Multi-Unit Franchisee Magazine - Issue II, 2023

Franchisee Multi-Unit

2023 Multi-Brand 50 rankings

When is the best time to sell?

Is private equity right for you?

TOP OF THE WORLD

Sales: $1,792,000

Score: 142

Sales: $1,245,000

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40

NEIL HERSHMAN

At 27, he’s summited Mt. Everest, run ultra-marathons, left his job as a financial analyst, became a 16 Handles franchisee, saw its potential to scale, and bought the company.

62

SELLING UNITS

Thinking of selling? Experienced franchisees provide their best advice on maximizing the ROI when the time comes to let go of some or all of your locations.

64 PRIVATE EQUITY

“Making it on your own doesn’t mean making it by yourself.” But when it comes to growing your franchise organization, should that include private equity investors?

Multi-Unit Franchisee

Issue 2, 2023 Contents

04 CHAIRMAN’S NOTE

Chairman’s Note

Welcome to the 2023 MUFC— our conference!

08 MU PROFILE

Andy Gundlach

A passion for fitness leads to franchise success

12 MU PROFILE

Chris Dordell & Jason Fenske

Partners keep busy keeping Palm Springs fit & healthy

20 MU PROFILE

Jeff Burroughs

Making the most of a second chance at life… and then some

26 MU PROFILE

Rachel Wallace

Taking over—and expanding— the family business

34 MU PROFILE

T. J. Moe

A career-ending injury led from the NFL to a career in franchising

Our Team

CHAIRMAN

Gary Gardner

CEO

Therese Thilgen

EXECUTIVE VP OPERATIONS

Sue Logan

EVP, CHIEF CONTENT OFFICER

Diane Phibbs

VP BUSINESS DEVELOPMENT

Barbara Yelmene

BUSINESS DEVELOPMENT EXECUTIVES

Kry stal Acre Jeff Katis

Judy Reichman

EXECUTIVE EDITOR

Kerr y Pipes

40 MU PROFILE

Neil Hershman (Under 30) Flying, summiting, ultra-triathlons, and multi-brand franchising

46 RANKINGS

Multi-Brand 50

Top U.S. franchisees by total units & their favorite brands

54 FEATURES

Private Equity

Weighing the benefits and pitfalls of outside investors

62 FEATURES

Selling Units

There are many paths to the best deal. What’s yours?

70 COLUMNS

Customers Count

Finding employees in all the right places

72 COLUMNS People

Hiring in 2023 is a 24/7/365 job for employers

MANAGING EDITOR

Eddy Goldberg

CREATIVE DIRECTOR

Cindy Cruz

DIRECTOR OF TECHNOLOGY

Benjamin Foley

WEB DEVELOPER

Don Rush

WEB PRODUCTION ASSISTANTS

Esther Foley Juliana Foley

DIRECTOR, EVENT OPERATIONS

Katy Coutts

SENIOR SUPPORT MANAGER

Sharon Wilkinson

74 COLUMNS

Finance

Planning for a sale starts long before the event

76 COLUMNS

Investment Insights

Is today’s economy a good time to sell your business?

78 COLUMNS

Exit Strategies

When does partnering with private equity make sense?

80 COLUMNS

Market Trends

Trying to understand today’s labor conundrum

SENIOR SUPPORT COORDINATOR

FRANCHISEE LIAISON

Leticia Pascal

SENIOR GRAPHIC DESIGNER

Michael Llantin

VIDEO PRODUCTION MANAGER

Greg Delbene

EVENT OPERATIONS MANAGER

Chelsea Weitzman

EVENT PRODUCTION COORDINATOR

Lillian Swenor

CONTRIBUTING EDITORS

Laura Darrell Carty Davis

John DiJulius Darrell Johnson

Barbara Nuss Carol Schleif

CONTRIBUTING WRITERS

Helen Bond Colleen Mcmillar

Sara Wykes

Article Inquiries editorial@franchiseupdate.com

Subscriptions subscriptions@franchising.com 408-402-5681

Looking Forward To Seeing You at “Our” Conference

Greetings My Fellow Franchisees,

I look forward to welcoming you to Las Vegas for our 2023 Multi-Unit Franchising Conference at Caesars Forum this April 25–28. I call it “our” conference because there is no other place where the speakers, presentations, sponsors, and activities all come together in one place to help multi-unit franchisees connect, learn, reenergize, and revitalize themselves and their teams.

There’s something extraordinary about meeting in person. Great minds coming together in one place for several days fuels creative energy and innovation that help move our businesses forward into the future.

The past 3 years have challenged us to reimagine our businesses—how we work, how we connect, even why. Our economy for the year ahead is uncertain. Facing an ever-changing future forces us to prepare not only to meet the challenges ahead, but also to be positioned in such a way that we can capitalize on the opportunities that come our way. Success happens at the intersection of preparedness and opportunity. To prepare you for those opportunities, our conference this year will feature:

• More than 800 high-performing franchisees to connect and build relationships with.

• Two dozen educational, general, and networking sessions to sharpen your skills and fuel your ideas.

• Two dynamic, inspiring keynote speakers: Peter Diamandis, New York Times best-selling author, innovator, and founder of the XPRIZE Foundation; and Col. Nicole Malachowski, the first woman Thunderbird pilot, combat veteran, fighter squadron commander, and White House Fellow and advisor.

• More than 250 franchisor exhibit booths putting those opportunities right in front of you.

• More than 65 supplier booths connecting you with the latest technology, real estate, finance, and service providers. So here’s to sharpening your knowledge, gaining and sharing new ideas and best practices, learning about the latest innovations and insights, meeting influencers and franchise industry experts face to face, making new contacts, building relationships, and reconnecting with your friends and colleagues. And just maybe a little fun.

I am honored and grateful to serve as your chairman and look forward to seeing you there.

Gary Robins

GARY ROBINS

Join the Family

Be part of a brand and community built through earned experience with a culture of strong leadership, innovation, operations, and growth.

We have opportunities in select, prime markets and non-traditional venues for qualified restaurant operators and developers with varied incentives for development.*

• Part of Dine Brands Global, a publicly traded company and one of the largest full-service restaurant groups in the U.S.

• An iconic brand with an integrated franchise support system—operations, training, new restaurant openings, marketing, site selection, design, food innovation, and technology*

• Strong franchisee collaboration and feedback in various corporate committees to keep the brand relevant

*Subject to Franchise Agreement and Development Agreement Terms © 2023 IHOP Franchisor LLC. This is not an offer to sell a franchise. An offer can be made only by means of a Franchise Disclosure Document that has been registered and approved by the appropriate agency in your state, if your state requires such registration, or pursuant to availability and satisfaction of any exemptions from registration.

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Andy Gundlach

A Passion for Fitness!

Andy Gundlach rides the growth track

Written by SARA WYKES

ANDY GUNDLACH President

Company: Argent Companies

No. of units: 33 Anytime Fitness, 3 Basecamp Fitness

Age: 46

Family: Wife Nichole, children Aiden, 4, and Addy, 2

Years in franchising: 17

Years in current position: 17

Andy Gundlach didn’t have entrepreneurial roots. But, he says, “I came from a good home with good supportive parents and they let me be me.” That turned out to be someone with a tremendous love of people and a passion for business growth and development, one that’s now focused on fitness franchises. Gundlach, who had wanted to be a personal trainer, is diversifying his franchise holdings with two fitness brands and says he couldn’t be happier.

He has learned, however, that as much as he would like to be a hands-on operator who is everywhere doing everything, he simply can’t. As his unit count has grown, so has

his understanding that to grow more he had to delegate.

“I had to learn to trust my people more— to let them surprise me,” he says. “I was forced to do it. I just couldn’t operate the way I did, having my hands in everything. Things won’t always be perfect, but I have empowered a whole group of people, and I sleep better at night.”

Beyond that, Gundlach knows that the opportunities in fitness are abundant and he wants to take advantage of that. “There is really so much opportunity to expand, to capture more of the market,” he says. His two franchise brands complement each other, so for the moment, he’ll be sticking with the fitness sector.

PERSONAL

First job: Pizza Hut.

Formative influences/events: Becoming director of operations of Pizza Hut of Southern Wisconsin (PHSW), and Jim Williams, COO of PHSW.

Key accomplishments: At age 20, youngest person in PHSW to win Restaurant of the Year. Three-time Anytime Fitness Franchisee of the Year, Madison, Wisconsin. Small Business Executive of the Year 2020.

Biggest current challenge: Finding great people!

Next big goal: Expand the company through strategic acquisitions. Grow by 50% over the next 5 years.

First turning point in your career: Becoming an area manager at PHSW when I was 21.

Best business decision: Opening my first Anytime Fitness club in 2016.

Hardest lesson learned: Hire great people and don’t get in their way too much.

Work week: Typical business owner—I’m all over the place!

Exercise/workout: Six days a week. It’s my passion!

Best advice you ever got: Always remember that we are in the people business.

“There is really so much opportunity to expand, to capture more of the market.”

What’s your passion in business? Growing opportunities for my team.

How do you balance life and work? Surround myself with great people.

Guilty pleasure: Pizza!

Favorite book: The Ride of a Lifetime by Bob Iger.

Favorite movie: “Star Wars.”

What do most people not know about you? I am a huge “Star Wars” fan!

Pet peeve: Multi-tasking.

What did you want to be when you grew up? Personal trainer.

Last vacation: Cruise to Bahamas, St. Maarten, and St. Thomas.

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

MANAGEMENT

Business philosophy: We are in the people business. Obsess about our customers and employees.

Greatest challenge: Continuing to find great people.

How do others describe you? Intense and very detailed.

How close are you to operations? I spend time in the customers’ shoes every day in my gyms. I meet weekly with my key operators. What are the two most important things you rely on from your franchisor? Future thinking and enhancing the brand.

What I need from vendors: Great service and fair pricing.

How is social media affecting your business? It has become our number-one marketing avenue and lead source, by far. We spend 90% of our ad budget on social media. How do you hire and fire? Hire slow and fire fast.

How do you train and retain? Train the systems and develop the person. Give autonomy for people to put their own stamp on how they do their job inside of our systems. How do you deal with problem employees? Quickly and directly! Problem employees can be infectious.

Fastest way into my doghouse: Not taking ownership or accountability.

COVID-19

How did Covid-19 affect your business? It was one of the toughest things I have ever gone through, but now we are a much stronger organization. It exposed our weaknesses and forced us to look at every aspect of our business, every line on our P&L, and how we operate.

How have you responded? We made many strategic decisions that not only made our bottom line better, but also made our company a better place to work.

What changes do you think will be permanent? We cut out a lot of fat and red tape from our financials. We will also keep the changes we made to the staffing model.

BOTTOM LINE

Annual revenue: $20 million.

2023 goals: Add 5 new units.

Growth meter: How do you measure your growth? The main way we look at it is year-over-year.

Vision meter: Where do you want to be in 5 years? Increase revenue and units by 50%.

Do you have brands in different segments? Why/why not? We have two brands, both in fitness. Fitness is my passion!

How is the economy in your region affecting you, your employees, your customers? We are fortunate to have a very strong economy in southern Wisconsin, so the labor market is tight.

Are you experiencing economic growth in your market? Yes!

How do changes in the economy affect the way you do business? Our economy is strong, but because of so many cost increases, we did make a price increase on new membership sales.

How do you forecast for your business? We look at 12-month history, current trends, and current local competitive landscape. What are the best sources for capital expansion? We set aside 10% of income for cap ex, and also have great local bank partnerships.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We have great local bank relationships. We have looked into private equity, and that may be an opportunity to accelerate growth in the future.

What are you doing to take care of your employees? Engage with them, provide opportunities, and allow them to really make their mark on the business. Ensure opportunities for career and financial growth. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We have had to make a small price increase on new memberships.

What laws and regulations are affecting your business and how are you dealing with it? Not really any obstacles for us.

How do you reward/recognize topperforming employees? We do an annual awards celebration for our 200 employees and give out many awards for performance. We also continue to add leadership positions as we expand.

What kind of exit strategy do you have in place? I plan to continue to operate my business for a minimum of 10 more years. I’m having too much fun and also have such a great team. 

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*This figure represents the net sales achieved for calendar year 2022 at five (5) affiliate owned restaurants and ten (10) franchised restaurants. **This figure represents the average EBITDA achieved for calendar year 2022 as a percentage of consolidated net sales at the same five (5) affiliate owned restaurants and nine (9) of the ten (10) franchised restaurants. *** This figure represents the Median Initial Investment to open the same five (5) affiliate owned restaurants and eight (8) of the same ten (10) franchised restaurants above, all of which were opened in Second Generation Sites. Second Generation Sites are restaurant locations where the operator utilized a premises that was previously operated as a restaurant and therefore requires less initial investment to open and operate. Most Angry Crab Shacks are opened in Second Generation Sites. Each of the included restaurants were open for all of calendar year 2022. This information appears in Item 19 of our Franchise Disclosure Document (FDD). You should review our FDD for details about these results. Your results may differ. There is no assurance that you will do as well.

Chris Dordell & Jason Fenske

Power Couple

Keeping Palm Springs fit is a full-time job

Written by SARA WYKES

CHRIS DORDELL Co-Owner

Company: Coachella Fitness Concepts

No. of units: 2 Club Pilates, 2 YogaSix, and 1 CycleBar

Age: 52

Family: Husband and co-owner

Jason Fenske

Years in franchising: 5

Years in current position: 5

JASON FENSKE Co-Owner

Company: Coachella Fitness Concepts

No. of units: 2 Club Pilates, 2 YogaSix, and 1 CycleBar

Age: 50

Family: Husband and co-owner

Chris Dordell

Years in franchising: 5

Years in current position: 2

Chris Dordell and Jason Fenske have been together for nearly a quarter century and had long planned to build a co-owned franchise group together. While that took longer than planned, they are now happily building a group of fitness franchise locations in Palm Springs, California—and working at it more than full-time.

“We talk about business 24/7 and work constantly, but we hope to get to a point where we have more downtime than we do now,” says Dordell. Although they’ve defined a division of labor for themselves—Dordell is the CFO and CMO and Fenske manages the HR team for the 60 employees at five locations, the retail experience at all the locations, and the indoor cycling unit—employees who see them just assume they are interchangeable. “So we both have to know everything,” he says.

Dordell and Fenske spent the majority of their pre-franchising business lives working in corporate jobs. Dordell left first, did some investigation, and then received a solicitation email about a franchising opportunity. Club Pilates struck him as a relatively simple business model that didn’t require hundreds of employees and, says Dordell, “We liked the fitness aspect of it.” A year after their first club opened, they expanded into the space next door with a CycleBar franchise.

The duo say they are happy with their Palm Springs territory and don’t want to go too far or expand a lot more. “I feel like the business will be much more successful when you are on the ground as an involved owner,” says Dordell.

PERSONAL

First job: Dordell: Shoe department and cashier at Marshall’s. Fenske: Soda jerk at a malt shop.

Formative influences/events: Dordell: My father, who was a managing partner in a law firm, and my older brother, who has always given solid advice. Also, working at an advertising agency taught me to be agile and a great multi-tasker. Fenske: My grandfather always told me that taking care of your

“It’s all about connecting through social media, making people feel something that drives them to get in touch.”

people was number one, and, if you did that, they’d take care of you and your business.

Key accomplishments: Dordell: My 25 years in corporate and agency marketing. My last job was head of international marketing at Wells Fargo Bank. Fenske: At Salesforce, I introduced a career development program to cultivate managers’ and team members’ success. Ultimately, it boosted employee satisfaction by simplifying promotion criteria and improved overall team wellness scores.

Biggest current challenge: Fenske: Recruiting and retaining employees is always a challenge, especially in a smaller geographic area. The competition for good candidates is strong and the number of candidates small.

Next big goal: Dordell: Achieve solid, sustained profitability for all the studios. Fenske: I am training to be a Pilates teacher at our Club Pilates.

First turning point in your career: Dordell: Moving from agency to “in-house” marketing, then climbed the corporate ladder.

Best business decision: Dordell: Deciding to leave corporate America and dive into franchising and business ownership. Fenske: Enrolling in the Integral Coach training program at New Ventures West was pivotal for my personal and professional growth. I’ve had a small private practice as a coach and have been able to use all those skills in every aspect of my life since I graduated in 2014.

Hardest lesson learned: Dordell: Have your ducks in a row as it relates to following state employment laws. In a small business you may think of your team as a family, but always do things by the book. Otherwise things may go south and turn ugly. Fenske: The shift from a corporate job to franchising meant learning how to slow down in order to get more done and to relate to a different kind of employee.

Work week: Dordell: We work pretty much every day, but have some flexibility in our schedules. It’s never 8 to 5 only. We are always taking care of something. Fenske: When you own a small business, the business is always on your mind, so it’s important to find time for ourselves.

Exercise/workout: Dordell: You would think owning five fitness studios we would do more exercise. Unfortunately it’s as difficult for us to find the time as it is for our customers. Of our three brands, I enjoy the Pilates workout the most and I’ve started to

take more cycling classes. Fenske: Pilates is my true love, so I try to get into a class two or three times a week or get a private session. I also throw in a few yoga and indoor cycling classes here and there.

Best advice you ever got: Fenske: Be curious and cultivate curiosity as a skill. This leads to more listening, better problem solving, and a lot more fun.

What’s your passion in business? Dordell: We formed our business to help people feel good in their bodies. We love hearing the stories of our how our businesses are making a difference in people’s lives. Fenske: Seeing someone leave a class and say that they feel amazing is the best gift I get every single day! Also, I like to create an environment where our team can thrive.

How do you balance life and work? Dordell: Right now, very poorly. We are always working on the businesses, at home on the laptop and during the day at the studios helping our team. Living in Palm Springs, we do get to enjoy the outdoors most of the time and the weather is great!

Guilty pleasure: Dordell: Chocolate-covered almonds and wine. Fenske: Gummy bears and gin.

Favorite book: Dordell: I am not sure I have one favorite. I like historical and political novels and I like fiction mysteries. Fenske: From a business perspective, I love Three Signs of a Miserable Job by Patrick Lencioni. On a personal note, I am a huge fan of Jonathan Livingston Seagull by Richard Bach.

Favorite movie: Dordell: “Broadcast News.” Fenske: It’s a tie between “The Wizard of Oz” and “Grease.”

What do most people not know about you? Dordell: I’m a pretty private person, I don’t share a lot. I do have a small talent to do impersonations that most people do not know about. Fenske: I’m generally an open book, but people may not know that I would love to have a private pottery studio where I could throw pots as a creative outlet.

Pet peeve: Dordell: Lack of a solid work ethic. People not using common sense to solve a problem. Fenske: I’ve always been a “pile person,” but I know where everything is in my piles. That is, until someone moves my piles.

What did you want to be when you grew up? Dordell: When I was very young,

a pilot. Then I switched in high school to an interest in journalism. I wanted to be a network news anchor. Fenske: A chef.

Last vacation: Portugal and Spain last summer.

Person I’d most like to have lunch with: Dordell: I love presidential history and have a goal to visit all the presidential libraries. Probably President Obama. Fenske: Derek DelGaudio, the creator of “In and Of Itself” that was on Broadway and is now a documentary on Hulu.

MANAGEMENT

Business philosophy: Dordell: Do your best to provide a welcoming environment for employees and customers, but one that is also ethical and common sense. This will keep people coming back. Fenske: 1) Do something you love. 2) Work with people you genuinely like and care about. 3) Listen more than you speak. 4) Avoid drama by taking responsibility and speaking clearly.

Management method or style: Dordell: I would say I am hands-on, but I try as much as I can to teach people to do a task, rather than do it myself. Also, giving people grace and knowing that they probably don’t know as much as I do at times, or have different areas of expertise than I do. I’m always willing to listen to all ideas and then make a decision. Fenske: I think about management from a perspective of experiences. What is the experience I want my team to have, and what is the experience I want them to deliver for my customers? Then ask for feedback and be curious about what I hear so I can make change for the better. When I meet with my team I always try to have a good mix of inspiration, information, and participation.

Greatest challenge: Dordell: People are the greatest challenge. Hiring, training, and retaining people. Fenske: I always have a lot of creative ideas brewing in my head that can lead to “shiny object syndrome.”

How do others describe you? Dordell: I would say fair, practical, common-sense, and even-keeled with a dry sense of humor. Fenske: Passionate, caring, smart, driven, curious, and fair.

One thing I’m looking to do better: Dordell: Train my managers and team to delegate and let go of more. Fenske: I’d love to find more ways to have an impact in the broader community as a business owner and business leader.

How I give my team room to innovate and experiment: Dordell: I try to check in regularly and ask questions that might spur new ideas. And setting boundaries so they know where the lines are. Fenske: I try to be a debate-maker, meaning that any suggestion is welcome and worthy of a conversation. How close are you to operations? Dordell: Very close. I am able to step in and manage any of our businesses on a day-to-day basis should someone get sick or leave. Fenske: Very close! I’m in one or more of our studios almost every day.

What are the two most important things you rely on from your franchisor? Dordell: Best practices/tips from other franchisees and national brand support to help brand recognition. Fenske: We need best practices that evolve as we learn more and marketing/branding support.

What I need from vendors: Dordell: Show the value of the service you provide. How have you helped other business owners? Understand our challenges. Fenske: High-quality products and great customer service/communication.

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

How? Dordell: We follow our franchisors’ marketing strategy, which is a combination of digital advertising and community events. As for brand positioning, we need to demonstrate the value of what we provide and why someone should invest in their own health. Fenske: It’s all about connecting through

social media, making people feel something that drives them to get in touch. How is social media affecting your business? Dordell: As with anything, the biggest challenge is anyone can post anything online, whether it is true or not, or just comment on ads and be negative. On the plus side, it does help people learn about our brands and offering. It’s a must to be on there and posting regularly. Fenske: Our advertising is almost exclusively on social media platforms, and the best advertising is when someone posts about their experience for their friends.

How do you hire and fire? Dordell: It’s so difficult to find solid part-time employees who really have a passion for fitness and aren’t just looking for a job. We do the best we can with training, but if someone is not the right fit we try to take action as soon as possible, following the right legal steps. Fenske: We use standard questions for all interviews to make sure all candidates are treated equally. We have a simple process for hiring: phone screen, audition (for teachers), and in-person (panel) interview. When it comes to letting someone go, we try to take action as soon as possible if we determine that someone isn’t the right fit for the role.

How do you train and retain? Dordell: We do lots of shadowing of managers and other employees in each studio. We also rely on training modules provided by the franchisors. Fenske: For our front desk teams, we have an onboarding process to make sure they know all the core components of

their job. And we do a lot of role playing, not just when hired, but all throughout an employee’s time with us. For teachers, we have a more robust training to ensure that they are following our corporate standards and methodologies. Each brand has a “Bridge Training” that takes their knowledge and experience and helps them learn to shape it so it meets our expectations.

How do you deal with problem employees? Dordell: Give them verbal feedback, then proceed to verbal and written warnings, if necessary. In some cases, if an instructor or operations staff person is a liability to the business we have taken action to terminate them. Fenske: Be honest, offer regular feedback, and set actionable goals with appropriate support. If that doesn’t work out, it’s better to part ways than to continue down the wrong path.

Fastest way into my doghouse: Dordell: Not being responsible with business resources, or just not caring. Fenske: Withholding information or outright lying will land you in the doghouse.

COVID-19

How did Covid-19 affect your business? Dordell: One of the Pilates studios was shut down for 10 months. The other was opened at half capacity. We opened the first YogaSix in July 2020, the height of the shutdown. It felt like it was a constant scramble and pivot.

How have you responded? Dordell: We were able to get government funds through

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PPP and the Employee Retention Tax Credit. One major change in the yoga studio is people no longer feel like they can be eight inches apart, which was standard in most studios. What changes do you think will be permanent? Dordell: Providing a little more distance between mats in the yoga room. Sharing more about our cleaning procedures.

BOTTOM LINE

(Note: All responses are Dordell’s.)

Annual revenue: $3.2 million expected this year (approx.).

2023 goals: Solid profitability for each studio, getting the CycleBar on track for repeatable monthly performance, and hiring some additional shared staff we can delegate more to.

Growth meter: How do you measure your growth? Monthly membership numbers and revenue numbers.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, I’d like to be working less and have strong managers running the business with our direction. In 10 years, hopefully a sale/exit and heading into retirement.

Do you have brands in different segments? Why/why not? We have stayed in fitness but with the same franchisor (XPonential).

How is the economy in your region affecting you, your employees, your customers? More people are moving into the area. The home market was very hot

in 2022, but is slowing. There is still lots of growth, and the area demographics are getting younger. We are competing for parttime employees with lots of spas, country clubs, and hotels.

Are you experiencing economic growth in your market? Yes, although it’s very focused here on retail, service, healthcare, and hospitality. We don’t have a lot of other industries.

How do changes in the economy affect the way you do business? We tend to have slower summers. Seasonal visitors leave, so we adjust number of classes and number of hours for our operations team when there are fewer active members.

How do you forecast for your business? We review numbers weekly and monthly, forecasting membership and revenue.

What are the best sources for capital expansion? The SBA loans from Covid were very helpful. We self-funded the initial two studios and we partnered with a small community bank on a loan for the first YogaSix studio.

Experience with private equity, local banks, national banks, other institutions? Why/why not? Local bank. We did partner with one, and that was a pretty smooth process. Some of the smaller banks at the time were sitting on a lot of cash and looking for places to invest.

What are you doing to take care of your employees? From a healthcare perspective, we don’t offer health benefits. For

our full-time managers, we offer a monthly expense reimbursement if they purchase their own health insurance plan. We do offer a 401(k) plan after a year and offer matching funds for that.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? It’s a challenge! Competition for workers is tough, so we end up offering more per hour to make it attractive. And it’s very easy for them to find another job that pays a little more.

What laws and regulations are affecting your business and how are you dealing with them? State employment laws around timekeeping are always a challenge to keep up with. We have an employment law firm on a monthly retainer, and they answer any questions and give us advice. They also put on seminars and tell us what we need to be concerned about.

How do you reward/recognize topperforming employees? Discretionary bonuses. Our managers have bonus targets for revenue.

What kind of exit strategy do you have in place? We don’t have a full strategy in place yet, other than we assume we will want to sell the company within 8 to 10 years. 

Hungry Howie’s Pizza is proud to announce its 50th anniversary in 2023. Throughout the years, our brand has remained steadfast in its commitment to quality ingredients, such as 100% real mozzarella cheese, and making fresh dough daily in all our stores. Our unique position in the pizza category is solidified by our introduction of innovative products, such as Flavored Crust® Pizza, and e ective vertical marketing strategies. We also make superior use of technology, further contributing to our reputation as the “Best Kept Secret” in the pizza industry.

Units that were open and reporting sales to us for the entire fiscal year, and excludes units in the State of Florida, affiliated units, units which opened or closed during the entire fiscal year, legacy units which are not obligated to and do not report sales to us, and units that were closed for more than ten consecutive days during the entire fiscal year due to a force majeure event (e.g. COVID-19). The Franchised Units are in 20 states. These Franchised Units have reasonably similar operations as those being offered for sale. See Item 19 of Hungry Howie’s 2022 Franchise Disclosure Document for additional information. This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin.If you are a resident of one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your jurisdiction.

All stores are independently owned and operated. Prices and participation may vary. If you have online ordering issues, visit hungryhowies.com/help. If you need help ordering online due to a disability, please contact your Hungry Howie’s store for assistance. Pepsi, the Pepsi logo and related marks are trademarks of PepsiCo. ©2023 Hungry Howie Pizza & Subs, Inc. All rights reserved. Hungry Howie’s® and its related marks are trademarks of Hungry Howie’s Pizza & Subs, Inc. Use of the trademarks in the State of Florida are under license to HH Pizza, Inc.

Hungry Howie’s

Driven To Succeed

Making the most of a second chance in life

Written by SARA WYKES

JEFF BURROUGHS

Franchisee/Owner

Company: Blue Pen Management

No. of units: 27 Sport Clips Haircuts, 4 Rita’s Italian Ice

Age: 51

Family: Robyn (wife), Tyler (son), and Titan, Tango, and Charlie (furry kids)

Years in franchising: 14

Jeff Burroughs made a bad mistake when he was 18. He says he contemplated what might become of his life, what others would think of him, and whether he could ever recover. Ultimately, he made another choice. Instead of hiding, he would get people to believe in him again. “I had to remarket myself, to think of myself as a brand,” he says. “It was hard. Everybody knew me and knew my past.”

After 23 years in the auto industry, Burroughs had been able to move beyond his youthful mistake. That event drove him to succeed, and that drive has not changed. When his auto industry job didn’t allow him to grow, he made another choice and turned

to franchising. He’d met some people in the franchise business, and the fit seemed right: Being his own boss, growing his own business, and involving it in the community were all things he wanted to do. He also wanted to have more than one brand and for them be “people businesses.”

Today, he operates 27 Sport Clips and 4 Rita’s Italian Ice locations.

“The more people I can touch with each one of those businesses, the better,” he says. His son graduated with a degree in business and is now playing a role in the business. “He’s a major part of Rita’s,” says Burroughs, “part of the next generation.”

Another idea that’s a favorite of Burroughs is not just leasing the land for his locations, but buying it. One of his latest purchases is a bank with a drive-thru that will convert well to a franchise location. He’s now considering a third brand and expanding his geographic range.

PERSONAL

First job: Working on the farm and then at Bert’s 50’s Diner, a local ice cream shop/diner.

Formative influences/events: Over the years I can say there have been a few mentors who have helped guide me on the right path. Back when I was in my late teens, some personal trouble caused my life to take a negative turn. This trouble changed my course in life and gave me an extreme drive to succeed. There was a day I was sitting in a one-bedroom apartment shaking a ceramic piggy bank and the noise I heard was my current reality. Because of the trouble I created for myself and my family, it was hard to ask for help. My name was tarnished locally, and my bank account was dry. I began to start my days with a driveto-succeed attitude, which I still do today. One thing I said early on is that I would never hide from what had happened, but instead would use that as a driver to my future success—including a desire to make a difference by giving back in many ways to the communities surrounding my businesses. With my second chance, I make differences daily.

“It’s always been said that if you provide great service and/or products, customers will return.”

Jeff Burroughs

POTBELLY DIFFERENCE TIME TO DISCOVER THE

400+ Shops

32 States

46 Years

Excellent Sales-to-Investment Ratio CONTACT

• Double-digit comp growth

• Flexible shop formats that include:

• Inline, Endcap, Drive-thru and Non-traditional

• Diverse menu with multiple dayparts

• Seasoned leadership team with 100+ years combined experience

Jeff Burroughs

Key accomplishments: Sales Awards with Ford Motors, Team Leader of the Year (2014) Sport Clips Haircuts, Heart of the Champion Award, Franchise Update Media Noble Cause Award (2019), Certificate of Gratitude Award (2019) Calvert County, and several other business performance awards.

Biggest current challenge: Making sure that as we grow the business we can maintain the right culture for our employees. We don’t want to get so large that the employees just feel like a number. Another is doing things at a scale to provide the right support to our employees and customers.

Next big goal: I am still in growth mode with my business, so there is always a goal to grow things to another level. A goal I work toward every day now is to help my son grow more with our business and any other interests he might have. It is exciting to see him grow. We both have similar levels of drive and work ethic.

First turning point in your career: The turning point for me was getting introduced to a franchise opportunity I could do on my own and build my own business. At that point I was in the auto industry working for another business owner with no obvious path for career advancement. Franchising has given me the chance to grow at my own pace.

Best business decision: To make the transition from working for someone else to working for myself. I am now more in control of my personal and business life.

Hardest lesson learned: I have had many setbacks in life, both personal and in business. Now I live by, “I may get knocked down, but I will get back up stronger.”

Work week: My work weeks can always be a little different. There are many days spent in the office working to grow the overall business and/or the performance. We do find time to visit our stores and teams on a regular basis. Because of our community involvement, there can be times we are attending local events. I also support the local fire department, going out on calls as a volunteer firefighter.

Exercise/workout: I stay very active daily. Best advice you ever got: “You get what you give.”

What’s your passion in business? To make a positive difference for others—and myself—through my business.

How do you balance life and work? I love the brands we are involved with. Blend-

ing personal and work life together is easy when you enjoy what you do.

Guilty pleasure: Going to watch oldschool dirt track racing at the local track.

Favorite books: The 10X Rule and Shut Up and Listen!

Favorite movie: “Six Pack” and “Days of Thunder.”

What do most people not know about you? I can get knocked down but I get up stronger.

Pet peeve: People who don’t show up. Just show up!

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

Last vacation: Robyn and I spent a week in Punta Cana in the Dominican Republic. Person I’d most like to have lunch with: Grant Cardone or Tilman Fertitta.

MANAGEMENT

Business philosophy: “You Get What You Give.”

Management method or style: We use more of a coaching management style. Many of our employees come to work for us early in their career. For many employees this is their first job with structure.

Greatest challenge: The greatest challenge I have seen recently is having the ability to pivot on a regular basis to stay in front of the needed changes of the business. I feel we have done a good job with this, but pivoting seems to be a new way to stay ahead of the curve.

How do others describe you? They would probably say I am a “go-getter” and maybe they would also use the word “driven.”

One thing I’m looking to do better: Delegating. I hope to improve delegating tasks to my area managers as a way to educate them and help them grow in their positions. How I give my team room to innovate and experiment: We discuss ideas with our management team on a regular basis. The first step is to work through the pros and cons. Then we discuss the ideas and work to execute.

How close are you to operations? I am hands-on with my business operations. We have area and operations managers who handle many of the operational tasks. This allows me to provide guidance to them while I’m also working on the growth of our company.

What are the two most important things you rely on from your franchisor? Training support and operational advancements.

What I need from vendors: We are always looking for innovation.

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

How? We have taken on more digital marketing than before Covid. Our approach is more about educating and promoting our services or products instead of discounting.

How is social media affecting your business? Social media is important to help communicate the efforts of our business. This communication could support our marketing efforts or highlight our community support projects. We like to make noise and work to keep folks engaged.

How do you hire and fire? Hiring is a major priority for our company because in both brands we are in the people business. The stability and growth of each of our locations is sometimes mostly determined by staffing. Before we fire, we try to counsel, educate, and use corrective measures before termination.

How do you train and retain? Our goal is to train up. Most people come into our business at a very entry level with limited experience. There is always a desire to train on technical and operational skills to improve the customer experience. We like to promote from within our company. Promoting from within requires management training for employees who have the desire to get to the next level.

How do you deal with problem employees? We try to counsel, educate, and use corrective measures before termination. For many of our employees this is their first job or they are still early in their career. There are many who, once hired, have to adapt to structure.

Fastest way into my doghouse: To live by excuses and not by execution.

COVID-19

How did Covid-19 affect your business? As it did to many others, Covid brought our business to a stop for a period of time. We were having good growth going into 2020, but then Covid hit. Once our stores were able to open back up after the shutdown, both brands have seen growth. Rita’s has seen regular growth but has had to deal with product supply issues. Sport

Clips is seeing growth at a little slower pace because of the shortage in available licensed stylists and barbers. We now are seeing more stylists and barbers coming back to the employment market.

How have you responded? When it comes to labor, we never stop recruiting and hiring. There are times product supply has been an issue, so we also recommend other product options that might interest clients. What changes do you think will be permanent? There are some safety items that have been put in place during the Covid experience that will stay. Moving forward, things like online check-in for Sport Clips and drive-thru availability at Rita’s will be important directions that were a real focus during Covid.

BOTTOM LINE

Annual revenue: $12 million. 2023 goals: To add locations for both brands and possibly a third option to the portfolio. My revenue goal is to continue growing client counts at all locations to increase sales.

Growth meter: How do you measure your growth? The most important thing to me is measuring the client count growth. It’s always been said that if you provide great service and/or products, customers will return. So focusing on client growth and added frequency will equal higher revenue growth.

Vision meter: Where do you want to be in 5 years? 10 years? Right now I have three development licenses with Sport Clips and two development licenses with Rita’s. Of course, the plan is to build these out quickly over the next 5 years and at the same time consider acquisitions. There is also a strong desire to add brands to the portfolio. In 10 years, I would like to think that we would still be in a growth mode at our current and future locations.

Do you have brands in different segments? We have Sport Clips Haircuts and Rita’s Italian Ice, a QSR/frozen treat business. How is the economy in your region affecting you, your employees, your customers? The economy seems to be stable in our area, even with rising inflation. When figuring out pricing, labor rate, and potential profit, we make sure all three (owner, employees, customers) are part of the consideration. Are you experiencing economic growth in your markets? In most of my markets we are experiencing overall growth. At Sport Clips, it is all about working to hire more stylists and barbers to handle our growing client count. With Rita’s, as we add new products we pick up more customers looking to enjoy the growing product line. How do changes in the economy affect the way you do business? Inflation has affected both brands, whether increased labor cost or rising cost of goods. The main goal is to continue evaluating to make sure we are providing the right value for a service or product.

How do you forecast for your business? We use many metrics, but several are the most important for both brands. These include client count, total ticket, and client excitement/experience.

What are the best sources for capital expansion? The best method of growth for me for new locations is spending time in the market looking for potential locations. When it comes to acquisition, I have found there is nothing wrong with asking other owners if they have ever considered a sale option. There are some who will welcome the question because of changes in their personal lives and/or wondering what their future direction might be.

Experience with private equity, local banks, national banks, other institutions? In the early days, we used local banks

we had relationships with. This was a great option to start with, but I eventually got the feeling that they wanted me to pump the brakes. At that point, I did research to find lending partners interested in helping us grow with speed. Once we found the right lender, we were given a funding line availability that allowed us to look with confidence and grow with speed.

What are you doing to take care of your employees? Even before Covid we have tried to do the best to treat our employees as family. After dealing with Covid, our company and both brands have come up with programs to help and/or educate on issues that employees might be dealing with. The goal is also for both brands to be the industry employer of choice in our local markets.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? With rising employee cost and inflation we did have to raise product and service prices. There is a heavy focus now on not continuing to raise prices at the possible cost of client count. The decision has been made to accept a lower profit margin with a plan for long-term client acquisition and profitability. What laws and regulations are affecting your business and how are you dealing with them? There are some new labor law changes in our state, but nothing that isn’t workable. The main thing is to stay educated on the changes and to pay attention to the fine print.

How do you reward/recognize topperforming employees? We do a company newsletter with Sport Clips that helps us celebrate top-performing employees and teamwork actions. Our Rita’s locations do an employee-of-the-month award to promote a top-performing team member. During the year with both brands, we run different performance contests with rewards that include gift cards or other fun prizes.

What kind of exit strategy do you have in place? Recently, we brought our son into the Rita’s brand in hopes that when it is time for the exit he can carry the torch into the future. With Rita’s, when we open or relocate a location, we are focusing on trying to acquire the real estate as a long-term personal investment. With Sport Clips, there could be several options if we decide to exit: getting our son involved, helping other owners grow by acquisition, or even helping top employees become business owners. 

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Growing Up Franchising

Taking over—and expanding—the family business

Written by SARA WYKES

RACHEL WALLACE

Franchisee, CEO

Company: CHF (Cup Half Full)

Investments, SRW Management

No. of units: 25 Subway, 3 Scooter's Coffee (11 total signed), 1 Best Western Plus

Age: 47

Family: Parents, one older brother and sister-in-law, two nephews, fiancé

Years in franchising: 20

Years in current position: 10

Some people might look at Rachel Wallace and assume it was just natural she would turn to franchising. After all, she grew up with it. Her parents bought their first Subway when she was 14, and much of her childhood was endowed with talk of business at home and examples of what you do when you own a business—like walk away from your Christmas celebrations because your employees working that day are overwhelmed with customers.

That immersion was intense enough that Wallace didn’t start her post-college career at a franchise. Instead, she spent several years as an accountant with a food production company named by Fortune magazine as one of

the world’s most admired in that industry. “It was just a matter of proving that I could go out and do something on my own,” she says. “You need to have that real-world experience, and I’m very glad I did. I came to appreciate how the corporate world works.”

When her parents retired in 2012, she took over the franchise and doubled the number of Subway businesses in Southern Illinois. Wallace focuses her Scooter’s Coffee and Subway expansion on small towns ranging from 2,000 to 20,000 residents eager for new development.

She also decided early on that her version of corporate culture would be more personal than seemed usual, especially with her upper-management team. Her goal? “To produce a culture that people want to be with.” With the size of her franchise holdings now, she must delegate and put faith in her employees. “I can’t do without them. I have wonderful people who do an amazing job.”

PERSONAL

First job: Subway at age 14.

Formative influences/events: Both of my parents owned their own businesses over the years and bought into their first Subway when I was 14. Growing up, I spent a lot of time listening to them discuss business, riding around looking at properties, hearing about employees and different issues. I learned so much from these times. What I would call “common business sense” was really the kind of knowledge that universities teach these days to those who don’t grow up listening to it. I was blessed with a free education in entrepreneurship.

As for an event that stands out, we once all went to Subway on Christmas Day to work because that store was the only restaurant open in town. (It was near the interstate.) It was so busy the employees were overwhelmed and called us for help. We all left Christmas dinner and went in to get them caught up. It was quite the family affair. That’s just what you do—whatever needs to be done.

Key accomplishments: Getting my first real job as an accountant with Archer

“I want to show my crew that I’m willing to do exactly the same job they are doing and that it can be fun.”

Rachel Wallace

Rachel Wallace

Daniels Midland. Building a hotel from the ground up. Becoming a Governor with Best Western. Winning the M. K. Guertin Award with Best Western—twice. Building and opening three Scooter’s Coffee kiosks in one year.

Biggest current challenge: Being in two places at one time. I try very hard to be engaged in each of the towns where I do business. Because my radius of business is up to 2½ hours from my home, it is difficult to be everywhere when I need and want to be. The ideal situation would be a helicopter, but I don’t really see that in my future. Basically, it’s going to have to come down to better time management.

Next big goal: Opening the remaining eight Scooter’s Coffee kiosks currently under contract.

First turning point in your career: When I realized that my body wasn’t going to work as hard as I wanted to. About 12 to 13 years ago I was working in the stores and my back wasn’t allowing me to do the physical part of the job any longer. I started to move into the office and learn the job that my parents were doing then. I started to take over the operations details and lead upper management. I was beginning to build the team to be as I envisioned it and to start to change the company culture. I also began to learn more about the details of planning, building, financing, insurance, human resources—all of the factors that go into a business that people don’t always think about—not always the most fun, but they are so important. Not long after this, my parents stepped out for good and I found myself at the helm.

Best business decision: Taking chances and diversifying.

Hardest lesson learned: No matter how hard you work, failure can happen. I opened a Rosati’s Pizza and Sports Pub franchise 3 days before the world shut down for Covid in March 2020. That obviously was a very difficult time, and the work put in to that restaurant was immense. After 2 years we closed. I had to realize the reasons for the failure were many—and several of them were because of choices I made or didn’t make. It seems a lot of the hardest lessons are also the most expensive!

Work week: Usually I work Monday through Friday, but my phone is always on

and I’m always available. If something comes up and I’m needed, I am willing to drop what I’m doing and be there.

Exercise/workout: This part of my life could use a lot of improvement. I try to take the dog for a walk every night. In the summer I swim a little, but mostly that means getting in the pool and pretending that I’m working out.

Best advice you ever got: “It ain’t right, but that’s the way it is.” In other words, know that sometimes the world isn’t fair. There are times that not everything is going to work out in your favor, but you will make it through and find a way to accept it or adapt and move on. Getting caught up in the why or dwelling on it will only bring you down. Move on and figure out a new solution. What’s your passion in business? I thoroughly enjoy making people smile and ensuring they have a great experience at one of my locations. I love to go in and wait on customers myself. I love to go in and have a great time with the crew, provide fast service, and have fun while doing it. If I make mistakes in front of the customers and they get a good laugh, even better. I want to show my crew that I’m willing to do exactly the same job they are doing and that it can be fun.

How do you balance life and work? That starts with having a fiancé who appreciates your work life and even works for the company. My life doesn’t revolve around my job, but I do need people in my life who can respect what I do. That means understanding that at any given time my phone may ring or a text may come through that is work-related. It takes a special person to understand this and, luckily, I have that person in my life. He also recently came on as the director of construction for the company and has become an integral part of building the new Scooter’s buildings, as well as remodeling many of the Subways and other repair work. I have also taught my staff how to handle most every situation.

Guilty pleasure: Watching reality TV. It’s so ridiculous, but I love it.

Favorite book: Although I enjoy reading from time to time, I don’t know that I have a favorite book. I like to read murder mysteries.

Favorite movie: I have seen the movie “Clue” so many times I can recite it. Same with “Gosford Park.” Very different, but both favorites.

What do most people not know about you? I have an accounting degree and that I worked 4 years for Archer Daniels Midland in Decatur, Illinois.

Pet peeve: Pen clicking in a meeting. It drives me nuts when I’m in a meeting and there are people clicking their pens or making some kind of nervous noise.

What did you want to be when you grew up? The joke has always been that when I was asked this question when I was young, the answer was, “in charge.” I didn’t really know what that meant or what all it entailed, but for some reason that was the goal.

Last vacation: Just getting ready to take a cruise in the Caribbean.

Person I’d most like to have lunch with: Unfortunately, she has passed, but the Queen of England. I have always had a fascination with the British monarchy. Queen Elizabeth saw so much during her reign. She is someone who took over at such a young age and was able to navigate in a male-dominated world and develop so much respect. I would love to know all of the things you would probably never get out of her because she was so good at being the queen.

MANAGEMENT

Business philosophy: Make It Happen.

Management method or style: I am very democratic in my leadership style. I take a lot of information from each of my key team members, and often we make decisions together based on what everyone feels is the best choice. There are times I will be the final say if necessary. I rely on the people in the field to give me the information necessary to make decisions.

Greatest challenge: Too many opinions sometimes. With so many stores, there can be an endless number of options of how to answer one question. Often, each answer will work. How do others describe you? Opinionated. Not afraid to speak. Quick-witted.

One thing I’m looking to do better: When you work as the leader, you become used to speaking up anytime you want to. When I get into meetings with other franchisees or other leaders, I have been working to keep myself quieter and to be less emotional about certain subjects that can sometimes cause me to be more aggressive with my opinions.

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Rachel Wallace

How I give my team room to innovate and experiment: I am not the creative one in my bunch. If my team comes up with an idea they are willing to try, such as a sales contest, I’m very happy to support them in finding a way to reward the winners. If they can give me a spelled-out plan that is fair and measurable and inspire others to put in the work, I am happy to give them the budget needed to reward participants.

How close are you to operations? I have a director of operations at each of the QSR chains, and I have a general manager at the hotel. I also have a director of business and employee development in Subway and for the hotel who is also my partner-franchisee in Scooter’s Coffee. Then there are two regional managers and six district managers and a store manager at each Subway. I have monthly meetings with the district managers and above. I am involved in all promotions and pay raises. I also monitor each store’s progress. What are the two most important things you rely on from your franchisor? Communication and assistance. One of the number-one things I need from my franchisor is to know who to contact when I have an issue. Scooter’s is amazing at this. They excel at franchisee support in almost every area. Communication from the franchisor is also of utmost importance.

What I need from vendors: Loyalty. A vendor that can stick with me through the issues that arise with products is one that can earn my business. If they can admit a fault and fix it quickly instead of making excuses and dragging out an issue, they can earn my trust.

Have you changed your marketing strategy in response to the economy? Because my businesses are franchises, my marketing is controlled at the corporate level for the most part.

How is social media affecting your business? Social media is a double-edged sword for sure. As quick as it is to alert customers to your great news, it’s just as quick to alert them to something that may be just a rumor a disgruntled employee is spreading. It can be your best friend and your worst enemy. How do you hire and fire? I don’t currently do much of the hiring, and I’m only involved in the firing process if it’s a major deal.

How do you train and retain? I find that it’s important to ensure that you are giving plenty of feedback to new employees or to

employees who are in a new position. We have job descriptions of each of the levels that are in the company. We give 3-month, 6-month, and annual reviews to new management trainees.

How do you deal with problem employees? The best thing you can do in this situation is to speak with them directly. In this day and age, so many managers will try to do this by text or email. As uncomfortable as it may be to sit down and speak with a person face to face these days, it is still the best form of communication.

Fastest way into my doghouse: Lie to me. This is one of my big three rules. If you screwed something up, come and tell me and we will work through it.

COVID-19

How did Covid-19 affect your business? It was a devastating hit to the restaurant and hospitality industry. It was a learning experience that will certainly not be forgotten. How have you responded? Every day was something different. We had to learn to pivot with each new rule and regulation that came out. Our concerns had to focus on the safety of our employees while maintaining the longevity of our businesses.

What changes do you think will be permanent? I think that the customer demand for cleanliness has increased. There has also been an odd twist on tipping in the industry that began during Covid and has continued. Now, many minimum-wage-level staff are getting tipped for a job they are getting paid full wages to do.

BOTTOM LINE

Annual revenue: $22.5 million.

2023 goals: Remodel five Subways and build two Scooter’s kiosks.

Growth meter: How do you measure your growth? By the number of personally signed Christmas cards that I send out to every employee each year. My goal is to be over 500.

Vision meter: Where do you want to be in 5 years? 10 years? I hope to have completed the Scooter’s builds and perhaps even expanded to more markets if possible. It wouldn’t be out of the question to have another hotel in my future either.

Do you have brands in different segments? Why/why not? Yes, I have restaurants and a hotel. I find that there is a need to

be diversified. The pandemic is a wonderful example of why we need diversification. How is the economy in your regions affecting you, your employees, and your customers? We are definitely feeling the higher food and labor costs and the decrease in customer counts in the restaurant business. With so many benefits available to people these days, employees are less likely to come to work for a minimum-wage job. Are you experiencing economic growth in your market? With Scooter’s, I believe there is room for growth in some of my markets. The coffee business is one that is much more insulated from inflation.

How do changes in the economy affect the way you do business? You have to find more and more ways to be frugal.

What are the best sources for capital expansion? Much of what we have done has come from within the family partnership. We also use our local bank.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We strictly use a couple of local banks we have developed relationships with. There is a higher level of trust with a local bank. There is also a much higher level of service. Local banks know you personally, know your track record, and are willing to take a chance on you if necessary.

What are you doing to take care of your employees? I don’t do any of this job by myself. I am surrounded by so many incredible employees who have been on my team for many years, several for more than 15 years. It is important to me that they are recognized for their work. They also know that I will have their back if necessary. I do for them what I can to make their quality of life better.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? This is an issue I’m still trying to navigate. We have to raise prices for our customers, but at some point we can’t go any further.

What laws and regulations are affecting your business and how are you dealing with them? So many businesses are looking for employees—quality employees. Unfortunately, as businesses we cannot compete with what the government gives away free.

Rachel Wallace

How do you reward/recognize topperforming employees? Last year we started the Wally Award to recognize the manager who best stood out for the year

as leading with our company values. They receive a plaque and an iPad in front of all of their peers. I make it a point to recognize milestone anniversaries with the company.

What kind of exit strategy do you have in place? A great question that perhaps I will be ready for next time we talk. 

Building a Nest Egg

A career-ending injury led T. J. Moe from the NFL to franchising

Written by SARA WYKES

T.J. MOE Owner

No. of units: 2 Smoothie King, 1 HomeVestors

Age: 32

Family: Married, 2 kids

Years in franchising: 8

Years in current position: 8

When T. J. Moe was growing up he and his dad talked business all the time, but professional football was his first goal. He made it, but not for very long—nowhere near the length of time needed to earn him the kind of income he’d counted on having as a nest egg after football. Instead, he found himself having to employ his business education much sooner than he’d planned. That’s when he turned to franchising—in particular to franchises that in one way or another provided him with what he needed to start building that nest egg anew.

A friend in Chicago had a HomeVestors franchise and introduced Moe and his old-

er brother, Scotty, to the system. For a brief time the brothers, now partners, worked with that friend, learning the system. Just 3 months later they opened their own HomeVestors franchise in St. Louis.

Moe and his brother also are Smoothie King franchisees with 2 stores. Their thinking was that Smoothie King would provide a reliable income, while HomeVestors allowed them to do something beyond just running a business. It’s turned out well, and Moe is invested in continuing to expand the business, with no plans to exit anytime soon.

“In general, the tool that people use to go from poverty to stability is to buy a house. It is the American Dream,” he says. And he happens to be in St. Louis—not a growing city, but a place where houses can be bought and renovated for far less than in many other major metropolitan areas. Moe and his brother are buying homes in areas of the city where property neglect has left many houses in dire need of renovation. Their most recent renovation took a home that had been left open for anyone to come in and converted it into a rental property that quickly found new renters—two nurses. “It’s now contributing to the local economy,” Moe says. “St. Louis is a vibrant market.”

PERSONAL

First job: Archway Industrial Coatings, laying decorative rock over driveways.

Formative influences/events: My parents are married and both poured their love and energy into my life since the first day I can remember. My father coached my football teams starting when I was 8 and continued through high school. My parents brought me to a Christian church as a kid, where I developed my beliefs and values. My brother is 6 years older than I am. We come from a blended family, so we didn’t grow up in the same home. When he went to college, I came to visit for a full week. Without that bonding time, I don’t think we ever would have started this business together.

Key accomplishments: Missouri Football Gatorade Player of the Year in high

“The biggest benefit of a franchise is the national brand recognition. When you open the doors, people are already familiar with the product.”

school, 3-year starter and captain at the University of Missouri, second team AllBig 12 Wide Receiver.

Biggest current challenge: Time management. There are a lot of opportunities available, but it is a challenge trying to balance those opportunities with raising two kids under the age of two, prioritizing my marriage, and staying involved in church. I also work for BlazeTV on a show called “Fearless with Jason Whitlock” that takes a fair bit of time each day.

Next big goal: Accumulating 50 rental properties. We are currently at 31. Our goal is to be at 50 by the end of 2023.

First turning point in your career: My brother and I have dabbled in rental properties since 2014. We had picked up one unit per year on average until we met a friend who had a HomeVestors franchise in Chicago. He introduced us to the system and we worked with him for a short time. Three months later, we opened our own franchise in St. Louis. In our first year, we added two rental units. We added 13 units in year two and 10 units in year three. The franchise has allowed us to begin to scale and make this a real business instead of a side hustle. My brother quit his job at a church last year to do this full-time. It’s now our primary focus each day.

Best business decision: When the pandemic hit in March 2020, many of our competitors scaled back into a “wait and see” position. We did just the opposite. We tripled our marketing within just a few months. We have found that every time we have been aggressive, we have been rewarded for it.

Hardest lesson learned: Two things. The first is that time kills all deals. We’ve lost tens of thousands of dollars by not pursuing an opportunity or lead quickly enough. The second is that good contractors/vendors are worth their weight in gold.

Work week: Seven days a week. It’s flexible, but there are no real days off in these businesses.

Exercise/workout: Seven days a week. I run, lift weights, and try to stretch some every day.

Best advice you ever got: Delayed gratification is the key to building wealth. To be something you’ve never been before, you have to do something you’ve never done before.

What’s your passion in business? Building. Money is great, but there is nothing that replaces the feeling of growth in the business.

How do you balance life and work? Not great.

Guilty pleasure: Gas station candy.

Favorite book: The Bible.

Favorite movie: “Remember the Titans.”

What do most people not know about you? I once showered with Tom Brady. (I signed with the Patriots in 2013 and spent the season on injured reserve.)

Pet peeve: People with no self-awareness. What did you want to be when you grew up? Professional football player.

Last vacation: Cancun, Mexico, in November 2022.

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

MANAGEMENT

Business philosophy: To focus on delivering high-quality, value-adding renovations to homes, with the goal of improving the standard of living for homeowners and improving the city, while also generating a profit. Management method or style: Pragmatist.

Greatest challenge: Empathizing with others. I don’t seek a ton of empathy for myself and therefore don’t naturally give it to others. It’s a constant focus to make sure I can empathize with employees and customers so they feel valued. If people don’t feel valued, they don’t want to work for you or do business with you.

How do others describe you? I’m an 8 on the Enneagram. That means I have to be very careful in my approach because some can see me as aggressive and intimidating. I’m generally confident, assertive, and logical.

One thing I’m looking to do better: Implement better systems so I am less involved in day-to-day management of our renovations. How I give my team room to innovate and experiment: As long as the job meets our standards, we don’t micromanage how it gets done.

How close are you to operations? At Smoothie King, I don’t oversee the daily operations. Our manager does that and one of the other owners oversees him. At HomeVestors, I directly oversee the operations. If I’m not in tune with every aspect of the daily operations, things get lost quickly and we struggle. At any given time we may be working on retailing or renting 10 or

more houses. Without proper systems and follow-up, chaos ensues.

What are the two most important things you rely on from your franchisor? Advertising. The biggest benefit of a franchise is the national brand recognition. When you open the doors, people are already familiar with the product. The other thing is access to other franchisees for advice and gathering market information. Sometimes it’s very difficult to differentiate whether an issue I’m having is a problem unique to me and my approach or a system-wide issue. Access to other franchisees brings clarity to that problem.

What I need from vendors: Priority. We spend several hundred thousand dollars at The Home Depot each year. Because of that, we have two direct contacts that allow us to get what we need in a timely fashion and often delivered to the work site. Someone is always offering to go above the normal service because of the amount of money we spend each year. That has allowed us to be more efficient in the business, buy more houses, and spend even more money with those vendors. Have you changed your marketing strategy in response to the economy? How? We tripled our marketing within just a few months after the pandemic started.

How is social media affecting your business? Our target market at HomeVestors is typically older people who don’t spend a lot of time on social media. We still have a social media presence, but not as heavy as many of the other marketing avenues. How do you hire and fire? My brother and I do all of the hiring and firing personally. How do you train and retain? At Smoothie King, it tends to be a young person’s job. The average employee is 16 to 18 years old. That means there is frequent turnover as kids have different seasons in their lives (sports seasons, summer break, etc.) and then go on to college. Aside from that builtin challenge, getting dedicated employees has been the most difficult part of the business since the pandemic started. This seems to be a nationwide problem. We have raised the pay offering and made sure to create a work environment that people want to be a part of, but it’s still our biggest challenge that we haven’t yet been able to solve at a high level.

More than 300+ active locations across 30 states, with dozens more in development.

Caring for nearly 6 million patients a year.

More than simply an emergency room alternative, AFC provides value-based, patient-first healthcare.

Ranked #81 on Entrepreneur’s 2023

Franchise 500®

Ranked #12 on the 2023 Franchise Times ‘Fast & Serious’ list.

No medical experience needed. Prime territories and area development opportunities available. Visit AFCFranchising.com for more information.

How do you deal with problem employees? Depending on the situation, they usually get a couple of chances to course correct, but as soon as I identify that they are an issue, I’m considering how to find a suitable replacement. Toxic people destroy team morale. One toxic person can, and often does, make the good members of the team want to find a different job.

Fastest way into my doghouse: Disrespect toward me, others in the company, or customers. Disagreements are acceptable and welcome, but disrespect in the workplace isn’t tolerated.

COVID-19

How did Covid-19 affect your business? The marketing price per contract that we purchase is significantly higher now than before the pandemic.

How have you responded? My brother and I started our HomeVestors franchise in St. Louis in March 2020—the exact month the pandemic started. Many of the other franchisees in the market dropped their marketing dollars significantly, and several stopped marketing entirely. We decided to double our marketing immediately. Within 3 months it had tripled and has continued to rise since then. Each month we have seen continued growth. It’s more difficult to get houses, but the ones we get turn big profits. At Smoothie King, it’s tougher to gauge. A Club Fitness gym opened up directly across the street in 2020 and drove a lot of sales to us. We had a record year during the pandemic in both Smoothie King and HomeVestors. What changes do you think will be permanent? Our advertising budget soared. That’s unlikely to return to previous levels. It is now more than 10 times what it was before Covid.

BOTTOM LINE

Annual revenue: N/A.

2023 goals: 45 purchases with 15 rental property acquisitions.

Growth meter: How do you measure your growth? Gross sales at Smoothie King. At HomeVestors, our goal is to accumulate rental properties, so that makes the measurement a bit different. We have to retail enough houses to float the business and take home a profit, but our primary objective is to keep as many rental properties as possible.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, our goal is to have 75 rental properties. In 10 years, our goal is to have 150 to 200 rental properties. These are the long-term investments that will provide residual income and build wealth. If we retailed every single house, we could make a great income today, but our goal isn’t to accumulate as much cash on hand as possible, it’s to build wealth as quickly as possible. That’s done through rental properties. Are you experiencing economic growth in your market? St. Louis is a great real estate market. It’s a top 25 media market. All of the studies show that housing affordability is near the top of the list compared with median income in the area. We saw a nice uptick in both rental and home prices, but there hasn’t been a big contraction yet. We’re expecting a minor drop in prices, but more like 1% to 3%; that compares with national projections as high as 10% to 12%, according to some banks and real estate companies. Our plan is to stay aggressive in buying.

How do changes in the economy affect the way you do business? It’s always a good time to buy homes for the right price. The real estate market is in an interesting spot since the market crash of 2008. Once people got their feet back under them and started buying homes again, the demand has surpassed the supply by quite a lot. A balanced market would keep a 6-month supply of homes always listed on the market for sale. If it’s more than a 6-month supply, it’s a buyer’s market. If it’s less, it’s a seller’s market. The last time there was a 6-month supply in St. Louis was September 2015. As of January 2023, we are at a 1.6-month supply. We have a seriously low inventory, which means that homes are going to sell if priced correctly. Therefore, the economy around us has less of an impact than in many other places because of the minimal supply of homes. Everyone needs a place to live, so homes will continue to sell.

How do you forecast for your business? For HomeVestors, there are quite a few factors: interest rates, housing inventory, supply chain, and which way prices are trending in the market.

What are the best sources for capital expansion? Private lenders, personal cash, and local banks.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We have primarily used private lenders and local banks.

What are you doing to take care of your employees? We do quarterly reviews with each employee. We have an open-door policy so that any issue, concern, or idea can be addressed at any time. But even if nothing is happening, we check in quarterly to make sure people are content with their role, schedule, other employees, etc.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? While it’s unpopular to admit, those costs are passed on to the consumer as much as they can be. If they weren’t, the business couldn’t survive. At Smoothie King, the price per smoothie has increased, while at HomeVestors the initial purchase price for the homes tends to be lower. We certainly take a hit as well because all the cost can’t be passed on to the consumer, but a fair bit of it does get passed on. The other way to compensate for the lost profit is more business. That’s why we’ve increased our marketing so much. If we do far more volume, that helps keep the numbers at an acceptable range. How do you reward/recognize top-performing employees? At Smoothie King, we have competitions each week for sales, and they’re rewarded for that. We also keep tabs on anyone willing to be available to cover extra shifts, stay late, and show initiative in growing the store. Those people often get bonuses and pay raises, along with priority when they do need some time off. It pays to be a team member who cares about the success of the business.

What kind of exit strategy do you have in place? There will always be buyers available with Smoothie King. The brand is great and known nationwide. We have people approach us all the time about purchasing the stores. At HomeVestors, we also don’t need a real exit strategy. The rental properties are owned by me and my brother, Scotty. The business is an avenue to create income and wealth, and not really something we view as an asset to sell. We certainly could sell it, but that’s not in the plans at any point. The brand has infinitely more value to us as franchisees than it ever could as an asset to sell.

Martin Fontela

Alex Melvin

Ray Muncy

Neil Hershman

Challenges Gladly Accepted Here

Flying, summiting, ultra-triathlons, and now multi-brand franchising

Written by SARA WYKES

NEIL HERSHMAN

Owner, CEO

No. of units: 7 16 Handles, 3 Dippin’ Dots & Doc Popcorn, 2 Captain Cookie

Age: 27

Years in franchising: 4+

Years in current position: 1+

Licensed as a commercial pilot at age 18, summiting Mt. Everest (and several other tall peaks), competing in ultra-marathon and ultra-triathlon races— even winning a 703-mile long triathlon. These are just a few of Neil Hershman’s accomplishments—and he’s only 27.

In the franchising arena, Hershman is a multi-unit operator for dessert brands Dippin’ Dots & Doc Popcorn, and 16 Handles. He also operates two joint venture stores in New York City for Washington, D.C.-based concept Captain Cookie. Clearly, he doesn’t shy away from dreaming big and accepting new challenges. Quite the opposite!

When he dreamed of being an astronaut, he earned his pilot’s license at 18. After graduating college with a degree in astrophysics and finance, he joined a New York City asset management fund as a financial analyst. But the longer he was there, the more he could see that sitting at a desk all day was not the future he envisioned for himself. Instead, he wanted to be involved with “a consumer-facing product that could impact a lot of people” where he could be hands-on. Turns out an opportunity in franchising was right around the corner...literally.

Hershman lived close to a 16 Handles frozen yogurt shop. “I saw it was always busy, and I saw a lot of opportunity,” he recalls. At the time, he says, the brand’s ownership was looking for “fresh blood and new energy.” He saw a chance to become franchisee and, more than that, a leader. And in August 2022, he bought the company from founder Solomon Choi.

It’s all about finding the things you like doing, says Hershman, and then doing the best you can at them. Today his focus is on building a nationwide network that runs successful franchise locations and connects with the communities they serve.

PERSONAL

First job: Financial analyst at CIFC Asset Management, a structured credit fund. Formative influences/events: Steve Jobs (Apple). My father, a surgeon who owns his private practice medical office.

Key accomplishments: Receiving my commercial pilot license at 18. Summiting various mountains, including Mt. Everest. Competing in various ultra-marathon and ultra-triathlon races, including winning a 703-mile long triathlon. Acquiring my first 16 Handles location in New York City with SBA financing. Opening the first Dippin’ Dots store in New York City in its Flatiron District. Opening 16 Handles’ Times Square location during the pandemic to show the city’s resilience. Acquiring the 16 Handles franchise and bringing in a new leadership team to operate and grow the concept.

“I lead by example and aim to be the hardest-working person at my companies.”

Next big goal: Getting 16 Handles to 100 units across the U.S.

Best business decision: When I first acquired a 16 Handles location, it was a turnkey business with a full staff. Instead of treating it as a passive investment, I spent every day working open to close so I could fully understand the operation and learn from the employees and customers. By doing this, I realized the business wasn’t optimized or operating at full efficiency, and that there was additional profit to be gained. As I created new systems, I thought about how to scale them, and ultimately acquired additional locations and implemented my new strategy.

Hardest lesson learned: Don’t grow too much too fast. In this business, you’re only as strong as your weakest operators. If you spread yourself too thin and don’t have strong operators in the store, you own a subpar store. The strain of trying to manage a subpar store can steal your attention from locations that matter most, and, overall, can lead to a negative spiral.

Work week: I am working at the franchisor level pretty much nonstop. We meet in the office during weekdays, but I still spend weeknights and weekends in my shops to feel the operation and to watch how customers experience my products. I do a lot of meetings throughout the day and, after my 6-month-old daughter falls asleep, I catch up on emails and paperwork between 10 p.m. and 2 a.m.

Exercise/workout: I train for ultra-marathons and high-altitude mountaineering, so I spend a lot of time running and biking, usually six or seven days per week.

Best advice you ever got: Not the best, but an interesting one: “You’ll catch more flies with honey than with vinegar.”

What’s your passion in business? To lead an industry and be able to have a product and brand so good that you are constantly setting the precedent.

How do you balance life and work?

I don’t think there has to be a traditional “balance” when you are hands-on with your work, as many of us in franchising are. When your work makes you and your family happy, you can be both working and living all the time. I try to keep my office meetings to weekday mornings so I can spend weekends with my family, but we all live on a flexible schedule. I do think taking some occasional breaks for travel and vacation is important.

Favorite books: Endurance by Alfred Lansing, Unbroken by Laura Hillenbrand.

Favorite movie: “The Big Short.”

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

Person I’d most like to have lunch with: Benjamin Franklin.

MANAGEMENT

Business philosophy: I exclusively invest my time and capital into long-term strategies with companies that have great products, active managers, and dedicated customers. I believe you can will your way into business success by being focused, determined, and perseverant.

Management method or style: I lead by example and aim to be the hardest-working person at my companies to show customers and employees what it takes to grow in your career. I give my employees a lot of creative freedom and independence because there may be multiple right solutions to a problem. But I do provide guidance and direction to ensure a cohesive working environment. Greatest challenge: Finding a balance with middle management between being bureaucratic and having too many small rules and too much paperwork to the point where they aren’t focused on the actual job at hand—but also having systems and processes in place so managers can reference cohesive procedures across multiple locations with hundreds of employees.

How do others describe you? Bold, creative, direct, credible, fast-paced, hard worker.

One thing I’m looking to do better: Find a better system for employee reviews so we can help provide constructive feedback more frequently to our retail-facing staff, who may not receive training on every scenario and could use more on-the-job testing and guidance.

How close are you to operations? Very—especially during busy seasons or management changes. I try to spend a few hours a week in every store, hearing from the employees and managers, helping to resolve ongoing issues, and documenting upgrades for maintenance staff to work on. I’m a perfectionist when it comes to the small chip of paint and such.

What are the two most important things you rely on from your franchisor?

A franchisor needs to provide constant LTOs and specials to keep the menu fresh, and a well-stocked inventory of product. Many times, franchisors provide a premium-branded product, and while it can be replaced, customers expect the taste and experience of the premium product, so there is no excuse for any outages with them or their distributor partners. At 16 Handles, we take this pressure and hold ourselves accountable to make sure we are always stocked for our many flavors of frozen yogurt and soft serve, as well as 50+ toppings.

How is social media affecting your business? It’s helpful to stay relevant to my customers and provide them with local-level updates such as specials and promotions. With so many brands competing for customers’ attention online, I think it’s most important to just stay present and subconsciously stay at the front of customers’ minds. How do you hire and fire? We hire through traditional websites like Indeed and Craigslist, but also through a lot of referrals from existing employees who love their jobs and have friends or former co-workers who could be good fits.

How do you train and retain? All employees are onboarded electronically, which gives them a chance to really read through various policies on their own time so they understand expectations like policies for time, attendance, or uniform. We work through various checklist and training guides over the course of two to five in-person shifts. We usually have employees spend time on their first shift interacting with customers to ensure they are a good fit for the team and can have positive and fun interactions with our happy guests.

How do you deal with problem employees? We like to provide constructive feedback through verbal and written corrective actions and offer retraining or guidance where applicable. We want all of our hires to work out and will always support employees who are willing to learn and progress. Fastest way into my doghouse: Treating a customer poorly for no reason. We sell dessert. We are in the business of giving away smiles!

COVID-19

How did Covid-19 affect your business? Initially, in New York City, we had to close all our stores because we were the epicenter of the pandemic. During this closure, I took the time to do some extra

cleaning, painting, and preventive maintenance to my stores. After a few weeks, my staff was eager to start working and we reopened for delivery and pickup only, before eventually reopening for in-store customers in the summer. We did require masks and gloves, which we handed out to customers who needed them. During the summer, I realized New York City was resilient. Because so many commercial tenants had closed for business and retail leases were readily available and cheap, I decided to further invest in the future and open new locations.

BOTTOM LINE

Annual revenue: My stores produce about $8 million per year. The 16 Handles, which I manage as the franchisor, does much more than this, and our start to 2023 has shown great revenue increases over 2022.

Growth meter: How do you measure your growth? For my stores, I look at growing each revenue center—in-store, catering, and third-party delivery—as well as maintaining reasonable labor costs and rent. This

should, in turn, lead to a higher bottom-line profit margin. Additionally, I look for capital improvement projects where new revenue can fund store updates, which in turn can increase customer demand and lead to more revenue.

Vision meter: Where do you want to be in 5 years? 10 years? I want to expand 16 Handles into the largest frozen dessert concept in the U.S.

Are you experiencing economic growth in your market? Yes, all sales are up double digits over 2022 because of higher prices, higher customer satisfaction, and brand awareness guerilla marketing.

Experience with private equity, local banks, national banks, other institutions? Why/why not? I think the SBA program is great for franchising and can help new operators get into the business costeffectively and experienced operators grow with leverage instead of giving up equity.

What are you doing to take care of your employees? We do annual holiday parties and outings as well as manager events.

We are flexible with our time-off policies and reasonable about scheduling around team members’ personal lives. Additionally, we give away gift cards and cash bonuses to top-performing employees and constantly run competitions, such as who can sell the most water bottles in one shift.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? A front-facing guest display that allows satisfied customers to add a small tip with their credit card payment has really helped increase net pay to employees without increasing our costs. I did invest a lot of time and money to build a comfortable and easyto-use POS experience so that customers do not feel awkward or forced to tip unless employees go above and beyond. This, in turn, incentivizes employees to give all customers a great experience because it could end up in their paycheck. 

2023 MULTI-BRAND 50

We know our customers’ time is valuable – we don’t want to waste it. That’s why we’re committed to delivering high-quality, high margin drinks through a fast and friendly drive-thru.

With the smaller model, our team is able to complete orders with lightning speed – serving smiles at the same time.

What sets our brand apart from the rest of the coffee industry is our commitment to speed.

2023 Multi-Brand 50

RANK COMPANY

TOP 25 BRANDS OF THE 2023

MULTI-BRAND 50

Private Equity Pros & Cons

Weighing the benefits and pitfalls of outside investors

Written by Colleen McMillar

Ten years ago, Jamie Weeks walked into his first class at an Orangetheory Fitness studio. Right away, he could tell the vibe was different from other gyms.

Much of what he liked about the feel of the place was that everyone from longtime fitness fanatics to recent couch potatoes seemed to feel comfortable working out together.

That was on a Tuesday. By that Friday, Weeks had bought the rights to operate three Orangetheory studios in Metro Atlanta.

He opened his first in 2014. Three years later, he had 12. By every measure, Weeks was a successful franchisee. He embraced the idea of creating a sense of community in an ego-free environment. He was making money and could run his business, Honors Holdings, the way he saw fit. But Weeks, much like some of his most committed customers, wanted to grow stronger faster. So in December 2017, he turned to Prospect Hill Growth Partners, a private equity firm.

Today, with 142 studios, Honors Holdings is the largest Orangetheory Fitness franchisee.

To be sure, there are business owners who balk at the idea of joining forces with private equity investors. They worry that, in return for deep pockets, they will be required to cede control of their business. However, for Weeks and a growing number of other

franchisees, the benefits of PE partnerships far outweigh the concerns.

“At the time, at Honors, it was my first time running a company,” says Weeks. “A private equity firm has seen and done this hundreds of times, with hundreds of CEOs, and so their guidance on how to build this and make it bigger is invaluable. How else would I get that?” Honors Holdings now has 1,600 employees and studios in 14 states.

Using insights gained from working with Prospect Hill, Weeks started his own family office, Legacy Franchise Concepts, which is now one of Dogtopia’s largest franchisees. Another company, SweatHouz, which offers services such as infrared saunas and cold plunges, also sits under the Legacy umbrella. Weeks, who is the founder and CEO of SweatHouz, plans to build more than 100 corporate studios and partner with a handful of multi-unit franchisees across the country.

When the PE firm approached Weeks about also partnering up on those ventures, he didn’t hesitate. “For me, it’s their experience,” he says. “It’s their ability to help with capital funding to grow and scale the business. It’s a depth of expertise that’s hard to get anywhere else.”

Then there are the tradeoffs

“You’re definitely giving up some ownership.

Justin Sharbutt CEO Conquer the Day

That’s the biggest one,” says Justin Sharbutt, CEO of Conquer the Day, which owns 54 Tide Cleaners and 7 co-branded Dunkin’ and Baskin-Robbins stores in Texas and Colorado. “You have another boss now, telling you what to do in your business.”

Jamie Weeks

Founder/CEO Honors Holdings

Still, Sharbutt has found his partnerships with private equity investors so beneficial that he plans to turn to them again for future ventures. In this economic climate, banks aren’t as willing to lend money, he says. “The other part of it is that private equity can help you grow a lot faster. They are putting up cash, money that they’ve raised. Instead of having to go one store at a time, you can open multiple stores at once.”

Franchisees hear warnings about the risks of entering an agreement with the wrong private equity firm—those that are overly aggressive and want to grow too quickly, sometimes in the wrong markets. There are cautionary tales about private equity firms that push companies to slash costs and employee numbers in the name of efficiency and, along the way, damage the company’s reputation and culture.

But that has not been Weeks’ experience. Far from it. “Owning fitness boutique studios during a global pandemic, you really find out who your partners are,” he says.

Fresh Dining Concepts

As businesses started temporarily shuttering in March 2020 because of Covid-19 lockdowns, he made a proposal to Prospect Hill during one of his daily check-ins. “I said, ‘I think we need to pay every employee.’” Not only did the firm agree—it agreed immediately. “At that time, we had about 900 employees, part-time included, and we paid every employee,” he says.

That confirmed to Weeks what he already knew—that he and Prospect Hill were aligned on the kind of culture they wanted to create. Employees had to come first, he says. “Without the right culture, you can’t scale. If I’m having turnover of 100% and having to retrain employees every year, it’s impossible to scale. But if I have the right culture, then we can scale very quickly.”

He’s even written a book on the subject, scheduled to be released this spring: It Takes a Fight: The Secret to a Great Culture that Nobody Mentions.

Franchisees are getting bigger Fresh Dining Concepts—which operates Carvel, Cinnabon, Jamba Juice, and Auntie Anne’s—announced last year that Franchise Equity Partners was investing $44 million to secure minority ownership. The new funding will help Fresh Dining continue its aggressive growth strategy. Since April 2021, the company has ballooned from 50 locations to 225. Whereas it once operated exclusively on the East Coast and in Texas, the company is now on the West Coast and has pushed into the Midwest.

When the alliance was announced, CEO Luis San Miguel issued a statement: “We feel like the team at Franchise Equity Partners and our organization share a lot of the same perspective, making this a perfect fit.”

Over the years, much has changed about the ways franchisees grow their business, says Kevin Bush, chief strategy officer at Fresh Dining. “Franchising, historically, has been mostly concentrated and built by individuals, going one at a time. That served its purpose, and there’s nothing wrong with it. It’s still a great way to get into franchising, and really a great way for a lot of people to get involved in small business. But that’s not to say it’s the only way to get involved,” he says. “To be a larger operator that has growth ambitions and a growth track record like we do, it’s very hard to do that without some type of institutional capital partner. Most companies that are growing at a fast clip can’t

Restaurant Group

fund it just with internal cash flow, and so you need other sources of funds.”

Private equity is an ideal source of capital because franchising is consolidating, he says. “There are bigger operators than there have been in any time in the past. To me, by definition, that means you need larger capital providers as well.”

However, Bush says, it’s not just about the money private equity can bring. He agrees wholeheartedly with Weeks that it’s about the expertise that an investor like Franchise Equity Partners brings. “To me, there are always benefits to having more smart people in the room with you,” he says. “There are all kinds of nuggets of wisdom I’ve been able to learn from them in the past, and I know I’ll learn from them in the future because they’re speaking to different franchisees in different systems every day.”

Are you on the same page?

In 2016, 2 years before they had bought a single unit for the company they were starting, Robert Rodriguez and Tom Scott sat down together to map out a plan. Both had been separately toying with the idea of

Kevin Bush Chief Strategy Officer

Robert Rodriguez CEO Tasty

putting together a multi-brand conglomerate of quick-service restaurants. Then a mutual friend connected them.

Rodriguez had deep experience in the franchise world, having held executive positions at numerous restaurant brands over a four-decade career. Scott was a managing partner with the private equity firm Triton Pacific Capital Partners. Together, they came up with the vision for Tasty Restaurant Group and set a goal: acquire 1,000 QSR units in 10 years. Their company, which will celebrate its fifth anniversary in June, has amassed a little more than 400 units in 21 states so far. Their brands are Pizza Hut, Burger King, Dunkin’ and Baskin-Robbins, KFC, and Taco Bell.

“It is absolutely a unique approach; it is not your traditional private equity investment in the QSR business,” says Scott. “What a lot of other private equity investors have done is investing from a commingled fund with other types of businesses, whether it’s other restaurant concepts or completely unrelated investments.” But Rodriguez and Scott’s venture sought to bring together capital, operational expertise. and a long-term commitment, not just a single investment, from the very start.

They made sure their own goals aligned, and the benefits of their partnership have been clear, says Rodriguez. “In my case, it was access to capital and having a partner who is able to manage the capital side of the business to get to the size that we wanted to be in a relatively short time. That’s not easy to do.”

Although it was clear that Tasty Restaurant Group had the financial ability to grow quickly, as if “on steroids,” Rodriguez says, that can produce other concerns for franchisors—concerns it’s important for franchise operators to thoroughly understand before taking on private equity partners.

“Franchisors are always nervous when you grow that rapidly because they don’t know if you have the bandwidth,” says Rodriguez. “In this case, on the financial side, we have the bandwidth. So the issue from the franchisor’s point of view is whether you have the bandwidth from the people side. We’ve been very, very fortunate to have put together a fantastic team.”

Two reasons franchisees fail are lack of capital and lack of operational expertise, he says. “If you have both and demonstrate

consistently that you can do that, franchisors would love to have you enter their brand.”

“It’s not just about capital, “says Scott. “It’s capital and the operational expertise. And I think we’ve been thoughtful from day one in terms of how we’ve architected our strategy, to be thinking about the different constituents and how that works for those constituents, as well as for us and our investors.”

Approaching the halfway point of their 1,000 units in 10 years goal, Tasty Restaurant Group has been able to bring together seasoned professionals in every aspect of operations, from human resources to information technology. That’s what puts franchisors at ease, says Scott, and why Tasty is “the right group to step into a large transaction.” 

Voices of Experience

Jamie Weeks: “Private equity partners are not for everybody. You have to have a mindset here that they are going to be in control and know more than you. And they do. They know more than you. They have the experience. And you have to look at that and say ‘I’m going to take on this partner and I’m going to be a sponge. I’m going to soak up as much as I can, because if I ever do this again, I may not need a private equity partner, or I may want one.’ Not every personality is going to work with a private equity partner, and not every private equity partner wants to work with a founder/CEO.”

Justin Sharbutt: “Make sure you’re aligned with your values because there are going to be those tough conversations, and you might not agree, so you have to be aligned on the bigger goal.”

Tom Scott Managing Partner Triton Pacific Capital Partners –

Kevin Bush: “When you bring in a partner that’s giving you money, trusting you with the funds to do the right thing, there’s stuff that comes with that. It’s not just free money and you can’t do whatever you want. That might be what some perceive as a negative, but that’s just the reality of the world.”

Robert Rodriguez: “We aligned early. We agreed on what we were doing, had common language on what we were trying to get done, and specific time frames. That’s the burden you have in this world. If you’re going to be the operator, you have to deliver the results.”

Maximizing the Sale

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There are many paths to the best deal

Written by M. Scott Morris

Maximizing the Sale

There are many reasons multi-unit franchisees decide to sell locations. Partners might not be getting along. A sudden illness or life change could dictate the time to sell. Maybe the next generation isn’t interested or lacks the skill set to run the business. Perhaps it’s just time for a wellearned retirement.

No matter what ultimately convinces owners to sell, they’re all hoping to maximize the return on their investment. Buyers are out there and interested in making deals, but how do the two parties get together?

At Flynn Restaurant Group, CEO Greg Flynn and his team are always looking for ways to grow through acquisitions. “We’ve bought restaurants that were very high performers and checked every box, and we’ve bought some restaurants that had lots of opportunity and were real turnaround situations,” says Flynn. His company owns more than 2,400 Panera, Applebee’s, Pizza Hut, Taco Bell, Arby’s, Wendy’s, and KFC restaurants across the U.S. “We’re not doctrinaire about doing it one way or the other, but it does affect the price.”

Even if a restaurant is shuttered, empty, and forlorn, the right buyer could see a perfect opportunity to swoop in and pull off a cost-effective resurrection. Chris Benner, COO at Trident Holdings, is in the process of developing his company’s 54th Captain D’s in a former Bojangles that’s been sitting empty. “The broker called me and we got together with the sellers and put a deal

together,” he says. “We acquired it and are under construction right now to convert it into a Captain D’s.”

Community matters

When it comes to making an offer, buyers of franchise units say they’re not particularly concerned with the business cycle. They’re willing to step in as long as the property makes sense and aligns with their goals. For instance, if a franchise isn’t in a buyer’s current market area, that could stop a deal before it gets started.

“A lot depends on where it’s located. Geography becomes extremely important,” says David Plait, who owns 21 Hungry Howie’s pizza restaurants in Michigan. “What I’ve learned with my gray hair is that if I can keep my company with all of its different entities close to our nucleus, then I can train. I can still have an influence, and my best people don’t have to travel too far.”

When Plait and his team are interested in buying another Hungry Howie’s, they begin by asking questions around the prospective neighborhood. “We’ll spend some time in the community and get to the schools,” he says. “We get to the church and see what kinds of community involvement they have. If they have nothing going on, I’m terribly excited because our template will work beautifully.”

On the flip side, if the restaurant has a good reputation for community involvement, it could signal that other things are going right and that the price could be higher. When he’s looking to add to CMG’s 101 Sonic locations, Nik Bhakta, a principal with CMG Companies, also pays attention to a restaurant’s reputation. “Yelp, Google reviews, third-party delivery reviews, all of that plays a part,” says Bhakta. “You’re looking for things where the service was not up to par, the food was cold, things like that.”

Clean up your act

After gathering opinions from customers, it’s time to make a visit and experience the product firsthand. “Are they good restaurants?” says Flynn. “Are they located in a good area? Are they in good condition? If not, what’s it going to take to get them into good condition?”

Greg

CEO Flynn Restaurant Group

A potential buyer can learn a lot about a restaurant by its general appearance. Benner said a tour of an underperforming facility will often reveal low-hanging fruit that can be easily fixed. After acquiring two Captain

D’s restaurants in Alabama, Benner’s team opened up dining rooms that had been closed since the arrival of the Covid-19 pandemic. This had an immediate impact on sales.

“Neither restaurant was using third-party delivery services like DoorDash, Uber Eats, and Grubhub. We implemented that and immediately captured additional revenue,” says Benner. Customers also appreciated the chance to order online.

A clean building may seem like a necessity in the foodservice industry, but that’s not always what potential buyers find during their initial review. “Cleanliness is important,” says Plait. “Lighting is important. Keeping the proper image is important.”

The little issues add up over time. If a buyer has to write checks to bring a location up to snuff and make it more comfortable for guests, that will lower the purchase price. “I can replace capital investment and equipment with the stroke of a pen,” says Plait. “I walk into a location and see the equipment is tired, so we bring new equipment in. All of that’s easy.”

People are harder

Staffing problems can be more difficult issues for new owners to fix. That’s why Plait likes to know the quality of the staff before making a purchase. “The best commodity beyond the goodwill in the community, which would obviously be the customers, is the people you’ll inherit,” says Plait. “I can tell you that I have not fulfilled a person’s

Flynn

Chris Benner

COO Trident Holdings

Maximizing the Sale

purchase price after I understood who I was going to inherit and how difficult it was going to be for me to operate that location and restaff it.” When buying new locations, he says, quality general managers, store managers, and assistant managers are proven assets.

When Bhakta is considering the acquisition of a new Sonic in his trade area, he’s also interested in the quality of the staff. “It’s a big, big point to look at,” he says. “How has it been doing operationally? How are the employees being paid? How many employees have been in and out the door?”

In Bhakta’s experience, it can take 12 to 36 months to turn around an underperforming restaurant. Training is one of the determining factors in how long that may take. “If an employee is well trained, that’s key,” he says. “It’s hard to teach an old dog new tricks, so you have to hire new people, train them well, and slowly weed out the bad ones.”

Fixer-upper or thriving business?

All the buyers we interviewed say they’d be happy to buy underperforming units, fix them up, and pocket the profits. They’re also open to paying a premium to purchase a booming business, especially if it’s located at the corner of Main & Main.

Sam Lamba and his daughter, Anchal Lamba, operate 111 Gong cha bubble tea restaurants in nine states. “If your numbers are strong, you will get good value for your business,” he says. “You want to maximize. Running a good business definitely helps.” If the business is humming along nicely, in-

vestors are willing to pay what’s required to take custody of the cash flow. Owners of underperforming businesses can increase their return on a sale by tackling the low-hanging fruit themselves.

Flynn, whose company owns the most restaurants in our 2023 Multi-Brand 50 rankings (see the list in this issue), says embracing good business practices is important whether someone wants to sell or not. “But if they are going to sell, make sure it’s in good condition because buyers will deduct for deferred maintenance and inefficiencies,” he says.

With the understanding that some factors will always be out of a seller’s control, steps taken to increase a location’s profits before going on the market can have a definite impact on the final purchase price. That’s why Flynn advises sellers to take the long view. “I would say make sure that in the years leading up to the sale that you are running them well and making as much money as possible.”

Benner agrees that investments in new signage and equipment make sense only if the owner has no immediate plans to sell. “Let’s say I’m 62 years old and want to be retired by the time I’m 65. That’s the perfect time to prepare my restaurants for sale,” he says. “Let’s inject a little capital right now and freshen up the restaurants up, staff them up, and get them looking up to date. Get them comfortable and attractive so they attract some guests.” Such steps will increase the eventual sale price. Until then, the owner will reap additional revenue from the improvements.

Plait says he has no problem dipping deeper into his pockets if he knows he’s getting a well-run restaurant at a proven location to expand his Hungry Howie’s portfolio. “With a good restaurant that’s been producing for a good long time and is solid, the proprietor believes it’s worth whatever it’s worth,” he says. “That guy you don’t negotiate with because he knows what it’s worth, and I don’t want to lose that property to somebody else who also knows what it’s worth.”

Who you know

If the business is ready to sell, there are multiple pathways to finding the right buyer. Plait believes in the personal approach. Over the years, he has built relationships with other Hungry Howie’s franchisees, who often will call him when they’re ready to move on. “I’ve been around for a minute and I’m trusted,” he says. “And I don’t want them to go down to option number two.”

David Plait Franchisee Hungry Howie’s

Relationships have been important in growing Bhakta’s portfolio of restaurants. He has shaken hands with owners at workshops and conferences and made sure they know CMG is in acquisition mode. “I think meeting face-to-face is still a big part of it,” he says. “That resonates well with a lot of ownership groups we’ve bought from just because they’re legacy franchises. They’ve operated for 20 or 30 years. It’s kind of a family thing.”

Benner has gotten wind of potential deals from brokers. For other purchases, Captain D’s corporate has informed him of franchisees in his trade area looking to get out of the business. “Some of our acquisitions literally have been because we just picked up the phone, made a cold call, and asked them if they would consider selling their restaurants,” says Benner.

It might not be probable, but it’s always possible for a buyer to walk in with an offer too big to ignore. These days, Lamba focuses on Gong cha and his passion for bubble tea, but he used to own about 230 cellphone stores. “We were approached for this buyout. We gladly accepted the numbers that were offered, and we made the sale,” he says. “It was not us aggressively going out to sell. We were happy where we were and not really looking to sell, but the numbers they offered made sense so we were happy to sell,” he says.

“If we have buyers looking to move into an area, we can take them to this franchisee who’s looking to sell,” says Lamba. “They do

whatever arrangements they can do. That’s how we can help them make a sale.”

For established buyers, the franchisor usually must approve the sale. Franchisors know what to expect when Flynn’s company takes over, but that wasn’t the case in the early days. “It used to be a joint effort between the buyer and seller to pitch the transaction to the franchisor and make the franchisor comfortable,” says Flynn.

Leases, land, and money

Once a potential buyer is seriously interested, it’s time to dive into the financials. The amount of transparency involved in the deal depends on the seller. “They may not be willing to share the numbers,” says Lamba.

Hiding information might work if the buyer is inexperienced, but anyone with a track record of buying franchises will make sure the deal makes sense to them. Flynn says there has to be a responsible amount of due diligence on the part of the buyer. “We wouldn’t make an offer until we had an understanding of the basic business, the brand, the geography, and such,” he says.

Buyers also will want to examine a business’s leases before making an offer. Flynn says any issues should be worked through before the deal is signed. “For example, you might have a lease on a highly successful restaurant that is about to expire.”

A seller often can get a higher price for a franchise by selling both the business and the property. Buyers are often willing to

purchase the land as part of the deal. Some will hold onto it, while others will sell it later. According to Benner, there could be times when the business is the liability and the property is what entices a buyer to open up their checkbook. “Sometimes the real estate is worth more without the business,” he says. “The business is devaluing the real estate.”

Other options

When selling multiple franchises, the best deal might come from an established company. “In most cases when somebody is buying a large business, a bigger fish is acquiring a smaller one,” says Lamba. “That’s normally what we see happen.”

However, selling to a relatively small operator could result in a higher profit, especially when the seller is willing to take on a level of risk. “If you’re holding the paper,” says Plait, “you vet the prospective buyer intelligently. The franchisor does it as well because they’re not going to bring them in as a franchisee if they don’t fit all the criteria. Basically, you vet them on both ends.”

By serving as the lender, a seller can charge 2% to 3% above prime and collect payments for years to come. “It might be worth $1 to someone who can write a check,” says Plait. “It’s probably worth $1.25 to someone not capable of writing that check, but who has the net worth and enough liquid assets. That’s where the seller gets real value.”

Bhakta says it’s important to keep in mind that a property is only worth what someone else is willing to pay for it. “Let’s say we’re looking at an acquisition and it’s within the area that we’re in, but the seller has an expectation of $10 million, and our max price is at $8 million,” he say. “‘Hey, is there any way we could meet at $9 million? It’s a little bit painful for you to come down to $9 million, and it’s painful for us to come up to $9 million.’ It has to be painful for both, so both sides can walk away happy.” 

6 Questions to Answer Before Selling

When it’s time to sell franchise locations, a number of factors come into play when the seller is looking to maximize their return on investment.

1) Is the business in a prominent location?

2) Is the staff well trained?

3) Does the business have good word of mouth?

4) Is the building clean and comfortable for guests?

5) Are the equipment and signage up to date?

6) Is the franchisor comfortable with the deal?

Sam Lamba Franchisee Gong Cha USA

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Hunting for Employees

Mining today’s discretionary workforce

Written by JOHN DIJULIUS

One of the most frequent questions

I’ve heard business leaders ask over the past 2 years is, “Where have all the workers gone, and how can I attract and keep them?” The pandemic was a professional awakening that caused many employees to reevaluate their professional careers—not only what they want, but also what they’re no longer willing to tolerate.

Who’s calling the shots?

One overlooked segment of the labor pool is what I call the “discretionary workforce”: people who do not have to work, but in the pre-pandemic past chose to work. Who are the people falling into this category?

1. People around retirement age, many of whom enjoy working and don’t want to retire or fully retire.

2. Recent college graduates who decide to delay starting their careers (i.e., stay on mom and dad’s payroll) because graduate school looked like a better alternative.

3. Stay-at-home parents (mostly mothers) who don’t have to work for financial reasons but who like to work a few days a week for sanity purposes.

The gig economy is another crevasse in the labor pool, with hidden workers who continue to reduce the available workforce. Looking for independence, this group includes solopreneurs, Uber/Lyft drivers, business coaches, virtual assistants, freelance writers, and other nontraditional workers.

Overlooked cohorts

Today’s discretionary workforce has become a great group to try to recruit. Shifting from the Great Resignation by capitalizing on the Great Opportunity starts with attracting and retaining women and the older workforce. Earlier this year, global leaders from numerous industries shared with the Fast Company Impact Council how companies can do just that.

“Women’s labor force participation rate in the U.S. has been set back 33 years, and gender pay equity has been set back 23 years,” said Jean Accius, SVP at AARP. “There’s very little gender equity in there. Childcare is important. Paid leave is important. But they are not silver bullets.” For more inclusive workplaces, he says, there must be a commitment to equity and oversight of that commitment. If this can be achieved, Accius believes the positive impact on employee acquisition and retention, and the economic impact on companies and our economy in general, will be tremendous.

Leila McKenzie-Delis, founder and CEO of Dial Global, said, “In the U.S., you have about 10,000 people who are turning 65 every day. Currently, companies are managing around five generations at any given point in time.” Organizations with inclusive company cultures leveraging this diversity in their workforce will enjoy a competitive edge going forward, both from retaining a broad range of talent and from enjoying a deeper understanding of their aging customer base.

For many workers, the Great Resignation is paying off. According to a Pew Research Center report, 60% of people who changed employers saw an increase in real earnings, compared with 47% of those who remained in the same job. Not only that, but approximately 20% of current employees are at least somewhat likely to become job seekers in the next 6 months. Clearly, every organization must have a solid employee retention strategy in place.

5 ways to lead the Great Retention

Now that we have a greater understanding of the post-Covid workforce, how can we best inspire leaders for the Great Retention?

1. Develop great leaders to be “people first.” In the past few years we have asked more of our leaders than ever before. Let’s reward them, let’s help them, let’s train them, let’s inspire them. To evolve into

customer service leaders, new leaders must strike a balance between getting results and being understanding and empathetic with employees.

2. Train your leaders how to lead at a distance. We live in a different world today; leaders have unique responsibilities never before seen. Today’s leaders must know how to lead from a distance, help their employees feel emotionally and professionally connected, and promote a sense of collaboration and work community.

3. Offer career opportunities. From their first day of new employee orientation— and continuously—inform every employee of the professional development opportunities. Share examples of your own rags-to-riches stories of people who rose through the ranks of your company and have been rewarded.

4. Conduct stay interviews. Let’s recognize loyalty. Let’s find out why existing employees stay. For the highest level of employee engagement, we must continue to re-recruit our employees.

5. Share your vision and tie it to your employees’ jobs. It shouldn’t be a shock that so many employees decide they don’t want to stay in jobs that don’t engage or inspire them. The vast majority don’t want just competitive wages and health insurance, they want to be part of something bigger. They are not lazy; they are simply not willing to trade hours for dollars.

Labor shortage as opportunity

While the past couple of years have been chaotic, with dust still settling from the resultant pandemic restrictions and labor shortage, this can also be a time of greater understanding between employers and current and prospective employees. In the words of the late American publisher Malcolm Forbes, “The best vision is insight.”

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 that include Starbucks, Chick-fil-A, Ritz-Carlton, Nestle, PwC, Lexus. Contact him at 216-839-1430 or info@thedijuliusgroup.com.

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Hiring 24/7/365

Recruitment practices that drive franchisee success

Written by LAURA DARRELL

Hiring for entry-level positions in the retail and hospitality markets across North America has become incredibly difficult, with historically low unemployment in many areas. Add the complexities of trying to woo workers back in a post-Covid world, and the situation only worsens. We’ve seen countless stories of ever-climbing starting wages, signing bonuses, and many other perks used to bring back workers, making it difficult for many franchisees to compete for talent in these industries.

There was a time when hiring in retail and hospitality didn’t start until someone gave their two weeks’ notice, but this is a recruiting practice of a bygone era. What’s needed now is a 365-recruitment approach, where franchisees actively promote themselves as a great place to work within their community and online 365 days a year. Posting roles on job boards like Indeed.com and hoping for the best is no longer enough. While Indeed is still an essential tool, it should now only be one part of a multi-method approach, deployed 365 days a year, to finding talent. Specifically, a strong referral program, presence on local and national job boards, active recruitment on social media, and robust community partnerships. Let’s take a look at each tactic.

Social media

Younger generations who typically work in entry-level jobs, specifically Generation Z, have very different job search methods than those of even the Millennials. But not to worry, finding Gen Z isn’t that difficult. One need only head over to TikTok to see how it has become a critical tool in your recruiting arsenal, and many businesses are taking note. Case in point: Chipotle undertook a massive initiative to hire more than 10,000 employees across the U.S. in late 2020, and TikTok was an important part of their strategy; in fact, it generated an additional 7% of resumes, something I’m sure many franchisees

would welcome. If TikTok isn’t your strong suit, enlist the support of Gen Z’s who work for you to understand how the platform works and to help you create short videos for use on TikTok to help attract younger talent. Additionally, leverage your company’s Facebook page to promote your business as an excellent workplace. Find community groups on Facebook and join them. You can often post recruitment-specific content on these pages that help create awareness about why your business is a great place to work. LinkedIn, a professional networking powerhouse, is an excellent place to promote positions such as general manager, regional manager, and the other professional services roles your business may need to hire.

Job boards

While job boards alone won’t solve all your hiring needs, they are still an important tool. However, the job postings of days gone by will no longer cut it. It’s not enough to list the job duties they’ll perform, a starting wage, and all the qualifications they need to work for you. You need to lead with everything that makes your business a great workplace. What perks do you offer to your employees? Bonuses? Team outings? Efforts to give back to the community? These things stand out and make you an employer of choice among younger demographics. So ditch the traditional job posting and lead with what makes your business different.

Referral program

Employee referral programs top this 365recruitment list for one big reason: Employee referrals are the best source of hiring across all industries and business sizes. Employee referrals are already a good fit for your working culture, making them stay longer and decreasing costly turnover, often a hidden cost in your monthly P&L.

A referral bonus is often all it takes to entice your employees to refer their friends. It’s

common to pay this referral bonus after the new employees hit their 90-day employment mark; this tactic can protect you if the new employee leaves before the 90 days are up. Another critical ingredient to a successful referral program is awareness among your existing team. Posters in the staff area and messages pushed out weekly on automated scheduling tools are two great options.

Community partnerships

Last, but certainly not least, is leveraging the power of partnerships within your community. Consider visiting local high schools, community colleges, and community centers. Working with the leaders in these community institutions to promote your business as a great workplace can help you access community boards, newsletters, and even the chance to participate in local job fairs. Building community relationships has been talked about as a great way to build business for a long time, yet it’s still a relatively untapped tactic for recruitment purposes.

All of the above

Recruiting entry-level employees today requires much more consideration and planning. If you want to win the war for talent, it must be top of mind 365 days a year. Taking a hard look at your total compensation, not just the hourly wage, is essential. Your workplace culture is the leading driver of why people want to work for you and, more importantly, why they stay. The ultimate recruitment tool is a culture where your employees feel appreciated for their work and know that you are providing them with meaningful opportunities to learn new skills and advance their careers. Environments like this make people stay. And not having to hire in the first place is the best place to start. 

Laura

Darrell,

author of The Principles of Franchisee Success: Apply Them and Take Control of Your Business Results, is a former franchise operations executive with more than two decades of experience working with some of Canada’s leading franchisors at both the franchisor and multi-unit franchisee levels. Her master’s degree in organizational leadership focused on multi-disciplinary stakeholder collaboration between franchisees and franchisors that unlocks enhanced business outcomes for both. Contact her at ldarrell@oldgrowthdevelopments.com.

When To Sell?

Start planning now to maximize your value

Written by BARBARA NUSS

All business owners should have a long-term exit strategy. It’s where all business planning begins. There are only 3 possible exit strategies: liquidate, sell, or continue as an absentee owner.

1. Liquidation is easy. It takes no planning and yields the least value of the three strategies. You don’t need to factor in how the business is valued when the plan is to walk away. Nobody wants this option. It takes planning to avoid it.

2. If the intention is to sell or transfer the business to another owner, understanding how the business will be valued at exit is essential to the plan.

3. If you expect to continue as an absentee owner instead of selling, the business will create taxable value to your estate, but will not necessarily provide enough cash to pay the tax. Regardless of which exit strategy you choose, there’s no downside to understanding how the business will be valued.

Plan for value

Here is an example of how a vision for a timeline and value proposition can establish a framework for your long-term value plan.

Sample Long-Term Value Planning Worksheet

1 When will the transition take place? 5 years

2 How much do you want the business to be worth then? $3,000,000

3 What EBITDA multiplier is realistic for your industry? 4x

4 EBITDA target for your investment (line 2 divided by line 3) $750,000

5 What’s the average EBITDA for a franchise unit in your system? 10%

6 Sales required to generate target value (line 4 divided by line 5) $7,500,000

Your priority is to execute growth strategies to support the plan. This can be achieved, for example, with one territory with sales of $7.5 million, 2 territories averaging $3.75 million each, or 3 territories averaging $2.5 million each.

EBITDA multiple

Accountants use the term EBITDA a lot, but not everyone understands what it means. (EBITDA is an acronym for earnings before interest, taxes, depreciation, and amortization.)

EBITDA is commonly thought to measure cash from operations. Some refer to it as “free cash flow.” It is derived by starting with the bottom line from the income statement (net profit); this includes adding back discretionary expenses to the owner, taxes, interest, and the two primary expenses that don’t require cash: depreciation and amortization. These are accounting entries that represent the decline in fixed assets (depreciation) and intangible assets (amortization). You don’t write a check for them.

In this way, we attempt to estimate how much of the revenue was left in cash after paying all the expenses. Unfortunately, EBITDA ignores many other things that consume cash in a business, such as increasing inventory, accounts receivable, property, and furnishings. For these reasons, EBITDA does not indicate the amount of cash flow the business produces.

Capitalized earnings

The capitalized earnings approach works on the theory of the goose that lays golden eggs: Buy a goose today that will return golden eggs tomorrow. Based on the volume of golden eggs anticipated and the acceptable ROI, we can work backward to find out how much we would be willing to pay for the goose (its price or value). Let’s take our earlier example.

If you think the investment can earn a profit of $100,000 per year and expect a 10%

ROI, how much would you invest? Easy: If 1) ROI% = profit divided by amount invested, then 2) your value of investment (price) = profit divided by ROI%. Thus, in our example, to generate that profit of $100,000 per year with a 10% ROI, you would have to make an investment (price) of $1 million. When attempting to establish price (value), we estimate EBITDA and then choose a reasonable ROI percentage. When the price is known and we’re deciding if it’s reasonable, we work backward to measure the implied return. The implied ROI is referred to as the capitalization rate, or cap rate. In this example, the asset’s cap rate is 10%.

Investment (price) ÷ anticipated profit = cap rate (ROI)

$1 million ÷ $100,000 = 10%

Generally speaking, the capitalization rate is the yield necessary to attract investors, given the risks. The capitalization rate is selected subjectively, considering the return you would expect to receive on other investments of similar risk.

Cap rate & EBITDA multiples

Here is how capitalization rates compare with EBITDA multiples. A 50% cap rate is equivalent to a 2 times multiple, 33% is 3 times, 25% is 4 times, and 20% is 5 times.

So why does a higher multiple yield a lower ROI? Because the buyer pays a higher price (investment) for the same EBITDA dollars (return), which reduces the ROI percentage (return divided by investment).

In conclusion, maximizing the value of your company begins with an understanding of what you want to accomplish, when you would like to make the transition, and executing a growth strategy to meet those objectives. If you would like to learn more about how to maximize the value of your company, please connect with us at profits@ profitsoup.com and request our 25 tips list. 

Barbara Nuss is president and founder of Profit Soup, a financial education organization specializing in providing services to franchisors and franchisees to enable them to trust their numbers, focus on priorities, make better decisions, and earn more profit. She can be reached at barbara.nuss@ profitsoup.com or 206-282-3888.

Investment Insights

Shaky Economy, Volatile Markets

Is now the right time to sell the business?

Written by CAROL SCHLEIF

Both equity and fixed markets are off to a more optimistic start in 2023 than the performances they turned in last year, when both declined by double digits. The rapid inflation experienced during 2022 seems to be leveling, thanks to aggressive interest rate hikes by the Federal Reserve and other central banks. These hikes brought short-term policy rates from at or below zero to 4.5–4.75% (as of this writing) with market participants actively debating how high that terminal rate will ultimately go—and how long it will stay there.

Amidst this rapid increase in lending costs, consumers have proven resilient, presumably because of the strong labor market and improved progress on wages. Unemployment hit a 50-year low in early 2023 and— despite a mounting list of headcount trims by technology, financial services, and media companies—two job openings remain for every unemployed individual, even as the participation rate has started to climb.

Given the stabilization in markets and hints at a leveling in key borrowing rates, many owners are asking themselves if now is the right time to follow through on that plan to exit the business. The pandemic and other traumas of the past few years have prompted a general reprioritization for many—especially those who had planned to sell even before the pandemic, but held off until the timing “felt better.” So is now that time? Here are a few points to consider.

• While there is volatility in markets and the macro picture, there also is keen interest by investors for solid businesses, especially in industries that will be key beneficiaries of the more than $1.3 trillion in fiscal stimulus teed up by the Infrastructure Investment and Jobs Act

(2021), the CHIPS and Science Act (2022) and the Inflation Reduction Act (2022). The fiscal funds set aside in these acts are aimed at building important infrastructure and productive capacity in a variety of segments of the U.S. economy. To the extent your business can directly or tangentially aid in that process, it may well make an attractive target for a strategic or financial buyer.

• While the macro economy scares some away, venture capital funds have raised record amounts of funding in recent years that they are still looking to deploy. Valuations may have flattened, but they are still high by historic standards. If you have a solid balance sheet and cash flow, they will want to chat.

• Interest rates, though up from zero, are still historically low when looked at through the lens of the past 40 to 50 years. They may well tick up from here, at least modestly, given the strength in the economy and oft-stated Federal Reserve intent to keep them “higher for longer.” This might make pushing the numbers and finding an agreeable settle point sooner rather than later—a wise choice to facilitate moving ahead with your life’s broad plans.

• With fewer companies coming to market at present, the competition for funding sources is less. On the other hand, banks and other lenders are less busy—and arguably more willing to consider cutting more attractive deals than they were when the markets were frothy.

• The legal and planning environment remains attractive, with a high exemption amount ($12.92 million) and the availability of valuation discounts and grantor

trusts. Further, residents in high tax states have the ability to use Delaware Trusts.

• A temporary reduction in margins because of pandemic-related supply chain issues may not reduce valuation from a buy-side perspective

• Rising interest rates have slowed middlemarket deal activity, but it is far from shut down and potential sellers are getting more creative about where to look for financing. Although higher interest rates naturally imply lower valuations, a professionally run competitive sale process can still result in a compelling valuation, especially for the strongest businesses.

• Other factors that may influence your willingness or ability to sell may include family and succession issues. From a balanced life standpoint, are you ready to want to spend more time pursuing other passions and interests? Or perhaps downshifting to consulting for a reduced number of hours per week? If there are no logical family members ready to step in, are there employees you can train and help arrange financing for to help the transition process?

Bottom line

Contemplating a sale can lead to a host of emotional, logistical, planning, and financial decisions in the best of market/economic environments and should not be undertaken without a good deal of introspection. In addition to engaging sound counsel on the legal, tax, financing, and estate planning implications, it will be imperative to engage those closest to you who will be affected by your choice to “go or stay.”

While the pandemic and resulting market and economic turbulence of the past years may have created cover for delaying decision-making, there are actually a number of viable reasons to consider the current framework as the ideal one for taking that next step into writing your own next chapter.

Carol Schleif is Chief Investment Officer at BMO Family Office, a wealth management advisory firm delivering investment management services, trust, deposit, and loan products and services through BMO Harris Bank. To learn more visit www.bmofamilyoffice.com.

Open The Door to Your Next

94.5% Average Occupancy

* 43.4%

*Per the 2022 Franchise Disclosure Document. The following figures are only estimates, and there is no assurance you will do as well if you rely upon our figures. If you rely upon these figures, you must accept the risk. Average gross sales are based on the gross sales reported by 146 locations, and average owner benefit is based on the unaudited operating statements supplied by the 146 locations open for the entire year ending December 31, 2021. Average owner benefit is calculated based on the 2021 year-end benchmark study from Item 19 of the 2022 Franchise Disclosure Document.

IS PRIVATE

EQUITY FOR YOU?

When partnering with PE makes sense

Written by CARTY DAVIS

Even though the calendar has turned to 2023, many of the obstacles franchisees faced in the challenging deal environment of 2022 are still present. Potential buyers continue to be discouraged by rising costs, restricted access to capital, and elevated interest rates. Franchisees considering a sale must seriously contemplate if this is the right time to sell their franchised units.

For companies that cannot wait for the macroeconomic environment to improve, our advice is to get organized and proactive. Financial records, contracts, leases, and other financial documents must be in order. Know the challenges or weaknesses of the business and be prepared to offer options or solutions. Valuations will be lower than in previous years, and a transaction’s momentum will suffer if the buyer encounters unexpected difficulties or surprises during due diligence. In some cases, a quality of earnings (QofE) report may be helpful, with most independent brand transactions requiring one. Proactively completing a QofE report before going to market will often mitigate a purchase price adjustment or re-trade and accelerate the deal timetable.

As part of the transaction, sellers should clearly outline planned and required future capital projects. For networks that have received deferrals or extensions on development or remodeling, the cost, timing, and scope of work should be detailed. In most cases, deferred maintenance and remodels that have not been completed will be a shared cost between buyer and seller. Projections that include proven sales increases have a greater likelihood of acceptance by a buyer. Details on historical sales improvements will also provide the buyer comfort that they are sustainable and not a one-time occurrence. Positive sales and EBITDA momentum are essential when selling in a challenging economic environment. If you don’t have a definite logical buyer, hire an advisory firm to manage the sale, minimizing distractions

with the process while adding value and allowing the seller to focus on maintaining the performance of the business.

Time kills deals

With rapidly changing costs, interest rate swings, global political developments, and government intervention in franchising, completing transactions on an accelerated timeline has never been more important. Uncertainty and the abovementioned factors are contributing to more situations for something to go wrong than at any time in recent memory.

To keep transactions on track, sellers should focus on preparation and relations with contracted parties. Solid relations and communication with landlords can save days or weeks in the closing process in terms of receiving timely consents and lease assignments. Open dialogue in terms of transaction timing can also minimize last-minute demands from landlords. Advanced communication with counsel to prepare initial forms of LOIs, purchase agreements, and other documents also can save sellers time.

Reasonable expectations

A wide gap in valuation expectations persists between sellers and buyers. Many sellers, especially those in the QSR space with drivethrus, experienced strong financial results in 2020 and 2021 and continue to think they can sell based on those results. Buyers, however, are factoring in an additional 6 months of margin compression because of increases in commodities and labor costs. Thus, sellers contemplating deals today must be prepared to get creative to bridge the gap. With traditional capital sources constrained, to get deals done both buyers and sellers should review alternatives such as seller financing, non-bank lenders, earnouts, and rollover minority equity positions. We expect the valuation gap to remain unbalanced until margin pressures and interest rates are more predictable.

The private equity option

While private equity can be a solution for franchises, especially in larger, established tier-one brands, most PE firms concentrate on owning brands, not on being a franchisee.

PE firms, family offices, and other institutional capital will continue to selectively pursue new franchisee opportunities. In limited cases, turning to one of these investors may be the best option for franchisees, especially in growing, independent brands with scale. Family offices can be a better fit for franchisees as they often have a longer-term investment horizon with flexibility to invest in real estate as well as in operating businesses. PE firms generally have a defined investment horizon and are not interested in real estate.

However, many brands are not interested in PE investments in their system. Before embarking on a sale to a PE firm, it is best to understand your brand’s thoughts on institutional capital. Brands vary on this issue; some restrict PE investments while others are more open to the idea.

Selling to a PE firm or family office also can be an option for operators who may want to continue to be involved in the business without the pressure of full control. Often PE firms bring industry experience, backoffice resources, and technology that can improve profitability. Synergies may be present in their existing portfolio, especially if the PE firm is a proven consolidator. Franchisees looking to partner with a PE firm must be prepared to have a laser focus on growth and investment returns.

Conclusion

Franchisees that are successful dealmakers must adapt to different and evolving criteria as deal conditions remain less certain and fluid. Be patient, flexible, and look for fair solutions that can satisfy both parties. The deal environment is expected to be unpredictable for the foreseeable future, so consider adjusting your expectations to improve your chances of success. 

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.

Riddles Inside Enigmas

Looking to understand the labor conundrum

Written by DARRELL JOHNSON

This year will go down as one of the worst for the world economy in four decades. Wall Street strategists are expressing a consensus view that a recession, albeit mild, will hit both sides of the Atlantic:

• One-third of the world may slide into recession in 2023 if the U.S., E.U., and China all slow down as expected.

• While the U.S. may avoid that fate, half of the E.U. will be in recession, and China also faces a tough time; the picture is even more dire for developing economies.

What will determine whether the long-predicted recession will come—and, if it comes, how severe it will be—rests largely on actions by the Fed (absent a regional or global shock). The Fed is waging war on inflation. The story of the 2023 economy is that the Fed won't feel confident on the inflation front until we see a “labor market in retreat.” That means the key is to understand the labor market. We hear labor statistics every day. While the numbers do matter, they don’t reveal just how the pandemic has changed the employment system. To be successful in our growth plans, we better figure out what’s happening so we can satisfy our labor needs.

Labor availability

While product availability and rising costs across the board are affecting businesses, our multi-unit clients are telling us that their biggest concern is labor availability. The recently released IFA/FRANdata Labor Study drove this point home. In this second annual study, the survey shows slight improvement in labor market conditions, but four out of five franchised brands continue to experience constrained growth from labor challenges. Wage rates are rising, the economy is growing, and consumers are spending money. Yet franchisees say their biggest

challenge is filling positions with qualified hires. That was not the case pre-pandemic. So what happened?

To paraphrase Churchill’s famous quote about Russia, the labor conundrum is a riddle wrapped in a number of enigmas. Let’s start with the numbers. Unemployment is at all-time lows and net new jobs far exceed labor availability. Or do they?

In Q4 of last year, the Philadelphia Fed determined that state-by-state data revealed only 10,400 net new jobs were created—rather than the 1+ million reported. That’s quite a disparity. The Fed is laser-focused on measuring unemployment, a number that has always been deceptively noisy and imprecise.

As further evidence of the messiness of labor data, if we look at the last 2 years as measured by the “establishment survey” (which gets the most publicity on NFP Fridays, and is based on interviewing companies), and compare it with the “household survey” (based on polling individuals about their work status), another startlingly wide gap opens.

Labor data do matter, to be sure. However, labor data are unlikely to resolve the central questions around just how the pandemic has changed the U.S. employment system. Regardless of what the data say, if we can’t fill vacancies our businesses are affected. If we are to fill future vacancies in a tight labor market, we must understand why.

Understanding the why

The pandemic did accelerate regular and early retirements. People who are aging out won’t be coming back. Those skills have been put on the shelf. Further, the money supply over the past 3 years affected labor supply. With pandemic-driven government largesse, money supply jumped, reaching a peak in 2021. Americans’ savings accounts

grew and are still fuller than they were before the pandemic. With actual declines in the money supply, household savings will curb at some point. That will help draw some workers back, but for many skilled workers (especially second household income workers), it’s increasingly clear we will need more than waiting for their savings cushion to decline. Raising wage rates hasn’t worked so far, and for most franchisees that’s not a sustainable trend for very long, given margin pressure across the board. Yet we need candidates with higher skill levels.

Two strategies that can help come to mind. The obvious first one is that if you can’t hire specific skills, then create a training program to build those skills. We have a lot of unskilled and largely unqualified candidates, but relatively few skilled employees whom everyone is chasing. Keeping and growing promising unskilled employees is how many of today’s franchisee owners achieved success. Why are we not institutionalizing and marketing this? Franchising has a real advantage with upward mobility if we can properly harness it. We have the best apprenticeship program in America for developing soft skills.

The other practical solution is to emphasize another strength of the business franchise model often overlooked: culture. Offering higher wage rates may open the hiring door, but in an inflationary environment it’s less a strategy than a short-term survival tactic. Do you really want employees who will jump at the first opportunity to make 50 cents or a dollar an hour more? They rarely are the best cultural fits to begin with. You want employees who look for reasons to stay. Give them those reasons. Vacation, WFH, health, educational support, and intraday and after-work company events are especially appealing to younger employees—and can be “employment sticky.” Look hard at what you’re offering. And when you think you have it right, highlight them. When all is considered, I’m pretty sure the cost tradeoff to chasing higher wages will favor benefits. 

Darrell Johnson is CEO of FRANdata, an independent research company supplying information and analysis for the franchising sector since 1989. He can be reached at 703-740-4700 or djohnson@frandata.com.

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S o l v i n g t h e

M u l t i - U n i t C h a l l e n g e

D i s c o n n e c t e d l o c a t i o n s , p e o p l e , a n d s y s t e m s m a k e i t h a r d t o w o r k e f f i c i e n t l y . T h e r e s u l t i s a p e r f o r m a n c e g a p b e t w e e n w h a t l e a d e r s w a n t t o h a p p e n a n d w h a t u n i t - l e v e l m a n a g e r s a r e a b l e t o d e l i v e r .

I n t e g r a t e , A u t o m a t e , & S i m p l i f y W i t h e v e r y t h i n g t i e d t o g e t h e r a n d a u t o m a t e d , T r u O I s t a y s o n t o p o f t h e d e t a i l s s o y o u c a n f o c u s o n t h e b i g p i c t u r e .

T r u O I t i e s t o g e t h e r a l l s y s t e m s , d a t a , l o c a t i o n s , a n d p e o p l e i n r e a l - t i m e s o b u s i n e s s i s d o n e t h e r i g h t w a y , a t t h e r i g h t t i m e , b y t h e r i g h t p e o p l e . I t ’ s t h e f i r s t - o f - i t s - k i n d s o l u t i o n a n d i s b a c k e d b y t h e e x p e r i e n c e g a i n e d f r o m 2 0 y e a r s o f w o r k i n g w i t h m u l t i - l o c a t i o n b u s i n e s s C E O s t o s o l v e t h e i r o p e r a t i o n a l c h a l l e n g e s a n d b e m o r e s u c c e s s f u l .

S t a y I n t h e K n o w . F o r l e a d e r s , a s i n g l e l o g i n p r o v i d e s a c c e s s t o a l l p e r f o r m a n c e d a t a –f r o m l a b o r a n d t r a i n i n g , t o s a l e s a n d i n v e n t o r y . N o m o r e m u l t i p l e r e p o r t s f r o m m u l t i p l e s y s t e m s .

A u t o m a t e A c t i v i t i e s l i k e A M / P M c h e c k l i s t s , f a c i l i t y c h e c k s , a n d m a i n t e n a n c e w i t h a l e r t s a n d i n s t r u c t i o n s s e n t t o t h e r i g h t t e a m m e m b e r w h e n i t ’ s n e e d e d - o r t o t h e l o c a t i o n m a n a g e r i f t h e w o r k w a s n ’ t c o m p l e t e d .

G e t A u t o m a t i c P e r f o r m a n c e a l e r t s . T e a m s g e t a l e r t s w h e n t h i n g s a r e n ’ t g o i n g a s e x p e c t e d s o t h e y c a n b e a d d r e s s e d r i g h t a w a y – E x : w h e n s o m e o n e f o r g e t s t o c l o c k o u t , o r t e m p s o n t h e w a l k - i n s a r e h i g h .

A u t o m a t e T r a i n i n g w i t h a c o n n e c t i o n t o y o u r t r a i n i n g a p p l i c a t i o n a n d d e l i v e r i t r i g h t t o t h e i r m o b i l e d e v i c e .

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LA CONVENTION CENTER

The Palm Beach Tan® footprint expanded by 120 locations in 2022. That’s a 23% growth, the largest during a single year for PBT. We’re growing because we’re one of the most dynamic and evolving retail brands in the beauty and self-care industry. We deliver what today’s beauty and lifestyle consumers desire: the confidence and empowerment derived from looking and feeling their best. We are the undisputed leader in the indoor tanning industry. But we are much more than a tanning brand. With a full line of our own exclusive Premier Collection® tanning and skincare products, wellness and beauty products, and personalized beauty therapies, PBT is a player in the broader beauty industry. Take the next step in your journey and join us for the next chapter of our brand’s success.

GO “ALL IN” ON FRANCHISING IN 2023

LEGAL SYMPOSIUM

May 7-9 | Washington, DC

IBA/IFA JOINT CONFERENCE

May 9-10 | Washington, DC

MFV INTERNATIONAL FRANCHISE EXPO

June 1-3 | New York, NY

Partnership event with MFV Expositions/Comexposium

FRANCHISE CUSTOMER EXPERIENCE CONFERENCE

June 20-22 | Atlanta, GA

Partnership event with Franchise Update Media

MFV FRANCHISE EXPO SOUTH

September 8-9 | Ft. Lauderdale, FL

Partnership event with MFV Expositions/Comexposium

FRANCHISE ADVOCACY & LEADERSHIP SUMMIT

September 11-13 | Washington, DC

FRANCHISE LEADERSHIP AND DEVELOPMENT CONFERENCE

October 18-20 | Atlanta, GA

Partnership event with Franchise Update Media

EMERGING FRANCHISOR CONFERENCE

November 1-3 | New Orleans, LA

Scan here to learn more about these events and plan your year with IFA!

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