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CUSTOMER SERVICE ■ TECHNOLOGY ■ FINANCE

Multi-Unit

MULTI-UNIT FRANCHISEE

Franchisee ISSUE III 2016

2 0 1 6 M V P S

2016

A N D M U 5 0

MVPs

R A N K I N G S

CELEBRATING THIS YEAR’S OUTSTANDING OPERATORS

INSIDE:

■ GROWTH MASTERS

Advice on expansion strategies and tactics

■ MULTI-UNIT CONFERENCE REVIEW

A look back at this year’s record-setting event

Adam Saxton, chief business officer at The Saxton Group, operator of 67 McAlister’s Delis

■ MU50 RANKINGS

Multi-friendly brands by totals and percentages

Mark Your Calendar ! ISSUE III 2016 muf16-3_cover.indd 1

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Multi

-26, 2017 APRIL 23 GAS L AS VE

Unit

FRANCHISING

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FROM $2,000 TO $20 MILLION Financing that’s quick, easy and affordable. I found Direct Capital to be professional, timely & competitive. – Dawn Lafreeda, Denny’s Franchisee



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"Denny's is an iconic American brand that delivers on the American dream. When I started with Denny's at 16, I was a food server. Today, I'm one of the largest franchisees in the system. If that's not the American Dream, I don't know what is."

"As a new franchisee, I was drawn to the leadership position Denny's has in family dining. I love the food, the people and the growth potential. No other brand has this much to offer!" Donnell Thompson

Dawn Lafreeda Den Denny's Franchisee, Owner/Operator of over 70 restaurants in 6 states

Den Denny’s franchisee, former McDonald’s franchisee, 12-year NFL veteran

“As a multi-concept owner with over 200 restaurants, I am very happy with the performance of Denny's since I became a franchisee. Denny's is the perfect complement to my restaurant portfolio." Anil Yadav La Largest Jack in the Box franchisee in the U.S. and Largest Denny's franchisee in California

Denny’s is celebrating over 60 years of growth and today, more than 90% of Denny’s restaurants are owned and operated by franchisees. Our commitment to long-term market share growth is supported by the industry’s leading program offering up to

$1 MILLION OF INCENTIVES FOR NEW & EMERGING MARKETS.

BE A PART OF AMERICA'S DINER. BECOME TODAY'S FRANCHISEE. DENNYSFRANCHISING.COM

800.304.0222

©2016 DFO, LLC 203 East Main Street, Spartanburg, SC 29319. This advertisement is not an offer to sell a franchise. The savings estimate of up to $1 million is based on the potential savings of developing, opening and operating six Denny's restaurants under the New and Emerging Markets incentive program, in comparison to developing, opening and operating six Denny's restaurants without the incentive program. The estimated savings include reduced royalty fees calculated using the $1,493,000 average unit volume of franchised Denny's restaurants nationwide in 2014, as published in Item 19 of Denny's 2015 Franchise Disclosure Document. Of the nationwide franchised outlets whose data was used in arriving at the 2014 franchised restaurant sales figure, 601 franchise units, or 43% of the franchised restaurants, actually attained or surpassed the indicated sales results. Individual restaurant sales performance will vary. There is no assurance that you will do as well or achieve the estimated potential savings. You must accept this risk. See Denny's Franchise Disclosure document for complete program details, including restrictions such as applicable geography and development time frames. Limited time only.

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Multi-Unit

Franchiseecontents I S S UE III, 2016

2016 MVP AWARDS

COVER STORY

MVP Awards 12

Get the inside stories of 2016’s MVP Award winners: Ali Shahib Butt, Jeff Davis, Sunny Ghai, Michael Geiger, Todd and Kelly Mulvahill, Dan Ponder, Adam Saxton, Brooke and Les Wilson, and Ed Wolak BY HELEN BOND

LISTS

MU50: Ranking the most multi-friendly brands 56 This year’s top brands by number and percentage of multi-unit franchisees

FEATURES

Masters of Growth 60

Tips and advice on expansion strategies and tactics BY EDDY GOLDBERG

Multi-Unit Franchising Conference 62 A look back at the record-setting event, featuring Jim Collins and Joe Theismann BY KERRY PIPES & EDDY GOLDBERG

Pro Athlete Profile 68

Former NFL running back Tim Biakabutuka rushes to success with Bojangles’ BY KERRY PIPES

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MULTI-UNIT FRANCHISEE IS S UE III, 2016 2009

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Departments CHAIRMAN’S NOTE

Multi-Unit Franchising Conference: Start Planning Now To Attend! 6 ONLINE

What’s online @ mufranchisee.com 10

Columns

Franchisee CHAIRMAN Gary Gardner CEO Therese Thilgen EXECUTIVE VP OPERATIONS Sue Logan EXECUTIVE VICE PRESIDENT Diane Phibbs VICE PRESIDENT BUSINESS DEVELOPMENT Barbara Yelmene BUSINESS DEVELOPMENT EXECUTIVES Judy Reichman Jeff Katis EXECUTIVE EDITOR Kerry Pipes

CUSTOMER SERVICE

MANAGING EDITOR Eddy Goldberg

Rapid Response 72

CREATIVE DIRECTOR Peter Tucker

When it comes to speed of service, customers want it—now! BY JOHN DIJULIUS

PEOPLE

People Power 73 Lessons from Southwest Airlines’ senior advisor to the CEO BY JASON CONRAD

FINANCE

Trend Spotting 74 Your Q1 results set the tone for the year. How were yours? BY ROD BRISTOL

INVESTMENT INSIGHTS

Time To Recalibrate? 76 Global shifts portend changes in the intermediate term BY CAROL SCHLEIF

EXIT STRATEGIES

Full Steam Ahead! 78 The outlook for the franchise business model is bright BY DEAN ZUCCARELLO

FRANCHISE MARKET UPDATE

Harmonic Convergence? 80 Three trends are coming together to shape the future of franchising BY DARRELL JOHNSON

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Multi-Unit

DIRECTOR OF TECHNOLOGY Benjamin Foley WEB DEVELOPER Don Rush WEB PRODUCTION ASSISTANT Esther Foley TECHNOLOGY PRODUCTION ASSISTANT Juliana Foley MANAGER, SOCIAL MEDIA Cheryl Ryan SENIOR SALES, EVENT & OPERATIONS SUPPORT MANAGER Sharon Wilkinson SENIOR PROJECT MANAGER, MEDIA AND BUSINESS DEVELOPMENT Christa Pulling MARKETING ASSISTANT, SPEAKER LIAISON Katy Geller FRANCHISEE LIAISON, SUPPORT COORDINATOR Leticia Pascal CREATIVE PRODUCTION ASSISTANT Phi Le VIDEO PRODUCTION MANAGER Wesley Deimling CONTRIBUTING EDITORS Rod Bristol Jason Conrad John DiJulius Tom Epstein Darrell Johnson Steve LeFever Carol Schleif Paul Wilbur Thomas J. Winninger Dean Zuccarello CONTRIBUTING WRITERS Debbie Selinsky Helen Bond ADVERTISING AND EDITORIAL OFFICES Franchise Update Media 6489 Camden Avenue, Suite 204 San Jose, CA 95120 Telephone: 408-402-5681 Fax: 408-402-5738 SEND ARTICLE INQUIRIES TO: editorial@fumgmail.com MULTI-UNIT FRANCHISEE MAGAZINE IS PUBLISHED FOUR TIMES ANNUALLY. Annual subscription rate is $49.00 (U.S.) FOR SUBSCRIPTIONS EMAIL sharonw@franchiseupdatemedia.com or call 408-997-7795 FOR REPRINT INFORMATION CONTACT FOSTER PRINTING AT 800-382-0808 www.fosterprinting.com

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Chairman’sNote

MUFC: Why I Attend Each Year

I

immigrated to the U.S. to pursue my dream of becoming a successful entrepreneur. Born and raised in Mexico, where I was trained as a CPA, I earned my master’s degree in business administration from Texas A&M. In 1997 I bought my first franchise, a Golden Corral, with a $100,000 SBA loan. Today my company, Sun Holdings, operates 710 units and is one of the largest franchisees in my adopted country. Ambition, dedication, and discipline are key to developing a large company. Ambition will give you a goal to reach for in your business. But to reach that goal, you must be dedicated and patient. Discipline will help you work hard to achieve the success you seek. As I expanded my company with multiple franchises in different locations, I no longer was able to operate and oversee them myself. A successful franchisee must have (or develop) not only a solid infrastructure to build upon, but also leadership skills strong enough to guide managers and employees from afar to keep each location and each brand running smoothly. These skills and more are critical to success, which is why I look forward each spring to the Multi-Unit Franchising Conference (MUFC). The educational sessions and panels are designed by an advisory board consisting of successful multi-unit and multi-brand franchisees in different industries and stages of growth. Their interests are your interests, their challenges the same as yours—which is why attendees come away each year with useful, relevant solutions to help them grow. This year, advisory board members welcomed first-time attendees at a meet-andgreet cocktail hour, sharing their experience not only in franchising, but also providing tips to help first-timers navigate the rich and varied conference agenda with its workshops and panels. For me, one of the best parts about this conference is the built-in opportunities for informal networking. I can learn about new brands, and which brands are working for my peers. After all, if you want to build an empire, you must be able to determine which franchise brands are the most successful and which will be successful in the future. I also can ask my own questions about topics such as hiring and retaining the best employees, the latest on governmental regulations and wages, and tour the Exhibit Hall to learn about new technology and other solutions. Then there are the keynote speakers. This year featured Jim Collins of “Good to Great” fame and Joe Theismann, former NFL great. Both were informative and inspiring. For Collins, it was the second time he’d been a keynote speaker at this conference. He also joined a panel of multi-unit franchisees to discuss what made them great. Theismann, a Super Bowl winner and MVP with the Washington Redskins, inspired, challenged, and entertained the attendees with stories from his NFL days and as a restaurant owner. That evening, he helped raise more than $30,000 for charity. To sum up: The Multi-Unit Franchising Conference is the place to be next April for its powerful agenda, educational sessions, peer-to-peer networking, franchisee-only events, and inspirational speakers. Finally, I would be remiss if I didn’t thank Michael Kulp, the 2016 chair, for his year of service and dedication to making a great conference even greater—as well as all the past chairs who have built the conference into the great event it is today. It’s a true honor to be named chair of the 2017 Multi-Unit Franchising Conference. See you next April in Vegas!

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Guillermo Perales CEO/Founder, Sun Holdings 2017 Conference Chair

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GROWTH, PROFITABILITY, & 20+ FRESH INGREDIENTS $1,252,653 AVERAGE TOTAL ANNUAL GROSS SALES 650+ RESTAURANTS AWARDS

AVERAGE EBITDA $191,760* (15.3%)

2011-2016 ENTREPRENEUR FRANCHISE 500® 2014-2015 QSR® BEST FRANCHISE DEALS 2013-2015 ENTREPRENEUR FASTEST-GROWING FRANCHISES 2013-2015 THE QSR TOP 50

For more information, contact: 404.705.2051 • requests@moes.com *Figures reflect averages for 194 franchised restaurants that were in operation continuously for 3 or more years and that provided us with complete financial information for the full calendar year of 2015, as published in Item 19 of our April 2016 Franchise Disclosure Document. These averages are based on a 52-week annual period from January 1, 2015 through December 31, 2015. Of these 194 restaurants, 78 restaurants (or 40%) attained or exceeded the average total gross sales and 78 Restaurants (or 40%) attained or exceeded the average EBITDA. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. This offering is made by prospectus only. This information is not intended as an offer to sell a franchise. We will not offer you a franchise until we have complied with disclosure and registration requirements in your jurisdiction. Contact Moe’s Franchisor LLC, 5620 Glenridge Drive NE, Atlanta, Georgia 30342, to request a copy of our FDD. RESIDENTS OF NEW YORK: This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the New York Department of Law. RESIDENTS OF MINNESOTA: MN Franchise Registration Number: F-5795.” ©2016 Moe’s Franchisor LLC

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WH� �RANC��S� W�'V� RA���D THE JUIC� B���

840,740 AUV

$

*

A�WAYS �H�LE, ��TH�NTIC, ��� �RES�

*As disclosed in Item 19 of Nekter Franchise, Inc.’s 2016 Franchise Disclosure Document. The above figure reflects the average for the 7 franchised locations that opened before January 1, 2015 and operated for the full 2015 calendar year. 57% of these franchised locations met or surpassed the average. The results for new locations may differ from the represented performance. There is no assurance that you will sell as much. This is not a franchise offering. An offering is made by Franchise Disclosure Document only.

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WITH NÉKTER?

THE NÉKTER DIFFERENCE “We looked at very aggressive proposals from several franchisors, but Nékter Juice Bar offered a cutting-edge concept that delivered on opening and ongoing support, and also in the highest quality menu offerings. The juice and smoothie market was in need of a drastic change, and Nékter has stepped up to modernize the industry by using clean, fresh ingredients versus artificial flavors, unnecessary sugars or fillers used by many competitors. Today’s more health-conscious consumers, especially Gen Z and Millennials, flock to Nékter and we anticipate that this trend will only continue to accelerate.” - Batta Brothers & Team Redlands, Multi-Unit Franchisees

CONTACT US TODAY  partner@nekterjuicebar.com

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 nekterjuicebar.com/franchise

 (714) 697-5808

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2O17

Unit

Multi CHISING FRAN

e c n e r e conf

April 23–26, 2017 Caesars Palace, Las Vegas

✓ CONFERENCES Multi-Unit Franchising Conference 2017!

It’s never too early to start planning to join your peers at the 17th annual Multi-Unit Franchising Conference next April in Las Vegas. Attendees at the 2016 conference overwhelmingly said it was a useful, worthwhile experience and plan to return next year. Total attendance, which topped 1,300, included more than 550 franchisees who collectively accounted for more than 12,000 operating units, $8.5 billion in annual revenue, and more than 100,000 jobs. This is a unique opportunity to attend the premier multi-unit franchising event, meet and learn from the best in the business, explore new brands, and soak up invaluable expertise at the educational sessions. The conference will be at Caesars Palace. Need some inspiration or a reminder? Take a peek back at the 2016 conference to see the speakers, review educational sessions, and sign up to keep up on developments for 2017 at www.multiunitfranchisingconference.com

✓FRANCHISE OPPORTUNITIES Looking for your next franchise opportunity? Have we got the tools for you! Find articles

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

✓ RANKINGS Check out our annual rankings of top multi-unit franchisees and

their brands out our annual rankings of top franchisees and their multi-unit brands and find out “who’s on first.” This issue has our annual Multi-Unit 50 rankings. For last year’s Multi-Unit 50 rankings go to www.franchising. com/multiunitfranchisees/mu50.html. To see the Mega 99 rankings, go to www.franchising.com/ multiunitfranchisees/mega99.html

✓PUBLICATIONS “Don’t just survive, thrive!”

Franchise Update Media’s 2016 Annual Franchise Development Report, and the best-selling book, Grow to Greatness by top franchise consultant Steve Olson, offer invaluable tips for franchise sales success and unit growth in today’s economy. To order, visit www.franchising.com/ franchisors/afdr.html and www.franchising.com/ franchisors/growtogreatness.html.

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

✓NEW ONLINE VIDEOS EmpireBuilders.tv Expands

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

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

HAVE A LITTLE FAITH

“The biggest fear most franchisors have regarding their multi-branded operators is that they will lose focus on a single path to grow that brand. We have solidified their faith in our loyalty and we wear our logos with pride. We’ve shown our faith in our concepts by developing aggressively for them, sometimes opening three to four units per year for the same brand.” —Sunny Ghai, president and CEO of Ghai Management Services Co., franchisee of more than 70 Burger King, Taco Bell, Corner Bakery Cafe, Blaze Fast-Fire’d Pizza, Chevron, Conoco-Phillips 76, and Arco ampm locations.

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464

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BY KERRY PIPES & EDDY GOLDBERG

2016 MVP WINNERS F

Honoring outstanding multi-unit franchisees

ranchisees work hard, provide jobs, help their communities, and inspire countless others to follow in the footsteps of their well-earned success. That’s why we recognize the best of them each year with our Most Valuable Performer (MVP) Awards. Ten qualifying franchisees were chosen from a worthy group of their peers and honored at this year’s Multi-Unit Franchising Conference at Caesars Palace in Las Vegas. Choosing MVPs is a lengthy, arduous process—also incredibly rewarding as we learn more about the lives and achievements of the many candidates. To qualify, franchisees must have at least five operating units and have been in a franchise system for a minimum of two years. This year’s winners are power players, innovators, and creative thinkers with big hearts who genuinely care for both their employees and their communities and are working to make the world a better place. During the conference, before a general session filled with hundreds of their peers, each MVP took the stage to receive a plaque commemorating their achievements. The presentation was sponsored by Church’s Chicken. Congratulations to these franchise operators who exemplify the best of what franchising has to offer. AMERICAN DREAM AWARD Ali Shahid Butt is president of AR Group of Restaurants, which operates 25 Popeyes locations in 5 states. The Pakistani-born franchisee and his wife Arian Rahmani are a classic example of the American Dream. He recalls working 18 to 20 hours a day in the beginning and is proud to have achieved success and provided opportunity for his employees. His growth plan for the next decade is to add more than 100 locations. COMMUNITY INVOLVEMENT LEADERSHIP AWARD Adam Saxton is chief business officer and co-owner of The Saxton Group, founded by his father Kelly Saxton. The company operates 67 McAlister’s Delis, with another 10 in the pipeline. This family-run business has always been active in its communities and hosts weekly fundraisers at all its locations. Last December, when a tornado struck a Dallas suburb near one of their stores, the manager provided free meals and shelter to first responders. INFLUENCER AWARD FOR A HUSBAND & WIFE TEAM Brooke and Les Wilson opened their first franchise location as newlyweds in 2004. Today they operate 5 Two Men and A Truck territories in North Carolina and Georgia. They’ve learned to blend their personal and professional lives to achieve a balanced life. Their well-defined boundaries and responsibilities, hard work, and sense of fun have helped them build a successful franchise business together. INNOVATION AWARD Michael Geiger is president of Big Plan Group, which operates 7 Moe’s Southwest Grills in the Pittsburgh area. He and his partner John Iaquinta are passionate about creating innovative ways to build their business. From Free Queso Day promotions

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to unique mobile loyalty program ideas, the company is opposed to “allowing complacency in operations,” he says, and plans to saturate the Pittsburgh market with Moe’s in the next 5 years. MEGA GROWTH LEADERSHIP AWARD Jeff Davis chairs United States Beef Corp., the country’s largest Arby’s franchisee. US Beef operates 333 Arby’s locations and 6 Taco Bueno locations in 8 Midwestern and Western states. Far from done, US Beef plans to add 70 new restaurants by 2020 and remodel 123 existing stores. Sounds like a mega growth strategy to us! MULTI-BRAND LEADERSHIP AWARD Sunny Ghai is president and CEO of Ghai Management Services in Pleasanton, Calif. The company operates 60 Burger Kings, 9 Taco Bells, 2 Corner Bakery Cafes, and 1 Blaze Fast-Fire’d Pizza (with more on the way), plus convenience stores and gas stations. He’s now looking to move into fast casual. NOBLE CAUSE AWARD Todd and Kelly Mulvahill, operators of 6 Papa Murphy’s Pizza stores, recently signed on as the pioneer franchisees of The Gyro Shack to develop 14 stores in the Seattle area. They have long been passionate about helping their community, especially children. Longtime supporters of St. Jude’s Children’s Research Hospital, they also work actively on programs that benefit the local partner hospitals of Starlight Children’s Foundation. SINGLE BRAND LEADERSHIP AWARD Ed Wolak is the founder and CEO of The Wolak Group, which operates 96 Dunkin’ Donuts stores in Maine, New Hampshire, and New York. With the brand for 42 years, he’s looking to open his 100th location in the next 12 months. He has served as a leader at every level of the brand’s advisory system and has been honored nationally for retail excellence and as developer of the year. If Dunkin’ Donuts is pondering a new product, it’s likely made a test run in his organization. SPIRIT OF FRANCHISING AWARD Dan Ponder is president of Ponder Enterprises, which operates 36 Hardee’s in Alabama, Florida, and Georgia. He’s based in Donalsonville, Ga., pop. 3,000, but don’t let that fool you: Ponder publishes the local newspaper, is the mayor, and is leading an effort to make his town the nation’s first Smart Rural City. VETERAN ENTREPRENEURSHIP AWARD Fred Howard is principal of Fresno-based F&M Rally’s, which operates 11 Rally’s locations. The military veteran, who opened his first Rally’s in 1992, was recognized for outstanding performance and leadership. He previously was named Rally’s Franchisee of the Year three times. (Editor’s note: Howard was unavailable for a profile.) 2016 MULTI-UNIT 50 RANKINGS Looking for a new brand? Don’t miss this year’s “MultiUnit 50” lists, ranking brands by the greatest number and percentage of multi-unit franchisees in their system.

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f o z t Lo opportunity! h t w o r g 404-705-2051 2014, 2016

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2016 MVP AWARDS BY HELEN BOND

American Dreamer “Team work makes the dream work”

P

opeyes Louisiana Kitchen multiunit franchisee Ali Shahid Butt learned long ago that success in business depends on other people. “Team work makes the dream work,” says Butt, president of AR Group of Restaurants, which operates 25 Popeyes restaurants in 5 states. Butt and his wife, Arian Rahmani, received the MVP American Dream Award for achieving remarkable success in the United States. Born in Pakistan, he journeyed to the U.S. in 1992, “based on the desire for achievement and success,” he says. “I had friends who always talked about the United States, its greatness, and the opportunity,” Butt told the New Jersey newspaper The Trentonian. “This country inspires a person to succeed. People willing to work hard can always make a life here.” When he began his franchising journey in the U.S., the choice of which path to take was easy: he was a big fan of Popeyes’ fried chicken. “Once I tasted it, I loved it and started looking to get a franchise,” he said in a recent Popeyes video. He opened his first restaurant in Philadelphia in 1999, working tirelessly with his wife to build the business. “I remember working 18 to 20 hours a day, full focus without having a back door,” he says. “It was a very exciting time, as I had an opportunity to achieve the American Dream, and I wanted to do everything possible to achieve it. I knew I was not afraid of hard work and I am very NAME: Ali Shahid Butt TITLE: President NO. OF UNITS: 25 Popeyes AGE: 46 FAMILY: 4 daughters YEARS IN FRANCHISING: 18 YEARS IN CURRENT POSITION: 10

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F I R ST M OV E R A D VA N TAG E FO R T H E L A R G E ST N E T W O R K O F P R E M I U M G R O U P P I L AT E S ST U D I O S I N T H E W O R L D .

E X EC U T I V E M O D E L / S E M I - A B S E N T E E

S CA L A B L E SIMPLE HUMAN RESOURCES

N OT L A B O R I N T E N S I V E MEMBERSHIP BASED

R EC U R R I N G R E V E N U E WA N T TO L E A R N M O R E ?

C L U B P I L AT E S F R A N C H I S I N G . CO M NUMBER OF STUDIOS SOLD TO DATE*

AVG. TOTAL REVENUE LESS CERTAIN OPERATING EXPENSES**

190 39.7%

TM

* This total Includes Studios with signed Franchise Agreements and Studios committed to be developed under signed Development Agreements as of March 1st, 2016. ** Please see Item 19 of the Club Pilates Franchise Disclosure Document (FDD) with the issuance date of April 14th, 2015, as amended October 28th, 2015 for more details. Some Studios have sold and earned this amount. Your individual results may differ. There is no assurance you’ll sell or earn as much. Your results may vary upon the location of your Franchised Business. Your results may also vary because you will be establishing and operating a start-up business. This advertisement is not an offer to sell, or the solicitation of an offer to buy, a franchise. Club Pilates franchises are offered solely by means of the franchise disclosure document issued by Shaun Grove at Club Pilates Franchise, LLC, 3185 Pullman Street, Costa Mesa, CA 92626, (949) 346-9794. Certain states and foreign countries have laws governing the offer and sale of franchises. If you are a resident of one of these states or foreign countries, Club Pilates will not offer you a franchise unless and until it has complied with all applicable legal requirements in your jurisdiction. Please consult with your franchise seller/broker for an updated list of jurisdictions where franchises can be sold. CopyrightŠ 2016 Club Pilates, LLC. ALL RIGHTS RESERVED.

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2016 MVP AWARDS think I have reached the American Dream yet, “I don’t but I am happy with what I have achieved. ”

honest. So once I had the opportunity, I knew nothing could stop me. It was a very exciting time.” His passion for growth, along with his desire to pass his success on to others, is still expanding: he plans to add at least 10 more restaurants by year-end and 100 more restaurants to the company in the next 10 years. “As you grow, the dream grows,” he says. “I don’t think I have reached the American Dream yet, but I am happy with what I have achieved. I remember I was opening my Olden Avenue store and there were lots of hurdles. I remember sitting on the curb across the street wondering if this store would ever open. In the end, everything worked out and when that store opened, I had a feeling of achieving the American Dream.” Butt credits his father, who owned a construction business in Pakistan, not only for his work habits, but also for teaching him to have a passion for giving to others. “My father always said to share your wealth,” he says. “Create opportunity for others. When others grow, you grow automatically. Today, I have helped seven other people obtain a Popeyes franchise and I am happy that they have an opportunity to create opportunity for others, the way I created opportunity for them.” The Popeyes team, he says, has given him “full support from every aspect” and vows to work to do the same for his company and the communities his restaurants serve. He believes that striving to iden-

PERSONAL Formative influences/events: Coming to the United States. Key accomplishments: Starting from scratch to grow to a company with 25 Popeyes. Work week: No set hours. Best advice you ever got: My father gave me the advice, “Don’t ever be greedy.” What’s your passion in business? To serve as a role model for people starting from scratch. I strive to be the best I can be. I want to be a role model for others who are trying to achieve their dream. I want to mentor upcoming entrepreneurs. I want to coach and guide them so they do not make the same mistakes I did.

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tify and meet the needs of his employees makes for a happy workplace. His advice for others seeking success is simple, yet powerful, and has served him well since he arrived in the U.S. almost 25 years ago: honesty, hard work, humility, and focus. “Work hard, have passion, and close all the back doors and just focus on one thing. Try not to chase too many opportunities at one time,” he says. “The problem with young people today is that they want to

2016 MVP AWARDS

American Dream Award Why do you think you were recognized with this award? I believe I was recognized because my story is—from first to last—a portrayal of the American Dream. When I started, for me success was to make money, but as one grows and achieves something the definition of success changes. As of right now, I think success for me is how many people are better off because I lived. I want to make others successful now and help others achieve the American Dream. I am happy that 500-plus people are currently employed in my organization and have a job because I decided to pursue my dream. How have you raised the bar in your own company? It is always about being friendly and humble. That is why I believe that people love to work with me—at all levels of employment. What innovations have you created and used to build your company? Customer satisfaction is our utmost goal. We have trained our managers to think and anticipate customers’ needs and expectations. What core values do you think helped you win this award? Humility, hard work, and service. How important is community involvement to you and your company? It is very important to be a part of the community you are in. I have gone to extra lengths to give back to the communities everywhere I have a restaurant. What leadership qualities are important to you and your team? Professionalism, patience, and an understanding of how to get along with employees and guests.

achieve everything yesterday. The only way to achieve the American Dream, I believe, is to have focus, passion, be honest, and do hard work. There is no shortcut to success.”

MANAGEMENT Business philosophy: Honesty, hard work, and service. Management method or style: Involved. Humble. Relationship builder. My father is my role model. He is a very hard-working man and very honest. I learned from him that you cannot do anything alone. You have to rely on other people and create a team. Team work makes the dream work. Today, I have a group of people I can rely on, and I think I have created a very good team. The sky is the limit for this team. Greatest challenge: Having 100 percent satisfied customers. How do others describe you? Nice guy. How do you hire and fire, train and retain? QSR is a high employee turnover business. We hire after a series of interviews and do not like to fire people. We have our own training restaurants and we all work together like a family.

BOTTOM LINE Annual revenue: About $39 million. 2016 goals: At least 10 new restaurants. Growth meter: For me, growth is new store openings and creating jobs, while maintaining or improving the service standards in the existing restaurants. Growth is taking the Popeyes brand into new markets and operating successful stores. It is so satisfying to see people get an opportunity to achieve their own American Dream. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years I would like to have another 50 stores, and 50 more in the next 6 to 10 years. What are you doing to take care of your employees? Every manager or owner must have the vision to identify the needs of their employees. Those needs must always be satisfied to achieve a good working environment. What kind of exit strategy do you have in place? None.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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© 2016 Bojangles’ International, LLC. This franchise sales information does not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have registered the franchise (or obtained an applicable exemption from registration) and complied with the pre-sale disclosure requirements that apply in your jurisdiction.

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2016 MVP AWARDS BY HELEN BOND

Hail to the Beef! A

Providing career opportunities since 1969

s chair of Arby’s largest franchisee, Jeff Davis has led his family-owned business to new heights. Davis is quick to say the restaurant business is in his DNA, and his vision, track record, and passion for providing opportunity to anyone who works for his company made him a natural for the 2016 Mega Growth Leadership MVP Award. Davis, son of the late restaurateur Bob Davis, helped his father open the Tulsa family’s first Arby’s in 1969. The restaurant posted $200,000 in sales that first year. Today the company, United States Beef Corporation (US Beef), operates 333 Arby’s in 8 contiguous states across the country’s midsection (Oklahoma, Arkansas, Kansas, Missouri, Illinois, Colorado, Idaho, and Wyoming)—along with an

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aggressive expansion plan to add 70 new restaurants by 2022 and remodel 123 existing stores along the way. US Beef, still a family business nearly NAME: Jeffery W. Davis TITLE: Chair, United States Beef Corporation NO. OF UNITS: 333 Arby’s, 6

Taco Bueno AGE: 63

FAMILY: Wife Judy Davis; 4

children and 5 grandchildren

YEARS IN FRANCHISING: 47 YEARS IN CURRENT POSITION:

2 years; CEO, 1995–2014; President, 1990–1995

50 years later, is co-owned by Davis and his younger brother, CEO John Davis, who started with the company in 1975 as a crew member. The company, the first franchise partner of Taco Bueno, also owns six of the Tex-Mex fast food restaurants in Northwest Arkansas. When Davis took the helm at age 43 after his father’s death in 1995, he immediately set out to grow the company by surrounding himself with trusted business experts “who have carried me through all these years,” he says. “It’s about hiring the right people who are really good and have the potential and let them go, and not try to manage them by the minute.” Davis, who has been recognized for his leadership and growth of the Arby’s brand as Franchisee of the Year and with the Arby’s Maverick Award for innova-

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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Visit owncheckersfranchise.com/update or Call 888-913-9135 © 2016 Checkers Drive-In Restaurants, Inc. 4300 W. Cypress St., Suite 600, Tampa, FL 33607. 1. Per Item 19 in Checkers & Rally’s 2016 Franchise Disclosure Document. Same-store sales results are measured by combining 2016 FDD and 2015 FDD data. 2. Per Yahoo!.com Fast Food French Fries Taste Test Winner Gets an Asterisk article 3.Per Franchise Business Review 2015 Top Multi-Unit Franchises Report. Written substantiation will be provided on request. This advertisement is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. The franchisor, Checkers Drive-In Restaurants, Inc. is located at 4300 West Cypress Street, Suite 600, Tampa, Florida 33607, and is registered as fi le number F-4351 in the state of Minnesota. In New York, an offering can only be made by a prospectus fi led first with the Department of Law, and such filing does not constitute approval by that Department. 20160773

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2016 MVP AWARDS 2016 MVP AWARDS

Mega Growth Leadership Award Why do you think you were recognized with this award? Actually, this was a very pleasant surprise. Our franchisor, Arby’s Restaurant Group, nominated me for this award. We’ve been Arby’s largest franchisee for some time now, and at the close of 2015 signed a very aggressive development agreement to open 70 new Arby’s restaurants in the next 7 years. We also have plans on the books to remodel another 123 of our restaurants. We have confidence in the brand, its leadership, and the unique niche we’ve carved out in the industry. How have you raised the bar in your own company? In a phrase, we don’t settle. We continue to invest in professional, skilled people. We’ve always believed in the brand and kept building and remodeling, even during economic slowdowns. And we’ve relied on state-of-the-art technology and equipment to sustain our robust business model. What innovations have you created and used to build your company? We’ve never been happy with the status quo, nor have we always waited patiently for our franchisor to have all the answers in operations or marketing. We’ve developed a lot of our own promotions over our 47 years that were eventually adopted by the Arby’s system, and have made operational and training innovations to improve workflow that we’ve shared with our parent and the franchisee system. We’re also very proud of the fact that we own the majority of the land our restaurants reside on. What core values do you think helped you win this award? In the fall of 2015, our executive group went on a retreat with a single purpose: to put

in writing our core values and strategic anchors that would lead our company into the future. We had always felt those values were inherent and presumed, but we wanted to document them as our company begins its next business cycle. We call it our Compass, and its core values are Commitment, Humility, and Respect. I was raised with those values, and have worked hard to personify them professionally and personally. How important is community involvement to you and your company? We’ve always made community involvement a priority—not just because it’s good business, but because it’s the right thing to do. Our employees work and live in those communities. They have children who go to school there. They worship there. It’s our responsibility to be a good citizen and give back to the communities where we do business. John Davis, my younger brother and US Beef CEO, is on the board of the Arby’s Foundation, which gives over $3 million annually to Share Our Strength/No Kids Hungry. Locally we do a lot of work with the schools, sports teams, churches, and organizations to make each community we’re in that much stronger. Most of our executive group is on a nonprofit board. We encourage our employees at every level to be involved in helping shape their community. What leadership qualities are important to you and your team? I’ll have to refer again to our company’s Compass, and the core values we look for when hiring: Commitment, Humility, and Respect. So many great qualities actually emanate from those values, including integrity, loyalty, and work ethic. Those are all qualities that enable and enrich a company to be sustainable during good times and bad.

PERSONAL Formative influences/events: Thanks to my parents, Bob and Connie Davis, the restaurant business is in my DNA. I’ve never known anything but restaurants. Dad never worked anywhere else. He and mom either owned or worked in a restaurant, and as their five children (I was the oldest) got old enough to clean a table, wash a dish, or fill a sauce bottle, my parents made it a family affair. It was fun working as a family unit. After school and weekends, it was something we all looked forward to doing together. I recall those early days with great fondness. Obviously, becoming one of the pioneer franchisees of Arby’s in the late ’60s was a significant event in my life. It set the course. But by 1995 both my parents had passed away, and at the age of 43 I had to take the reins. Key accomplishments: Spearheading the growth of the company has given me the most satisfaction, generating economy in communities across an 8-state footprint and providing employment and career path opportunities for more than 7,000 employees. In the past 47 years, I’ve also been proud to serve in positions of leadership in the industry I love so much, including as the current vice chair of the National Restaurant Association and current chair of Arby’s Franchise Association (AFA). I have also served on the board of trustees for the Arby’s Supply Chain Cooperative since 1986. My alma mater, the University of Tulsa, has also been very kind. I have been honored as a University of Tulsa Distinguished Alumnus and inducted into the University of Tulsa Business Hall of Fame in 2012, where I received the Outstanding Entrepreneur award. Work week: I really couldn’t tell you when my work week starts or when it ends. When you own and operate 340 restaurants, with many more on the drawing board, there are really very few moments when I’m not working. And with the additional responsibilities as vice chair of the NRA and chair of the AFA, my plate

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stays pretty full with travel to Washington, D.C., Atlanta, industry events, and meetings with various constituents inside the industry, Arby’s, and my executive team at US Beef. What are you reading? With my various responsibilities, I have a mountain of material to review on a daily basis. There are NRA publications and white papers, marketing and operations communications from Arby’s Restaurant Group, the Wall Street Journal, and as you might imagine, too many emails to count. I’ve always been a history buff, and after seeing “Hamilton” on Broadway bought Ron Chernow’s book Alexander Hamilton, which I’m enjoying reading right now. And, I always find time to read some passages from the Bible. Best advice you ever got: I’ve been so blessed in my life to have wonderful teachers, mentors, and coaches—and have learned from all of them. But through osmosis, the best professional and personal advice always came from my parents. I’ll never forget the three words that dad repeatedly told me to master in the restaurants: “Cleanliness. Service. Product.” At the risk of sounding like a cliché, they also instilled in me the Golden Rule: to treat everyone as I’d like to be treated. Their advice was really about “servant leadership” before that phrase was coined and went mainstream. What’s your passion in business? It’s always been people. Our employees. Our guests. I learned early on in this business that if you don’t strive to run a great operation, you can’t serve either one very well. Having great operations generates more profit that enables you to pay your employees well and offer better benefits. In turn, happier employees who are proud of where they work do a better job serving our guests.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS MANAGEMENT Business philosophy: Stay focused on what you can control from the operations side of the business. You can’t control the weather or the economy, but you can control how you treat and compensate your employees. You can control expenses. You can control training and guest service. You can control fair pricing that reflects value. Don’t ever lose sight of what’s important: “Cleanliness. Service. Product.” Management method or style: Again, we’re in a people business. But it’s also become a more complex business. So I’ve focused on finding and hiring really good people at skilled positions. Then we make sure they’re well trained and coached, understand the vision of our company, and then empower them to do their job. Greatest challenge: To be a better company today than yesterday, with the capability and attitude to quickly adapt to competitive challenges, the economic environment, prohibitive government regulations, employee hiring and retention, and staying ahead of consumer trends. How do others describe you? With humility being one of our core values, this question is a delicate one to answer. I’ve never been a fan of “I”; it is always about “We.” So I’ll answer this question “in all humility.” I think others would describe me as an effective leader, who listens. I’m also a product of my parents, who were empathetic, compassionate, and never forgot where they started out in life. I hope others would describe me as humble and grateful, with a strong desire to pay it forward professionally and personally. tion, is counting on that philosophy as an executive branch shuffle—the first since 1995—takes shape. In December 2014, Davis moved from CEO to chair, and his brother John from president to CEO. Brett Pratt, hired in 1995 as chief financial officer, now serves as the company’s first nonfamily president. Jeff Davis’s son Bo, who started working for the company as a summer crew member, now guides company operations in the newly created post of chief operating officer. But don’t expect Davis to retire anytime soon. In many ways, after 42 years he’s just

How do you hire and fire, train and retain? Recruiting and hiring the best talent we can find has been our number-one goal. We’re always on the lookout for outstanding candidates. Given our growth, it’s important for us to promote from within first and foremost. Our district managers and directors are the key to hiring and recruiting talent in the restaurants. We have processes in place to select the best candidate for the job, but at the end of the day it comes down to the candidates who can truly meet and support our company values and standards. Progressive discipline has always been our preferred method of trying to afford all employees the opportunity to improve. While we make every effort to give opportunities to employees, we sometimes have to make tough decisions to let them go if they’re not meeting our expectations or following our policies or procedures. In regard to training and retaining, employees are our number-one investment, our greatest asset. It’s not only our goal, it is our responsibility to give our employees every opportunity to succeed, and you do that with constant training, with content that is always relevant and up to date. We’ve made a big investment into the digital age with our training, deploying iPads to all locations for on-the-job and online training—and to assure that all of our employees are receiving identical training. Employee retention begins from the moment we say, “You’re hired!” We’re training our leadership to have a servant’s heart, mentoring and coaching to help lift the crew person to the next level and beyond. We want to help create a career path for that new employee, and have established a process to provide consistent feedback to that employee to reach their goals. Retaining an employee is as important as retaining a guest, and a lot of the same service principles are involved.

getting started. A longtime board member and current vice chair of the National Restaurant Association, he is expected to take over as chair of the world’s largest foodservice trade association in the coming year. He also serves as chair of the Arby’s Franchise Association and is a board member of the Oklahoma Restaurant Association. Throughout, he remains steadfast in his mission to invest in training and development, despite grappling with the wave of laws and governmental regulations affecting labor policy. For Davis—who

prefers to call those who work for him “family and friends” rather than employees—providing possibilities for others to succeed, no matter what their education or background, still provides the greatest joy in an industry that is all Davis has ever known. “If you are willing to work hard you can still have the American Dream. That is why it is really exciting to me,” he says. “Everything we’ve done—my brother and I, and now my son—is about taking care of our people, trying to open up restaurants and give them the opportunity.”

BOTTOM LINE Annual revenue: $350 million-plus. 2016 goals: Besides the robust construction and development plans for new restaurants, we also plan on honing our recruiting and retention skills, elevating our new employee training program, and developing more in-depth dashboard data, allowing us to monitor all restaurants on a daily basis and giving us the ability to react faster to struggling restaurants. Vision meter: Where do you want to be in 5 years? 10 years? Add 70 new Arby’s restaurants between now and 2022, while remodeling another 123 in the same period. I envision our growth to be steady and disciplined, relying on our experience, data, and technology to grow the brand in our territories, while always being open to smart and strategic acquisitions. I also see our training systems elevated to being the gold standard in the industry. Expanding our footprint is important, but not at the expense of quality and service. What are you doing to take care of your employees? Competition

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for employees is intense. To hire and retain good people, we must have employee benefits and initiatives that make us an employer of choice in our markets. Some of the tangible benefits include a matching 401(k), paid time off, health insurance, management incentive bonuses, and annual performance reviews. There’s also a connection between our rapid expansion and our aggressive training, creating unlimited opportunity for employees who express a desire to have a career with US Beef. I think people also appreciate and want to work for a company whose core values are “Commitment, Humility, and Respect.” They can see that they’re not just empty words on a poster, but true top-down principles that we live every day for each other and our guests. What kind of exit strategy do you have in place? We’ve never underestimated the importance of succession planning. I’m very blessed to have talented family members engaged in the company, as well as very skilled and tenured people who have been by my side these past 25 to 30 years. We make it a point to always have a strong bench at all skilled positions.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS BY HELEN BOND

Free Queso!

How a penchant for innovation turned into a national promotion

W

hen a competitor set up shop too close to Michael Geiger’s Moe’s Southwest Grill, he and his partner John Iaquinta fired back with a volley of cheese dip. “We started planning ways to disrupt grand openings for competitors that select real estate close to our existing locations,” Geiger recalls. “One of the more successful tactics involved giving away our world famous queso on the day of a competitor’s big day. It is a great differentiator of ours and we wanted to highlight it. After we did it a few times and saw net revenue more than double on those days (as well as seeing empty parking lots for our competitors’

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NAME: Michael Geiger TITLE: President, Big Plan Group NO. OF UNITS: Moe’s Southwest

Grill, 7 AGE: 40 FAMILY: Wife Kristy; sons Jackson,

7 and Cole, 4 YEARS IN FRANCHISING: 11 YEARS IN CURRENT POSITION: 11

openings), the brand took note and made it a national one-day event.” Six years later, the brand’s nationwide Free Queso Day each September is one of the top business days of the year for the system. That’s just one of the reasons Geiger and his Big Plan Group received the 2016 Innovation MVP Award. For Big Plan, which operates seven Moe’s locations in the Pittsburgh area, taking a fresh approach is just the way Geiger and partner John Iaquinta do business. The pair converted punch cards into a mobile loyalty program long before it was common. More recently, they leveraged community service contributions with a “Buy One, Give One” catering program

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2016 MVP AWARDS 2016 MVP AWARDS

Innovation Award Why do you think you were recognized with this award? Johnny and I have always taken the approach that the franchisor is the landlord and we are the tenant. As such, you can just pay your rent and live in the surroundings as is, or you can spruce the place up. We have always opted for the latter. I think that is why we are being recognized—because we are not sitting back. We are fully engaged in our business and constantly looking for new ways to raise brand awareness and drive traffic to our restaurants. We have contributed things as simple as designing a new bag to use for transporting chips on catering jobs, to the significant impact of coming up with the core idea that evolved into Moe’s annual nationwide Free Queso Day promotion. We started planning ways to disrupt grand openings for competitors that select real estate close to our existing locations. One of the more successful tactics involved giving away our world famous queso on the day of a competitor’s big day. It is a great differentiator of ours and we wanted to highlight it. After we did it a few times and saw net revenue more than double on those days (as well as seeing empty parking lots for our competitor’s openings), the brand took note and made it a national one-day event. Six years later, when we host Free Queso Day nationwide every September, it is one of the top system-wide business days of the year. How have you raised the bar in your own company? I am on the brand’s franchise advisory council and see that platform as a responsibility to ensure that as Moe’s grows nationally we don’t lose our roots in local communities. We recently have launched national media programs, and I am very proud we have grown to that level. We cannot forget that we got to this point because of local efforts, however, and I see that as a role we as franchisees need to play.

What innovations have you created and used to build your company? See Free Queso Day above. I have also recently developed a program used on “Cinco de Moe’s” that offers corporate customers an incentive to cater on Cinco de Mayo by providing small Moe Money gift certificates the corporate customer can give to their employees, in addition to the food. This program has now been launched system-wide with a massive impact, driving record-breaking catering volume in our market every year. What core values do you think helped you win this award? An inferiority complex when it comes to achievement. Regardless of what we may achieve or accomplish, Johnny and I never feel like we have done enough. I constantly find myself, saying, “But what if…” How important is community involvement to you and your company? This answer can be summarized with one sentence. We believe it is our obligation to give back to the communities we serve. We have met with the success we have only because people patronize our restaurants, and we owe every bit of recognition to those communities and patrons. What leadership qualities are important to you and to your team? A leader needs to be selfless. A leader needs to be willing to do anything they ask someone else to do. When that is not the case, trust and respect break down and failure will soon follow. Last, as referenced earlier, loyalty needs to be valued above anything else—and that loyalty requires reciprocity.

PERSONAL Formative influences/events: I fell in love with basketball at a young age and through a lot of practice became a pretty good player. My parents refused to allow it to define me and forced me to develop my vocabulary and speaking skills through study and activities like debate team. While I was not thrilled with it at 16, when I had to miss practice to attend debate events, they saw something in me that needed to be cultivated. I will forever be appreciative, because I now know that the ability to have confidence in yourself and your words in any environment is a priceless and rare skill in the sales and business world. The development of that skill set landed me an interview and eventual job offer in sales, at just 24, with a small tech company in Tampa called Syniverse Technologies. David Wasserman was the guy who hired me into a position that I was certainly not yet seasoned for, but he took a shot with me. He opened every pathway for me to learn from him, customers, and even the CEO of the company. I took advantage of every opportunity that presented itself to be quiet, look around the room for the person who could teach me something, and take it in. I credit those moments and experiences in forming the core of my philosophies in business today. I sent a note to the former CEO of Syniverse of few years back, thanking him for granting access and not creating the “walled garden” of secrets that many executives do to protect their position and perceived value. His response was priceless and showed me that I’m still learning to this day: “I was the same CEO for thousands of people. You chose to take advantage of the access and knowledge when others did not.” I think that can summarize how my management style and approach to business developed. Key accomplishments: Named to the Presidents Club, the award for top sales at Syniverse, four consecutive years and five out of seven years total. My partner John Iaquinta and I have also been named marketing or local store marketing

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Franchisee of the Year several times from Moe’s, and in 2014 we were an Ernst & Young Entrepreneur of the Year Awards finalist. Named to the Pittsburgh 100 the past 3 years as one of the fastest-growing privately held companies in the region by the Pittsburgh Business Times. Becoming a father! Work week: Varies by design. My partner Johnny and I call it the “shiny object conversation.” We try to keep our schedules as fluid as possible to ensure we are always able to accommodate the needs of the business and our team. I view my role as a support mechanism, as much as that of a leader in the organization. “That’s not my job” is a forbidden phrase. What are you reading? Anything that provides insight on my surroundings. What is the newest real estate project in Pittsburgh? What is the latest menu item or marketing program my competitor is rolling out? Does the fast casual segment have a new emerging trend that I can adapt to my own operation? Best advice you ever got: From one of my older brothers, Mark. You have many people in your life, but only go home to one of them every night (your wife). That person always needs to be the priority in decision-making. Ironically, it has also translated directly to my business life as well. Johnny and I are the only partners and investors in our company, so applying the same philosophy to business decisions has made for a fruitful and harmonious partnership. What’s your passion in business? Making a meaningful impact on people’s lives, be it helping a high school employee with a school project, advising a young manager ascending our ranks on the virtues of home ownership and retirement savings, or a philanthropic endeavor in the community. I want to know that my business activity helped to make the world a better place each day.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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*As of 12/31/15, there were 162 UBREAKIFIX locations in operation. As published in Item 19 of our Franchise Disclosure Document dated 4/15/16 these figures represent the actual, average total revenues and net profit (cash basis, before interest, income taxes) for the calendar year ending 12/31/15 of all UBREAKIFIX stores operated by us or our affiliates that met the following criteria: (i) were company/affiliate-operated businesses as of 12/31/15, (ii) had been open for at least two full years as of 1/1/15, and (iii) were still open as of 1/1/16 (16 stores in total). Of the included stores, six (or 38%) exceeded the stated average total revenues and eight (or 50%) exceeded the stated average net profit. A franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. The figures do not include revenues or expenses for franchisee-operated UBREAKIFIX Businesses as we cannot verify and/or control the level or type of expenditures made by individual franchisees. The net profit figure also does not reflect royalty, advertising and other franchise fees that franchisees pay to us and must be deducted to determine a franchisee’s net profit. **This information is not intended as an offer to sell, or the solicitation of an offer to buy a franchise. If you are a resident of or want to locate a franchise in a state that regulates the offer and sale of franchises, we will not offer you a franchise unless we have complied with the applicable pre-sale registration and disclosure requirements in your state. This advertisement is not an offering. An offering can only be made in NY by a prospectus filed first with the Department of Law of the State of New York; such filing does not constitute approval by the Department of Law.

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2016 MVP AWARDS that benefits the company’s relationship with Beverly’s Birthdays, a local nonprofit that provides birthday celebrations to homeless children and families in need. Geiger, who honed his innovative mindset at a small mobile technology firm, initially sought a path to diversify his income through franchising and found Moe’s. In 2013, after 7 years of double duty and 100 nights a year on the road, he left his tech job and set his sights solely on Moe’s. His background in the tech world, where success often means new product launches and beating competitors to market, continues to serve him well as a franchisee. “We are very opposed to allowing complacency in operations,” he says. “We preach the same messages every day:

high-quality food, facility cleanliness, and over-the-top guest interaction and experience. If we do not keep the framing of the message fresh, beating the same drum day after day can turn into background noise for our crew. So to link it back to technology, it is taking the stability of a legacy product and injecting the hype of a new one to keep operations performing at their peak.” Geiger credits Moe’s for its ability to balance the needs of the brand with the perspective of its franchisees to seize growth opportunities. “I think a brand is foolish if they do not take advantage of the great minds they have in their system as franchisees,” he says. “Clearly, entrepreneurs who are self-made have some value

to bring to the conversation when creating the road map for a brand’s future. By engaging that asset of their business—which costs nothing, by the way—they maximize their resources.”

MANAGEMENT Business philosophy: If your focus is always directed squarely at quality, honesty, and supporting the top-level talent you surround yourself with, everything else will fall into place. Management method or style: Collaborative and empowering. I’ve always described myself as the anti-micromanager. Greatest challenge: Finding the right people who fit and buy into our organization. I value loyalty over just about anything else and that is often very hard to find or develop. How do others describe you? Driven, charismatic, big thinker, but not afraid to dive in and get my hands dirty. How do you hire and fire, train and retain? We’ve always looked at internal development as the first option. The average tenure of our upper management team is about eight years. The pace at which we have grown over the past three to four years has made exclusively promoting and moving internal candidates increasingly difficult, so we have been going outside the organization more recently.

BOTTOM LINE Annual revenue: NA, but our AUV is significantly higher than the average Moe’s AUV. 2016 goals: Hit a fifth consecutive year of double-digit comp sales growth. Continue growing our catering sales support team to three full-time positions. The team has achieved a fourth straight year of more than 25 percent growth. Play a key role in helping our local charity partner, Beverly’s Birthdays, elevate their brand awareness and crush their financial goals. Growth meter: How do you measure your growth? We rely heavily on same store sales as an indicator of the health of our business. I think judging your success by store count can get you into trouble because chasing a store count goal can cloud your judgment on the quality of a location. Seven locations in nine years has been our growth trajectory. You could call that a tortoise approach by many standards, but I will take my double-digit SSS comps every year—10 times out of 10—over having double the stores and running flat sales growth. Taking the time to develop strong bonds in the communities we serve and strong management teams has worked out well. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, I want to have completed our Moe’s footprint build-out in the Pittsburgh region and have a minimum of 60,000 square feet of retail property in our portfolio. We will certainly do at least two more stores. From there, great real estate that is strategically positioned will dictate the opportunities we pursue. I also have specific

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goals I want to achieve in terms of key employees/roles reaching income levels through our bonus program. In 10 years, I want my top priority to be sitting in the bleachers to watch my son play high school baseball, basketball, or whatever ends up being his passion. If I can honestly say that is my mindset and what I’m doing, everything else I need to achieve will have been accomplished. What are you doing to take care of your employees? Our average hourly wage is right about $10 an hour, about 40 percent higher than the state minimum wage. This, coupled with aggressive management bonus structures, has always been a focus for us. We expect premium performance and are willing to pay a premium wage for it. We’ve always offered a full benefit package related to healthcare long before we were required to, and a generous 401(k) match. We do a senior employee event each year for everyone who has been with us more than two years, as well as a themed and fun manager holiday party. Also, as an incentive to be healthy, we do a mud run event each year. This year, for the first time, it will be a BattleFrog obstacle race. Last, we make it a priority to integrate philanthropic programs with employee incentives to ensure they understand how important it is for us to give back to the communities we serve. What kind of exit strategy do you have in place? An exit strategy continues to be a moving target. As we have grown the business, our exit strategy has become more of a diversity strategy. We are now acquiring and developing our own real estate for new locations to ensure long-term security.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS BY HELEN BOND

Power Pumper!

F

Creativity fuels Sunny Ghai’s multi-brand empire

or Sunny Ghai, the key to multibrand franchisee success is creativity. The founder of family-owned Ghai Management Services operates 7 brands, including 60 Burger Kings in 4 states. His ability to leverage the power of strong brands to make smart development decisions earned him the 2016 Multi-Brand Leadership MVP Award. “The biggest fear most franchisors have regarding their multi-branded operators is that they will lose focus on a single path to grow that brand,” Ghai says. “We have solidified their faith in our loyalty and we wear our logos with pride. We’ve shown our faith in our concepts by developing aggressively for them, sometimes open-

NAME: Sunny Ghai TITLE: President/CEO, Ghai Management Services NO. OF UNITS: Burger King (60), Taco Bell (9), Corner Bakery Cafe (2), Blaze Fast-Fire’d Pizza (1), Chevron (3), Conoco-Phillips 76 (2), Arco ampm (2) AGE: 59 FAMILY: Wife Tina; daughter Ritu,

and son-in-law Harsha; son, Harsh and daughter-in-law Gurbir

YEARS IN FRANCHISING: 22 YEARS IN CURRENT POSITION: 20

ing three to four units per year for the same brand.” Ghai worked for Burger King as a restaurant general manager before becoming a franchisee in 1999, just four years after immigrating from India with his family. He built the base of his company by successfully reimaging the Burger King brand, and later by constructing and acquiring high-quality Taco Bell sites and expanding into the convenience and gas business. Along the way he has weathered economic, franchise, and industry changes with innovative branding ideas. “Logistically, having such strong brands works extremely well for growth,” he says. “In projects like our development in Winters, Calif., we were able to put

2016 MVP AWARDS

Multi-Brand Leadership Award Why do you think you were recognized with this award? I believe I was chosen because of the success we have achieved through the four franchise brands we are currently operating. It is an achievement to be recognized by such great brands. We are thankful to Burger King, Taco Bell, Corner Bakery Cafe, and Blaze Fast Fire’d Pizza for being the best concepts in their segments. How have you raised the bar in your own company? Creating a fun and competitive environment is key in raising the bar. In order to push people to their limits it’s important to make them feel they truly enjoy what they do. And creating a competitive environment is much easier when you have such diversity in concepts. What core values do you think helped you win this award? Keeping an open mind. It would be impossible to have reached this level without being creative and being open to anything and everything possible. Too often people in our industry find it hard to think outside the box and stay enclosed in their comfort zone. Becoming a Burger King franchisee was completely out of my comfort zone, as was diversifying into convenience and gas, Taco Bell, and fast casual concepts. How important is community involvement to you and your company? We feel it’s important for every concept to rally behind a unified cause. Luckily, both Burger King and Taco Bell through their charitable arms—the Burger King McLamore Foundation and the Taco Bell Foundation for Teens—focus on educational needs of kids in the U.S. I feel that everyone is entitled to an education, and the two foundations do an excellent job of providing scholarships to kids who cannot afford higher education. Both foundations provide scholarships to our employees, which is extremely valuable in recruiting students to work for us. No Kid Hungry is another really important cause we participate in. Childhood hunger is another world issue that should not exist, and this organization has done an excellent job of rallying restaurant concepts like Corner Bakery Cafe to their cause. What leadership qualities are important to you and your team? Creativity and coaching. We want our leaders to be coaches rather than bosses. It’s important for leaders to get down and dirty and show their subordinates that they can work side-by-side with them.

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MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS an Arco ampm, Burger King, and Taco Bell on the same parcel, creating a major stop for travelers and drawing more traffic than we would with a single concept. We call these “Power Pumpers” and they are the ultimate multi-branded businesses.” More recently, in a move to continue expanding his company, Ghai has turned his attention to the fast casual franchise segment. “We’re looking forward to determine which brands have the horsepower to be relevant in the future,” he says. “We’re not necessarily looking to make money in this segment right away. Instead, we’re looking to create a strong infrastructure for a medium- to largesized operation in each concept. The upside to fast casual is that the concepts are willing to give you a protected territory where only you can grow and have full control of making the brand relevant. This makes things more fun.” Ghai plans on having that fun with his family, a driving force in his continued mission to build his business even more. Many extended family members work for the company, led by his son Harsh Ghai, who oversees operations as COO (for his profile, see the Q2 2015 issue on our website.) “My children are my business partners, and their input into our growth is most important when making a decision,” Ghai says. “I grow our company with pride, knowing that it will be in good hands and that we don’t need an immediate exit plan. When I do decide to retire I know all I have to do is hand over the reins.”

MANAGEMENT Business philosophy: The success of our operation has come through our people. We have instilled the value that in order to serve our guests best, we have to ensure that our partners in the field (from operations directors to crew members) have the best experience possible working for and in our organization. What do you consider when evaluating additional brands? The two biggest things we look at are product and people. The most important thing is that you can’t sell something you don’t like. That was the first thing that attracted us to Taco Bell, a brand my family has thoroughly enjoyed for years. When choosing Blaze, we compared it to its top competitors and the product was clearly far superior. In fact, we were on the verge of going with a different fast casual pizza concept when a chance meeting brought us to Blaze. It is a decision we feel privileged to have been able to make. The people portion is sometimes more important than the brand. We look to see whether the people leading the concept have an evolving vision of the future, rather than settling for what has worked in the past. Are they engaging Millennials? Are they open to new and creative ideas, or are they stuck to a cookie-cutter model? What growth potential do they offer? For example, is there acquisition opportunity? Is there opportunity to develop outside the given region? The last question we ask ourselves after conducting our due diligence is, “Can we make this business profitable?” The “we” portion is most important, as you have to consider many aspects, including real estate costs, our experience in the industry, whether we have the capital to support growth, etc. Management method or style: I consider myself an integrator or unifier. We look to hire people with creativity who bring new and innovative ideas to the table. And we give them the freedom to use new ideas to achieve success. Greatest challenge: Starting from scratch. In the beginning it was difficult to break into the industry with lack of experience and not having the high net worth that others in the industry did. But through development and running good restaurants I was able to grow to 70-plus restaurants. How do others describe you? A perfectionist: although true perfection is impossible, people know that I always strive to perfect the process to achieve greater results. Always plugged in: most people who know me or work with me know that I am always plugged in and often receive communications at odd hours. How do you hire and fire, train and retain? The best way to hire is to promote from within. We have found the greatest success in giving growth opportunities to people within the organization. Loyalty is earned over time while information and processes can be taught.

PERSONAL Key accomplishments: Burger King 2010 True North award for development; Taco Bell 2013 award for development; growing from 1 unit in 1996 to 70-plus in 2016; developed 22 new units in that period; achieving 90 percent up to date image across all brands. Work week: Seven days. I’m extremely passionate about my work, and unless I’m spending quality time with my family, I’m usually catching up on work. Weekends are the best time to catch up. What are you reading? Other than emails, The Burger King: Jim McLamore and the Building of an Empire by the brand’s founder. The book is extremely important in understanding the roots of our brand and business. We can often get sidetracked and distracted from the ultimate goal, which has never changed: to serve the best hamburger possible. Best advice you ever got: To pursue the American Dream. After I married, my wife and I raised our family in India for 10 years. We always knew we would one day want to pursue life outside India and ultimately chose to come to the United States, understanding how great the opportunity was here. And that’s exactly what happened. I was able to grow with no ceiling and achieve something that’s impossible in most parts of the world. What’s your passion in business? Development has always been my passion. I find it much more satisfactory to grow through the act of building something completely new from the ground up. It gives you immense pride to see a successful business that you built. I involve myself heavily in the development process, from the planning portion to the construction site.

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BOTTOM LINE Annual revenue: $90 million (food, convenience, and gas). 2016 goals: Grow our number of units through acquisition and development. We opened five new restaurants in the first half of 2016 and hope to open at least two more. Vision meter: Where do you want to be in 5 years? 10 years? In the next 5 years we would aspire to grow to 100 restaurants. In the next 10 years I hope to retire as president and allow my children to take over the family business. What are you doing to take care of your employees? Because of the fact that we are always growing, the greatest thing we offer our employees is growth opportunity. To drive our employees, we use existing examples of people within our organization who have grown from crew member to district manager. What kind of exit strategy do you have in place? My exit strategy is through succession planning. My son Harsh is the chief operating officer of the company and will take my place. My daughter-in-law Gurbir is the controller. My daughter Ritu is currently practicing law in New York and eventually plans to assist us with the family business as well.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS BY HELEN BOND

Serving with a Cause W

Husband-and-wife team pass the blessings on

hether working to build up their business or improve the lives of children in their community, Papa Murphy’s franchisee Todd Mulvahill and his wife Kelly love serving with a cause. And for their passionate, unwavering support for children in the Seattle-Tacoma area, they are the 2016 recipients of the Noble Cause MVP Award. “To our company, being noble means helping others who are either too young to know what help they need, or their families do not have the ability to provide the help,” says Todd Mulvahill, a Papa Murphy’s franchise for 20 years. “We are not looking to be recognized. We just want to know that our actions have improved a young person’s life.”

Giving back is a way of life for the Mulvahills, longtime supporters of St. Jude’s Children’s Research Hospital. They also work actively to spearhead programs NAME: Todd Mulvahill and Kelly

Mulvahill

TITLE: Owner, President, CEO;

Owner, Secretary

NO. OF UNITS: Papa Murphy’s, 6; The Gyro Shack (signed for 14) AGE: 51 FAMILY: Wife Kelly; two daughters,

Mikaela and Abi

YEARS IN FRANCHISING: 20 YEARS IN CURRENT POSITION: 20

2016 MVP AWARDS

Noble Cause Award Why do you think you were recognized with this award? We have always believed in giving back to the community that has been so giving to our company all these years. But more importantly, we believe in giving to charities for kids. We have partnered with the Starlight Children’s Foundation for five years. We have provided children’s hospitals with game carts for sick kids to play while hospitalized for lengths of time, and surgical grade iPads to many Seattle-area children’s hospitals. We also donate pizza and provide funding for the children and their siblings attending their summer camps. How have you raised the bar in your own company? We are always looking for the next great opportunity to either better our operations or assist in the growth of our employees. What innovations have you created and used to build your company? We were the first owners in the Seattle DMA to embrace installing a new POS system and using it to its full capacity to control costs and create better flow-through to the bottom line. Our employees—from hourly to management level—loved our dedication to the investment for this technology. What core values do you think helped you win this award? Treat others as you would want to be treated! Don’t give to receive, give to help others. How important is community involvement to you and your company? The South Sound Seattle area has embraced our company for many years. We can never stop giving back to support them, from children’s charities to local schools. What leadership qualities are important to you and your team? What kind of party do you want? If you were to be transferred to one of my other restaurants tomorrow, what kind of party would your crew throw for you? Would it be a party of sadness because they don’t want you to leave? Or a party of joy because they can’t stand working for you and are elated that you are leaving? If any of our managers possesses leadership qualities that would land them at the second party, they most likely should go find their happiness somewhere else.

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2016 MVP AWARDS that benefit the local partner hospitals of Starlight Children’s Foundation. Recent community initiatives include money for mobile entertainment centers to help children cope during chemotherapy treatments, and free pizza donations to camp programs for cancer patients, survivors, and their families. Employees in their own company also experience their generosity, each receiving a gift that gives back at the annual Christmas party. “Every guest gets to walk away with a little stuffed animal, and we make sure they know that all the proceeds go to St. Jude’s,” he says. “It is something all of our employees look forward to every year.” Mulvahill is always looking for ways to give back. After nearly eight years as president of the brand’s Seattle DMA Advertising Co-op, he recently stepped down, calling his service there a great run. “I always led the co-op to help others and to try and help build all of our sales,” he says. “Our Seattle DMA owner group has been wonderful to work with in supporting Starlight Children’s Foundation. We all have gotten behind it and have never once questioned what all the goodwill

PERSONAL Formative influences/events: I simply got tired of working for Corporate America. When I received a letter of warning from my job for something that wasn’t even my fault, it was the straw that pushed me into franchising. Key accomplishments: Our second store. When we opened our second Papa Murphy’s, we broke the company’s record for grand opening sales. Our stores have always outperformed the rest of our DMA’s AUV. Other accomplishments: I have served as president of our DMA for 8 years and served on Papa Murphy’s franchise advisory board for 15 years. Workweek: 50-plus hours. What are you reading? Slash by Slash and Anthony Bozza; Good to Great by Jim Collins. Best advice you ever got: Never partner with anyone! What’s your passion in business? We absolutely take great pride in the development of our people and their well-being both in and outside of working for us. Without them, we would be nothing. We love providing them the opportunity to grow within our company and run the business as if it is their own.

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was going toward.” These days, the Mulvahills are gearing up to spread their good works to new customers and a new brand. The company, which has operated as many as 17 Papa Murphy’s before selling off 11, recently signed on as the pioneer franchisee of The Gyro Shack, a Boise-based QSR concept. The agreement calls for 14 Greek food restaurants in a market that will be able to house as many as 60. With little room to add any more quality, high-volume Papa Murphy’s stores in their Seattle market, the time was right

MANAGEMENT Business philosophy: With franchising, we already have a great product. If we take good care of our people, they will take care of the customer and deliver the quality product. Management method or style: To be the best coach we can be. Acknowledge successes before areas of improvement. We always are there to listen and learn ourselves. We learn a lot just by listening to our team. Greatest challenge: Keeping up with and staying ahead of today’s government-regulated, business-unfriendly climate. How do others describe you? A leader. Caring with a huge vision. How do you hire and fire, train and retain? With management we always try to promote from within whenever possible. We have not gone outside the company for management for three years. When we have gone outside, we use Indeed as a tool to find candidates. If I’m guilty of one thing, it is leading a horse to the water trough too many times thinking it will drink, and it just won’t. I tend to believe everybody is good. But sometimes it’s just clear that an employee needs to go find their happiness somewhere else when company standards are not followed. We have a main store that we call our training store. New hires or current employees climbing the company ladder spend time in this store to learn high-volume/best practice procedures. It is typically an eight-week course from start to finish—starting with daily operations and moving on to building and working with their own team of employees, and daily and period administration duties. At the end of the eight weeks, they should be able to fully manage their own restaurant as if it were their own. For hourly employees, we use a 30-day training/coaching program. If we have done our selection process properly, an individual should have no problem becoming effective within the 30-day process.

to add a new brand. “We both wanted to diversify, and The Gyro Shack fit what we were looking for,” says Mulvahill, who worked in national sales for a beer distribution company before he turned to franchising. “I’m only 51. I would drive Kelly crazy if I retired right now.” Also, he says, “We have two girls, 17 and 21, and have to pay for two colleges and two weddings.” The Mulvahills say receiving the Noble Cause award was a humbling experience. They hope to continue to lead by example by showing others that, “We all should reach out and help others with our blessings.”

BOTTOM LINE Annual revenue: $7 million. 2016 goals: For our Papa Murphy’s stores, we want to keep up our positive comp sales growth. Our DMA is almost filled in, so we would like to start acquiring current owners looking for a change. For The Gyro Shack, we plan to open our first store by the end of the year and follow with two more in Q1 of 2017. We currently have three LOIs turned in on great sites and have five more in the hopper. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, we hope to be the dominant owner in the South Sound of the Seattle Papa Murphy’s DMA. For The Gyro Shack, we will have already finished building out our 14-store agreement. In 10 years with Papa Murphy’s, I would love continued steady growth as a national brand and continued achievement of positive sales comps. In 10 years with The Gyro Shack, we hope to have our entire DMA built out (50-plus units). Most of all, I would love to see my two daughters involved with the company if that is what they could see themselves doing for a career. What are you doing to take care of your employees? We always do our best at staying competitive with current salaries. We have always offered a very nice bonus program that allows for a share of net profit by period. We offer paid vacations, sick leave, and profit-sharing. We have a 401(k) that we fund with 3 percent of a manager’s salary on an annual basis. And we throw an awesome Christmas party for management and spouses. What kind of exit strategy do you have in place? If our kids choose to join the business, we would work with them to someday take over. But equally important would be to take care of and set up the people who have taken care of us for all these years: our senior management! That’s at least 10 to 15 years away. We have lots of time to figure that one out.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS BY HELEN BOND

Man of Many Hats

I

Longtime Hardee’s franchisee also is a mayor and a publisher

f you want to see the positive influence of Hardee’s franchisee Dan Ponder at work, look no farther than his hometown of Donalsonville, population 3,000. Nestled in the southwest corner of Georgia’s Seminole County, Donalsonville is home to Ponder Enterprises, which opened its first Hardee’s restaurant in 1983. Ponder is publisher of the town’s award-winning newspaper, the Donalsonville News, and in 2013 was elected mayor. At the moment, he is tirelessly leading an effort to make his town the nation’s first Smart Rural City. The broadband project, which has the potential to transform the community, “could have never happened without franchising and my long relationship with Hardee’s,” says Ponder, the recipient of the 2016 Spirit of Franchising MVP Award. The plan to wirelessly blanket

the city is designed to provide the rural area with virtual education, business, and cultural arts opportunities and make free high-speed Internet available. Ponder, who grew up working in his family’s Alabama peanut processing plant, NAME: Dan E. Ponder, Jr. TITLE: President, Ponder Enterprises NO. OF UNITS: 36 Hardee’s AGE: 61 FAMILY: Wife Mary Lou; 2

daughters, 2 sons-in-law, 3 grandchildren YEARS IN FRANCHISING: 32 YEARS IN CURRENT POSITION: 32

2016 MVP AWARDS

Spirit of Franchising Award Why do you think you were recognized with this award? While I was surprised by the award, I would like to think that I was selected because of my 32 years of steady growth as a franchisee and support of the brand. I have also served on the franchisor’s board of directors for the past 15 years, which has given me a good perspective about the business from both sides of the fence. How have you raised the bar in your own company? Years ago we scrapped our detailed mission statement and replaced it with “Working together to be the best franchise group in the Hardee’s system.” We evaluate ourselves against that goal every year. What innovations have you created and used to build your company? We have developed what I believe to be a state-of-the-art data management system involving all aspects of our business. This tool is available remotely and at the restaurant. Most company management tools from exception reporting to QA audits are now automated in customized Apple apps available on iPhones and iPads provided to our management team. What core values do you think helped you win this award? Nothing is more important to me than integrity. I want our company to be known for doing things the right way for the right reasons. I want everyone from our employees to our vendors to our competitors to know that our word is our bond. How important is community involvement to you and your company? Our company is involved in sporting partnerships from Little League to high school and college. Every single field in every single sport in our hometown has a scoreboard sponsored by our company. We are the title sponsor in several charitable events, as well as at events held at several military bases located in our footprint. What leadership qualities are important to you and your team? Lead by example and value the contributions of your employees. We look for people who want to be part of a winning team and who take pride in their own personal contribution to that success.

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MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS was initially drawn to franchising for its strong support system. “I’m not a big fan of reinventing the wheel,” he says. “I’d rather take someone else’s wheel and make it better, and franchising allows me to do that.” When he made the decision to open a restaurant, he optioned property on the biggest intersection in Donalsonville— and then went looking for a franchise. Ponder’s first Hardee’s was such a success that his brother Ernest joined him as a

PERSONAL Formative influences/events: My brother and I grew up in a multi-generational family business. We were given the opportunity to work in positions of responsibility at a very early age. My father and grandfather held us accountable as teenagers, which allowed me to open my first Hardee’s restaurant at the age of 29. Key accomplishments: I was awarded the John F. Kennedy Profile in Courage award in 2003 related to a speech I gave as a member of the Georgia House of Representatives. That speech and award have affected my life in many ways since then. Within the Hardee’s system, I was awarded the Founders Award by the IHFA in 2004. In 2009, our company received the first annual Wilber Hardee’s Founders Award, as well as the inaugural CKE Star of Excellence Award from the franchisor. We have also been named Hardee’s national Franchisee of the Year. Work week: I would say five and a half days a week, though my wife would say it is more than that. I tend to work early and late, and some on weekends, to get things done when no one else is around. As the mayor and publisher of the local newspaper, I try to balance my time between the entities I am involved with. What are you reading? In addition to various trade magazines and the Wall Street Journal, I am currently reading The Road to Character by David Brooks. I also am the publisher of an award-winning weekly newspaper in Georgia, which celebrates its 100th anniversary this year. I read the Donalsonville News cover to cover each week. Best advice you ever got: My father warned me that I should not measure myself when everything was going good. He told me, “The measure of a man is determined by how he responds when he stubs his toe.” He was right. What’s your passion in business? Developing people who become part of our company family. I take great joy in seeing our team take ownership of their responsibility and talk with pride about working for our company.

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business partner, and the pair—now with 36 Hardee’s in 3 states (Alabama, Florida, and Georgia)—have never looked back. These days, it is the franchising friendships that Ponder cherishes most, particularly those formed during the early days as a founder of the Independent Hardee’s Franchisee Association (IHFA). “We were all talking the same language, fighting the same battles, and trying to help each other succeed,” he says. “That camaraderie transcended the business and became personally important and invaluable to me.” Ponder Enterprises is an operationsfocused franchisee organization, opting to own the building and land underneath. A dozen years ago Ponder scrapped a formal mission statement for a focus on providing employees and various departments with the tools to be the “best franchise group” in the Hardee’s chain.

MANAGEMENT Business philosophy: Develop a plan for steady sustained growth and then build a team that makes it happen. Build every restaurant with the plan to be operating it yourself for the next 30 years. No shortcuts. Management method or style: I try to focus on the big picture. We have many good, longtime employees. I try to set expectations for them, make sure they have the tools to succeed, and then I stay out of their way. Greatest challenge: People. Finding the right people to operate the restaurants at the store level and then keeping them happy. The implementation of the Affordable Care Act has been particularly challenging in the past two years. How do others describe you? I would like to think they say I am fair, honest, hard-working, generous, and, hopefully, a good man. How do you hire and fire, train and retain? We focus on hiring people with the right attitude. We can train anyone with the technical skills, but we can’t teach them to smile. I often ask when an employee is terminated if we did all we could as a company to help them succeed. We are putting more and more resources into training while at the same time developing tools that identify and reward good behavior. Given the high cost of replacing employees in today’s market, we try to provide the best benefits we can at an affordable price. This will be the eighth year in a row we have provided a 100 percent match for all employees who choose to participate in our 401(k) plan.

Ponder and his company have been lauded with numerous awards over the years—the most personally notable, the John F. Kennedy Profile in Courage Award that Ponder received in 2003 as a Georgia legislator, after his unplanned, impassioned speech led to the passage of the state’s first hate-crimes legislation. The life-changing impact of the award continues to serve as the foundation of his business today. “We want to be trend-setters in our brand,” he says. “We have always been cutting-edge when it comes to products and equipment. But there is never a question about doing the right thing. And I think we are respected for that.” It’s all about being the best you can be, a mantra Ponder lives by.

BOTTOM LINE Annual revenue: $41 million. 2016 goals: $50 million. Growth meter: How do you measure your growth? We measure comparable sales, transactions, profits, and employee retention, as well as how we performed against our plan. We measure some 16 different items in a matrix to compare restaurants’ performance against each other. Vision meter: Where do you want to be in 5 years? In 10 years? I would like to complete our current development plan and be operating 45 to 50 restaurants, primarily on our own real estate. I want our management team fully staffed in preparation for the next generation. What are you doing to take care of your employees? Each year, we hold a company-wide General Manager Rally at a resort for three days. We provide trips (a cruise this year) for our top 10 managers. We try to make our company an employer of choice in our markets by providing competitive pay with excellent benefits at affordable prices. As I mentioned, we have been matching our employees’ 401(k) contributions with a 100 percent company contribution for the past eight years. What kind of exit strategy do you have in place? I grew up in a family-owned business and know all the benefits and disadvantages of working with your children. I currently have one son-in-law involved in the company, though time may bring some of my brother’s children back home. Our overall strategy is to have a strong enough management team to allow the company to operate and grow after I am no longer involved in the day-to-day operations.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS BY HELEN BOND

A Culture of Giving

The Saxton Group is committed to serving its communities

W

hen an EF4 tornado ripped through the northeastern Dallas suburb of Rowlett the day after Christmas last year, the people at a McAlister’s Deli a mile away knew just what to do. “Our manager was feeding first responders free, handing out food to anyone who needed it,” says Adam Saxton, chief business officer at The Saxton Group. “He knew it was the right thing to do and that the company would support that decision without question. You can’t do that if your people don’t know your culture.” Employees of The Saxton Group, the country’s largest McAlister’s Deli franchisee, are card-carrying members of the company’s culture—literally. Every employee receives a business-sized laminated card that outlines the franchisee organization’s vision, mission, and values—with a special emphasis on contributing to the communities where they operate. “We call them culture cards,” says Saxton, who co-owns the Dallas-based company with his father Kelly Sexton, founder and CEO, and younger brother Matt, chief operating officer. Saxton, who has been with the company for 13 years, says it’s really been a lot longer than that. “Since this is a family busiNAME: Adam Saxton TITLE: Chief business officer,

co-owner NO. OF UNITS: McAlister’s Deli, 67 AGE: 34 FAMILY: Wife Sarah, 2-year old

twin boys, Patrick and Harry YEARS IN FRANCHISING: 13 YEARS IN CURRENT POSITION: 2

(previously vice president)

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2016 MVP AWARDS 2016 MVP AWARDS

Community Involvement Leadership Award Why do you think you were recognized with this award? We have found ways to give back to the community both big and small, and I think that is why we were recognized. We have a comprehensive approach that covers everything from small, local fundraisers to big, company-wide charity programs. However, I think the most important thing is that we empower our employees and managers to take action on their own. If they see a need in their community, they have the ability to step up and do their part to help. How have you raised the bar in your own company? We have always believed in building a culture that is separate from the brand we operate. Often, restaurant franchisees can get lost in the culture of the brand they franchise, when ultimately you don’t own that brand. We own The Saxton Group brand and want our people to think of us as their employer first. By creating a culture of excellence we are able to turn that to any brand we may be operating. What core values do you think helped you win this award? We believe in giving back to the communities in which we operate. In addition to the economic impact we have in our local communities through operations, we also give back with our time, talent, and treasure. Every single employee carries a card in their pocket that says this, because community is part of who we are. How important is community involvement to you and your company? I believe the success or failure of a business depends on the community’s support of that business, and you can’t ask for support if you aren’t also willing to give it. I also believe that for anyone interested in community involvement or philanthropy that the first dollar you give should always be local; start at home before looking elsewhere. There are great needs in every town. Two recent examples: 1) Our McAlister’s Deli locations sold pink sugar cookies last October as part of Cookies for a Cause, with a portion of the proceeds split among 13 local Susan G. Komen affiliates. In 31 days, 63 stores sold 36,105 treats, resulting in a donation of $18,052.50. The project was incredibly successful, highlighting just how powerful cause marketing can be. 2) In December, I helped lead an iniative for first responders and emergency personnel, less than 24 hours after an EF4 tornado touched down in Rowlett, Texas, about a mile from one of our stores. Those involved with disaster relief were encouraged to come into our Rowlett store to rest and were served a free meal. The social response was electrifying and quickly went viral. The opportunity to provide meals for first responders helped re-establish and strengthen the relationship we already had with the Rowlett community.

PERSONAL Formative influences/events: I grew up in the restaurant franchising business. I remember once, when I was 12, eating at one of our pizza restaurants—it had a salad bar. At the table, my parents were discussing the fact that the salad bar really needed cleaning and that my Dad would need to talk with the manager about how to make that an area of focus. Well, my 12-year-old self thought I could take action right away. I went up to a young team member and told her in my sternest pre-teen voice that the salad bar was unacceptable. My parents were mortified. The team member was confused and embarrassed—after all, who was this kid? I think I learned pretty quickly that how you treat your people matters. I’ve thought of that often as we try to build a people-first culture. Key accomplishments: Just recently I was proud to help lead our team to open four restaurants in four weeks, back-to-back, in four different states. That was a record-opening cadence for both The Saxton Group and the McAlister’s brand. Growth and opportunity are key values in our company, and it was such an accomplishment to bring those values to life in a really tangible way. Work week: I work all the time, but I have a lot of flexibility too. That’s being a part of the modern, connected workforce! I’ve always been an early riser so I do some of my best work very early in the morning. I travel frequently, visiting new markets and finding ways to grow our brand.

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What are you reading? I read the New York Times, Wall Street Journal,and parts of The Financial Times every day, and because I’m a Millennial I read them on my phone. I started that habit about a year ago and felt that was the best combination of news to give me a wider perspective. I keep up with restaurant industry news by following trade blogs and love seeing what articles others in our industry are sharing on LinkedIn. Best advice you ever got: A high school teacher of mine—and I don’t know why he even did this—encouraged me to look at colleges in Texas and move to Texas after I graduated from my high school in a small town in Mississippi. That’s what led me to SMU. Moving myself to Texas—and eventually our business and family to the state—opened up a world of opportunity and success for The Saxton Group. I’m a firm believer in that saying, “I wasn’t born in Texas, but I got here as soon as I could!” It’s an amazing place to live, work, and grow a company and I’m forever grateful for the advice that brought me to Dallas. What’s your passion in business? Growth! I am most gratified when we bring the brand to a new market that has never experienced McAlister’s before. When done properly, growth fuels opportunity for advancement for our people, creates new jobs, provides our shareholders with fantastic returns, and gives our company something to rally around. Really, nothing is more exciting than opening a new restaurant.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS MANAGEMENT Business philosophy: Really happy customers will solve at least 90 percent of any business challenge. Management method or style: You have to give people room to let their talent shine, but with balance. Too much oversight will stifle the individual drive to succeed inside of top performers, but too little will leave them feeling neglected and on an island. I try to give people plenty of rope, but also an anchor. Greatest challenge: People. How do others describe you? I hope that people believe I have genuine passion for the McAlister’s brand, its inherent strength, and its huge

runway of opportunity. How do you hire and fire, train, and retain? We are looking for people who first and foremost are passionate about service—and not just our restaurant staff. When I hire for the corporate office, I want that person to provide world-class customer service and support to our restaurants. I believe service can be trained, but only to a degree. There is a natural inclination in everyone to either serve or not, to put the needs of others above themselves, or not; and if you have those qualities you will stand out at The Saxton Group. We can train job skills, but we can’t teach you how to have a genuine smile, anticipate needs, or care about your customers and your co-workers.

at a time, one community at a time, “One customer one successful restaurant at a time.

The restaurant business is a relationship business, and we want to know our customers and understand the needs of the places they live.

ness, I feel like I have been in it all my life. I was never that kid in school who didn’t know what his father did at work. We talked restaurants at home as long as I can remember.” The Saxton Group, which operates 67 McAlister’s Deli restaurants with 10 more in the pipeline, was honored with the MVP Award for Community Involvement Leadership for their thoughtful approach in giving back in ways big and small, and serving as a role model not only for the brand but for franchising itself. As chief business officer, Saxton focuses on growth, development, new business opportunities, marketing, and legal issues. In other words, he says, “all the things that happen outside of a restaurant that it takes to make a company of our size grow and thrive.” Saxton says community giving is a very important element of how he leads.

All the company’s charitable efforts are designed to keep the money local, even when it goes to national charities. For example, the company hosts fundraisers every single week in all of its locations. In 2015, these hyper-local fundraisers raised more than $90,000 for small, local organizations. With The Saxton Group planning to top the 100-store mark in the next few years, Saxton expects to seek bigger ways to give as the company grows—while never taking his eyes off the customers they serve. “It’s really the cornerstone of who we are. One customer at a time, one community at a time, one successful restaurant at a time. That’s how we built our business,” he says. “The restaurant business is a relationship business, and we want to know our customers and understand the needs of the places they live.”

BOTTOM LINE Annual revenue: $140 million. 2016 goals: 9 new McAlister’s Deli locations. Growth meter: How do you measure your growth? 40-plus additional McAlister’s Deli locations in the next few years. We talk a lot about the 1.2.3. plan. For us, that means 100-plus McAlister’s locations, $200 millionplus in revenue, in about a 3-year time horizon. I like to put big goals in front of our teams that all levels of the organization can engage in to help make happen. Vision meter: Where do you want to be in 5 years? 10 years? See above.

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What are you doing to take care of your employees? We provide a competitive and comprehensive benefit package, but what keeps our employees around is our culture. We treat people well. Happy employees make for happy customers. Our employees are our first customers. We are growing and provide a ton of opportunity for advancement. In fact, the majority of the senior directors and vice presidents started as hourly employees in the restaurants. What kind of exit strategy do you have in place? I believe that if you build a business with really strong fundamentals—consistent sales growth, strong profitability, proven ability to open and grow, and a culture in place to continue to do all of that in the future—then the opportunity to make an exit will always be there. Strong businesses attract buyers.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS BY HELEN BOND

Married with Trucks O

Setting boundaries is their formula for success

ne of the strategies multi-unit franchisees Brooke and Les Wilson practice to keep both their marriage and their business on track is to keep each in its proper place. “After the first year of marriage and work, I wondered if we had more than a business partner relationship,” says Brooke. “We had to draw a line. No business talk at home. If that means we stay at the office late to work through an issue, we do.” That also meant no venting about business in their off hours, and no late night work emails, “a sacrifice we felt was important to keep work out of the house,” she says.

NAME: Brooke Wilson TITLE: Owner NO. OF UNITS: 5 Two Men and

a Truck AGE: 36 FAMILY: Husband and partner

Les Wilson; 3 dogs and a cat (rescues) YEARS IN FRANCHISING: 15 YEARS IN CURRENT POSITION: 12

2016 MVP AWARDS

Influencer Award For a Husband & Wife Team Why do you think you were recognized with this award? Because people like us? Kidding! I think our passion for business and each other is evident. Being business partners puts a strain on personal relationships, yet Les and I have managed to run successful businesses and, though we of course have our spats, are truly happy together. How have you raised the bar in your own company? Standards. We have high expectations for our people. And our people are rewarded for meeting and exceeding those expectations. We encourage constructive challenge in solving problems and strategizing objectives. Varied perspectives are positive. What innovations have you created and used to build your company? Digitized the highly regulated contract and paperwork process related to household goods moving, making the interaction more user-friendly for both our movers and our customers. The technology innovation also limits billing error and protects against fraud. What core values do you think helped lead you win this award? Good things happen to good people. Doing the right thing pays dividends. Always operate with integrity. How important is community involvement to you and your company? Giving back to the community is important for local businesses. We run two campaigns annually to benefit domestic violence shelters and animal protection, in addition to continual support of small local in-kind causes. What leadership qualities are important to you and your team? Integrity, work ethic, and respect for the team. A good leader encourages employees, considers themself to be part of a team, and gives credit. They offer a vision and coach toward a common goal.

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

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6/17/16 9:51 AM

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TERRITORIES AVAILABLE To learn more go to franchising.hungryhowies.com or call us today at (248) 414-3300. *Results measure company-wide same store sales figures for each calendar year 2010 through 2015. Excludes store sales from units in the State of Florida, units which are not obligated to and do not report sales to Hungry Howie’s, and units which opened and/or closed during each calendar year period from 2010 through 2015. † Average Unit Volumes reflect average annual gross sales of 319 Hungry Howie’s units opened for the entire 52-week period from December 28, 2014 through December 27, 2015 (the Measuring Period). The 319 units includes all franchised and affiliate-owned units but excludes units in the State of Florida, units which opened and/or closed during Measuring Period, and units which are not obligated to and do not report sales to Hungry Howie’s. Of these 319 units, 131 (41.07%) had higher gross sales during the Measuring Period. Food, paper and direct labor cost information is obtained from income statements submitted to Hungry Howie’s. Figures reflect average cost information of 243 Hungry Howie’s units opened during the Measuring Period. The 243 Hungry Howie’s units includes all franchised and affiliated-owned units, but excludes units in the state of Florida, units which opened and/or closed during the Measuring Period, units which are not obligated to and do not report sales to Hungry Howie’s and units which either did not submit income statements or submitted any incomplete or improperly prepared income statements as of March 26, 2016. Labor costs do not include amounts paid to managers and/or owners. The 243 Hungry Howie’s units had an average food cost of 24.87%; an average paper cost of 3.44%; and an average labor cost of 17.75%. The sum of such costs averages is 46.06%. Of the 243 Hungry Howie’s units, 128 (52.67%) had lower food costs; 131 (53.91%) had lower paper costs during the Measuring Period; and 108 (44.44%) had lower labor costs during the Measuring Period. Some Hungry Howie’s Units have earned this amount. Your individual results may differ. There is no assurance that you’ll earn as much. This advertisement is not an offer of a franchise. Franchises are offered and sold only through an FDD.  Please see our FDD for more details. State of New York: This advertisement is not an offering. An offering can only be made by a Franchise Disclosure Document filed with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law of the State of New York. Minnesota state registration number F-2873.  HUNGRY HOWIE’S PIZZA & SUBS INC., 30300 STEPHENSON HIGHWAY, SUITE 200, MADISON HEIGHTS, MI 48071, 248-414-3300.

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2016 MVP AWARDS The Wilsons, who own and operate five Two Men and a Truck territories in North Carolina and Georgia, are the recipient of this year’s MVP Influencer Award for a Husband & Wife Team. The Durham, N.C.-based couple each had worked for Two Men and a Truck before they became married franchisees. Les was a mover for the brand in college, eventually becoming a general manager and buying the rights to the Charlotte franchise with an investor group after graduation. Brooke, who spent time with the brand in customer service, says she loved the diversity in her workday and

PERSONAL Formative influences/events: I come from a family of business leaders. Work ethic was instilled at a young age, and I have worked as long as I can remember, often holding multiple jobs simultaneously—not because our family needed the additional income, but because nothing in life comes free. One has to work hard for what they want— and no matter what you do, do it to the best of your ability. You’re always on a stage. You never know who is watching. Key accomplishments: Two Men and a Truck Achievement in Excellence Award winner every year since the award’s inception. Consistently named an Angie’s List Super Service Award winner. Maintained 4.70 (out of 5) customer satisfaction score and referral rate of 95-plus percent over the last 5 years in an industry where 80 percent is considered good. Franchise system leader in revenue achievements. 2015 Two Men and a Truck Safety Award winner. Helped raise more than $14,000 in 2015 for the Animal Protection Society, which raised awareness and led to a nearly 25 percent increase in adoptions that October. Personally: Traveled to all but four countries in Europe over the past decade. Learned to sail (a dream of mine). I remain happily married to my best friend and partner in life and business after 13 years. Work week: Mostly Monday through Friday; occasional weekends. What are you reading? The Art of Crash Landing by Melissa DeCarlo. Fiction is an escape for me. I love to read! Best advice you ever got: Surround yourself with people who have different perspectives and are smarter than you. Diversity and challenge, when constructive, can be a good thing. What’s your passion in business? To be a great boss. I’ve had bad ones and vow to never be a bad boss. Fair, firm, and consistent accountability with a genuine care for people.

50

the company’s family-focused system. The duo, who began dating at the University of South Carolina, opened their first franchise together in 2004—as newlyweds. At the office, they learned to clarify their roles to avoid taking charge of the same departments or working on the same tasks, which they discovered had confused the staff and held back business. Instead, they focused on delegating duties based on their individual strengths and weaknesses. Brooke, for instance, is more analytical and detailed in nature, while Les tends to be task-driven. “I am visionary and creative,” she says. “Les gets it done. There is a time and a place for both.” Work partnerships, she says, can put

MANAGEMENT Business philosophy: Happy people breed success. Happy employees create happy customers. Management method or style: We focus on people and keep a pulse on the numbers. The bottom line will work itself out. Greatest challenge: In the moving industry, it’s managing recruitment and retention with the seasonality of our business. How do others describe you? I had to ask. Here are some of the answers I received: “Sharp, motivated, and tenacious with a hint of wanderlust.” “Intelligent, hard-working, dedicated, willing to ‘Brookinate’ to solve issues. Fair and able to recognize that no one person has all the answers.” “Always going the extra mile and coaching for a better understanding of situations.” “Committed, positive energy, and gives 100 percent all the time. Caring. Laser-like focus. Just makes things happen. Takes large complex issues, works for the solution. And, of course, lovely and just fabulous.” How do you hire and fire, train and retain? That’s a big question with a long answer. There is no surefire, simple solution. Hire qualified candidates who will fit the culture. Even the most skilled candidate can destroy a business if they bring negativity to the workgroup. Clearly and consistently communicate expectations in orientation and ongoing training. You can’t manage what you don’t communicate. Be genuine in your care for the happiness of your team. Coach and mentor them. Help them be better both personally and professionally. Provide them with opportunities to continually move forward. And if you must terminate, it should never be a surprise to the employee. Fair, firm, and consistent accountability, in line with clearly communicated expectations, lays the groundwork for success.

a strain on any relationship—married or not. She recommends potential partners understand and discuss the good, bad, and ugly before jumping into business together. Well-defined boundaries and responsibilities and formalized business strategies protect everyone involved, she says. With per-unit sales growth trending in the double digits and a 95-plus percent customer referral rating, the Wilsons see a bright future for expansion into new markets and new business ventures—while still making time for each other. “I’m a strong believer in frequent vacations,” says Brooke. “Even a staycation at home can serve as a refresh for our personal relationship.”

BOTTOM LINE Annual revenue: $13 million (approx.). 2016 goals: $14 million, with the downsize of two markets (we recently elected to sell two franchises in Baltimore and D.C.); 96-plus percent customer referral rate. Growth meter: How do you measure your growth? We measure revenue growth year over year and consider market segments and market share as drivers. We aim to continue growth trends in our current markets at a rate of 10 percent or better, while broadening our investment “basket.” Vision meter: Where do you want to be in 5 years? 10 years? It’s important that we diversify our business investment. We hope to have established a successful partner business within the next 5 years. In 10 years, I hope to manage my businesses from my sailboat depending on my awesomely talented management teams and utilizing technology. :) What are you doing to take care of your employees? Recognize hard work, dedication, and loyalty. Support their objectives and aspirations. Help them achieve their personal and professional goals. Offer opportunities for advancement, and respect their wants if they are comfortable where they are. We have brought in financial counselors to help them plan personal budgets to align with financial goals (like buy a new home, or pay for schooling). We have provided training for business ownership and invested in business ownership through partnership in franchising. What kind of exit strategy do you have in place? Honestly, this is where we are lacking. We are working to establish an executive team that can manage independently. We are young and remain in the mindset of “bring it on—go big or go home.”

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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STRIVING TO BECOME THE

#1 DRIVE-THRU COFFEE FRANCHISE IN THE NATION!

*

2012 2013 2014 2015

11.9% 10.9% 12.6% 14.9%

*2012 Same-Store Sales Growth - This figure is based on a comparison of net sales (i.e., gross sales minus customer discounts and refunds) earned by operating Scooter’s Coffee® outlets in 2012 with the net sales earned by the same outlets during 2011. Of the 89 franchised units included in the comparison, 47 units (52.8%) met or exceeded the average percentage increase of unit net sales. 2013 Same-Store Sales Growth - *This figure is based on a comparison of net sales (i.e., gross sales minus customer discounts and refunds) earned by operating Scooter’s Coffee® outlets in 2013 with the net sales earned by the same outlets during 2012. Of the 93 franchised units included in the comparison, 48 units (51.6%) met or exceeded the average percentage increase of unit net sales. 2014 Same-Store Sales Growth - *This figure is based on a comparison of net sales (i.e., gross sales minus customer discounts and refunds) earned by operating Scooter’s Coffee® outlets in 2014 with the net sales earned by the same outlets during 2013. Of the 99 franchised units included in the comparison, 52 units (52.5%) met or exceeded the average percentage increase of unit net sales. 2015 Same-Store Sales Growth - *This figure is based on a comparison of net sales (i.e., gross sales minus customer discounts and refunds) earned by operating Scooter’s Coffee® outlets in 2015 with the net sales earned by the same outlets during 2014.

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2016 MVP AWARDS BY HELEN BOND

Renaissance Man W

One brand, 42 years, and multiple interests

hen he was 16, Ed Wolak perfected the art of baking hand-cut donuts on the night shift at Dunkin’ Donuts. He’s been a single-minded brand ambassador ever since. Today, with 42 years of Dunkin’ Donuts franchise experience behind him, Wolak, who will open his 100th location in the next year, is a true MVP for Single Brand Leadership. “I believe success within the fast food industry is vastly underestimated and misunderstood,” he says. “Franchising with the right brand provides an unparalleled ladder to success. I love the Dunkin’ Do-

NAME: Ed Wolak TITLE: President and CEO, The

Wolak Group NO. OF UNITS: 96 Dunkin’ Donuts FAMILY: Wife Debby; daughter

Kimberly Wolak Garrett YEARS IN FRANCHISING: 42 YEARS IN CURRENT POSITION: 42

2016 MVP AWARDS

Single Brand Leadership Award Why do you think you were recognized with this award? My 40-plus years as a successful developer and operator of Dunkin’ Donuts restaurants. Throughout most of this time, I have been elected as a representative to the Dunkin’ Donuts Brand Advisory Council. How have you raised the bar in your own company? I have not been afraid to challenge my managers and reward them when they succeed. What innovations have you created and used to build your company? Again, this is a penny business. The detailed cost and loss prevention controls we have developed over the years really set us apart from other players in our industry. What core values do you think helped you win this award? Never get outworked and you will be successful. How important is community involvement to you and your company? The Wolak Group has earned a strong reputation for social responsibility and community involvement. As our business continues to grow, so do our community commitments. We continue to grow existing relationships with local and national charitable organizations, such as the Juvenile Diabetes Research Foundation, the Make-A-Wish Foundation (Central New York and Maine chapters), the Maine State Society for the Protection of Animals, and many more. We have also formed relationships with multiple cutting-edge companies to reduce our carbon footprint, reduce and re-channel our waste stream, and become an innovative “green” and sustainable business. What leadership qualities are important to you and your team? Someone who is a team player willing to roll up their sleeves and work hard, and who accepts responsibility without trying to blame others.

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MULTI-UNIT FRANCHISEE IS S UE III, 2016

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2016 MVP AWARDS it our mission to demonstrate “We shall tomake every new recruit that no position in our company is out of reach. ”

nuts brand because it has provided me the opportunity to succeed.” In return, Wolak, who owns and operates 96 Dunkin’ Donuts in Maine, New Hampshire, and New York, has given back to the brand in countless ways over the decades. Since founding The Wolak Group in 1975, he has served as an elected franchisee leader at every level of the brand’s advisory system, and has been honored by the brand with its Annual Retail Excellence and Developer of the Year awards. If Dunkin’ is pondering a new product, you can bet it’s made a test run in The Wolak Group. But don’t let his single-mindedness about the brand fool you. Wolak is something of a modern Renaissance man. Along with his philanthropic commitment to the communities he serves, he is a World War

PERSONAL Formative influences/events: My mother worked in Dunkin’ Donuts when I was young, so I guess you can say she got me started in the business. I was working for Dunkin’ Donuts when I was 16, and Dunkin’ has been part of my life ever since. I started out as a porter and eventually worked my way up to being a baker. I put myself through college working 60-plus hours a week and became a manager upon graduation. Before long, I was overseeing multiple stores and soon set my sights on owning my own network. I purchased my first Dunkin’ in 1975 and never looked back. The first three units I purchased had been hemorrhaging cash, so I had to learn to squeeze two cents together to make a nickel. I have never forgotten that this is a penny business! Key accomplishments: Started with nothing and have grown The Wolak Group into 96 locations that employ almost 2,000 people. Work week: 50 to 60 hours. What are you reading? Thomas Jefferson by Jon Meacham. Best advice you ever got: Management is getting work done through other people. Learn to delegate! What’s your passion in business? Finding the sites that I consider “diamonds in the rough” and turning them into successful Dunkin’ Donuts.

54

II buff, a classic automobile collector, and recently was executive producer of the movie “Sugar Mountain,” a thriller set in Alaska, which premiered at the Cannes Film Festival in May. Wolak has taken the initiative to improve both himself and the brand since his high school days, when he started at Dunkin’ Donuts washing floors, the lowest paid position on the crew. He quickly assessed all the job and pay levels around him and went to work developing the skills to en-

MANAGEMENT Business philosophy: You can’t grow without taking chances and trusting your employees. Management method or style: Put the right people in key positions and let them do their jobs. Greatest challenge: Labor costs. I take great pride in the number of jobs I have created over the years, especially entry-level positions. I’m afraid that the proposed drastic changes in the minimum wage will lead to a sharp decrease in the number of jobs in the QSR industry, as we are forced to replace employees with machines. How do others describe you? As a person who is not afraid to stand up for what I believe in business and in life. How do you hire and fire, train and retain? We have a rather large and elaborate training department and take pride in the number of longterm employees we have. The substantial number of people who have been with us for 10-plus years demonstrates that we are an employee of choice in our industry.

sure an opportunity never passed him by. “I took it upon myself to study the Dunkin’ training manuals and everything I could learn and read about franchising so I could always put my best foot forward on behalf of the franchise owner and franchisor,” he says. Wolak continues thinking big on behalf of the brand and his company. His 2016 goal, he says, is to be known as the “destination employer of choice within the franchise industry where we compete.” To help others follow in his footsteps, Wolak has submitted plans to build The Wolak Group Career Development Center in Syracuse, N.Y. The proposed facility will serve as an educational, training, and development pathway to success in the QSR industry. Wolak sees it as a chance to inspire and mentor others to dream big. “Many individuals in today’s labor market feel trapped in entry-level positions and view the American Dream as being out of reach,” he says. “Going forward we shall make it our mission to demonstrate to every new recruit that no position in our company is out of reach, and that with hard work and dedication to our company, anyone can enjoy a successful and rewarding career with The Wolak Group.”

BOTTOM LINE Annual revenue: NA. Growth meter: How do you measure your growth? Generally, by number of new stores each year. Vision meter: Where do you want to be in 5 years? 10 years? We will not stop growing and improving. The one thing I know for sure is that in 5 years we will be bigger and we will be better. What are you doing to take care of your employees? Our employees are our most important asset and we are constantly working on new and innovative ways to attract and retain employees. We have recently hired a full-time recruiter whose sole job is to work on recruitment and retention. What kind of exit strategy do you have in place? My daughter Kim has recently assumed the role of COO and will eventually take over my role as CEO.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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The2016Multi-Unit50

Ranking the most multi-friendly brands Top 50 Brands by Number of Multi-Unit Franchisees RANK BRAND 1 2 3 4 5 6 6 8 9 10 11 12 13 14 14 16 17 18 19 20 21 21 23 24 25 26 27 28 29 30 31 31 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50

SUBWAY MCDONALD’S DUNKIN’ DONUTS LIBERTY TAX SERVICE H&R BLOCK AFC FRANCHISE CORP./SOUTHERN TSUNAMI THE UPS STORE LITTLE CAESARS DAIRY QUEEN/DQ GRILL & CHILL GREAT CLIPS DOMINO’S BURGER KING RE/MAX ACE HARDWARE HEALTH MART PHARMACIES JACKSON HEWITT TAX SERVICE FIREHOUSE SUBS TACO BELL JIMMY JOHN’S WENDY’S CENTURY 21 VISION SOURCE KFC ANYTIME FITNESS SPORT CLIPS PAPA JOHN’S PIZZA COUNTRY INNS & SUITES BY CARLSON DUNKIN’ DONUTS/BASKIN-ROBBINS COMBO PAPA MURPHY’S COLDWELL BANKER EDIBLE ARRANGEMENTS PACIFIC PRIDE SERVICES SONIC DRIVE-IN HISSHO SUSHI FANTASTIC SAMS GNC ARBY’S PIZZA HUT CHICK-FIL-A BASKIN-ROBBINS ZAXBY’S JERSEY MIKE’S POPEYES LOUISIANA KITCHEN MIDAS KUMON SUPERCUTS TIM HORTONS AUNTIE ANNE’S PLANET FITNESS MIRACLE-EAR

MULTI-UNIT FRANCHISEES

SINGLE-UNIT FRANCHISEES

TOTAL FRANCHISEES

4,284 2,151 885 826 781 772 772 716 604 572 568 536 503 495 495 444 438 406 372 366 361 361 340 338 278 277 273 256 250 249 243 243 241 238 225 218 216 203 194 191 181 168 167 163 160 158 155 154 149 146

3,838 497 467 1,039 831 1,366 2,398 100 2,171 322 352 401 1,874 2,564 2,380 138 25 358 336 232 969 2,159 233 1,319 173 419 75 266 307 603 313 62 355 5 317 268 134 141 1,215 586 34 188 483 285 1,124 126 92 286 101 30

8,122 2,648 1,352 1,865 1,612 2,138 3,170 816 2,171 894 920 937 2,377 3,059 2,875 582 463 764 708 598 1,330 2,520 573 1,657 451 696 348 522 557 852 556 305 596 243 542 486 350 344 1,409 777 215 356 650 448 1,284 284 247 440 250 176 Source: FRANdata

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MULTI-UNIT FRANCHISEE IS S UE III, 2016

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The2016Multi-Unit50 Top 50 Brands by Percentage of Multi-Unit Franchisees RANK

BRAND

% MULTI-UNIT FRANCHISEES

MULTI-UNIT FRANCHISEES

SINGLE-UNIT FRANCHISEES

TOTAL FRANCHISEES

1

APPLEBEE’S

100.00%

34

0

34

1

PANCHEROS MEXICAN GRILL

100.00%

29

0

29

1

PANERA BREAD

100.00%

30

0

30

4

HISSHO SUSHI

97.94%

238

5

243

5

FIVE GUYS

97.62%

123

3

126

6

GATEWAY NEWSTANDS

97.37%

74

2

76

7

BOJANGLES’

94.94%

75

4

79

8

FIREHOUSE SUBS

94.60%

438

25

463

9

SAM’S HOT DOG STAND

92.86%

26

2

28

10

CAPTAIN D’S

89.39%

59

7

66

11

JACK IN THE BOX

88.78%

87

11

98

12

A ALL ANIMAL CONTROL

88.46%

23

3

26

13

HWY 55 BURGERS SHAKES & FRIES

88.37%

38

5

43

14

LITTLE CAESARS

87.75%

716

100

816

15

WORLD OF BEER

84.62%

22

4

26

16

ZAXBY’S

84.19%

181

34

215

17

FRESHII

83.87%

26

5

31

18

THE LITTLE GYM

83.66%

128

25

153

19

MIRACLE-EAR

82.95%

146

30

176

20

JIMMY’S PIZZA

82.76%

24

5

29

21

PALM BEACH TAN

82.35%

28

6

34

22

SWEET FACTORY

82.14%

23

5

28

23

GRANDY’S

81.82%

27

6

33

24

MCDONALD’S

81.23%

2,151

497

2,648

25

NEWK’S EXPRESS CAFE RESTAURANT

80.65%

25

6

31

26

RADISSON HOTELS

80.00%

64

16

80

27

PACIFIC PRIDE SERVICES

79.67%

243

62

305

28

SIMPLE SIMON’S PIZZA

79.07%

102

27

129

29

AARON’S

78.85%

82

22

104

30

COUNTRY INNS & SUITES BY CARLSON

78.45%

273

75

348

31

ZPIZZA

76.79%

43

13

56

32

JACKSON HEWITT TAX SERVICE

76.29%

444

138

582

33

DUTCH BROS. COFFEE

73.85%

48

17

65

34

SUN TAN CITY

72.50%

29

11

40

35

BARBERITOS

72.41%

21

8

29

36

HUNTINGTON LEARNING CENTER

72.19%

122

47

169

37

CARL’S JR.

72.12%

75

29

104

38

BETTER HOMES AND GARDENS REAL ESTATE

72.00%

36

14

50

39

PENN STATION

70.51%

55

23

78

40

MCALISTER’S DELI

69.57%

32

14

46

41

VALVOLINE INSTANT OIL CHANGE

69.49%

41

18

59

42

RALLY’S

68.75%

22

10

32

43

COST CUTTERS

68.49%

50

23

73

44

GODFATHER’S PIZZA

67.57%

125

60

185

45

PACLEASE

66.10%

39

20

59

46

DUNKIN’ DONUTS

65.46%

885

467

1,352

47

ADAM & EVE

65.38%

17

9

26

48

GREAT CLIPS

63.98%

572

322

894

49

CHECKERS

63.92%

62

35

97

50

PET SUPPLIES PLUS

63.64%

28

16

44

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

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MULTI-UNIT FRANCHISEE IS S UE III, 2016

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GROWING TO 10 (and Beyond)

BY EDDY GOLDBERG

A D V I C E F O R T H E E X PA N S I O N - M I N D E D

G

rowing to 10 units is a cherished milestone for franchisees. Different obstacles and opportunities crop up along the way, some expected, others not. A while back, we spoke with multi-unit, multi-brand franchisee Sean Falk about his own journey to 10 units, which at the time included four brands: Great American Cookies, Pretzelmaker, Mrs. Fields Cookies, and

Salsarita’s Fresh Cantina. Since then, he’s had a few more journeys: serving as chair of the Multi-Unit Franchising Conference, testifying before Congress on the Affordable Care Act, and vice president of franchising at Safeway Driving School. Today, in addition to his franchise business, he’s franchise development leader and client executive at Hylant Insurance. Looking to grow to 10 units or more? Here’s some advice you can take to the bank. How do you know when it’s time to expand? Everyone will have a different trigger point and time frame. It may rely solely on your ability, confidence, and talent. It may take some time for you to feel knowl-

edgeable enough and have the monetary support to open additional locations. Or you may have vast experience running big operations and can step into a demanding role right from day one. Others still may have significant financial resources to open multiple locations quickly. Additionally, the level of complexity of the operation will affect how quickly or slowly you expand. Simplicity may afford you the opportunity to expand more quickly. As a QSR operator, I had the good fortune of waiting until my 10th location to add overhead, like an operations manager and an administrative assistant. Some operations, like hotels, are so complex and demanding that you will need that level of support right out of the gate! So there really isn’t just one answer for when it is time to grow. There are many variables to consider. But you will know, and it will be very clear to you! Should you stick with one brand or take on additional concepts? There are pros and cons to both sides of this argument. Again, it depends on you. Let me give you my track record as an example. Initially, I bought into a brand and opened a location in my home town of Monroe, Mich. Monroe is a very small town. There wasn’t an opportunity for me to open multiple locations of the same brand there. My initial plan was to stay local and open other concepts. So I looked for other brands and eventually had three different brands operating in Monroe. When I decided to break ties with my partner at the time, my goals changed. My new plan was to just have one, or maybe two brands, and expand into other cities. That changed again. As

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New build-out vs. taking over existing units There is significantly more safety in choosing an operation that has been up and running for years. Perhaps you’re more comfortable paying a premium for an existing business with a known cash flow. Or maybe you can find a bargain with a struggling location, if you think your talents can make a difference in its performance. However, opening a new location and taking on the cost of a build-out may prove to be your best choice. It depends on the cost of the build-out, the risk you are willing to take, and the projected performance of the location. To answer this question for yourself, you’ll have to calculate your projected ROI, your longterm goals, and your tolerance for risk.

my empire got bigger, I had four different brands in four different states. Part of that plan included diversifying my holdings to a certain degree. It also included going to new cities and looking for the opportunity to open up two or three of my brands there right away. This approach helped me consolidate the management and oversight of all my locations during my trips or discussions. What infrastructure do you need to grow to 10 units? The important thing to remember is to take on the responsibility for the things that you do best. Outsource the things that are time-consuming or a challenge for you, so you can focus on strategy and growth. Infrastructure is usually just overhead with no significant income associated with it. When you add overhead, you better have additional plans to grow from your current level. Otherwise, you cannot overcome the expense you just added to your business model. Initially, I think you should consider the following positions: an operations manager, a regional manager, an administrative assistant, a marketing specialist, a bookkeeper, and perhaps an accounts receivable/payable position. All of these choices depend on your situation, the needs you have at the time, and the things you excel at. Here’s another piece of advice: stay ahead of the growth! Don’t hire an operations manager because you have grown so much that operations are now out of control. Hire early so you can continue with your growth plan in an orderly way. You don’t want to hire someone and have them spend the next year or two fixing all the problems that could have been avoided if more systems or procedures were put in place earlier. How do you assemble a great management team? Leadership is a subject that could take years to discuss and teach. Everyone has different leadership styles. And, depending on execution, many leadership styles can be extremely effective. My approach is to hire strong people with a broad range of skills and experience. I use a “coaching” method of leadership, and then I give my management team full responsibility for the operations. My focus is to develop them on their leadership, understanding of the business model, and the key indicators of success. All of my stores do things differently, but the measure of

Sean Falk success—profitability—is the same. Let the managers have the reins. They need to feel that their efforts are tied directly to the performance and success of the location. Being micro-managed is not what they desire, and is not an effective way to lead. And make sure to compensate and reward them for their individual performance. Capital vs. debt when growing to 10 units This is a very challenging part of your growth. If you don’t grow fast enough, then you end up working for the bank as you open new locations and always have a note to pay. If you grow too fast and finance all of it, then you could experience significant challenges if you have a slowdown in sales and have trouble making the note payment. Like all things in life, there is a balance. Make sure you evaluate your capital vs. debt ratios closely. If you want to grow, maybe you have to get capital from other sources. Private equity may be an option; so is bringing in partners. Sometimes, the more you want, the more you have to give up. Often, your growth plan can “snowball.” In the beginning, you considered opening one location every two years. But as you grow, your opportunities also grow. When you’re bigger, you may consider opening up four locations in one year. Doing this will have a significant impact on your cash flow, and may require creative solutions to not miss out on an opportunity!

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You’ve made it to 10… why stop there? When a single-unit franchisee decides they want to grow and become a multiunit operator, they will have to navigate several new challenges on the road to success. Growing from one to two units is difficult. Growing from two to three is a challenge. And growing from 3 to 10 has many, many hurdles to overcome. And when you grow beyond 10 units, you will face an entirely new set of obstacles and challenges—as well as opportunities. But “10 units” is just a number used here to discuss the set of new obstacles and opportunities you will encounter along the way. The important thing is to not consider 10 a magic number and a place to stop and rest. You still will have to plan for what to do after that. In fact, I would argue that with most systems, 10 units is a danger area. For example, having a larger number of employees will mean having to deal with more government regulations. You also will have to deal with significant growing pains as your geographic area starts to increase when you spread out to new areas of opportunity. Last, you will need to figure out how to pay for all the infrastructure you must put in place. When you’ve learned how to handle that level of growth, your next plan may be how to pare down your holdings to get to a core set of holdings that is profitable and easier to manage. Or, if additional growth is your goal, you need to start planning for an infrastructure that allows you to springboard to the next level of management and ownership. Never stop planning!

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BY KERRY PIPES & EDDY GOLDBERG

OPPORTUNITY BECKONS 2016 Multi-Unit Franchising Conference delivers again

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as Vegas, home of the high rollers, once again played host to the annual Multi-Unit Franchising Conference this spring at Caesars Palace. For the 16th consecutive year, multi-unit franchisees, franchise brands, and thirdparty suppliers gathered in the high desert to share ideas, exchange information, and of course do a little business. This year’s event was another home run, with attendees at an all-time high and a long waiting list for booths in the Exhibit Hall. More than 650 franchisees attended this year, a new conference record. Their aggregate numbers were impressive: more than 12,000 operating units, revenues topping $11 billion in the past 12 months, and 120,000-plus employees in the U.S. Fore charity! The conference, which ran from Wednesday through Friday, kicked into motion on Tuesday for the nearly 100 attendees who showed up a day early to participate in the event’s annual fundraising golf tournament. The beautiful Arroyo Golf Club at Red Rock hosted the scramble-style tournament, which has become a signature event, not only for a chance to play golf and have some fun in the beautiful

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Michael Kulp, conference chairman

CONFERENCE BY THE NUMBERS A quick summary of some aggregated statistics from the 16th annual Multi-Unit Franchising Conference in Las Vegas this past April: • Attendees: 1,566 • Franchisees: 652 • Units: 12,000+ • Exhibitors: 250+ • Revenues: $11 billion+ • Employees: 120,000+

Nevada desert, but also to participate in raising significant sums for charity in the process. Combined with the Silent Auction, held in the Exhibit Hall throughout the conference, the tournament helps raise tens of thousands of dollars for worthy causes, notably the Little Rock Foundation, an organization of parents with children living with blindness, visual impairment, and other disabilities. That evening, a welcome reception at Carmine’s Italian restaurant inside the Forum Shops in Caesars Palace served as the official kick-off event for the conference. The reception featured cocktails, hors d’oeuvres, and plenty of lively conversation. The first hour offered first-time attendees an opportunity to meet Conference Advisory Board members and learn more about the conference before the veteran attendees showed up to reconnect. Day 1: Let the gains begin The registration desk opened early Wednesday morning and the hallways began to buzz with anticipation as attendees fueled up on coffee and a light breakfast before heading into the first general session. In her opening remarks, Therese Thilgen, CEO of Franchise Update Media, wel-

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ability, provide opportunities for employees, and participate more effectively in local communities? This conference, he said, was a great way to ensure that they would.

Therese Thilgen, CEO, Franchise Update comed what she called a “stellar group” of multi-unit franchisees and panelists. She noted that this was the first time the conference had attendees from every state; that there was an uptick in the number of franchisees in their 20s; and that 75 percent of franchisees said they were looking for new brands. Michael Kulp, chair of this year’s conference and a multi-brand franchisee with more than 350 units, added his welcome message to the roomful of franchisees, thanking the golfers for their charitable contributions the day before and setting the tone for the coming days. Kulp said this conference differentiates itself by being “truly the only conference in the industry geared toward learning” versus those geared toward the deal and the sale. (Still, plenty of deal-making takes place during and soon after the conference.) “I think it’s the best time ever to be a franchisee,” he said, as he challenged franchisees with a flurry of questions to continually strive to do better, such as: Do you have the systems, tools, processes, and strategies in place to expand, raise profit-

Jim Collins! World-renowned leadership guru and best-selling author Jim Collins started the day on a high note as the conference’s first speaker. He was introduced by Cheryl Fletcher of Popeyes Louisiana Kitchen, which sponsored his keynote address. Returning for a second time as a keynoter, Collins adapted 12 questions from his Good to Great project to help attendees unravel some of the secrets of business success. (The 12 questions can be found in a PDF on his website.) He began by saying, “We don’t study success. We study the contrast between those who went from good to great and those who didn’t; between those who were able to scale and those who didn’t.” Like any good teacher, he wove thoughtprovoking questions into his examples of

Jim Collins, keynote speaker

Gary Gardner, Franchise Update chairman what makes businesses succeed or fail, such as “What are you doing to scale yourself?” He also discussed five levels of leadership, dismissing the notion of a “natural born leader” in the process: “The vast majority of great leaders grew into it,” he said. The single most important leadership skill to master, he said, is the ability to make superb people decisions and have 90 percent of your company’s key seats filled with the right people. “You build a great company by building great people. There is no other way,” he told the crowd. Collins also discussed ROL: return on luck in business, using Steve Jobs as example of “who” luck. Three years after Jobs was fired by Apple, and with his new company (NeXT) floundering and Pixar not yet in the picture, Jobs was “in the wilderness,” said Collins, which he said is “a good time to meet a great person.” So Collins, who was teaching at Stanford, called Jobs and asked if he’d join him in the classroom. Jobs accepted. Soon afterward, came the luck: Apple was struggling and NeXT just happened to have the OS they needed to move forward and become

(L-R) Michael Kulp, Carin Stutz, Aziz Hashim, Jim Collins

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Greg Vojnovic, Arby’s the largest company in the world. Jobs, said Collins, was a great example of a “20-mile marcher,” someone who got up and went to work every day, despite external circumstances. “What if in the midst of all the bad stuff he quit?” asked Collins. “True creators stay in the game, no matter what hand they’re dealt. Play every hand, luck favors the persistent. That’s what Jobs did and he enjoyed a great comeback.” Collins finished his keynote by reminding attendees that “the greatest leaders don’t focus on success; they focus on taking care of their people.” He closed with the following exhortation: “How will you change the lives of others? How will some peoples’ lives be better and different because you are here on this planet?” He suggested viewing franchising as “an honorable path—not just building units, but touching lives that you change. I can think of no greater legacy or testament to how life could be spent.” Following his keynote, Collins joined a group discussion called “Growth Evaluation & Implementation.” Supercuts franchisee Gary Robins moderated the panel, which also included Aziz Hashim, managing partner of NRD Capital and IFA

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chair; Michael Kulp, conference chair; and Carin Stutz, president of McAlister’s Deli (now COO at Red Robin). With questions from Robins leading the way, the high-powered panel covered issues ranging from essential leadership traits and characteristics to finding and building talent within your organization. “There’s a difference between having a job and having a responsibility,” said Hashim, of people inside an organization and, he added, it’s essential to be able to tell the difference. Time for lunch After an inspiring, action-packed morning, two separate luncheons followed, one exclusively for franchisees, the other for franchisors and exhibitors. The franchisor/ supplier luncheon featured a discussion

focused on “5 Deal Killers for Multi-Unit Franchisees.” At the franchisee-only luncheon, multi-unit franchisees relaxed in a “pitch-free” environment where they could rekindle old relationships and build new ones, as well as engage in frank discussions about the pros and cons of adding specific brands and their level of satisfaction with third-party partners. A new offering, The Money Room, debuted that afternoon, providing an opportunity for growth-minded franchises to

Dave Goebel, multi-unit franchisee meet one-on-one with potential lenders to discuss financial solutions and expansion strategies. At the same time, numerous breakout sessions were under way, covering topics ranging from attracting, recruiting, and retaining good talent to securing funding under $10 million and above $20 million. Breakout panelists represented food and non-food brands, large and small operators, and retail and non-retail brands. As the day drew to a close, attendees headed to the Exhibit Hall, where more than 200 franchise brands and thirdparty suppliers were on display to discuss franchise opportunities, products, and services. The Exhibit Hall served as the central gathering place for attendees to explore new brands and supplier solutions, as well as to meet and mingle with fellow franchisees to compare notes and evaluate brands and vendors. Day 2: The Economy & MVPs Coffee and continental breakfast awaited attendees on Day 2. Conference Chair Michael Kulp welcomed the crowd back before introducing FRANdata President and CEO Darrell Johnson for his annual report on economic trends and their likely effect on franchising. Johnson provided insight into the labor picture (tight), capital markets (improving), and the effect of the global economy on franchising (“not a whole lot or excitement but nothing eminently a challenge for worldwide growth”). And while the U.S. has seen its longest consecutive bull market in the past 100 years, “It doesn’t feel like much of a bull market,” he said, with GDP growth expected to remain low in the next couple of years (2% to 3% at best), following a dismal 1.4 percent rise in the fourth quarter and an anemic 0.5 percent growth in the first quarter of this

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Darrell Johnson, FRANdata year. And the Fed, he added, is “just about out of tools and energy to stoke growth.” Still, he said, it’s not as bad as the numbers might indicate. The year following a presidential election tends to be a fairly good one in the 4-year election cycle (no matter who the president is). Pairing that with consumer optimism about where the economy will be in the next 24 months, along with financial factors—such as low interest rates and multi-unit franchisees being the “darlings” of lenders these days—the capital market side is playing to the strengths of multi-unit operators. As he’s said before, with the pie growing so slowly, the “real battle right now is for market share.” Strong brands and savvy franchisees stand to gain, as performance will matter more in today’s business climate. “The economy won’t bail out a bad business decision, but will punish it,” he said. The good news? The opposite is true for good decisions. He reminded attendees that franchising is the largest vocational training program in the country for unskilled labor. “We’re the biggest solution for that,” he said, and expressed concern about external factors such as minimum wage increases. With all this in the mix, he told the audience

of multi-unit franchisees, “This year and next should present you with a pretty good environment in which to grow.” Next up was the recognition and presentation of plaques to honor this year’s MVP (Most Valuable Performer) Award winners—multi-unit franchisees who have taken advantage of the opportunities life and the economy have presented them. The annual award celebrates multi-unit franchisees for their contributions to their brands, their community, and their employees. Profiles of the honorees begin on page 12. Joe Theismann, inspiration Then it was on to Day 2’s keynote speaker, Joe Theismann, one of pro football’s alltime great quarterbacks. Following an introduction by Greg Vojnovic of Arby’s, which sponsored the keynote, Theismann thrilled and energized the crowd with tales of his 12 years in the NFL with the Washington Redskins. The 1982 Super Bowl champion, two-time Pro Bowler,

Joe Theismann, keynote speaker

and league MVP saw his playing days cut short in 1985 when a severe (and dramatic) leg injury ended his career. He went on to become an NFL broadcaster and restaurant owner—as well as an active member of his community. “It’s only when you start to give back that we truly appreciate what success is,” he said. Theismann shared entertaining, educational stories from his own life about overcoming adversity and creating success. “I never had a failure in my life—just an educational experience that didn’t go my way,” he quipped. “Change is just a part of life.” But, he pointed out, people can’t be their best without help. “You have great teachers and mentors in this room,” he said. However, he added, you must be coachable, something he struggled with early in his NFL career when he thought he knew it all. “You really don’t know everything.” Theismann spent the remainder of his time outlining the importance of having goals (“What price are you willing to pay for being special?”); maintaining a good attitude (“What do you say when you look in the mirror in the morning?”); and being motivated to achieve (“Competition is what drives us. I am not a fan of participation trophies.”). Panel of pros Theismann’s inspiring talk was followed by a general session panel called “How To Select a New Brand.” Tom Garrett, CEO of GPS Hospitality (Burger King and Popeyes franchisee and former Arby’s CEO), led a star-studded panel consisting of Eric Werner (president of Texas Subs, a large Subway franchisee); Dave Goebel (Pie Five Pizza franchisee and former Applebee’s CEO); and Matthew

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That evening, a closing cocktail reception in the Exhibit Hall provided attendees one last chance to meet with brands, vendors, and to move deals to the next level.

Kelly, partner and managing director of North Point Advisors, a financial advisory firm. The panel touched on what criteria they use to evaluate a new brand; the importance of starting with a strategy (not a brand) in mind; the importance of timing in both the marketplace and within one’s own portfolio; the pros and cons of going with an established brand or an emerging one; and once the decision is made, how to finance the new growth. Lunch in the Exhibit Hall followed, after which franchisees had another crack at one-on-one meetings in The Money Room, while concurrent breakout sessions fired back up. Sessions included “Mergers & Acquisitions: Buying a Business”; “Labor Environment: NLRB, Minimum Wage”; “Mobile & Loyalty Marketing”; and “Professional Athletes in Franchising: Tapping Into a New Source of Capital and Brand Expansion.”

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Day 3: Advice from the top The event wrapped with Friday morning’s closing session, “Open Forum with Successful Multi-Unit Franchisees,” in which successful multi-unit franchisees told the stories of their own journey, with lessons aplenty based on what they encountered along the way and what they’d recommend to others seeking to build up their own organizations. Mara Fortin, the first franchisee of Nothing Bundt Cakes who now operates seven bakeries, led a panel that included Greg Cutchall, a multi-brand franchisee based in Omaha, who last year became a franchisor (Lolo’s Chicken); Cheryl Robinson, who with her husband Joey, operates 37 Supercuts salons; Tony Lutfi, with eight brands, who began with food brands and has added Sears stores; and John Hotchkiss, who operates 42 Little Caesars and 3 Firehouse Subs. Each described their life in franchising, how they started, and how some things had gone as planned while many others went in completely different directions—for better and for worse. Their stories were surprisingly frank about mistakes they’d made and the lessons they’d learned, and all were generous with advice for aspiring, growth-minded attendees. It was an enlightening conversation and the perfect

way to send everyone home to their own franchise businesses, reenergized and ready to apply the lessons and inspiration they’d soaked in over the past few days. “This is my second year attending this conference and I would not miss it,” said Allan Boomer, a Retro Fitness franchisee and managing partner of investment firm Momentum Advisors. “Every year I mark my calendar, and I’ll certainly be here next year.” Jim Hannan, vice president of operations at Schostak Family Restaurants, an Applebee’s, Del Taco, and MOD Pizza franchisee, said, “I really liked all the presenters and panels I’ve been to and the networking I’ve been able to do in the Exhibit Hall.” For more information on the conference, photos (you might be in one), or to learn about next year’s event, visit multiunitfranchisingconference.com.

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2016-2017 Conference Calendar IBC 2016 Franchise Leadership & Development Conference 59 Aaron’s, Inc. 5 Batteries Plus Bulbs 43 Big O’Tires 35 Blue Coast Burrito 71 Bojangles’ Restaurants, Inc. 17 Broken Yolk Cafe 43 Capriotti’s Sandwich Shop Corporate Office 45 Captain D’s 41 Checkers 19 Club Pilates 15 Del Taco 71 Denny’s 1 Direct Capital IFC Dunkin’ Brands 45 Earl of Sandwich 59 Entrepreneur Media, Inc. 75 Farmer Boys Food Inc 47 Feed America 57 Firehouse Subs 29 Franchising.com 71 FRANdata Corporation 77 Fuddruckers Inc. 59 Giordano’s 55 Golden Corral Buffet & Grill 35 Huddle House, Inc. 49 Hungry Howie’s Pizza 49 Ice Born 67 79 International Franchise Association Jimmy John’s Gourmet Sandwich Shops 23 Liberty Tax Service 21 Lift Brands 31 MassageLuXe 3 McAlister’s Deli 25 Miami Grill 37 Midas International Corporation 47 Moe’s Southwest Grill 7 NAPA AUTO PARTS 39 Nekter 8,9 Pancheros Mexican Grill 51 71 Perkins Restaurant & Bakery Pizza Patron 57 Retro Fitness Back Cover Saladworks 41 Save-A-Lot Food Stores 11 Schlotzsky’s Bakery & Cafe 13 Scooter’s Coffee & Yogurt 51 Shakey’s USA, Inc. 53 33 SiriusXM Music For Business SPEEDEE OIL CHANGE & TUNE-UP 37 The Coffee Bean & Tea Leaf 33 uBreakiFix 27 UFood Grill 53 ZIPS Dry Cleaners 55 ZUUS Workforce 57

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AT H L E T E S I N F R A N C H I S I N G BY KERRY PIPES

Rushing Ahead Former NFL running back scores with Bojangles’

T

shimanga “Tim” Biakabutuka, born in Kinshasa, Republic of Zaire in 1974, came to the U.S. with his family when he was just 6 years old. The family settled in Canada, in the Montreal area. Adapting to a new country and culture meant a lot of adjustments for him and his family, but they made the transition and built a new life for themselves. And, it turned out, the young boy had a hidden natural gift that was just a few years from being revealed. Biakabutuka never played football until he was in high school. That’s when he discovered he could run with a football and was good enough to earn the nickname “Touchdown Tim.” His on-field abilities landed him a scholarship at the University of Michigan where

NAME: Tim Biakabutuka TITLE: Managing partner COMPANY: Threeone Corp. NO. OF UNITS: 4 Bojangles’

Famous Chicken ’n Biscuits AGE: 42 FAMILY: Married, two young girls YEARS IN FRANCHISING: 7 YEARS IN CURRENT POSITION: 7

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AT H L E T E S I N F R A N C H I S I N G

PERSONAL First job: Delivering newspapers. Formative influences/events: Father was a cheap taskmaster. He required quality work with poor tools.

Best advice you ever got: Hire the right people and be quick to let go of the wrong ones. What’s your passion in business? Learning and people.

Key accomplishments: Surviving in business.

How do you balance life and work? My wife makes sure I do.

Biggest current challenge: Finding the right area to open a new location.

Guilty pleasure: Chocolate.

Next big goal: Average $2 million per store.

Favorite book: The Pursuit of God by A. W. Tozer.

First turning point in your career: Getting my first store to profitability.

Favorite movie: “The Godfather” and “The Godfather II.”

Best business decision: Not defaulting on debts even when times got tough.

What do most people not know about you? I am scared of heights.

Hardest lesson learned: Not hiring the right attorney to review leases.

What did you want to be when you grew up? A businessman.

Work week: 6 days.

Last vacation: Jamaica.

Exercise/workout: Circuit training 4 times a week.

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

Pet peeve: Messy places.

Biakabutuka says he loves the teamwork, spirit, and camaraderie of franchising and hopes to keep building his company by continuing to hire right and excel at offering great customer service and quality food. he was a running back from 1993 until 1995. Drafted by the Carolina Panthers in 1996, he carried the ball for the NFL team for six seasons. He was ultimately plagued by injuries, and when football ended for him in 2001 he knew it meant the beginning of something new.

Optimistic and a hard worker, he found a mentor who pointed him in the direction of franchising: Carolina Panthers owner Jerry Richardson, a former NFL player himself, who caught a touchdown pass from legendary quarterback Johnny Unitas in the 1959 NFL Championship

game. After his own, brief NFL career, Richardson opened the first Hardee’s franchise in 1961, and knew the kind of success that could be found in the business. He also knew it wasn’t always easy and advised Biakabutuka on both the risks and rewards of franchising.

MANAGEMENT Business philosophy: Be fair, understand the numbers, and execute the key business drivers.

franchisor? System innovation and making decisions that keep the brand healthy and growing.

Management method or style: Define objectives and let the team use their own skills to get us there.

What I need from vendors: Quick response and best prices.

Greatest challenge: Finding the right people and capital to expand. How do others describe you? Stubborn.

Have you changed your marketing strategy in response to the economy? How? I started in 2008 just when the economy was tough. I have kept the same strategy.

One thing I’m looking to do better: Balanced life.

How is social media affecting your business? You can’t hide. Bad news travels even faster.

How I give my team room to innovate and experiment: Empower them with clear directives and allow them to make mistakes.

How do you train and retain? Yearly reviews and continuous coaching. We never stop coaching.

How close are you to operations? Daily communication with my managers. Weekly visits to the stores.

How do you deal with problem employees? 1) Bring the issue to them as an adult. 2) Write it up if the issue continues. 3) Let them go.

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

Fastest way into my doghouse: Lying and laziness.

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AT H L E T E S I N F R A N C H I S I N G ATHLETICS

“He [Richardson] had partners involved with the Bojangles’ brand and thought it might be a good fit for me,” says Biakabutuka, recalling the start of his post-football entrepreneurial phase. But, he’s quick to say, operating a business is not easy, just as Richardson had warned. “Being in business is tougher than football. You have to be humble, willing to learn, and not afraid to get your hands dirty,” he says today. Owning a business is certainly different than performing on the gridiron, says Biakabutuka, but he sees similarities too, including hard work and persistence. On his path to success, he says, he has had lots of support and learned from his own mistakes and from surrounding himself with good mentors. Today, Biakabutuka’s Threeone Corp. operates four Bojangles’ locations in Augusta, Ga. He says he loves the teamwork, spirit, and camaraderie of franchising and hopes to keep building his company by continuing to hire right and excel at offering great customer service and quality food. “We have grown to four stores now and I’d like to keep it going,” he says.

What skills or experience from sports have carried over to operating a business? Hard work and a never-give-up mindset. Which do you find more competitive, sports or business? Both are in their own way. Business is much harder, in my opinion. Why did you choose franchising as an investment option? It was the best choice at the time. Franchising gives instant brand recognition with tested systems that give you a better chance to succeed. How did you transition from sports to franchising? I got into my first business venture, real estate, and then to franchising. What was your greatest achievement in sports and what has been your biggest accomplishment as a franchisee? Landing a scholarship at the University of Michigan when I was told I couldn’t play Division I football. Remaining profitable year after year despite external challenges.

BOTTOM LINE Annual revenue: N/A. 2016 goals: Grow same-store sales by 4 percent. Growth meter: How do you measure your growth? Transactions are our meter. You can grow sales by increasing prices. But transactions are the result of execution. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, 15 locations. 10 years? I tend to not plan that far out. It has led me to make bad decisions just to meet goals. I am very goal-oriented. I take it one year at a time and focus on maximizing what’s before me. How is the economy in your region affecting you, your employees, and your customers? I came in during tough economic times so it’s been the norm for me. Are you experiencing economic growth in your market? Yes, the military base in our area is expanding, bringing in an additional 1,500 jobs. How do changes in the economy affect the way you do business? Our price points are pretty good so we offer value at all times, regardless of the economy, which I believe helps. How do you forecast for your business? We plan a 4 percent price increase each year as a benchmark, but react on a weekly basis to sales numbers.

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What are the best sources for capital expansion? Capital is tough right now. The banks have the cheapest money but are still very tight on lending flexibility. The SBA has great options. Experience with private equity, local banks, national banks, other institutions? Why/why not? Smaller to medium-sized banks have worked best for me because of longstanding relationships. I have worked with private equity; they look for larger transactions. What are you doing to take care of your employees? We have various employee incentives, but more importantly have a culture of respect and have fun. Disrespectful people don’t last very long in our company. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We are continuously trying to find the best ways to absorb the rising costs without going out of business. But it’s not easy. How do you reward/recognize top-performing employees? Employee of the month, but most importantly, a lot of recognition such as: “Thank you. I appreciate you being part of the team.” What kind of exit strategy do you have in place? The business is always for sale; the real estate is not for now.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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7/6/16 2:14 PM


CustomerService BY JOHN D I J U L I U S

Speed Thrills Today’s customers expect instant response

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ime and speed of service are critical to the customer experience. Everyone in the organization has to understand how valuable time is to the customer. In today’s busy world, it is vital for businesses to demonstrate to their customers that their time is always regarded as a critical resource. It doesn’t matter what industry you are in today. Companies like Google, Zappos, and Amazon have changed your business because they have affected the expectations of your customers. It’s all about time

The world of the Internet has made everything instantaneous, from information and answers to questions to getting products into people’s hands. Today a friend can recommend a book for you to read, and within 30 seconds it can be in your hands on your iPad, Kindle, or other e-reader. Companies like Zappos and other great retailers can have a product at your door the next morning if you order it by 6 p.m. This has not only changed customers’ expectations for everyone they do business with, it also has changed their level of patience. Today, like never before, we expect information instantaneously. If you have a question about something, you google it, press a button, and it’s there. With the world of information at their fingertips, people hate not knowing things almost as soon as they think them. If a company offers a certain product, what’s the price? Can they get a better price, faster delivery, or free delivery with another couple of clicks on their keyboard or swipes on their smartphone? What does the product contain? Is it gluten-free? Where is it from? In the business that I own, John Robert’s Spa, we had a client email us inquiring if we could do her wedding party of 12 people, which was seven months away. By the time our bridal party coordinator called her back—the next day!—she had

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booked with another spa. Her wedding wasn’t for seven months, but the anxiety of not knowing, for even 24 hours, drove her crazy. Customers expect phone calls and emails returned the same day, even the same hour, as well as immediate sup-

The world of the Internet has made everything instantaneous, from information and answers to questions to getting products into people’s hands.

port and resolution to their issues. Rapid response

When dealing with a customer challenge today, this is even more urgent. If a customer complains in any channel (email, voicemail, your social media page), with every hour that passes and they don’t hear back from you, they think you are ducking them, or providing poor customer service (justified or not). What is your company’s guideline when it comes to responding to customer email inquiries? Most companies I have worked with or visited typically require a 24-hour turnaround time to respond. This has been the standard for quite some time, but does it still hold true? On a recent trip I was disappointed in my Uber driver and expressed this when the instant survey to rate my driver came up. Within 5 minutes I received an email response sent to me from a real person at Uber referencing my specific issue. The employee stated that I was a valued customer, that he had already processed a refund for $15 on my last trip, and would be giving me a $15 credit to use on my next one. My issue had been acknowledged, reviewed, and resolved—all within 5 minutes. Everyone industry today has its Uber

People have said that Uber will have some type of affect on just about every industry, whether you realize it or not. In my opinion, this is an example of just that: Uber making an impact on the expectations customers have when emailing or contacting any organization. If your guideline is responding within 24 hours, it might be time to ask yourself if that is still acceptable in today’s world. John R. DiJulius III, author of The Customer Service Revolution, is president of The DiJulius Group, a customer service consulting firm that works with companies including Starbucks, Chickfil-A, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Call him at 216-839-1430 or email info@thedijuliusgroup.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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7/8/16 11:59 AM


People BY JASON CONRAD

People Power Your people are your greatest strength

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ecently, I had the pleasure of working with Dave Ridley, who spent 27 years with Southwest Airlines as a senior executive in a variety of operational, commercial, and staffing roles. These included CMO, SVP of people and leadership development, SVP of business development, and VP of ground (airport) operations. Now a senior advisor to CEO Gary Kelly, Ridley is the embodiment of Southwest’s mission: dedication to the highest quality customer service, delivered with a sense of warmth, friendliness, individual pride, and company spirit. Working with him at our annual customer conference and hearing him speak got me thinking about how all of us in the service industry, vendors and franchisees alike, could learn a thing or two from Dave. But as Dave would say, these aren’t lessons; they’re just reminders of what we’ve already experienced, seen, or heard. • Dare to be different. Sept. 11, 2001 hit the airline industry hard. Fortunately for Southwest, the company had been very well managed for its first 30 years and did not have to lay off 20 percent of its staff like every other U.S. airline did. They also didn’t ground their fleet. Southwest was back in the skies within days, flying 100 percent of its planes, even when customers had not yet come back. They ran ads to “Keep America Flying,” and it worked. Their message? Nothing can keep our country, or Southwest, from moving ahead. It was a message that moved customers, too. Then came the economic tsunami of 2007–2008, which felt like another punch in the gut for the airlines. As traffic fell and fuel prices spiked, airlines introduced the highly loathed bag fees and change fees. Dave and his team debated whether or not to follow. Against the advice of Wall Street, they were able to convince their CEO to go the other way, leaving $700 million in revenue on the table by not charging bag and change fees. To this day, bags still fly free and flight changes are still free. The “reminder” here: Differentiate yourself and stand up for what you believe is the right thing to do. Being different and doing what’s best for your customers—even

when it’s not the popular choice—is what drives real loyalty. That mentality has led Southwest through 43 consecutive years of profitability and zero involuntary layoffs or furloughs. • Never forget that your people are your most powerful fuel. After a perfect meal at a restaurant, if someone is rude to you at the counter you can walk away and never want to do business with them again. Yet, even if a restaurant is understaffed or

Companies don’t usually fail because they lack strategy or execution; they fail because they’re lousy with their people. your order is wrong and the staff are caring, thoughtful, and go the extra mile, you’ll come back. People remember the way you make them feel, and that feeling starts from the inside out. If your people feel valued, respected, and inspired, that will be reflected in how they treat your customers. Companies don’t usually fail because they lack strategy or execution; they fail because they’re lousy with their people. • Seek people who want to join your cause. To have a happy company, you have to start with happy people. Dave’s been asked countless times what kind of training Southwest has that makes its people so friendly, hospitable, and gracious. But there is no training. If you want to have happy employees, hire happy people. You can’t force-feed happiness. Southwest looks for “patriots”—people who want to join their cause: to connect you to the important moments in your life with friendly, reliable, low-fare air travel. Working there is about more than a paycheck. So ask yourself, What is your company’s cause? What are your core values? Southwest looks for three things in its team members: Warrior Spirit, Servant’s Heart, and Fun-Loving At-

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titude. How many companies do you know have the word “fun” in their core values? Finding values unique to your business is critical to getting the right people on board the first time around. • Remember the rule of three. Hiring is the most important job you can have as a leader. Dave suggests following the rule of three to ensure you hire the best-fit people: 1) Always interview at least three people for a position. Even when you have your star player, interview two more. You may be surprised at what you find, even if the other two don’t change your mind. 2) Always have three other people interview your candidate. You just might be wrong! 3) Always interview a candidate yourself three different times. Try to make one of these meetings outside the office. Why? To cite author Dave Barry, “If someone is nice to you but rude to the waiter, they are not a nice person.” • Get rid of the bad apples. If you want an environment where people love coming to work, you must get rid of the slackers. Letting the wrong people hang around is unfair to the right people, who must compensate for the inadequate. To make your people a priority, show them you have the courage to build a team that’s centered around your values. It’s not easy, but it’s the right thing to do. • Don’t tolerate “BS.” Leadership at Southwest is about “you,” not “me.” Dave says the singular reason for Southwest’s culture and success is, “No BS.” Not the kind of BS you’re thinking of, though, rather “No Big Shots.” Big Shots can command people’s hands for the short term, but they can’t reach their hearts. Without a heart, it’s just a machine. It’s not hard to see why Southwest consistently ranks in the top 10 of Fortune’s World’s Most Admired Companies. Southwest understands that customers and team members have options. Time and again, the airline proves that its people are its greatest strength, its most enduring long-term competitive advantage, its most powerful fuel. Jason Conrad is vice president of marketing for PeopleMatter. Call him at 877-300-6222 or email to info@peoplematter.com.

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Finance BY ROD BRISTOL

Quarterly Checkup

Your Q1 results set the trend for the year

I

f your business is on a calendar year, you’ve finished your first-quarter operations. Hopefully, your accountant or bookkeeper gave you your financial reports by April 15—both an income statement and a balance sheet—and you spent time reviewing them. So, how did you do??? If you set up your financial information for maximum “management intelligence,” you now have a very accurate picture of how your business is performing. Your financial statement should have given you your 2016 first-quarter results compared with your 2015 first-quarter results, and also compared your results with your annual plan for the first quarter of 2016. Let’s talk trends

• Revenue. Up or down? Compared with last year, are you ahead? If so, did you meet your plan? If not, what happened, and how are you going to fix it? Remember: “Financial data is absolutely worthless unless it drives operational improvement.” • Cost of goods sold (COGS). Up or down? If your revenue is up, has your COGS increased faster, eroding your gross margin? In one of my previous articles I gave you an assignment to find a 2 percent improvement (by that I mean a reduction!) in your COGS this year. So, at the end of first quarter is your COGS down a full 2 percent from where you were last year? If not, why not, and what are you going to do to fix it? • Gross margin. Increasing revenue and decreasing COGS drives up gross margin. However, many businesses find themselves in the exact opposite predicament (decreasing revenues and increasing COGS), which dramatically erodes gross margin. Where are you? Remember, small percentage points really add up over the course of a year. If your gross margin is down a full 1 percent in first quarter 2016 over first quarter 2015, there should be huge alarm bells ringing in your head. Go find it, and don’t let it go! If this continues over the course of a full year at an annual sales volume of $1 million, you could have

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eroded $40,000 of gross margin by yearend. This is totally unacceptable! • G&A expense. (This means everything below the gross margin line.) Your other assignment was to find a 2 percent improvement in all of these costs. Did you achieve it? If not, what are you go-

Your first quarter results are critically important and set the trend for the rest of the year. Don’t ignore them! Find out what’s happening inside your business and, if necessary, fix it. No one is going to do it for you. ing to do about it? The only way you’re going to get a cost down in your business is to drive it, beat it, whack it, and punch it down. None of your vendors is going to come to you and say, “Oh by the way Bob, we’re giving you a 2 percent price decrease this year because you’re such a great customer!” • Owner’s discretionary profit (ODP): That’s everything you take out of the business for yourself. Up or down? Usually when a business’s operating profit is down, so is the chunk you get to keep. Your goal this year was to improve what you paid yourself a full 5 percent of your gross revenues. “Are you there yet?” Balance sheet

Now let’s take a look at your balance sheet—at two critically important ratios: your current ratio and your debtto-worth ratio.

• Current ratio. Remember, this is calculated by dividing all your current assets (everything coming in and converting to cash this year) by all your current liabilities (everything you have to pay out in cash this year). This measures your ability to pay your bills. The bank is looking for a 2:1 current ratio, meaning that for every dollar you have going out on the bottom of the ratio, you have two dollars coming in on the top. How do you measure up? Is your current ratio up or down from last year? If it’s down, why, and what are you going to do to fix it? • Debt-to-worth ratio. This measures that all-important four-letter word every banker hates and every business owner should carefully understand about their business: risk. Is your risk up or down this year? To calculate your debt-to-worth ratio, divide your total liabilities by your net worth. This will give you a very clear measurement of how much more or less risky your business has become at whatever your sales level is at the end of first quarter. For every dollar of net worth on the bottom, you have X dollars of debt on the top. In a recent benchmark study we just completed, the range was from 3:1 to 5:1. Let’s put that into words: in the worst-performing operations, for every dollar the business owner owned they owed three dollars in debt. In the bestperforming operations, for every dollar the business owners owned they only owed 50 cents in debt. Yes, you can have a bigger, weaker company. If you do, you need to fix it, now. Your first quarter results are critically important and set the trend for your financial performance for the rest of the year. Don’t ignore them! Find out what’s happening inside your business and, if necessary, fix it. No one is going to do it for you. Rod Bristol is executive vice president at Profit Mastery. For over 30 years, franchisors and franchisees have improved their financial performance and unit profitability by following the Profit Mastery process: financial training, benchmarking, and accountability/ bankability modeling. Learn more at www. profitmastery.net, 800-488-3520 x13 or email bristol@brs-seattle.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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7/8/16 12:02 PM


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InvestmentInsights BY CAROL M. SCHLEIF

Time To Recalibrate? Global shifts portend intermediate-term changes

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fter decades of seemingly inviolable correlations, shifts in markets, demographics, interest rates, and politics suggest that change may be in the offing. Two areas we watch closely to help us assess the macro environment and give us clues about potential secular trend changes are growth and inflation. Within each area, hints are emerging that relationships are shifting, though the ability to predict magnitude and timing remains as elusive as ever. At Abbot Downing, we use three core models to help us frame the short-, intermediate-, and long-term context within which we construct and rebalance our portfolios. As we are assessing intermediate-term market/economic dynamics, we analyze a variety of factors that relate to various economic growth and inflation regimes. We feel that the recent and expected rates of change, as well as an assessment of what factors may influence these two elements, are more important than the absolute level of either. For many decades now interest rates trended downward, stocks marched largely upward, the purchasing power of anything undergirded by technology increased rapidly, and Baby Boomer preferences drove economic variables all up and down the supply and consumption chains. For much of this period, bond coupons were higher than stock dividends, growth was solid, inflation and commodity prices were lower, and recessions—thanks to increasingly active Federal Reserve intervention—were short-lived, further apart, and typically much milder than those in any previous period dating back to the country’s founding. Several generations of investors had become so used to this environment that they failed to realize that other backdrops could exist. Growth and inflation trends have been a bit tougher to analyze in recent years, thanks to the significant intervention orchestrated by global central bankers in the wake of the Great Recession. While this level of assistance was arguably necessary to stave off even more dire con-

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sequences, the amount of debt absorbed onto sovereign balance sheets is without precedence—making predicting its ultimate unwinding a virtually impossible task. Then too, the significant lengths these bankers have gone to in order to inject liquidity into the global system have caused an underpricing of risk in most markets and forced inflation to roll through a host of other asset classes. Recently, the U.S. Federal Reserve signaled a willingness to raise rates sooner than expected. We view this as positive news on several fronts. First, the continued move toward rate normalization after nearly a

We think the Fed is onto something: that underlying inflation may well be ticking up more rapidly than many have realized. decade of unprecedented intervention indicates an economy deemed capable of standing on its own. Second, we’d rather see the Fed move pre-emptively than have it get behind the proverbial eight-ball. We think the Fed is onto something: that underlying inflation may well be ticking up more rapidly than many have realized. Intermediate-term model

Armed with an understanding that “traditional” relationships might be somewhat tainted by central bankers’ overt ministrations, a discussion of the general workings of our intermediate-term two-factor model would be helpful. The key philosophy here is that the interplay of rising or falling interest rates relative to rising or falling growth rates creates different environments that are beneficial or detrimental to various sub-asset classes. For example, rising growth with low or falling inflation creates an amenable environment for stock ownership as

companies’ top-line revenues grow even as margin pressure eases. On the other hand, high growth coupled with high or rising inflation indicates an overheating atmosphere, prompting real asset and non-U.S. investments to hold value more concretely. Among other things, we look at bond spreads to measure economic growth, and changes in currency relationships to measure inflation. Other factors that can subtly influence growth and inflation considerations over time include demographically inspired changes in consumption habits, both in the U.S. and around the globe. Millennials, for example, represent the single largest segment of both the U.S. population and the working-age population. The largest contingent came of age in the midst of the Great Recession and grew up never knowing a world without cell phones, PCs, Google search, and many other modern technological wonders. Their preferences—for services and experiences versus the accumulation of stuff; for collaboration versus competition in the workplace; for living within their means; for saving versus spending; for sharing versus owning; and for environmental and social responsibility— understandably have both subtle and not-so-subtle influences on “traditional” economic and growth statistics. Taken all together, we expect that global growth should continue its path of low single-digit progress—though we suspect the composition of that growth will continue to favor services. Inflation, not only in commodities but also in wages and other core inputs, will likely firm, though be partially offset by price reductions and productivity improvements wrought by the continued pace of technological change. We are closely watching inflation factors, however, and the actions of global central bankers, as we suspect markets will react as much to rumor and innuendo as they will to absolute fundamentals. Carol M. Schleif, CFA, is regional chief investment officer at Abbott Downing, a Wells Fargo business that provides products and services through Wells Fargo Bank, N.A. and its affiliates and subsidiaries. She welcomes questions and comments at carol.schleif@abbotdowning.com.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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9/16/15 2:13 PM


ExitStrategies

BY DEAN ZUCCARELLO

A Model of Success Franchising’s future grows bright

F

ranchising has proven to be a successful and popular business model since its mainstream inception many decades ago. Three constants have fueled its growth: the desire to expand, the need for capital to fuel that expansion, and the goal of operating seamlessly across large geographical distances. Credit for developing the restaurant franchising model we know today belongs to Ray Kroc, who discovered McDonald’s when it was still a small California hamburger stand. This enticing operating platform has grown massively in scale since the 1950s, becoming one of the most prominent and favored business models for those with a desire for self-employment. But has it reached its tipping point? Let’s look at the current state of franchising and what we can expect for its future. Current state of franchising

Today the method remains robust, with more franchise concepts alive and thriving than ever before. Why are we continuing to see such positive momentum? One key factor is consumers’ strong reliance on the power of branding. Franchising leverages the power of branding by providing mass scale in terms of advertising, market penetration, and customer recognition. There is also the power of legitimacy (whether perceived or accurate) that accrues as a benefit to the most recognizable brands. Many people are less inclined to dine at an independent concept they are unfamiliar with, preferring the comfort of sticking with a known, established brand. A widely known brand name carries a lot of clout, putting potential diners at ease about the value/experience equation. People like to know ahead of time what kind of food and service to expect, giving the widely known brand names an advantage over the unknown option. Entrepreneurship also plays an important role in franchising. A large and growing number of people aspire to run

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their own business, but there is great uncertainty about creating an entirely new concept. Franchising provides an opportunity to be self-employed while mitigating the risks of an independent concept. Another important facet of franchising’s success stems from today’s accessibility to debt financing. Lenders are very comfortable with the franchise model, having lent in the space for many years now, perceiving it as a safer option than most, and thus providing funds that are more readily available. Lenders aren’t just lending to an entrepreneur, they are lending to an individual business that is backstopped by a meaningful number of other operators, and even the franchisor, should their borrower not perform. Just like debt financing, individual equity has greatly contributed to the ongoing success of the franchise model. In today’s economic landscape, individuals are less enamored with investing in securities (stocks, bonds, annuities) and are instead looking for investments where they have more individual return opportunity. This comes in the form of control-adjusted risk. If an owner-operator risks their treasure, but has the means to oversee that capital and an ability to voice their opinion about the business and its operations, this can become an appealing lifestyle and investment alternative. Another appealing aspect is the notion of often steady cash-flow generation from this investment. Private equity supports franchising much like individual equity, but on a larger scale. The abundance of capital available in many of today’s private equity groups is staggering, and franchised concepts have become one of the most attractive investment opportunities available. Many private equity firms have embraced the franchise model because of its lower risk/return scenarios. We expect to see this trend continue for quite some time. The scarcity of new locations and markets also contributes to the success of franchising. Many brands are dependent on real estate or location. Thus, given the

lack of acceptable new locations available in today’s marketplace, the valuations of mature, developed brands will continue to increase. Last, the operational transfer of risk is an increasingly popular trend and proven advantage for franchisors. Those who are developing and expanding successful brands have the capacity to shift the risk of operation and capital to others, while generating strong return on assets for themselves. This is why we continue to see refranchising initiatives, with franchisors selling off their company operations to franchisees. We believe this trend will remain compelling and active in the coming years. The future of franchising

Considering all these dynamics, the future of franchising is bright. We will continue to see strength and growth in the franchise segment, as operators further invest in mature brands through organic growth and consolidating M&A activity. Franchisees reaching retirement age will create additional buying opportunities for the foreseeable future. Additionally, we will continue to see the evolution of new industries adopting and growing the franchise model that haven’t done so before. Many of these will likely be within service industries, where we have already begun to see some franchising occur. These businesses include beauty services (hair and waxing salons), massage, pet care, healthcare, and housecleaning. We expect to see a widespread embrace of the franchise business model in these industries, with companies seeking the same success as the first adopters. It has become increasingly clear that because of the immense success franchising has achieved, this business model is here to stay. Dean Zuccarello is CEO and founder of The Cypress Group, a privately owned investment bank and advisory services firm focused exclusively on the multi-unit and franchise business for 25 years. He has more than 35 years of financial and transactional experience in mergers, acquisitions, divestitures, strategic planning, and financing in the restaurant industry. Contact him at 303-680-4141 or dzuccarello@cypressgroup.biz.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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Join the Movement Are You a FAN? Franchise businesses need to come together and speak with one, consistent, strong and collective voice on behalf of our great industry. IFA has launched the Franchise Action Network (FAN), to mobilize the franchise industry to be that voice. By joining the FAN, we will unite all of our voices within franchising with a strong message about the positive impacts of the franchise business model in every community across the country. Make your voice heard and join in this fight by signing up for the FAN today!

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1/15/15 6:38 PM


FranchiseMarketUpdate BY DARRELL JOHNSON

The Future of Franchising Three converging trends are taking shape

S

ince the turn of the century, I have observed three fundamental trends within the franchise business model. The first is adaptability, which has a wonderful positive attribute but a dark side as well. The second is unit concentration, which is another way of describing the rise of the multi-unit operator. The third is the pendulum swing of franchise agreements toward franchisor interests. These three trends are having a converging impact on the 2016 version of the business model and suggest some things about further changes to come. There are about 3,200 active franchise brands across more than 200 industry sectors. More than 300 brands dip their toes in the franchising water for the first time each year (some have good success, some stay a few years and decide it’s not for them, and some never get off the ground). What they all have in common is a business model they are able to adapt to the idiosyncrasies of specific industries and circumstances. The franchise business model operates equally well in industries with little regulation (e.g., home-based consulting) and industries with a lot of regulation (e.g., medicine). While the business model itself is regulated, one of its strongest attributes is its ability to adjust to industry-specific requirements. At the highest level, there are two versions of the franchise business model: business format and non-business format, the latter usually considered a combination of dealer, license, and distributorship forms. While those of us on the business format side usually don’t consider these other forms, they often are included and often misapplied in regulation, legislation, and the press. Under this top level, the model takes many forms and uses terms that have different meanings, depending on who is doing the talking. Adaptability is a good thing but we have unintentionally created a dark side. We use terms such as area development, area representative, sub-franchisor, and master franchise, sometimes with a degree

80

of interchangeability. No wonder we confuse the media, regulators, legislators, and the public. We also confuse ourselves. Ask franchisee (and even franchisor) employees who they work for and, more likely than not, they will say the brand, not the franchisee who employs them. Multi-unit concentration wasn’t much of an issue before the beginning of this century. Most franchisors didn’t want multi-unit operators having too many units, presumably because they were concerned about losing control. That changed dramatically

Ask franchisee employees who they work for and, more likely than not, they will say the brand, not the franchisee who employs them. starting in the early 2000s. A combination of factors drove this trend. Baby Boomers were in their prime income years and as a group had accumulated considerable wealth. They also were leaving the ranks of large companies with a desire to control their own businesses, but with growth in mind. At the same time, franchisors woke up to the training economies and (at least perceived) lower failure risks associated with experienced operators. The race to attract them was on, and the result has been a steady rise in multi-unit control of total franchised units, which stands today at about 55 percent. In the past 15 years, franchise agreements have slowly, consistently been strengthened in favor of franchisors. During this period FRANdata has reviewed more than 1,000 franchise agreements a year for SBA affiliation eligibility purposes, so we have a pretty good vantage point to observe how contractual agreements have evolved. It could be argued that one of the unintended consequences of this control shift has been the dramatic rise in state legislative initiatives that involve franchising.

Where are we today?

The franchise business model is expanding, both in the number of brands and number of units. On an economic level, most franchisors and franchisees are making money in this sluggish, slow growth economy. The publicly traded franchise brands are outperforming the broader indexes. Yet the franchise model is facing serious legal, legislative, and regulatory threats. We face special interest groups with specific agendas who have been able to bend legislators and the media by twisting and distorting franchise terms. We have franchise stakeholders who don’t make the correct distinctions between brand and employer. Where are we headed?

Let’s consider how the three basic trends I’ve identified are likely to interact. If the legal/legislative/regulatory barriers are not too great, the adaptability hallmark of the franchise business model will adjust to get around or over the obstacles. The model may not construct ideal solutions for both franchisors and franchisees (for instance, it is quite likely franchisors will pull back the levels and types of support in reaction to NLRB/DOL threats if they continue), but the model will adjust and survive, hopefully not in a seriously weakened state. Further, with the growing influence of multi-unit operators in the way franchise agreements are designed, I think the control pendulum is starting to swing back toward the middle. We are already seeing this with many franchisors willing to “negotiate” franchise agreements with larger franchisees while still insisting on a take-it-or leave-it approach to single-unit operators. Like the economy itself, franchising trends move in a cyclical pattern. I think the cycle we are entering will lead to a business model that is better described and understood than previously, with a more balanced franchisor/franchisee relationship. 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.

MULTI-UNIT FRANCHISEE IS S UE III, 2016

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6/30/16 10:17 AM

Multi-Unit Franchisee Magazine - Issue III, 2016  

2016 MVPs: Celebrating This Year's Outstanding Operators. Get the inside stories of 2016's MVP Award Winners.

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