FranchisingFeature multi-unit
april 2 0 1 7
Lifesavers for
Multi-Unit Franchise Owners Making Franchising Work For You Six Signs It’s Time to
Keep Growing Your Franchise
Franchising USA
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what’s new! Minuteman Press Franchise in Manhasset, Long Island, NY Moves to Brand New Facility
Old Chicago Pizza & Taproom Releases 2016 Success Report
Old Chicago Pizza & Taproom, a leader in casual dining known for its vast craft beer selection, delicious handcrafted The Minuteman Press franchise in Manhasset, Long Island, NY has moved to a new facility at 125 Plandome Road. Family owned by father and son franchise team Les and Michael Forrai since 1996, Minuteman Press in Manhasset offers essential design, printing, marketing, and branding services to today’s business professionals. “Moving to our new space was a tremendous opportunity that will benefit our customers,” says Michael. Les and Michael purchased the building and remodeled the facility to optimize the customer experience and maximize functional space. Les Forrai spent sixteen years as part-owner of a limousine business. With Minuteman Press, Les always felt like he was in good hands: “Minuteman Press International has always been there for us. The web presence, marketing programs business management software and advice has been something that would have been very difficult to accomplish on our own.” Michael Forrai began working in the business while still in college. He credits Les for being a great mentor and business partner. Today, Les and Michael own three Minuteman Press franchises in Long Island: Manhasset, Valley Stream (2008), and Island Park (2014). www.minutemanpressfranchise.com
Franchising USA
pizza and distinctive taproom fare, announced it achieved record high system-wide revenue in 2016, reporting an 11 percent increase from 2015. Additionally, Old Chicago accelerated its national expansion
efforts with the signing of four franchise development agreements that will bring 20 new locations to markets including Texas,
Oklahoma, Arkansas, Missouri, Montana, Wyoming, Michigan and South Carolina. Old Chicago experienced record-breaking success in 2016 reporting 10 consecutive quarters of positive
transaction and average unit volume of $2.8 million, resulting in $263 million in system-wide revenue.
Old Chicago also launched its new restaurant prototype in 2015. The continued roll-out of this new prototype paired with Old
Chicago’s commitment to bringing the most expansive lineup of
world-class craft beers has helped catapult the brand to its current level of success.
This year, Old Chicago has plans to develop nearly two-dozen
new restaurants across the country, targeting growth in markets such as Florida, Georgia, Illinois, Indiana, Mississippi, North
Carolina, South Dakota, South Carolina and Texas, among others. www.ocfranchising.com.
Tropical Smoothie Cafe Announces Opening of 50th Location in Michigan have successfully helped to expand the brand’s presence throughout Michigan since 2005.
Over the past three years, Tropical Smoothie Cafe has sold over 450
franchises nationwide. The opening of this new location in Portage continues
to solidify Michigan as the third largest market for Tropical Smoothie behind
Florida and Virginia. On the heels of one of the strongest years in the company’s
20-year history, the award-winning brand successfully propelled its expansion
and grew its presence in key markets
nationwide, including Charleston, South Carolina; Albuquerque, New Mexico;
Dallas, Texas; and Southern California. This year, the company plans to open Tropical Smoothie Cafe, the leading fast casual cafe concept known for its better-for-you food and smoothies with a tropical twist, announced it will open the state of Michigan’s 50th location in Portage.
This restaurant will mark the second location in the region for husband-andwife franchisees Eduardo Ramos and Corina Groeger, as well as a milestone achievement for area developers Craig and Dianne LeMieux, and Debbie King, who
100 restaurants nationwide and currently has franchise opportunities across the U.S. in markets such as Indianapolis,
Nashville, Houston, Dallas, Cincinnati and Minneapolis, among others.
www.tropicalsmoothiefranchise.com.
Longtime Always Best Care Franchisee Expands Services to West Los Angeles Area has provided award-winning senior care services to Torrance, Palos Verdes, Lomita, Harbor City, Redondo Beach, Hermosa Beach and San Pedro since 2010, and will now serve Brentwood, Santa Monica and surrounding communities.
Always Best Care Senior Services, one of the leading senior care franchise systems in the United States, announced that longtime franchisees Carrie and John Bianco expanded their business to the West Los Angeles area. Always Best Care of West Los Angeles
As California natives, the Biancos recognized a growing need for dementia education and training in the state, so they developed Always Best Care Academy, a 14-week course to help groom their caregivers. Carrie and John also established Concierge Care, a resource for all areas where clients may need additional assistance, including transportation, care
management with degreed gerontologists, family support and more. Founded in 1996, Always Best Care delivers its services through an international network of more than 200 independently owned and operated franchise territories throughout the United States and Canada. By working with case managers, social workers, discharge planners, doctors, and families, Always Best Care franchise owners provide affordable, comprehensive solutions that can be specifically matched to meet a client’s particular physical or social needs. www.franchisewithalwaysbestcare.com
Franchising USA
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what’s new!
Juice It Up! Launches Enhanced Franchise Website as a Resource for Investors on behalf of franchisees and fueling the brand’s nationwide expansion. The new website includes startup costs and financial performance, exploratory videos and interviews, franchisee testimonials, and Juice It Up!’s position within the booming raw juice and smoothie segment. “The broader market is looking for a solid, owner-operated type of business with a low-entry cost that might be on a scale of 1-3 units,” said company CEO, Frank Easterbrook. “Juice It Up! is perfect for small partnerships, family businesses and, of course, we welcome larger investors who are interested in diversifying their franchise portfolio with a thriving lifestyle brand.”
Juice It Up! has launched its new franchise website to serve as a comprehensive resource for those interested in learning about the many benefits of becoming a franchisee. With 2016 sales up seven percent over the previous year and continued projected growth, the brand is investing significantly
Juice It Up! is interested in talking with candidates who have at least $100,000 in liquid capital and a minimum net worth of $300,000. Startup costs, as estimated in Item 7 of the 2016 Franchise Disclosure Document for Juice It Up!, are $249,550 to $343,726. www.juiceitupfranchise.com
SAFE HOMECARE Opens Denver Location While Offering Franchising Opportunities in 33 States SAFE HOMECARE is proud to announce the opening of a franchise in Denver, Colorado. “SAFE HOMECARE® is just beginning its national rollout of franchise locations across the United States, forecasting to award nine new franchise locations in 2017.” says Adam Krueger, COO of SAFE HOMECARE. SAFE HOMECARE provides non-medical, in-home care and companionship services that make a significant difference in the daily lives of seniors, adults, and others needing assistance. The services provided by SAFE HOMECARE include: one-onone time, companionship, meal preparation, laundry and light housekeeping, basic medications management, personal care (including shower assistance, incontinent & colostomy care), transportation to/from appointments, Dementia and Alzheimer’s support, pet care/dog walking, and more. The Company, founded in 2014, prides itself on providing nocost in-home assessments and top tier professional caregivers who are not just a “warm body”, but who provide compassionate interactive care - reliably, consistently and professionally to those in need of assistance up to 24 hours a day, 7 days a week.
Franchising USA
Potential franchise candidates can expect to receive a geographically desirable territory that is substantially larger than industry norms, a tested and perfected model, extensive training and on-going management support, materials, the benefit of the senior management team’s experience, company’s unique and highly successful marketing strategies, essential ingredients and maximizing location performance. www.safehomecarefranchise.com
Grasons Co. Estate Sales Services Opens Franchise Inside Dallas-Fort Worth Metroplex Grasons Co. is mostly recognized for their on-site estate sale services, the company also offers exclusive virtual consignment, and home staging and design. The company provides a complimentary initial in home interview and assessment. Once the process is started, they clean your items, stage all items in proper places and price each and every item inside and outside the home and garage. They, also, sell larger items such as cars, boats, and items of higher value such as fine jewelry and costume jewelry. Grasons Co Estate Sale Services, which is the #1 Choice for estate sale services and estate sale business franchise, is proud to announce the opening of their new Texas location in the city of McKinney. McKinney is located in Collin County – and is a part of the Dallas-Fort Worth Metroplex.
“Our estate sale company began in Orange County (California) and is quickly moving across the Nation as the recognized brand for estate sales,” says CEO of Grasons Co., Simone Kelly. “We started franchising our business at the end of 2014 when our initial business was too busy to sustain just one location.”
With the company being headquartered in Huntington Beach, the company also has presence is in Nevada, Pennsylvania, and throughout California. The company recently secured a master franchise deal to developed 28 units throughout New England. www.grasons.com
Dunkin’ Donuts Announces Plans to Develop First Restaurant in Pinconning, Michigan Dunkin’ Donuts, America’s all-day, everyday stop for coffee and baked goods, announced the signing of a store development agreement with new franchise group, Pinconning Food Services, LLC, to develop the company’s first Dunkin’ Donuts restaurant in Pinconning, Michigan. The restaurant is planned to open this upcoming summer. Pinconning Food Services, LLC is a subsidiary of Corrigan Oil Co., an operator of 54 gas and convenience store locations with more than 55 years of experience in the gas and convenience industries. Currently, there are 78 Dunkin’ Donuts restaurants located throughout Michigan, 18 of which are gas and convenience locations.
The brand is continuing to recruit franchisees in the Detroit, Grand Rapids and Lansing areas to develop freestanding locations as well as gas and convenience locations. It will consider qualified groups as both franchisees to directly develop and operate Dunkin’ Donuts locations, as well
as landlords for traditional franchisees to operate within their gas and convenience operations. To help fuel growth in
Michigan, special development incentives are available.
www.DunkinFranchising.com
Franchising USA
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Featu re
b y G i n a G i l l Fr a n c h i s i n g U S A
MULTI-UNIT franchising Multi-Unit Franchising is when a franchisor takes on more than one operation in the same territory. Once a franchisor becomes comfortable in their position with one franchise, they may consider purchasing more to multi-manage. Franchising USA
Once a franchisor is established and able to step back from the day to day operations of a unit, it could be an easy profit increase to consider multi-unit franchising. It’s important to ensure that your current business is successful and running properly during peak times before moving forward with another investment. With technology connecting us globally, it’s a lot easier for one person to run a few of the franchises from their home. Easy access to all locations makes it feasible and creates a work life balance. Franchisors can phone in and check on many businesses across the region, without having to be on the road day and night. Before picking up another franchise,
one must take a lot of things into consideration. It would be wise to contact another multi-unit franchisor to get a personal assessment of their experience, how they have adjusted and the challenges and successes they have experienced. This firsthand experience may be worth noting before jumping into a multiple franchise situation. Though it may seem easy to handle, it may not be what you want for your work life balance. A franchisee should do some research to see how other franchises of this brand have fared with multiple units. Can a territory of your size carry more than one franchise of this sort? Has it been successful in similar populations and communities?
“It’s important to ensure that your current business is successful and running properly during peak times before moving forward with another investment.” There are a lot of resources one could avail from to help support their decision making process, including the franchise’s online presence. If the company has a stable online income within your area, creating another location may not be applicable in your territory.
yourself the same questions you asked the first time around, but with more experience and firsthand knowledge. Sometimes this can be blinding for some franchisees, who do not consider the facts or conduct the research, an arrogant approach will not allow for success.
Do you provide children’s products? If so , are there enough children in your community to have more than one service? These are a few of the specific details that only a current franchisee may be aware of through experience.
Of course, a lot of information and support is provided directly by the franchisor. Before setting up a location, they will likely consider a lot of the statistical influences of your area and a lengthy discussion should be considered before moving forward in any capacity.
You recognize your business’ abilities better than anyone else and it has to be visualized as a bigger supplier in a relatively same area. You have to ask
Multi-unit franchises are more common nowadays and constantly on the rise; multi-unit operators now control 54
percent of all franchise units. Though it’s a trending business move in the franchise field, one must consider if a new unit would damage its current functioning business before upgrading. Of course, it is wise to wait until your first operation is functioning completely on its own without your presence. Talent is a big influence on the ability for a business to function without its owner. If you notice in your location there is a large turnover and talent seems to be one of your weaknesses due to location, then it may not be wise to invest in a similar franchise in the area. Top talent would allow a franchisee to trust in his or her employees and allow them to run
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“It would be wise to contact another multi-unit franchisor to get a personal assessment of their experience, how they have adjusted and the challenges and successes they have experienced.� the business when they are not available. Research how your current talent has been functioning and consider whether or not you believe creating a successful team for another location is a possibility. Relationships and experience can be a benefit for a franchisor invested in multiunits. If you have established yourself within your community, you can take advantage of the opportunities your relationships have created. Real estate agents, vendors, consumers and suppliers in your area may allow for easy growth in your location. These relationships can help you establish a wider presence more easily than a new developer in the business. Franchisors also enjoy the idea of handing off a unit to someone already well versed in their brand and operations.
Franchising USA
It’s comforting and less risky when a franchisee has provided results and profits within their territory. A current owner will not waste their time with coaching and support, they are already prepared for a lot of the process. Plus they may now only deal with one source of contact for a territory, which makes it easier at the head office location. There are some franchises that prefer multi-unit franchises if you are a first time investor and have plans to grow in the same brand. The restaurant market has been successful as a multi-unit operation; in fact 76% of franchise restaurants are multi-operated. Restaurants brands are well-recognized and franchisors have a good sense of whether or not a new one in the same region will provide profit.
One that is well established and holds a hefty brand can easily locate within a community and become as successful as another unit. Multi-unit ownership is rising in the franchise field and can not only increase profit and success, but with the right variables lead to a better work life balance. With the proper research, environment, support and understanding, a franchisee could run multiple units with ease. ABOUT THE AUTHOR: After receiving an English Degree, followed by a Journalism Diploma, Gina Gill became a freelance journalist in 2008. She has worked as a reporter and in communications, focusing on social media. She currently works as a community information officer with Epilepsy Society, while pursuing her writing career at the same time.
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Ashley Jeffery, Business Consultant, FrankCrum
Lifesavers for Multi-Unit Franchise Owners
Ashley Jeffery
Franchising USA
You know who you are – the multi-unit franchise owner who may still face the conflicts between working “on” or “in” the business. You’re not alone -- this happens in franchises of all sizes.
The temptation to continue to work in the business may be a big one, regardless of the number of units owned. Particularly for multi-unit owners, though, the need to focus on developing strategies and growing revenue (working on your business) should take precedence over dayto-day issues related to human resources administration (working in your business). That includes HR issues like workers’ compensation, risk management, payroll and payroll reporting, unemployment
claims, employee benefits, employee onboarding, employee retention – and more. Hiring specialists in each of these areas is not cost effective or particularly successful, particularly with multi-unit and multi-state operations. Most multi-unit franchise owners prefer to stick with a flat or lean management team, rather than loading up on overhead costs. But regardless of how you handle HR administration, it’s important to start with the what. Which are the most critical HR issues you should handle to maximize profitability, minimize liability, adhere to appropriate regulations and attract/retain the best employees? Let’s briefly discuss these top HR issues and some options for the most costefficient ways to take care of them.
What to know about workers’ comp costs and risk management Workers’ compensation is often top of mind for multi-unit franchise owners, as on the job injuries can wreak havoc for the best run franchise operations. Owners know they need workers’ comp coverage, but may assume all rates are created equal. That’s not the case. Rates, while set by states, are also based on the size of the operation and eligibility for discounts based on a documented safety program or drug free workplace. The most important factor, though, is the loss history and ability to qualify for an experience modifier. But there’s more to it – and that’s premium costs. A combination of safety training and audits, creation of a safe work environment and enforcement of safety rules, as well as a wise selection of carriers, can make a difference in premium costs.
“Although workers’ comp, risk management, payroll, payroll reporting and unemployment claims may be at the top of the multi-unit franchisee’s list, they are often just the tip of the HR iceberg.” What about payroll and payroll reporting? It’s only after your franchise starts doing its own multi-unit payroll that you realize how time consuming it is, along with the risks and minefields that await you with reporting and compliance. This is not a clerical function. Payroll is way more than just cutting checks – it’s also the time spent compiling time-sheets, checking pay rates and verifying deductions and garnishments. And that’s before reporting, fines for late reporting and the many regulations imposed on businesses.
Unemployment claims No franchisee can really avoid unemployment claims, because former employees are always free to file claims. However, the right approaches, particularly in high turnover franchises, can minimize the number of claims and maximize franchisees’ ability to defend themselves against claims that have been filed. Most unemployment claims are based on disagreements about employee performance, attendance or conduct. Additional but less frequent reasons for claims include layoffs and reduction in employee hours. Best practices to avoid these include: • Hire the best qualified people, performing background checks, using job descriptions and thorough onboarding • Establish written policies/procedures • Provide training • Perform regular reviews, counsel on deficiencies and document files As for claims, although the burden of proof is on the employer, employees are less likely to win a claim for termination for conduct or attendance if the employer has ample documentation.
And so much more… Although workers’ comp, risk management, payroll, payroll reporting and unemployment claims may be at the top of the multi-unit franchisee’s list, they are often just the tip of the HR iceberg. No owner can perform all the HR functions alone and few want to bear the expense of hiring individual specialists. Some franchisees choose to outsource to multiple vendors, but there’s another option. That option, the Professional Employer Organization (PEO), offers a one-stop shop approach, with all of these services under one roof, with one partner. Choosing the right Professional Employer Organization (http://www.frankcrum.com/peo-services/) allows franchisees to work with dedicated professional team members in each service area. The right PEO will also provide these services at an affordable cost, which is often less than what other multi-unit franchisees are paying staff members and/ or multiple vendors. It’s not practical to hire all the help you need and you know you didn’t start your franchise to become an HR specialist. When you achieve the efficiencies of outsourcing, you can control costs and gain more time for sales and marketing. This, in turn, will allow you to focus on building your franchises, and we’d say that’s a pretty good recipe for success. Ashley Jeffery is a Business Consultant for FrankCrum, a national Professional Employer Organization with experience working with single and multi-unit franchisees. Working directly with business owners to help them improve their business operations, she offers ways to reduce costs by outsourcing HR. www.frankcum.com
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Chris Poelma, President & GM, NCR Silver
Six Signs It’s Time to Keep Growing Your Franchise For a franchisor, grand plans of opening that next location always burn brightly. And if recent history is any indicator, these dreams exist for good reason. Since 2011, the U.S. has seen year-over-year
improvements in direct franchise employment, monetary Chris Poelma
output and total number of franchise establishments, per research and advisory firm Franchise Direct.
Franchising USA
However, dreams of expansions shouldn’t mask the reality that expansion bears inherent risks. For major franchise operations, the failure of a single location may only raise a few internal eyebrows. But for smaller operations, one failed location can lead to lost credibility from investors and employees, a stumble in brand reputation among consumers and major financial woes. Fortunately, there are a few key signs to indicate you’re ready for a successful expansion.
You’re prepared to relinquish control At a foundational level, adding a location, whether it’s your second or seventeenth, means you’re preparing to loosen your grip and delegate some day-to-day responsibilities to someone else. After all, your time and energy are finite resources. Adding more locations means you’re spreading those resources increasingly thin. With each additional location, your goal is to replicate and improve the same experience that enabled you to expand in the first place. This begins with a vision and having the right people in place to execute it.
There’s talent that you trust Identifying the right point person to run the new location is paramount – whether the hire is a franchisee or store operator. Business acumen is essential, however, it’s equally important to add a team member who can extend the brand. Each franchise location truly reflects on the parent company’s broader brand, meaning a lackluster customer experience 20 miles away can have a major impact on other, more successful locations. Thus, it’s vital you identify a leader who shares the same vision and values that make your brand successful.
Your business model may not be perfect…but it’s close Advisors may tell you to perfect your business model before seriously
“With each additional location, your goal is to replicate and improve the same experience that enabled you to expand in the first place.” considering expansion. Let’s be honest, if you’re looking for perfection, you won’t find it in business.
you make the decisions necessary to successfully manage your expansion.
True, you’ll want a business strategy that’s easy to replicate and implement. However, the quest for perfection can stymie true growth. Instead, resolve minor problems before they become major problems across multiple locations. Accept that you’ll have to adjust on the fly and resist the urge to pursue perfection.
You have the financial support for organic expansion
Competitors can’t match your differentiator
Also, it’s essential to carefully chose how you’re going to fund your expansion. Cashing in on investment capital may propel your short-term goals, but it can also restrict your freedom in the long term. Instead, driving growth organically can help you grow your footprint with less caution tape for the future.
If you’re a barber, maybe you’ve developed a locally sourced pomade your clients love. Or take the rise of “rolled ice cream,” a Thai twist on a market without much recent innovation. If you have something new to offer, or a unique take on a preexisting service or product, speed can help you capture larger market share before your competitors have the appropriate time to respond. However, if your solution is more of a “me too” offering, it’s worth taking the time to develop and clearly define a differentiator.
Technology is set to help, not hurt your expansion efforts Too often, you’ll see technology chime in at number 11 on the 10 things to check off before expanding. However, overseeing multiple locations can prove overwhelming without the proper tools for the job. As you become more thinly spread, you’ll want technology (accounting, point of sale, etc.) that expands with you and provides remote management and insight capabilities. For example, a point of sale solution may allow you to accept payments at your locations, but it can also be used for advanced reporting including inventory levels, customer trends and more. Ultimately, you want your technology to inform your holistic oversight and help
Finally, never force growth. Success stories rarely begin with the expansion of a struggling operation. Particularly for franchisors with smaller operations, achieving profitability before opening an additional location remains key, as it validates your desire to expand.
So whether it’s getting ready to hand over the reins to individual operators or making sure your technology portfolio supports you, it’s important not to rush growth. And with the U.S. being franchise friendly at the moment, you may find it difficult to pace your expansions and examine the areas mentioned above. However, if you do, you’ll soon find your burning desire to open that tenth location will give way… to a desire to open an eleventh, and then a twelfth. Happy franchising. From mobile software founder to CTO of Microsoft’s Operator Channel, Chris Poelma has spent nearly three decades developing innovative, high-growth businesses in the technology industry. In April 2015, Chris joined NCR Corporation as President and General Manager of NCR Silver. He oversees a very talented and ambitious team to drive business model innovation for small businesses through its cloud-based POS platform, NCR Silver. www.ncr.com
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Penn S tation East C oast Subs
Penn Station East Coast Subs
Poised for Growth in 2017 Penn Station East Coast Subs customers know the sandwich franchise, which was named the No. 1 sandwich chain by the 2015 Nation’s Restaurant News Consumer Picks survey, for its grilled, madeto-order sandwiches, fresh-cut fries and handsqueezed lemonade. As a franchisor, though, Penn Station is known for its outstanding profitability and return on investment. In 2016, the brand was named one of the Best Franchises to Buy by Forbes and one of the Best Franchise Deals by QSR Magazine. “Franchising is staged entrepreneurism,” said Craig Dunaway, president of Penn Station. “It requires passion, energy and time combined with the ability to follow the franchisor’s proven systems. Franchisees who can accomplish both should have the most success, especially as multi-unit franchisees.”
Brand Updates Penn Station has made some key achievements in recent years and will build on those in 2017. Penn Station
Franchising USA
“Franchising is staged entrepreneurism. It requires passion, energy and time combined with the ability to follow the franchisor’s proven systems.” - Craig Dunaway launched its first-ever mobile app and loyalty program last year. The app allows users to find a location, refer a friend via social media, pay for their orders and send digital gift cards. The app gives Penn Station the ability to surprise and delight customers with double points days or other offers to reward app users. The app also integrates with Penn Station’s new loyalty program. Employees scan a barcode from the app at the register, so that customers earn points for their order. For every dollar spent, customers get one point. Points are tracked on the app and customers get notifications when they are eligible for a reward. Dunaway said Penn Station will also expand the app to allow for mobile ordering this year. “Launching our app and loyalty program were huge steps forward for Penn Station,” Dunaway said. “It’s another tool our franchisees can use to grow their sales and engage their customers.” Penn Station has overhauled its training programs in the last couple of years, even earning a coveted spot on Training Magazine’s 2017 Training Top 125 list, and is continuing to fine tune the process in 2017. “My Penn Path” is a training and career path program designed to help franchisee employees move from entrylevel crew member to crew leader, assistant manager and even general manager. “With only one company owned unit, we wanted to provide franchisees with a great tool to help them with their most valuable assets: their employees,” Dunaway said. “Our system can be more than a job for anyone who works with our franchisees. My Penn Path shows employees what and how to advance in today’s competitive hiring environment.” The program, along with training videos, quizzes and modules, is built into Penn
Station’s proprietary POS system. Penn Station is in the process of completely eliminating printed training manuals and creating a custom learning management system this year. “The training videos alone have already reduced training time by about half, and test scores on the various stations have improved significantly since the videos were implemented,” Dunaway said. “Our efforts on improving training and providing a career path have greatly benefitted franchisees in hiring and retaining employees.”
Focus on Profitability Dunaway said Penn Station focuses obsessively on ROI and profitability for its franchisees. The company concentrates
on opening one successful restaurant and then another and so on, instead of opening as many as possible without regard for failures. To help franchisees succeed, Penn Station typically grows in a concentric circle from Cincinnati. Penn Station is currently exploring options for an incentive program for 2017 development. They anticipate it will roll out within the next 30 to 60 days pending state and federal approval. “The concentric circle gives us the three things we need to enter a new market: logistics, brand recognition and our oversight and support,” Dunaway said. “In 2017, Penn Station’s growth plans focus primarily on filling out markets in which we currently exist. We were voted the best sandwich in America, so we
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Penn S tation East C oast Subs know our food can be national in scope. However, it’s important to us from a brand perspective to build out existing markets before expanding to many new markets.” With only the one company-owned unit, the brand invests its resources in helping franchisees maximize their return instead of competing with them. For example, in 2016, Penn Station invested just under a half million dollars to create a regional franchise consultant program to help franchisees assess their business, including profit and loss statements and balance sheets, and make specific recommendations on ways to improve. Penn Station also sends area representatives to visit franchisees six to eight times per year to provide detailed notes and a consultant post-visit. While the individual restaurants don’t simply run themselves, focusing on creating more tools to allow franchisees to run their business more profitably can prove to be more successful in the long term. Penn Station does not profit from rebates from suppliers from franchisees’ purchases. Instead, Penn Station negotiates a lower price or invests the rebates back into the system. That has helped keep Penn Station’s controllable and food costs low. Dunaway said return on investment is top of mind in everything Penn Station does. For example, when the brand launched a new design in 2016, each element was carefully chosen for durability, cost effectiveness, function and aesthetics.
Multi-Unit Franchising Opportunity Penn Station franchisees sign multi-unit agreements. In addition to the capital needed to cover the franchisee’s growth plan, Dunaway said Penn Station looks for franchisees with small business acumen and experience, especially with P&L statements and hiring and firing. It’s critical that franchisees are process compliant and able to follow the brand’s 106-page operations manual. “We take great care in selecting our franchisees, and when we find people who fit our culture, understand the restaurant industry, have small business acumen
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and are looking for a superior return on investment, we’re both set up for success,” Dunaway said. “When a franchisee’s goals align with Penn Station’s, we can provide a clear strategy to reach those objectives. This is a difficult industry. Proven systems, hard work and diligence are all required before any franchisee can even begin to think about success. If they’re not willing to follow the model and work harder than they’ve ever worked before, the potential for success can decline.” Penn Station uses online behavioral assessments to choose managing owners and provides those assessments for franchisees to choose their general managers. Dunaway said the assessments help determine which people have the necessary personality traits to succeed in a position beyond their job experience and skill set. Dunaway said the quality of Penn Station’s products helps separate it from other
multi-unit franchising opportunities. Penn Station uses proprietary hearth baked bread, meats and cheeses sliced fresh throughout the day and nationally branded products. “We grill, we fry and we bake,” Dunaway said. “Our food is made fresh in the restaurant every day, and customers can see watch as their food is prepared in our open display kitchens. We’re a bunch of passionate zealots about the food we serve, and our franchisees are extremely proud of the high quality products Penn Station offers.” Penn Station has made great brand improvements in recent years, including the launch of the mobile app and loyalty program, implementing training videos and debuting a new restaurant design. The company is readier than ever for expansion in 2017 and expects to open 15 to 20 new locations. http://penn-station.com
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Chris Conner, President, Franchise Marketing Systems
Multi-Unit Franchising:
Making Franchising Work For You Franchising is meant to be a mutually beneficial business relationship between all parties involved. The Franchisor is allowed to expand efficiently through scaled growth and rapid expansion with the investment made by independent franchisees and the infusion of capital that comes with new franchise ownership. The Franchisee is provided the opportunity to build a business efficiently and effectively with proven business systems and infrastructure along with economies of scale that come with a network of businesses working together. Finally, the vendors and suppliers benefit from franchising by being able to scale
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with the organization and realize better margins with a consistent customer base following the same business model and operating platform. Multi-Unit franchising is the most aggressive end of the spectrum and in a sense turbo-charges the franchise relationship for all parties. Multi-Unit franchising has many definitions and descriptions for the concept including master franchising, area developer franchises, regional director franchising along with others and really, the model has two distinctly different operating structures.
Area Developer Franchise Model: An Area Developer Franchise is typically the definition for a model where a franchisee invests in a region for the right
to develop a market as a sub-franchisor of the larger brand. The business relationship is typically based on an initial investment made by the Area Developer for the right to a given market where they are able to go out and market the franchise in that region. When they sell unit franchises in that market, they collect some percentage of all franchise fees and royalties collected from the Unit Franchises in that market. A typical scenario might be 50% of all franchise revenues paid to the Area Developer in that region. This model is aggressive, fast moving and used by companies looking to cover ground in as short of a time period as possible. It has been used extensively in the commercial cleaning market by brands such as JanPro, Jani-King and Jantize America, but also was used extensively by Subway as they developed their brand
“When you have identified the candidate as being a potential Multi-Unit buyer, structure your presentation to fit their attention span and focus on what is relevant.” globally. It also is a common model for international franchise development. Area Developer Franchisees are expected to contribute to the franchise relationship beyond the sale of the unit in support, training and local market infrastructure. This model is highly aggressive and requires the right candidate in the Area Developer position to facilitate growth and support new franchisees in farther reaching markets.
Multi-Unit Franchise Structure: A traditional Multi-Unit franchise model incorporates a franchise investor owning and operating the locations they invest in. This requires a much higher initial capital outlay to open the businesses than an Area Developer Franchise model in that the franchisee is investing in each business unit with real estate, leasehold expenses, employee and operating costs associated with the ramp up with each operating business. This type of Multi-unit franchisee brings a lot of capital, a great deal of operating experience and a strong resume to the franchise system and is an enormously sought after candidate in the franchise market. My most recent experience with a multi-unit franchise owner was a candidate we ran into at a franchise show who owned 150 Joint Chiropractic locations, 15 Juicing franchises and 125 weight loss franchises. He had been in franchising for over three decades and knew what unit level metrics he wanted, when he found a brand, he invested in a big way then scaled. Multi-Unit franchisees could have anywhere from two to hundreds of locations. In some cases, a unit franchisee can be “promoted” to a multi-unit owner, with success and the right infrastructure, good franchises can be supported and eventually they should want to transition to multi-unit ownership.
As a franchisor, how do you recruit area developer and multiunit franchisees? First and foremost, create happy and successful franchisees within your system and network. Area Developer and particularly Multi-Unit franchisees will look to unit validation before anything else. These investors are intelligent, experienced and know the market. Your franchise needs to be able to impress this buyer with the right messaging, presentation, branding, market potential and most importantly ROI on the franchise model. These owners are by nature big picture thinkers and will look at a bottom line and how easily the model scales as they are not operating any of the locations they own or operate within their market. As a result, you should have an earnings claim on your model that presents well, if you are a fixed location, restaurant or retail model the franchise needs to show a 100% return in 3-5 years on cash invested. Service franchises typically should show a 100% return in 1-2 years on cash invested. The systems will be analyzed intensely by these investors, you need to be able to show that your model is repeatable and you have invested in the right technology to manage the day to day business without being in the business. These bigger investors come from many of the same marketing campaigns that individual franchisees are sourced through. Web and Internet marketing mediums, franchise tradeshows, franchise brokers and others are viable sources for Multi-Unit franchisees. The messaging, presentation and quality of the presentation needs to be strong and relevant for a franchise investor of this caliber. If you want this type of buyer, you need to make sure you are saying the right things and have the right presentation to get these people engaged in your sales process. Once a Multi-
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Unit franchisee is engaged in the sales process, professionalism, consistency and an intelligent presentation will make all the difference in your ability to keep the candidate engaged in your sales model. These buyers have lots of options to consider and are unwilling deal with franchises they get any sense of lack of organization, focus or credibility, which means that you need to be buttoned up and have a very tight presentation. One last thing I’ve found, skip the fluff and get to the point, these are busy people who don’t really care about the nonsensical marketing lingo and want to hear bottom line facts and figures. When you have identified the candidate as being a potential Multi-Unit buyer, structure your presentation to fit their attention span and focus on what is relevant. One more thing, these are candidates it might be worth “pampering”. Go ahead and spring for the flight to get them to your discovery day, take them to a sporting event, pay for dinner, think aggressively and be willing to invest in their experience with you in order to increase your odds of closing the big deal. Christopher Conner is the President of Franchise Marketing Systems and has spent the last decade in the franchise industry working with several hundred different franchise systems in management, franchise sales and franchise development work. His experience ranges across all fields of franchise expertise with a focus in franchise marketing and franchise sales but includes work in franchise strategic planning, franchise research and franchise operations consulting. www.franchisemarketingsystems.com
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