH, RI, VT)

(DC, DE, MD, NJ, NY, PA, WV)

UNITS

UNITS

102

CARROLS GROUP

203

DHANANI GROUP

METRO FRANCHISING COMMISSARY

137

HK ENTERPRISES

87

ADF COMPANIES

130

FLYNN RESTAURANT GROUP

65

TARGET

128

PR RESTAURANTS

63

MUY BRANDS

126

DE FOODS

56 Source: FRANdata Note: Data based on most current FDDs

Multi-Unit Franchisee

ISSUE 4, 2019

41

Learning To Lead TRANSITIONING FROM MANAGER TO LEADER

Written By HELEN BOND

42

Multi-Unit Franchisee

ISSUE 4, 2019

Leadership Transition

A

fter Kimberly and Angelo Crowell opened their third Jersey Mike’s Subs, it didn’t take long for the couple to see they needed to lead more and manage less. It wasn’t easy, and still isn’t.

“When you build a company from scratch, it feels like your baby. You nurture it constantly and feel very protective of it,” says Kimberly Crowell, president of Kalo Restaurant Group, which operates 29 Jersey Mike’s, with five stores in development in Florida, Georgia, and Alabama.

The need to grow from hands-on management to influential leadership is a challenge every franchisee in growth mode must overcome on the path to becoming a successful multi-unit franchisee. Every journey is different with no one-size-fits-all approach. However, there are well-trodden paths to making the transition from day-to-day management to strategic leadership. While multi-unit leaders who do it best understand that the path to great leadership never ends, it has to begin somewhere.

The Crowells had no experience in restaurant operations when they opened their fi rst Jersey Mike’s in Tallahassee, after Angelo, a former NFL linebacker, left the sport in 2010. Earning Jersey Mike’s Rookie of the Year honors the following year provided the budding entrepreneurs with the confidence they needed to expand. In their maiden business voyage as a husband-and-wife team, they opened five restaurants in their fi rst three years.

And in the past year alone, they’ve doubled in size.

Their ability to take a proven model and run with it continues to pay off for the couple. In 2018, Jersey Mike’s recognized the couple with its Regional Operational Excellence award at the brand’s national franchise conference. “Earning that award has validated that we are on the right track,” says Angela Crowell. “If we didn’t have solid operations, we would not be able to grow in the way that we have.”

KEEP YOUR HEAD UP Navigating through the transition to leadership is both a personal and an organizational process. Along the way, the Crowells had to learn to let go, set expectations, find the right people, and provide them with the tools they needed—and then trust them to do their jobs effectively. And like all good leaders, they’re always learning.

“I have to ask myself, what is the best and most effective use of my time?” says Crowell, a lawyer who specializes in corporate transactions. “Angelo is constantly reminding me not to get caught up in the weeds. If that happens, then I need to determine what systems we need to implement. It is important always to remember that people manage the systems, and the systems manage the process.”

On the path to growth, there is no need to dwell on mistakes, she says, just to learn from them. “There is always something you can do better and figure out to streamline the process so that it doesn’t happen again.”

If you allow the daily fires to consume your day or week you’ve already lost, agrees Don Robinson, managing owner of 20 Penn Station East Coast Subs in the Louisville area. Robinson learned the hard way— around store number 10, he says—that he no longer could “outwork” the problems or daily issues that inevitably arise.

“Looking back, I realized I wasn’t very efficient in my approach,” he says. “For us to grow, I had to refocus my leadership style to work through people and empower our general managers to take the reins at the store level; to develop solid leaders and allow them to make decisions and learn from their mistakes. It took me a while to understand this is the best approach, and we are a better company today for it.”

These days, the veteran franchisee considers it his job to develop and prepare his GMs and operations directors to anticipate potential fires and head them off before they start.

CHANGING YOUR MINDSET To shape events—rather than be shaped by them—requires a shift in mindset. Start with the end in mind, says Mike Lokhandwala, who heads Impact Hospitality Group’s operations. The Norcross, Georgia-based company has more than 35 Huddle House, Fazoli’s, and Wingstop restaurants. “Focus on the input and not the outcome,” he advises.

“Outcome is only a by-product of what you put in.”

Experience is also a great teacher.

Lokhandwala, who began his restaurant career as a cook at Popeyes, credits the early insights he gained while moving up the management ladder for influencing how he leads his multi-brand company today. As he ascended to team member, shift leader, and management, he noticed

Multi-Unit Franchisee

ISSUE 4, 2019

43

Leadership Transition a disconnect when it came to managing the expectations of all the stakeholders: guests, crew, franchisor, and franchisee.

“Over time, I began to realize that to operate a successful business, having an objective approach, not a subjective one, was the key to driving results, which eventually balanced all stakeholders’ expectations,” he says. “It was a journey to handle this change, and it still is.

It began by challenging the status quo, which in general is a risky approach, as it is contrary to what is generally accepted or expected. But the ‘aha’ moment struck when this approach demanded change that led to delivering desired results.”

Emphasizing outcome over production can also help convey a higher purpose that people can see daily, weekly, and monthly to create a balanced corporate vision of all stakeholders. Most businesses generally overlook this approach, says Lokhandwala.

“It is crucial to be able to forecast what the finish line looks like, and from it, create a vision that can be translated to your teams, which motivates them to contribute toward the organization’s goals at large,” he says. This approach is harder with multiple brands, particularly today with the proliferation of data, which can be all-consuming. To overcome this potential analysis paralysis, Lokhandwala views each brand and location as an individual company.

The transition from the daily grind to strategic leader often requires the discipline of patience—a trait that has served longtime franchisee Allen Peake well. Over the years, Peake has seen what works and what doesn’t. He’s been a multi-unit, multibrand owner and was CEO of RMS Family Restaurants, where he operated 135 restaurants under five brand names before selling in 2000.

During a transition of growth and leadership it’s sometimes good to step back and pause for perspective, says Peake. “It is absolutely critical that you not grow too fast and make sure you are well-positioned from a people standpoint before you really get going,” he says. “That is where people fail: they grow too fast without the people infrastructure in place.”

Transitioning to a leadership mindset can be easier when leaders cultivate complementary skill sets, which is the case with Tim Stokes and Chris Benner of Trident Holdings, a private equity group with 33 Captain D’s in seven

44

Multi-Unit Franchisee

ISSUE 4, 2019

Southeastern states. The 2015 launch of Trident merged Stokes’ banking and investment management expertise with Benner’s substantial foodservice experience. Tight, “buttoned-up” operations allowed for rapid growth to quickly follow.

These days, Trident is Captain D’s largest franchisee. (For more, see Chris Benner’s profile on page 12.)

“We have a great team. We decided early on that each one of us would focus on our respective areas of strength,” says Stokes, Trident’s chief financial officer. “This allowed Chris and me to learn a great deal from each other. I think it’s made us both so much better.”

PEOPLE POWER One t hing about f ra nchising t hat will never change is the need to surround yourself with great people, says Robinson. As his company grew, he realized the importance of having great people at different levels and identifying leaders early. “One thing I changed in my approach was to start looking deeper down the line for future leaders,” he says.

“I spend more time and effort today on the development of entry-level managers than ever before.”

An early focus on people takes commitment from every team member—and it starts at the top, he says. That’s one big reason he and his operations director meet every Penn Station new hire, and all attend an orientation at the regional office. The expectations of company culture are laid out from day one, he says. Later, hourly employees ready to move up to team leader meet with Robinson for a final interview before they can work a shift.

“This interview lasts only about 15 minutes, and I come to their work location,” he says. “We talk about anything they want to discuss—dogs, family, school, or career options within our brand. This brief meeting allows me to, once again, identify future general managers in the very early stages of their career. It also allows me to follow the ‘be present’ model of management we stress in our company.”

Moving from the operational trees to the strategic forest with a robust support system is critical to making the transition to multi-unit leader. “We probably invested a bit early in upper management by hiring a director of operations by our fi fth store,” says Crowell, “but we felt it was essential that we had leadership in place to provide support and oversight for our continued growth.” She

Profitable. Unique. Simple.

1% ROYALTY FIRST 3-YEARS*

$5,000 FRANCHISE FEE

This Exclusive Offer Ends Soon!

Act Before 12/31/19 949-892-2629

franchising@wienerschnitzel.com

www.wienerschnitzel.com

Limited time reduced franchise fee from $32,000 to $5,000 for 2019. *To achieve discounted 1% vs. standard 5% royalty payments for your first three years in operation, you must begin construction on approved new site within 18-months of signing a franchise agreement. If you do not begin construction by month-18, your franchise agreement may be terminated. Only 20 discounted royalty incentive licenses are initially being offered. Only one discounted royalty incentive per person/ entity. This is not an offer to sell a franchise. We will not offer you a franchise until such time as we have complied with FTC disclosure requirements, and you have met our application and approval process to be awarded a franchise license. Please inquire for more information.

AWARD-WINNING CAL-MEX FRANCHISE 2019 BEST WITH A TWIST FAST CASUAL VOTED

Innovative and crave-enducing creations Food made in small batches Unexpected and bold flavors from around the world Best ingredients available

RESTAURANT

IN WASHINGTON, DC by readers of Washington City Paper

Proven Concept

AUV

$1,023,268

Strong Corporate Culture

Number of Restaurants Greater than Average

37%

Customer Service Oriented

Highest Annual Gross Revenue

$2,266,638

Eco Friendly FOR MORE INFORMATION, CONTACT

Aaron Goldberg, Director of Development aaron.goldberg@californiatortilla.com | 301.545.0035 Ext. 105 franchise.californiatortilla.com *These figures represent the financial performance of the 27 franchised California Tortilla restaurants in operation for at least 12 months, as of December 31, 2018, as published in Item 19 of our 2019 Franchise Disclosure Document (“FDD�). [These franchised restaurants had an average annual gross revenue of $1,023,268 with 10 restaurants (or 37%) exceeding the average.] The median annual gross revenue of these restaurants was $826,025, and the lowest annual gross revenue was $534,384. You should review Item 19 of our FDD for additional information and 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 advertisement does not constitute a franchise offering or an offer to sell a franchise. It is for information purposes only. A franchise offering can be made by us only in a state if we are first registered, excluded, exempted or otherwise qualified to offer franchises in that state, and only if we provide you with an appropriate franchise disclosure document. Please contact the California Tortilla Group, Inc., located at 7825 Tuckerman Ln., Ste. 214, Potomac, MD 20854, to request a copy of our FDD.

Leadership Transition also recently hired an employee relations director to bolster management support at the store level. “We preach to our team all the time: ‘Stay ready, so you don’t have to get ready.’”

LISTEN, LEARN, AND LEAD Effective managers push to motivate their people to get results; great leaders inspire.

The ability to inspire requires learning how to pull people toward a shared, clearly outlined and articulated vision.

“I think it really boils down to inspiring people and instilling a culture where every team member feels appreciated and has the opportunity to prosper personally as the company prospers,” says Stokes, who frequently speaks with other large operators to pick their brains and exchange ideas.

Great leaders also lead by example.

Lokhandwala says he prefers to lead by inf luence and inspiration, rather than by imposing power and control. To better understand, evaluate, and share any struggles his team may face in executing efficiently, he practices what he

46

Multi-Unit Franchisee

preaches by taking his brands’ training programs himself. “ T he concept of inclusion has proven to be very powerful,” he says.

“It is important for people to be able to see how their input contributes to the big picture. Including people in the grand scheme of things versus showing them where they belong on the organizational hierarchy has proven to be very efficient.”

Researchers who study leadership also suggest successful leaders share a key trait: the capacity of self-reflection, not just during a transition, but regularly in authentic and open-minded ways. They get honest feedback on how they are doing, ask questions, embrace change, continuously educate themselves, and fail smart.

“My advice is to not overcomplicate things,” says Robinson. “This business is challenging and always unpredictable, but it is also very simple and straightforward. Be there for your people, be fair, and always be present for them.” T

ISSUE 4, 2019

Leadership Transition

INTERVIEWEES

Kimberly Crowell

Don Robinson

Mike Lokhandwala

Allen Peake

Tim Stokes Multi-Unit Franchisee

ISSUE 4, 2019

47

Planning for Success-ion Insights and advice on passing it on

Written By SARA WYKES

48

Multi-Unit Franchisee

ISSUE 4, 2019

Succession Planning

C

urt DiPasqua’s connection to his family was strong enough to pull him away from a career practicing international law and into a partnership with his father, mother, and brother that became hundreds of Subway sandwich shops in 11 Central Florida counties. It was one of the largest franchisee groups in the Subway system, and for more than three decades DiPasqua was perfectly happy.

Then his children—and his brother’s—entered college and started talking about joining the family business. DiPasqua could see that he needed to think about the future in a very particular way. “We had three young people wanting to work in the company and it opened our eyes,” he says. The question was how. And, DiPasqua says, “It was a bumpy road right from the beginning.”

Nearly a decade later, DiPasqua and his family have it all nicely figured out. But his hard-won insights and those of others familiar with the skills and steps needed for succession planning make it clear that sooner is better than later. Not only does a rightfrom-the-start timeline reduce friction, so does thinking about succession as a foundational element of the business.

The DiPasqua family’s transition from one generation to the next took years—and, with the brilliance of hindsight, might have been much easier had the process started earlier.

Jeff Bannon is a partner with The Rawls Group, which has focused on succession planning for more than 45 years. “The best time to start succession planning for most business owners is usually years ago,” he says. “There are issues to address in the development of a plan that works, and many of those issues can be avoided if there is a proactive approach. Too often we find clients are reactive to circumstances that could have been avoided with some basic planning steps, and there are pretty significant challenges for the family and/or business to overcome.”

Understanding what succession planning is (and isn’t) also makes a difference. “It’s not an estate plan, it is a process,” says Bannon. “The development of a succession plan requires some heavy lifting initially, anywhere from 12 to 20 months of work with a team of advisors. This is quite a bit more than the idea many people have of sitting down with any attorney for a few hours to document an estate plan.”

The succession of a business is far more complex than what can be addressed in an estate document and the purchase of some insurance, he says. Nor is such a plan a static document to be tucked away in a drawer. “After the development of the plan, it is imperative to review it at least annually,” he says. “It must be kept up to date to reflect changes in family, feelings, federal tax laws, and finances.”

BUILDING IT IN A succession plan, says Ron Parikh, principal of the investment firm CMG Companies, should be part of a company from the start. “A lot of times, leaders get too involved with the daily grind and their focus shifts from people to profits,” he says. “This takes away from the organic building of people who would become the future drivers of the company.”

When there are profits, he says, “It’s because of the people behind those profits, and there should be a plan and road map to cultivate and enhance their skills further.” Even with a plan, while there will still be some bumps in the road, he says, a company should not deviate from the end goal.

“I’ve tried to build a culture in my organization where every leader is thinking about who will be the next in command to take over their position so they can move on to the next opportunity."

Rahul Marwah’s family has a nearly 40-year history of building a successful multi-generational business, the Denco Family. His parents, Rai and Rajni Marwah, opened their first franchised restaurant (Pioneer Chicken) in 1981 in Whittier, California. By 2002, when Marwah and his sister, Ritu Marwah Portugal, joined the business in full-time leadership roles, the family business included 1,200 employees at 45 locations.

Today it has expanded into hotels (Hiltons, Hampton Inns, and Comfort Suites).

“Succession planning should be thought about at all levels of an organization, not just at the helm,” says Marwah. “I’ve tried to build a culture in my organization where every leader is thinking about who will be the next in command to take over their position so they can move on to the next opportunity. I believe the gauge of good leadership is how well an organization, department, or unit runs in the absence of its leadership.”

With a company whose growth has been so steady for so long, succession planning has been essential, he says. “Succession planning, or lack of it, can be one of the biggest hurdles to growth as an organization. If I haven’t trained anyone to take on my dayto-day responsibilities, then I can’t step away to focus time and energy on strategic initiatives, whether growth-oriented or just initiatives that improve my business or efficiencies.”

Beyond the presence or influence of its founders or key figures, a succession plan must be ingrained into how the business operates. Having a plan worked out as early as possible “will give you the lead time required to shape and evolve the business to succeed without the main operator’s day-to-day influence,” says

Multi-Unit Franchisee

ISSUE 4, 2019

49

Succession Planning SEEK PROFESSIONAL HELP “You will always need outside help and an advisory team to put together a worthwhile plan,” says Bannon. “The planning has to start, however, with conversations regarding motivations and perspectives with someone who has been where you want to go. The quarterback-like person needs to be able to navigate the interdependency of legal, tax, business management, and family considerations so you avoid a disjointed plan that leaves a mess for the family.”

Navigating family relationships is one of the trickiest bits of succession planning. “In the business context, we consider family to be anyone you have chosen to be in business with for reasons more than money,” says Bannon. “That being said, family business is inherently an oxymoron. Families are based on unconditional love and acceptance, while businesses are based on conditional performance.” These are competing priorities that often come to a head in either the boardroom or at the dinner table. Maintaining a healthy balance between family and business is an ongoing challenge for every business leader. Open communication on difficult issues is the best way to alleviate the stress this dynamic creates.

“Our assumption was that everybody was the same and would take the same path. They quickly learned that approach would not work. In part, there were generational differences, “I think succession planning that but there were also differences in involves particularly complicated cirnatural talents and interests.” cumstances warrants the assistance of professional counsel” Damon Dunn, a Dunkin’ franchisee group leader since 2016.

“A succession plan is not simply the onboarding of a new main operator after the primary operator retires. You need to build processes and systems around the core parts of the business that allow those separate parts to operate without any one person’s involvement.”

To support smooth transitions, Dunn suggests that before taking on the main operator role, new proposed leaders be trained in every core part of the business, with a timeline customized to the needs of the business.

As the DiPasquas took their first steps toward a transition, “Our first idea was to treat everybody equally right off the bat,” says DiPasqua. “Our assumption was that everybody was the same and would take the same path.” They quickly learned that approach would not work. In part, there were generational differences, but there were also differences in natural talents and interests.

After another family member offered to help, DiPasqua decided a third party might offer a more objective point of view. In addition, there were legal questions about inheritance of shares that required a high level of expertise. Even with that level of professional knowledge, the process was sometimes painful. He and his brother both had to adjust, DiPasqua says. “It took a long time and a lot of patience. We couldn’t rush.” It also required the addition of guidelines for interactions between the family members to ease communicating and resolving any issues.

50

Multi-Unit Franchisee

ISSUE 4, 2019

BE AMAZING! OWN A SCOOTER’S COFFEE

$

80 B IL L ION

50% $

industry*

of all coffee is a drive-thru purchase

429, 289

AUV**

29. 9%

COGS**

24. 2%

Labor**

DRIVE-THRU KIOSK: 550 SQ FT

Call Now 877.494.7004 OwnAScooters.com/MultiUnitMag

*Retrieved from http://www.ncausa.org/industry-resources/economic-impact **As reported in item 19 of the Franchise Disclosure Document dated June 17, 2019. Please review item 19 for further details. This is not an offer to sell a franchise, which may occur only in applicable states and through a Franchise Disclosure Document or Prospectus. Your results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk.

My day job is in wealth management. I always look for the strongest ROI, and with a one-price, same-day model and a $1.1M AUV* – ZIPS Dry Cleaners was it.

ZIPS IS A TOTAL DISRUPTOR and it was something I had to be part of.

TIFFANY HAWKINS

Multi-Unit and Multi-Concept Franchisee

DISCOVER.321ZIPS.COM 240-437-4752 *Refer to 2018 ZIPS FDD for details

Succession Planning “Getting external advice is a necessity because those folks can definitely peek under the hood and provide a second opinion or an alternative solution,” says Parikh. “But it’s best to make the decision that will align with the success of your company and the people behind its success.”

Marwah says he finds valuable advice in the experience of his colleagues. “I think it’s always helpful to talk to peers in your industry to gain insight into best practices and where others might have failed or succeeded,” he says.

“As to seeking professional counsel, I think succession planning that involves particularly complicated circumstances warrants the assistance of professional counsel—if multiple generations in a family business are involved, for example, or if there is a complex partnership structure that warrants having an objective party weigh in on how a succession plan might be implemented.

Anytime you need to be able to provide assurance that there is not a conflict of interest involved, that’s probably a good time to consider utilization of professional services to assist with the succession plan.”

GETTING IT RIGHT Once a plan is in place, implementing it must be done carefully, with certain aspects requiring greater attention. “Accounting, bookkeeping, strategic planning, and fiscal discipline are the most problematic components to a succession plan,” says Dunn.

“Training the new proposed main operator, instilling the values of fiscal discipline, and developing a detailed plan each year of what the company is planning to achieve can help reduce those challenges. I would also consider outsourcing the bookkeeping and accounting. This will give you an arm’s-length relationship with the new operator and the books. I’ve found that outsourcing these components can allow a retired operator to stay engaged and keep a close eye on the financial management of the company.

Ultimately, once the new operator is trained appropriately, you can bring those services back in-house.”

Marwah likes to keep a close eye on how performance lives up to expectations. “For me, one of the most problematic issues with succession planning is that you can’t tell how someone will truly perform until they’re thrown into the position,” he says. “I think it’s most important to establish trust and a mutual understanding of the expectations from all parties involved. Another issue can be the fallout from the candidates not ultimately selected for the succession. I’ve often had to deal with fallout from these types of transitions.”

Parikh’s advice, for all the complexity he knows succession planning entails, also includes a core dictate. “It sounds like a cliche,” he says, “but open lines of communication and setting clear goals and understanding of those goals are the key. Most people don’t mind being led as long as they can connect and understand what they’re working toward. There’s not one particular issue that is difficult, but how to handle those situations is the key.”

While timely and simple communication is the key to tackling issues that might create problems, he says, it’s also important to provide a solution and a path forward.

DiPasqua is still the company CEO, and the next generation is doing well, he says. His son is now executive vice president, “and he’s really taking on a lot of responsibility and excelling.

I’m now realizing he works harder and faster than I do. We just came back from a national convention and I watched the next generation function. I realized how ingrained they now are in the

52

Multi-Unit Franchisee

ISSUE 4, 2019

He can step back and retire any time, secure in the knowledge that “the kids” will carry on the family business for the next generation. national franchise system. They’ve all been asked to participate in seminars and take leadership roles.”

Four years ago, when DiPasqua’s doctors told him his heart needed attention, he says that intimation of mortality pushed him to faster action on a succession plan. “I sat in my hospital room and thought about all the work we had done to create the business and I realized I hadn’t done anything to train anyone to run the business. The kids would have been rudderless.”

Today, at 63, with a succession plan he thought would be his ticket to retirement, DiPasqua is still working four days a week.

“My wife is somewhat bewildered, but when you do something for almost 40 years, it’s hard to stop,” he says. However, he now knows that he can step back and retire any time, secure in the knowledge that “the kids” will carry on the family business for the next generation. T Turn to page 56 for "7 Tips from the Top" by Gordon Logan, who founded Sport Clips in 1993 with his wife Bettye—and who is in the midst of grooming his son Edward to take over the reins as the brand's next CEO.

AMERICA'S FAVORITE SEA FOOD RESTA URA NT #1 qsr sea food brand #1 o vera ll satisfa ction in qsr sea food

6 months: 0% Royalty* No franchisee fee ($20,000 savings) Free digital drive thru hardware ($10,000 value) Free drive thru audio & timer system ($5,000 value)

R e d u c e d R oya lt i e s Ov e r 3 Y ea r s* : 0 - 6 M o n t h s : 0 % R oya lt y 7 - 1 2 M o n t h s : 2 % R oya lt y 1 3 - 24 M o n t h s : 3 % R oya lt y 2 5 - 3 6 M o n t h s : 4 % R oya lt y A ft e r 3 Y ea r s : Sta n da r d 5 % R oya lt y

• W e A r e T h e Q S R S ea f o o d L ea d e r • N o D i r e ct C o m p et i t o r s O f Mat c h i n g S ca l e • St r o n g C o n s u m e r Va l u e • 8 5 0 + R e sta u ra n t s

*Subject to discussion with qualified candidates. Incentives apply to new applications approved before December 31, 2019 RANKED IN FRANCHISE TIMES TOP

200

C O NTA CT T om. B u r r e ss @ lj si lve r s. c om

This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. This offering is made by prospectus only.

The franchisor, Long John Silver’s, llc, is located at 10350 Ormsby park place, Louisville, ky 40223. ©2019 Long John Silver’s, llc

Interviewees Curt DiPasqua

Ron Parikh

Jeff Bannon

Damon Dunn

Rahul Marwah

54

Multi-Unit Franchisee

ISSUE 4, 2019

18 MILLION EGGS A YEAR... & WE STILL GO HOME AT 3PM EVERY DAY!

FULL-SERVICE BREAKFAST & LUNCH 9-HOUR OPERATING DAY: 6AM - 3PM $1.96 MILLION AVERAGE AUV*

*2019 FDD, ITEM 19, AVERAGE OF ALL UNITS OPEN FULL CALENDAR YEAR 2018

STRONG SALES-TO-CAP RATIOS FLEXIBLE REAL ESTATE OPTIONS END CAPS AND CONVERSIONS/SECOND GEN

(858) 740-9554 • BROKENYOLKFRANCHISE.COM • VALERIEM@BROKENYOLKCAFE.COM

MUFC AD INDEX COMPANY

PAGE #

COMPANY

PAGE #

ApplePie Capital

29

Jersey Mike's Subs

Broken Yolk Cafe

55

Location3

37

California Tortilla Group, Inc.

45

Long John Silver's

53

Del Taco

39

MFV Expositions

67

Dogtopia

25

MUFC 2020

Dunkin' Brands

21

Newk's Eatery

37

Eat the Frog Fitness

39

Potbelly Sandwich Shop

17

Entrepreneur Media, Inc.

69

Pronto Insurance

5

Save A Lot

15

Scooter's Coffee

51

The Coffee Bean & Tea Leaf

33

Tin Drum Asian Kitchen

53

European Master & Mulit-Unit Franchising Conference

72, IBC

Fazoli's Italian Restaurants

11

FRANdata

65

Grimaldi's Pizzeria

33

GTS Franchise Executive Search

59

Hungry Howie's Pizza

23

Inspire Brands

IFC, 1

International Franchise Association

71

IWG

7

Titus Center for Franchising uBreakiFix Wienerschnitzel ZIPS

Insert

60, 61

63 Back Cover 45 51

SUCCESSION PLANNING: 7 Tips from the Top Written By GORDON LOGAN

Sport Clips Haircuts Founder and CEO Gordon Logan knows a lot about what it takes to make a franchise successful. He also knows a thing or two about succession planning because he’s in the middle of it. Even though he has no plans to retire anytime soon, he has been working closely with his son Edward to eventually take over the reins as CEO. Logan and his wife Bettye started the company in 1993, and it’s always been a part of their children’s lives. Daughter Carolyn has other plans for her future, but Edward has been involved in the business most of his life. Here are seven helpful tips from Gordon Logan on how others can create and implement a succession plan.

1

It is important to have a successor identified who is passionate about the business; otherwise, it just won’t work.

Once one or more family members has expressed interest in the business, start them with small jobs. As they gain experience, move them into progressively more responsible positions, giving them the opportunity to prove themselves each step of the way.

Our son Edward worked summers in our offices, then reviewed store fixture plans while getting his business degree. We agreed it would be a good idea for him to work for another company for a few years after college, giving him the opportunity to prove himself in “the outside world,” learning how other successful businesses operate. After graduating from SMU, Edward worked for a major consulting firm before joining us full-time in 2010.

When family members join the business, they have to work a little harder to be recognized for what they bring to the table, and previous work experience is a big plus. Edward started working with our company-owned stores, building them into some of the best in our system. He worked for a seasoned VP of operations and became VP of operations when she retired. Three years later he was promoted to COO and subsequently to president. Each step of the way he built credibility with our support team and with our franchisees.

2

Recognize that a written succession plan is not written in stone. Any succession plan you develop needs to be flexible. You first need to make sure your expectations match up.

Work to give your successor room and interact… a lot. Edward and I have an open dialogue and work closely together to ensure I am sharing my experiences and franchise knowledge with him, so when I step away he will be ready to be an outstanding CEO.

56

Multi-Unit Franchisee

ISSUE 4, 2019

3

Your initial vision for the company may evolve over time, but it should remain consistent with the company’s values and founding principles. As a founder, your hope is that a successor will build on the initial vision and “keep the faith” with the company’s core values. Our company’s core values are “do the right thing, do your best, and treat people the way they want to be treated,” which have been part of Edward’s DNA his entire life. We both believe in the Zig Ziglar saying that you can have anything you want if you help others get what they want. It’s the perfect description of a successful franchise system!

4

Don’t rush it. Aim for a 10-year+ plan if at all possible.

Your succession plan will depend on the founder’s and the successor’s ages. I’m still CEO, but Edward became our president after 8 years when he was 32. He is now making most of the day-to-day decisions and is closely involved in our strategic planning process. Taking time to do it right enables the next in line to establish credibility and ensure knowledge transfer while you are still engaged.

5

Start financial and tax planning early. Lack of estate planning is the reason many businesses don’t stay in the family, but with a competent estate planner you can avoid this challenge to the future of your family business. It is better to establish your plan while your company is still young. This will be more difficult when your company is more established and, therefore, more valuable.

6

Keeping a business in the family allows for more control over the brand’s future. I realized some years ago that we needed to build a strong leadership team to carry Sport Clips long-term if we were to continue as a family business. We feel a great responsibility to our franchisees and team members.

Therefore our decision to keep Sport Clips as a family-owned business will enable us to do the right things that benefit franchisees and team members for long-term success.

7

Succession can be challenging, but it doesn’t have to be.

Continuity can be comforting for everyone in the business.

The Sport Clips team has known Edward since he was young, and he’s here for the long term. His two-year-old daughter has already been in our stores vacuuming hair, so in the future our male-centric brand may ultimately be female-led! We have a lot of room for future growth in our system and, with a solid succession plan in place, we are confident we will continue to be able to take advantage of those opportunities.T Multi-Unit Franchisee

ISSUE 4, 2019

57

Customer Service

The Relationship Economy Making a deep connection with others Written By JOHN DIJULIUS

O

f all the many skills we can develop there is one, when mastered, that will, without question, have the biggest impact on us both personally and professionally. That skill is the ability to build an instant connection with others.

This is way more than a mere communication skill. It is the ability to communicate with a purpose, to build your community at every stage of your life. Building a relationship with someone else—an acquaintance, friend, customer, co-worker, or total stranger—is far and away the most important skill every human being should be taught at an early age and then should hone throughout their life. This skill should be taught at home, in school from pre-kindergarten to graduate school, and, of course, in business. Unfortunately it is rarely taught in any formal way.

THE LOST ART OF BUILDING RAPPORT Today we are living in the “digital disruption era.” Technology has provided us with unprecedented advances, information, knowledge, access, and entertainment. We have computers, mobile phones, tablets, the Internet, social media, apps, and artificial intelligence—assistants like Siri and Alexa, chatbots, virtual concierges, facial recognition, and self-driving cars.

As convenient as these advances can make our lives, they also have changed the way we communicate, behave, and think and have led to a dramatic decline in our people skills. As a society we are now “relationship disadvantaged.” We no longer become curious about others or eager to engage in conversations. The younger generation primarily communicates electronically, and the explosion of

58

Multi-Unit Franchisee

e-commerce means we go out less and less.

In business, multi-channel communication has dramatically reduced phone calls to companies; customers can get answers and place orders by email, on websites, or through social media channels.

The pendulum has swung over to hightech and low touch. Consequently, we long for a sense of community, belonging, and purpose; a world in which people actually know our name, what we do, what is important to us, and have trust in one another. Today trust is an endangered value. Those who understand that human touch is the most important part of any experience—especially a great customer experience—will flourish. Personally and professionally, success is increasingly about creating and building human connections.

RELATIONSHIPS: MORE VITAL THAN EVER Understand this: there is an Uber coming to every industry. Uber is part of the digital disruption that completely turned the taxi and limousine industries upside down. You can track similar developments in other realms. Amazon has disrupted nearly all retail businesses—grocery stores, health insurance, banks, home security, entertainment, pharmacies, and shipping—and continues to expand into other fields.

Airbnb has disrupted the hotel industry.

Netflix wiped out video rental stores.

No business is safe. In the past, cutting-edge innovation had a much longer shelf life in overcoming competition. Now, however, many of your competitors can replicate your innovations and quickly ISSUE 4, 2019

reduce any temporary advantage you had in the market. The answer cannot just be about technology either. To be sure, technological advances are critical to every business staying relevant. However, technology by itself is not a differentiator. The more you place technology between your company and the customer, the more you remove the human experience.

People crave human interaction.

Customers desire recognition and a personalized experience; technology can never be empathetic or build relationships.

In short, technology cannot provide genuine hospitality. It cannot express empathy, make people feel cared for, express emotions and vulnerability in a relatable way, or make people smile and laugh.

For anyone and any business to thrive in the future, they will have to master the art of relationship building.

WHAT IS THE RELATIONSHIP ECONOMY? In a Relationship Economy, the primary currency is made up of the connections and trust among customers, employees, and vendors who create significantly more value in what we sell. These relationships and connections help make price irrelevant.

The Relationship Economy is about building a culture that recognizes the importance of each individual and of making everyone a part of a community that is working toward something bigger—a community that makes them feel cared for.

The Relationship Economy is how strongly you feel about the people and businesses in your life. Relationships are the biggest differentiator in customer and brand loyalty. Relationships are at the center of all we do.

You need to make your entire organization “relationship centric” from the inside out. Customers don’t recommend businesses they like; they recommend businesses they love. When you accomplish that, you make yourself and your brand competitor-proof and irreplaceable.

This is taken from from my newest book The Relationship Economy: Building Stronger Customer Connections in the Digital Age, coming in October. T 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, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or info@thedijuliusgroup.com.

GT&S Executive Search to Focus Exclusively on Franchising

Three franchise veterans team up in new executive search venture Senior executives from three of the most respected entities in franchising have come together to launch GT&S Franchise Executive Search, LLC. The new company will focus exclusively on placing senior-level executives with franchise companies nationwide.

The three founder-partners are Gary Gardner, Chairman of Franchise Update Media; Tom Portesy, President and CEO of MFV Expositions; and Scott Lehr, who recently left his position at the International Franchise Association (IFA) as Executive Vice President of Development, Marketing, & Conferences, where he’d worked since 1990. Officially retired, Lehr now serves as a consultant to the IFA. SCOTT LEHR GT&S Partner & CEO

“Each of us has been helping franchisors find the right people for years,” said Lehr, who will serve as the managing partner following the wrap-up of his IFA consultancy.

“We’ve all been informally helping franchisors find the right franchise executives and assist executives to find their next opportunity. It was a natural activity for Gary, Tom and me to do.”

Lehr met Gardner at the first event he attended after joining the IFA, and the IFA has been a partner with MFV for more than 25 years. Collectively, the partners bring 90 years of franchising experience and their networks of contacts to the new venture.

“Over the past 30 years, the three of us have probably placed hundreds of people in positions in franchising,” said Portesy. “We saw how important the quality and talent of people at the senior level are to the success of a franchise company.”

“Tom and I can’t run it because we’re still in our full-time jobs,” said Gardner. “Scott is in the perfect position to take this idea and run with it. He’ll be a great operating partner.”

GARY GARDNER GT&S Partner

The network of contacts and connections the three partners bring to the new venture, with both franchise companies and individual franchise executives, will give GT&S a leg up in matching qualified candidates with franchise companies.

“Franchisors are facing new challenges finding talent in today’s robust economy, with nearly full employment making it tougher to find qualified candidates for CEO, president, COO, and head of franchise development positions,” said Lehr. The economy is placing additional pressure on franchise executives in a market where brands in many sectors are fighting for a larger slice of a shrinking pie.

Another challenge involves finding candidates who possess two skill sets that are more important today than in past years: finance and technology.

“Their bosses now are the private equity firms, and C-suite executives today must speak their language and understand what drives value for them,” said Lehr. “And with the continued M&A activity of smaller brands being acquired by larger entities seeking economies of scale, C-suite executives today must manage a more diverse portfolio of multiple brands.”

TOM PORTESY GT&S Partner

CONTACT Scott Lehr

ABOUT GT&S EXECUTIVE SEARCH To learn more about GT&S call Scott Lehr for a private and confidential consultation.

EMAIL scottlehr@franchiseexecutivesearch.com

PHONE 443.414.6131

APRIL 14–17

2020

2020

CAESAR’S FORUM LAS VEGAS

Registration Now Open at www.multiunitfranchisingconference.com

KEYNOTE SPEAKERS

FEATURED FRANCHISEE SPEAKERS INCLUDE • TONY LUTFI Franchisee, Arby’s Previous Franchisee: Captain D's, Church's Chicken, Jack in the Box, Sizzler, TGI Fridays, Little Caesars Conference Chairman • GREG FLYNN Franchisee, Taco Bell, Panera Bread, Arby’s, Applebee’s

KEVIN O’LEARY

Investor on ABC’s Shark Tank, Chairman of O’Leary Financial Group & Bestselling Author

NIGEL TRAVIS

Chairman, Dunkin' Brands Inc., Author of The Challenge Culture

• DAWN LAFREEDA Franchisee, Denny’s • MICHAEL KULP Franchisee, KFC (and more)

THANK YOU TO OUR 250+ SPONSORS

SPONSOR OPPORTUNITIES AVAILABLE

sales@franchiseupdatemedia.com

(800) 289-4232 x202

People

Tackling Holiday Hiring

3 tips for finding the best Written By MATHIEU STEVENSON

I

t’s no secret that the holiday season is mission-critical for the bottom line at many businesses. And the right-fit workforce is an integral part of the success equation.

In 2018, CBS News reported that retailers hired more than 700,000 additional employees to accommodate their busiest season. Last year, in a survey conducted by Wakefield, 86 percent of employers reported experiencing significant challenges when recruiting seasonal employees. Now is the time to make sure your business has the right strategy, tools, and budget in place to recruit the workers you will need.

According to 1,000 employers surveyed in the retail, restaurant, and hospitality industries, these are the top three challenges employers face when hiring seasonal staff—with action steps to overcome them.

#1: WHERE ARE THE QUALIFIED WORKERS? Unemployment remains at a near-record low, making attracting great workers— especially in a seasonal role—even more difficult. In fact, 38 percent of employers reported that fi nding available workers during the holiday season was a challenge.

In 2018, 42 percent of employers noted a lack of qualified workers in the seasonal hiring process. Landing the best talent means having a plan and starting early.

Last year, 27 percent of companies began recruiting in August in an effort to land the best talent.

Review last year’s schedules and performance data to determine where seasonal hires are needed most. Know what you want and who you want, and make your plan reflect that.

62

Multi-Unit Franchisee

ACTION STEPS Cast a wider net and increase applicant flow by launching a geo-specific campaign that uses sponsored posts and email blasts to drive more eyes to your posting.

• Ensure that your postings are mobilefriendly for the 90 percent of job seekers who use a smartphone to find work.

• Have a backup plan. Unfilled shifts are at an all-time high during the holiday season, so consider filling shifts with gig workers. #2: THE COMPETITION IS STIFF Several factors contribute to an hourly worker applying for or accepting a job with a particular employer. These include salary, benefits, location, and reputation.

Thirty-eight percent of employers cited their competition as a key challenge in seasonal hiring. Be up front about what makes you stand out.

ACTION STEPS • Know your market and make sure you are offering a competitive hourly rate.

In 2018 workers expected to earn $15.40 per hour, more than double the federal minimum wage. This was up 21 percent from 2017.

• Stand out by offering holiday employees additional benefits such as employee discounts, flexible scheduling, professional development, and paid sick days.

• Revisit old job descriptions and create refreshed postings that stand out and attract great workers. Focus on what applicants are looking for: pay, location, hours, benefits, and qualifications. #3: DID ANYONE SEE YOUR JOB POSTING? Getting eyes on your job posting is a challenge for more than 22 percent of employers. They key is knowing your ISSUE 4, 2019

audience and understanding where they are looking for employment. In 2018, 62 percent of employers reported using social media campaigns to hire hourly workers. Use the right tools to reach and recruit the right talent.

ACTION STEPS • Build a social media strategy to drive awareness and interest to your job posting. And make sure your brand personality shines in all social media posts.

You are more likely to attract quality applicants if your social presence is positive and strong.

• Use an online hiring platform to connect with qualified applicants. Using these platforms to post jobs, organize applications, and schedule interviews can save you time and money.

• Boost your job postings. Look at your budget before the holiday hiring season and develop a strategy to boost your spend with social communities, job boards, or vendors to drive the applicant flow you need and make the right hires.

FINAL ADVICE When you find a talented worker, hold on to them and reward loyalty. Be sure to discuss post-seasonal plans, especially if you’re hoping to fi ll permanent roles in the new year. Survey employees for honest insight on what’s working and what isn’t.

You may fi nd a permanent employee or build a loyal base of returning seasonal workers.

With the right planning and tools, successful seasonal hiring is never out of reach. No matter the obstacle, there are solutions you can count on every season: recruit early, recruit fast, and recruit on demand. T Mathieu Stevenson is CEO at Snag. For more information, visit snagajob.com.

TRAINING THE NEXT FRANCHISE GENERATION The Titus Center for Franchising at Palm Beach Atlantic University is the only comprehensive franchise education program in the U.S.A.

LEFT: DANIEL PLOURDE, FRANCHISE INTERN RIGHT: ROB MORRIS, CHICK-FIL-A OWNER & OPERATOR WEST PALM BEACH, FLORIDA

The Center’s distinctive features include: •

Four college courses with a franchise internship that lead to a Concentration in Franchising

•

Franchise professionals who visit campus frequently to speak with students

•

A 40-member Advisory Board that provides ongoing student coaching

•

The Don Dwyer Franchise Scholarship becoming available Spring 2020

•

The Kobel Challenge, which provides substantial funds to help graduates buy franchises

LEARN MORE:

TitusCenterforFranchising.com

Finance

Building a Management Mindset 5 keys to multi-unit success Written By ROD BRISTOL

S

ome franchises work best with multiunit ownership. But what makes multi-unit ownership work? It has little to do with how well franchisees cut hair, make sandwiches, or scoop poop.

Even the best operators will fail at multiunit ownership without an enterprise management mindset—from both franchisor and franchisee. Multi-unit success depends on these five capabilities:

1. Maintaining scalable systems (delivered by franchisor, executed by franchisee) 2. Screening, training, and coaching (franchisor and franchisee) 3. Leading, not doing (managing the enterprise) 4. Understanding financial drivers and results (monitoring the enterprise) 5. Managing the financial risks and rewards (planning the growth pathway) Maintaining scalable systems. When I owned my own company, we had 19 locations, served by our corporate office and production center. Adhering to prescribed systems saved us many times. Beyond the obvious (proficiency + consistency = efficiency), our systems revealed when staff were attempting to steal from us, which stores were profitable and growing, which needed a management change, and ultimately enabled me to stay married and sleep at night. You cannot be at all sites every day, so systems, not verbal directives, are the structure for the team. Enterprise managers embrace them, maintain them, and monitor them.

Screening, training, and coaching. In the rush to grow, franchisors may not carefully screen prospective franchisee candidates, or may offer multiple units to the wrong person. Effective screening (meeting defined criteria) and onboarding (training, shadowing, and mentoring) are essential.

64

Multi-Unit Franchisee

Preparing to own a first location is very different from preparing for your second, third, or fourth. The successful franchisor recognizes this and has specific training for management and leadership skills for enterprise managers.

Finally, engagement with franchise business consultants who support and coach franchisees is critically important. This requires both the franchisor and franchisee to invest time and effort. Franchise systems lacking field teams with consulting and coaching skills risk letting franchisee problems snowball. Similarly, franchisees must coach their management teams. Successful enterprise managers and successful multi-unit franchise models embrace a strong coaching culture.

Leading, not doing. An enterprise mindset requires giving up operational responsibility. For the franchisee, this may mean giving up what they do best in exchange for leading, motivating, and coaching, which may not be their strong suit.

One strategy is to assign a spouse to each location, which can work because of the direct, hands-on approach of the couple. However, this is not enterprise management and can cause the marriage to suffer. Further, when they add more locations and run out of family members, things can quickly go sideways.

Enterprise managers must release operational duties to a competent team and focus their energy on hiring, training, monitoring, and coaching. Setting goals for KPIs and allowing the managers to manage is critical. When there are problems (and there will be), remember that putting out fires is not enterprise management. Brainstorming solutions with key team members and coaching up their performance is.

Understanding financial drivers and results. Multi-unit owners must routinely review financial statements, budgets, and KPIs. They must master breakeven analysis to establish meaningful sales and profit goals, and to predict the timeline to breakeven as each unit is added. Location 2 is funded by profits of Location 1 and new debt.

How much capital is needed? How will the new location costs differ from the original? What sales are needed to support the profit goal? By when? What activity goals will keep your team on track with building your new customer base in the time required? Enterprise management is management by the numbers.

ISSUE 4, 2019

Managing financial risk. The higher reward (additional profits) of multi-unit ownership comes with a trade-off: higher financial risk. In simple terms, growing sales and profits requires more capital or debt. It’s the way wealth is built, but only if the enterprise is successful.

How long will it take to produce enough profit to repay the debt and pay a reasonable return to the owners? What if it takes longer than expected? Where will the money come from? What if you do better than expected? Where is the next opportunity to invest? Successful enterprise managers have written financial plans (Plan A and Plan B at least) that align with their personal financial goals and capacity.

They take risks and then manage the drivers of their success to assure their rewards.

As a past franchise executive, I received phone calls from franchisees facing bankruptcy and divorce as a result of their business failure. Too many franchisors pass these off as failures of the franchisee.

Many failures of the franchisee begin with a failure of the franchisor to incorporate the five competencies in their multi-unit development process. T Editor’s Note: The author will be presenting a full-day session at the IFA conference on February 8 in Orlando on “Advanced Financial Essentials: Driving Profitable Growth Through Multi-Unit Expansion.”

Rod Bristol is the director of business development and a presenter at Profit Soup, a financial education organization specializing in franchised companies. He can be reached at rod. bristol@profitsoup.com or at 206-427-5333.

1-800-485-9570

frandata@frandata.com

Find Your Next Best Franchise Prospects We at FRANdata have been growing our data and contact competencies to serve our client's dynamic business development and marketing needs. In this competitive landscape, you need a solution that can help you go beyond your current capabilities by utilizing better information to help you to focus your resources only on selling to your ideal market targets.

“

The franchisee listings available for purchase from FRANdata are the pieces that complete our integrated recruitment strategies. They enable us to reach our ideal candidate in our target growth markets.

Julie Mitchell Popeyes Louisiana Kitchen Franchising Manager

�

LEARN HOW FRANDATA CAN HELP YOU TODAY AT WWW.FRANDATA.COM

Investment Insights

Different Decade

New models needed for a new world

Written By CAROL SCHLEIF

D

THE ENIGMA Ever since the financial meltdown a decade ago, markets and many traditionally held models have simply not behaved as they “should.” Central banks have been striving for 2 percent inflation for years (U.S. and Europe) if not decades (Japan) to no avail. In the wake of the fi nancial crisis, these central banks have pushed interest rates so low that now more than $15 trillion of the world’s sovereign debt trades at or below zero.

The historically low unemployment rate that the U.S. has experienced for the past several years should have spawned a noticeable uptick in inflation by now. Then too, one would have expected housing stats (and overall economic growth itself) to have averaged out to higher growth rates than they have seen. All up and down the economic release schedule, this expansion has measured differently than other postWWII expansions. A variety of factors is typically blamed (e.g., lack of supply/ subcontractors in housing coupled with overwhelming levels of student debt), but perhaps something larger is at work. What if the combination of changing demographics and vastly upended business models in most sectors has overwhelmed the old models of what “should” happen?

espite ebullient stock market returns through the fi rst half of the year, politics, global supply chain disruptions, and multiple volleys in the trade wars have prompted increased volatility from July onward. Primary purchasers of stock in recent quarters have been companies buying back their own shares and interacting with each other in merger and acquisition transactions, even as fund flow data show individuals pulling money out of equities in favor of categories perceived as safe havens (cash, fi xed income, and gold).

In short, it’s an enigma wrapped in a dilemma surrounded by a conundrum.

With the number of issues at play, easy near-term resolutions are likely not at THE DILEMMA hand. We expect volatility will increase In short, one must ask, “Are the models temporarily out of order, or permanently as the year progresses and the election cycle gains momentum. Given reason- broken?” According to a recent article in able underlying economic and corporate The Economist (Riding High, July 11, 2019): fundamentals, however, this choppy “at the end of July America’s economy will have been growing for 121 months, the movement could present interesting longest run since records began in 1854.” opportunities for reevaluating one’s longterm asset allocation and provide ample Part of the longevity relates, we susopportunities for rebalancing. pect, both to the depressed starting point, and to the slower overall growth rate achieved all the way along. In the wake of the financial crisis, a substantial number of regulations and rules were rewritten, especially in industries like financial services. This coincided with an upending in sectors from technology to health care, transportation, retail, housing, and services. The result? Many things are different now than they were at the start of the crisis, and certainly than they were during previous economic periods.

Global trade is more nuanced and widespread with complex logistics spanning many steps and countries. Global partnerships and trade relationships are different.

The composition of business in the U.S.

66

Multi-Unit Franchisee

ISSUE 4, 2019

has shifted to more than two-thirds services-based, meaning that inventories, production lines, and capital expenditures (all primary drivers of the peaks and troughs in previous expansions and contractions) play a smaller overall role.

Banks have more capital, while overall aggregate S&P 500 balance sheets have substantially less tangible capital, given the shift to a knowledge-based society, making valuation trickier to do. More financing happens outside the traditional channels of banks, from venture funds, direct placements, and sovereign wealth pools to go-fund-me campaigns. Yet many of our economic statistics are still geared for a production-based and bank-financed society. Is it time to rethink some or many of these yardsticks?

THE CONUNDRUM Given all the moving parts, what is an investor to do? Part of the answer, we suspect, lies in advice that has rung true from the very beginning.

• Keep your sights off the month-tomonth swings and consider more prominently what your long-term goals are.

• Focus first on identifying and quantifying what your core needs are: growth, income, support for family, and causes that matter to you now or decades from now.

• Consider the time frame you have to invest over and align specific cash flow or future outflow needs against specific assets.

• Focus on the costs and factors you have some control over (fees, transaction costs, tax-aware investing methods).

• Focus on sound fundamentals, replicable processes, and measurable progress against rational metrics for the specific investments you hold.

• And above all, stay focused on longterm fundamentals, remembering that despite near-term noise, one of the most tried-and-true factors relative to the U.S. economy in particular is that its overarching bias has been up since the inception of the country. T Carol Schleif, CFA, is deputy chief investment offi cer at Abbot Downing, which provides products and services through Wells Fargo Bank and its affiliates and subsidiaries. She welcomes your questions and comments at carol.schleif@abbotdowning.com.

DIRECT ACCESS TO QUALITY CANDIDATES

The International Franchise Expo is the premier franchise event attracting investors from around the world. Whether you’re looking

MAY 28 - 30, 2020 New York, NY SUPPORTED BY

to expand in the U.S. or internationally, selling single units, area developments, or master licenses, IFE is the industry’s one-stop shopping event.

3 Day Regional Expos

Franchise Expo South and Franchise Expo West are the leading expos serving the Southern and Western United States, Central and South America, and the Caribbean. Meet face-to-face with the best potential franchisees from coast to coast.

DEC. 5-7, 2019 Long Beach, CA

FEB. 20-22, 2020 Miami Beach, FL

NEW 2 DAY EXPOS! Franchise Expo Nashville and Franchise Expo Houston are the perfect platforms to engage and connect with prospects on an even more personal level. Limited to 125 exhibitors.

FOR MORE INFORMATION EMAIL Linda.Thompson@Comexposium.com

Visit MFVexpo.com

2 Day Local Expos

MARCH 20-21, 2020

OCT. 2-3, 2020

Sponsored By

Exit Strategies

Preparing for a Sale

How to maximize returns in a liquidity event

exercising purchase options on leased sites? Should this be completed before the process starts?

Before approaching the market, every franchise business should be asking these questions, having internal discussions, and aligning on strategy.

• Is the owner seeking a partial liquidity event that likely includes new lending partners and/or outside investors?

PREPARATION PHASE The first step in preparing for a sale is to sort out the financials and real estate.

Financial reporting and contracts.

Running a franchise business is an all-encompassing venture. Owners spend so much time ensuring outstanding customer service and guest satisfaction that some of the legal, accounting, and tax issues can be overlooked. When considering a sale, it is important for the owner to understand and be prepared for the rigor that outside parties (buyers, franchisor, investors, lenders) will put into examining your business.

Integrity in financial reporting is paramount. The most serious mistake an owner can make is having inaccurate financials. Before providing financial records to outside parties, review them for accuracy and completeness. In addition, contracts, credit agreements, and leases also should be reviewed before the process starts. One-time, non-recurring adjustments should be detailed, along with proper supporting documentation.

Buyers, investors, and lenders often will also require a detailed quality of earnings report (these are like mini audits and are becoming more standard in franchise transactions). Tax planning is also important, and sellers should be aware of the tax implications of any sale transaction.

Real estate. In some cases, a significant portion of an owner’s equity is in the real estate. If you own property, what do you do with it? It is important to carefully consider all options, including the sale-leaseback market. Many buyers prefer to own both the business and underlying real estate and will often pay a premium to control both. However, if you plan to keep your real estate holdings, it is important to engage a competent real estate attorney to draft a marketable lease that provides the owner with flexibility to sell some or all of the properties at a later date.

• If there is owned real estate, should it be included as part of a sale? Are there opportunities to create value by

EXECUTION STRATEGY The next step for owners is to consider how to execute the strategy they’ve developed.

Written By CARTY DAVIS

B

efore embarking down any path of selling all or part of your business, it is important to spend time preparing. First, owners and key stakeholders should decide and align on a business strategy. Next, owners must make sure they are prepared for a sale and the rigors that ensue. Finally, no matter how wellplanned any exit strategy may be, it all comes down to execution.

BUSINESS STRATEGY When it comes to business strategy, owners must first understand the goals of the key stakeholders. Start with those end goals in mind and work backward.

Depending on the capital structure, there are many different variables that will determine the steps needed to maximize returns. Among the critically important subjects to address are: • Will the sale be a full or a partial liquidity event?

• Is the buyer a related party or will it be a sale to an outside, third-party group?

• Is the operator selling, retiring, and moving on or do they have flexibility or a desire to stay with the business in some capacity?

• Which is more advantageous, an asset sale or a stock sale?

• Understand what is being sold and set expectations. Is the sale opportunity for a limited number of units in a small market, or is it an emerging brand with potential and upside?

68

Multi-Unit Franchisee

ISSUE 4, 2019

• Franchised businesses. Sales of franchised businesses are almost always subject to franchisor review and approval. While the owner can select a buyer or partner, franchisor approval is necessary to consummate the transaction. Before moving forward with any buyer, franchisees must understand and manage the franchisor’s approval process and financial and operational requirements. In more and more cases, as a condition of approval, franchisors are requiring reinvestment commitments to effectuate a transfer.

It is important to understand these requirements and articulate them to potential buyers or partners. Exactly when to engage the franchisor can be complicated and will depend on the seller, buyer, and franchisor.

• Transfers to the next generation or existing management team. If the sale is part of a transition to the next generation or existing management team and does not involve changes to the capital structure, managing the relationship with your existing lenders is critical. Financial institutions do not like surprises, so it is important to communicate early and often. In most cases, lenders will be supportive if they understand and have been part of the transition process. If the value of the assets being sold is questioned, obtain reasonable consensus with lenders to avoid any delays. Decide early who within the organization should be party to the transaction and make sure any key personnel are not surprised by the transition. To ensure a successful completion, it can sometimes be helpful to incentivize key team members.

FINAL POINTS There is no one-size-fits-all strategy to maximize return in a liquidity event.

However, understanding your alternatives, the transaction process, and adequately preparing are all critical to achieving your goals and ensuring a successful outcome. T Carty Davis is a partner with C Squared Advisors, a boutique investment bank that has completed hundreds of transactions in the multi-unit franchise and restaurant space.

Since 2004 he’s been an area developer for Sport Clips in North Carolina with more than 70 units. Contact him at 910-528-1931 or carty@c2advisorygroup.com.

Franchise Market Update

Wanted: Tomorrow’s MUOs Building a multi-unit future Written By DARRELL JOHNSON

W

hile some franchisors have owner-operator models, most would like to attract more multi-unit operators (MUOs). Let’s look more deeply at MUOs. How do MUOs look demographically? What common underlying characteristics do they have that can be used to identify the prospects who will become the MUOs of tomorrow?

I’ll start with some basic facts. We tend to forget that MUOs are not people, they are businesses. Businesses can survive generational change. People, unfortunately, can’t. Based on our internal matching of multi-unit franchise businesses and owners, the majority of multi-unit organizations today are controlled by Baby Boomers. That generation is now transitioning at an increasing rate, which will slow their appetite for continued growth, at least in the short term.

Over the past few years, we’ve made tremendous strides in our understanding of MUOs. Big data has enabled us to take our MUO database, follow the business connection to owners, and append information about them at a household level. Some of our work with franchisors has involved using this capability to profile MUOs in this way. Armed with that information, we can build a profile of what a good multi-unit franchisee looks like before they become an

MUO, perhaps in the next state or city. The ability to find those franchise prospects is rapidly improving.

We learned from the Baby Boomerfueled explosion of MUO growth of the past 20 years that people in the 40–54 age bracket are the prime age group for minting new MUOs. Complicating the slowdown now under way with the Baby Boomer generation is the pace of growth of new MUOs in the smaller demographic pool represented by Generation X. In the U.S., that generational group has roughly one-third fewer people than the Boomers—a reduction of more than 20 million potential multi-unit candidates.

While we continue to see our database of existing MUOs adding and acquiring units overall, we are starting to see a slower pace of growth for new MUOs. We think demographics are part of the cause.

FEAR OF FAILURE Creating more MUOs begins with identifying the characteristics of individuals that lead to their becoming MUOs over time.

Now that we have so much more information on MUOs, we are ready to tackle this next big challenge. The real focus here is Millennials. What will lead them to entrepreneurship, and from entrepreneurship to become the MUOs of tomorrow?

Between 1989 and 2017, the number of young adults in the U.S. with stakes in private companies declined from 10 percent to 4 percent. This precipitous drop prompted the Wall Street Journal to label them an “endangered species.” The number-one reason given for not starting a business generally was fear of failure.

While overall 31 percent of Americans said that was the reason, for Millennials that figure was 41 percent. The number-two reason was higher education, which was inversely related to starting a business, ironic as that might seem. Finally, the third reason cited was financing or, more accurately, lack of financing.

GOOD FOR FRANCHISING It seems to me there are some marketing signals in these results that all favor franchising. The marketing message franchising actively was using in the recent past (“In business for yourself, not by yourself”) seems to line up well with the fear of failure line. We in franchising need to bring that more to life. Doing so starts with factual information. It’s time to tackle the issue of the relative success of franchising head-on. We have most of the information to do so now.

Our FUND Scoring Model for credit access uses historical unit success rate as a key metric. When normalized, the success rate would likely be somewhere above 70 or 80 percent. If the odds for success are above that level, franchising can conquer fear of failure. It would take some work to make accurate comparisons with non-franchised businesses, but it’s time we consider putting some resources into doing so. Having a positive answer would be a substantial contributor to overcoming the first and biggest issue, fear of failure.

The implication that more education reduces the desire for entrepreneurship may be a misinterpretation of the data.

Some students of higher education have targeted specific professions. When those people are removed from the data set, I suspect that the resulting statistics on people with higher education who start new businesses will bring the results more into what logic would suggest.

The lack of financing for many brands is becoming less of an issue. We see a high correlation between brands with higher FUND Scores and growth that exceeds their peers. Lenders know they can consider less financially qualified and experienced borrowers for brands with better credit scores without taking on more actual credit risk.

It’s hard to believe now, but in past decades MUOs weren’t very popular with franchisors. The logic of the time was that franchisors didn’t want to allow MUOs to get too big for fear they would be too hard to manage. How times have changed. Now we want to create as many as we can, and we have better tools for doing that. T Darrell Johnson is CEO of FRANdata, an independent research company supplying information and analysis for the franchising sector since 1989. He can be reached at 703740-4700 or djohnson@frandata.com.

70

Multi-Unit Franchisee

ISSUE 4, 2019

Join your peers at franchising’s biggest, boldest and most exciting event — the International Franchise Association’s Annual Convention!

FRANCHISING’S FUTURE STARTS WITH US

Come network and learn with the best in the business as we work together to honor our accomplishments and ensure tomorrow’s franchise community supports today’s ideas. We have topnotch programming and content that is designed to better your franchise business and profitability, and you’ll leave this event with valuable contacts who will help guide you to your future success.

KEYNOTE SPEAKER

Simon Sinek

Optimist and best-selling author of Start with Why: How Great Leaders Inspire Everyone to Take Action and Leaders Eat Last: Why Some Teams Pull Together and Others Don’t

REGISTER

franchise.org/convention

FEBRUARY 8-11, 2020 | ORL ANDO WORLD CENTER MARRIOTT | ORL ANDO, FL

JANUARY 28-29, 2020 VIENNA, AUSTRIA

HOTEL HOTEL SAVOYEN VIENNA

VISIT WWW.EMMFC.COM

The Premier Conference for Master, Multi-Unit and Multi-Brand Franchising An Exclusive Event with Limited Seating The European Master and Multi-Unit Franchising Conference is designed for master, multi-unit and multi-brand franchisees and franchisors eager to grow, learn from their peers and engage with new franchise brands.

A two-day multi-track event with over 40 experienced speakers covering high performance master and multi-unit franchising.

Multi-Unit

2020

Franchisee

YOUR BIG BREAK Average Second Year Total Revenue for Top 25 Stores

$684K

Average Second Year Net Income for Top 25 Stores

$120K

Contact Brynson Smith

877-224-4349 Franchising@uBreakiFix.com *As published in Item 19 of our FDD dated April 19, 2019, these figures represent the average total revenue and net income (total revenue, minus cost of goods sold and expenses excluding interest and income taxes) for the top 25 of 281 out of 458 franchisee-operated UBREAKIFIX stores that submitted unaudited profit and loss statements from Jan. 2013 through Dec. 2018. Average second year total revenue for the top 25 stores was $684,220 (median $663,760). Average second year net income for the top 25 stores was $120,273 (median $87,649).

Of the stores included for the second year, 9 (or 41%) attained or exceeded the average total revenue and 7 (or 32%) attained or exceeded the average net income. Average second year total revenue for the bottom 25 stores was $224,527 (median $224,875). Average second year net income for the bottom 25 stores was -$21,639 (median $40,132). Of the stores included for the second year, 8 (or 53%) attained or exceeded the average total revenue and 8 (or 53%) attained or exceeded the average net income. 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.

Franchise Opportunities www.uBreakiFix.com/Franchising