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FranchisingFeature multi-unit spo rts &franchising fitnesss
june april 2 0 1165
zips multi-unit
franchisees wanted
5 secrets to success
in multi-unit frnchises
an inside look at the
multi-unit franchisee Franchising USA
multi-unit FR A NCH ISI NG
what’s new!
Captain D’s Announces Plans for Expansion
Captain D’s, the leading national fast casual seafood restaurant, has announced plans to expand the brand’s presence in the Northern Virginia/D.C. area. This announcement comes on the heels of an incredibly successful 2015, where it established an all-time system-wide AUV record, marking the brand’s third consecutive year of AUV record growth. With a commitment to ongoing product innovation and serving the highest-quality seafood, Captain D’s has remained true to its core and is seeking qualified and experienced franchise candidates to propel Captain D’s in the Northern Virginia/D.C. markets. The company currently has 22 Captain D’s restaurants located throughout the state of Virginia. To further drive franchise growth in Northern Virginia/D.C. and beyond, Captain D’s recently expanded its development team and welcomed Jennifer Benjamin as director of franchise development. Benjamin is spearheading the company’s efforts in Northern Virginia/D.C. and will also handle single and multi-unit franchising efforts across the Southeast and Midwest. With 515 restaurants in 22 states, Captain D’s is the fast-casual
seafood leader and number one seafood franchise in America ranked by average unit volume. For more information about franchise opportunities, visit www.captaindsfranchising.com or call 866-955-1792.
ZIPS Dry Cleaners Signs 104-Unit Franchise Agreement ZIPS Dry Cleaners – an aggressively expanding dry cleaning franchise known for its same-day, one-price business model – has signed a franchise agreement for the development of 104 stores throughout the Mid-Atlantic and Midwest. “We were drawn to ZIPS because of its proven business model based on a concept revolutionary to the industry and clearly in high demand to today’s dry cleaning customer – dry cleaning that is ready for pick-up the same day it’s dropped off and all for a flat-rate price,” said Kevin Graff, Managing Partner of Business Development for R&R Global Partners, the owner of ZDC Holdings, the holding company for the ZIPS development. “We look forward to bringing the brand’s
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one-of-a-kind services to new parts of the country.” The agreement with ZDC Holdings marks the largest deal to date for the 20-year-old ZIPS brand. “We are thrilled to enter into this relationship,” said Aaron Goldberg, Vice President of Franchise Development for ZIPS Dry Cleaners. “We are at the beginning stages of what is going to be very exciting growth and development over the next several years, and signing an agreement of this size proves our ability to attract the highest level of sophisticated developers into the ZIPS Franchise system.” For more information, please visit www.321zips.com.
Big O Tires Franchisees Expand the Brand with 19th & 20th Locations in Indiana Big O Tires®, one of North America’s largest retail tire and automotive service franchisors with 389 franchisee-owned and 2 company-operated locations in 19 states, is pleased to announce the opening of two new stores in Indiana – one in Noblesville and one in Carmel. Both stores are owned and operated by franchisee Joe Peil; these are his first stores as a Big O Tires franchisee. Prior to converting his stores to Big O Tires locations, Joe operated these locations independently under the name Joe’s Auto Service, Inc. Peil, a 20 year industry veteran, joined the Big O Tires franchise system after careful evaluation of the industry and different retail opportunities. “Big O Tires was a perfect fit,” said Peil. “The breadth of product offerings, support from operations, solid and proven infrastructure, and their overall buying power as a leading franchise organization helped to make my decision an easy one and I am very confident in the decision that I have made.” These two locations represent the nineteenth and twentieth Big O Tires locations in the state of Indiana. “It‘s exciting to see successful independent operators like Joe join the Big O Tires organization,” said Kevin Kormondy, Executive
Vice President and Chief Operating Officer of Big O Tires. “We are committed to helping each and every one of our franchisees; from the beginning stages of evaluation through facility assistance and training, we’re confident that our talented field support team can assist new franchisees to enhance the operation of their business. We’re thrilled to have Joe as part of the Big O family.” www.bigotires.com
Arby’s Kicks Off 2016 with Significant Restaurant Development and Signings Momentum strategic priority to expand aggressively in the United States and select global markets, this is an encouraging start to the year for Arby’s,” said Paul Brown, Chief Executive Officer, Arby’s Restaurant Group, Inc. “We are more focused than ever on bringing Arby’s restaurants to new markets and further expanding in existing markets to Serve, Refresh and Delight our guests with an experience that is truly unique to Arby’s.”
through today, for the development of
This news follows a strong year of development for Arby’s in 2015 with 61 new restaurant openings and 179 remodels system-wide.
Arby’s launched a new franchise development website at DiscoverArbys. com, where prospective franchisees can get in-depth background information about the Brand, including available franchise markets and requirements.
138 new restaurants.
“As we begin 2016 and execute against our
DiscoverArbys.com
Arby’s has announced the signing of several recent franchise development agreements beginning late Q4 2015
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SAFE HOMECARE Announces Franchise Opportunities for Aspiring Entrepreneurs with a Passion for Providing Personal Care the metro area of Tulsa, Oklahoma. According to Adam Krueger, COO, the senior population demographics are exploding, signifying the right time to consider “the next big thing,” which is supplementing the daily needs of the aging baby boomers.
SAFE HOMECARE is proud to announce that they are currently offering franchise opportunities to qualified candidates throughout the United States, effective today. SAFE HOMECARE provides nonmedical, in-home care and companionship services that make a significant difference in the lives of seniors, adults, and others needing assistance in their daily lives. The Company, founded by Jeff Krueger
in 2014, prides itself on providing nocost in-home nurse 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. SAFE HOMECARE already has an established market presence and substantial market penetration throughout
SAFE HOMECARE has built a business model to enable the right candidates, those individuals who possess the “caring gene” and who want to make a meaningful difference, to seize this opportunity to participate in the ever-growing senior care market. Potential franchise candidates can expect to receive a tested and perfected model, extensive training and on-going management support, materials and the benefit of the senior management team’s experience. www.safehomecare.com
Google to Pilot Hands Free Payments Service with Select Papa John’s and McDonald’s Locations in the Bay Area Google will be testing an app that will let customers pay at the store without pulling out their wallets or phones. The technology, known as Hands Free payments, is supposed to make paying in stores/restaurants easier on consumers. Once a customer downloads the app on their phone, all they have to do when checking out at a store/restaurant is simply tell the cashier they’d like to pay with the service. The cashier will then ask for initials and use the picture added to
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the Hands Free profile to confirm their identity. “As a company we are perpetually committed to better – better ingredients, better pizza and a better customer experience,” said Cynthia McClellen, Senior Vice President of Global Information Services at Papa John’s International. “We’re excited to be working with Google to test Hands Free in our Bay Area stores. It’s yet another opportunity to push the possibilities of digital payment solutions for our customers.”
Hands Free is currently available on Android and iOS devices. www.papajohns.com
AAMCO’s Husband and Wife Team Receive Accolades for Outstanding Achievements Thomas and Ronda Scott recently became the largest franchise owners in the AAMCO system to date, following the purchase of seven centers in Oklahoma City. In addition to these seven units, the Scotts own two AAMCO locations in Tulsa, Oklahoma, which they purchased three years ago. Without any previous automotive background, the husband-and-wife team has received various accolades for their outstanding achievements from the company, including bottom line improvement, customer service and performance since their start with the brand in 2013. The Scotts’ success is built on morale – they strive to instill a strong work ethic
in their nearly 50 employees and deliver superior customer service at all of their locations. The Scotts are looking forward to continuing to serving new and existing
customers in Tulsa and Oklahoma City for many years to come. aamcofranchises.com
Tropical Smoothie Café signs six in dallas This announcement is part of the awardwinning smoothie franchise’s aggressive growth plans for the state of Texas, which kicked off in April 2015 with the opening of the company’s first Dallas location, quickly followed by additional cafés in Frisco and Fort Worth in June and August 2015, respectively. A fourth café is slated to open in the next several months at 4940 State Hwy 121 in Lewisville.
Tropical Smoothie Cafe, the leading fast casual cafe known for its better-foryou food and smoothies with a tropical twist, recently signed six franchise agreements to open new locations in Dallas.
Three of the new Dallas cafés will be family-owned businesses, led by Calei and Kodei Kesterson, along with their parents Thomas and Darci. The additional three new restaurants will be owned and operated by Tropical Smoothie Cafe franchisee Steve Milam.
Tropical Smoothie Café reported its strongest year of growth in 2015, with same-stores sales of 11.25 percent — its sixth consecutive quarter of doubledigit positive comp sales — and signed franchise agreements to develop 199 new cafes across the U.S., including about two dozen locations in Southern California. This year, the food and smoothie franchise plans to exceed 550 restaurants nationwide. For more information about Tropical Smoothie Café, please visit www.tropicalsmoothiefranchise.com
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ZI PS
Multi-Unit franchisees wanted for nationwide expansion One Washington, DC area discount dry cleaner is targeting nationwide franchise expansion, but it’s not content doing that one store at a time.
Whether their experience be in food, hotel or fitness centers, franchisees who are interested in joining ZIPS should have firsthand knowledge about dealing with multiple franchise locations and should be willing to make a multi-million dollar commitment on a multi-unit deal in a new market.
ZIPS Dry Cleaners, which charges a flat rate of $2.29 for any garment, has been in business for 14 years and franchising since 2007. The company is looking for experienced operators of other multiunit concepts, vice president of franchise development for ZIPS Aaron Goldberg explained during a recent interview from the company’s headquarters in Greenbelt, MD.
Faster expansion and the ability to attract a more sophisticated type of franchisee were the main reasons behind targeting multiunit franchisees, Goldberg said. ZIPS wants franchisees who will be responsible for their own operations management and
The minimum number of franchise units a new franchisee would have to be committed to is either five for a small market or 10 new for a larger market.
“The goal is to expand outward from Washington, DC, but the company will go beyond that area if it’s confident that it has found a good franchise partner in another area of the country.” Franchising USA
development after they’ve received the right amount of support and training from the company. “The logical pattern for growth is to sell territories at a time and to be able to have some cohesiveness in marketing operations and development within a territory,” the vice president of franchise development said.
The ZIPS Difference What sets ZIPS apart from other dry cleaners is its ability to offer an inexpensive flat rate while also providing customers with the best customer service in the industry, Goldberg noted. Plus, the company uses an eco-friendly process for its dry cleaning, which is attractive to customers. “Everything is done with a price that is reasonable to the consumer with full transparency of the entire process,” Goldberg said. With one corporate location and 41 franchise locations currently open and operating throughout the Mid-Atlantic, the company has another six locations under construction and hopes to add another four on top of that for a total of 10 new locations operating by the end of the year. Right now, ZIPS is concentrated in the Baltimore-Washington area, but is doing a lot of development in Pennsylvania, specifically Philadelphia. The goal is to expand outward from Washington, DC, but the company will go beyond that area if it’s confident that it has found a good franchise partner in another area of the country. Currently, ZIPS has finalized an agreement with a developer to open over a hundred stores from Philadelphia up into parts of New York City. They’re also in discussions with a group from Pittsburgh and South Florida for possible development agreements. Ongoing Area Development awards are pending with groups from Southern California, Central Texas and Maryland in-fill for an additional proposed 149 store commitments. Goldberg estimates there will be approximately 300 commitments by the end of 2016.
“The logical pattern for growth is to sell territories at a time and to be able to have some cohesiveness in marketing operations and development within a territory.” – Aaron Goldberg, Vice President of Franchise Development. “It’s quite a remarkable accomplishment for ZIPS, but more so a testament to the demand for the ZIPS concept by savvy investors and the services ZIPS provides by US consumers,” said Goldberg.
as the de facto manager.
The rapid, nationwide expansion is a long way from where ZIPS started. The first ZIPS locations were actually owned by eight dry cleaning operators of a different brand. They broke away from that other brand and started their own company, rebranding their stores as ZIPS in 2002.
Every franchise location goes through a franchise performance review cycle where ZIPS representatives visit the stores and do a 370-point inspection. The first year a store is open, they do inspections monthly and then depending on operations, they do it quarterly, every six months or annually based on how well the store does in prior reviews.
Eleven years later in 2013, the company experienced a majority acquisition by the private equity firm JBP Partners out of Columbia, MD and it’s been growing quickly ever since.
Training and Support ZIPS requires a franchisee’s district and/or store managers to attend a 10 week training program at ZIPS headquarters. Training is provided in dry cleaning production, customer service, maintenance and repair of the equipment and everything else that an operator or a manager of a store would need to know. For the final few weeks of the aforementioned training, ZIPS boot camps the trainees to run an existing store and act
Once a franchise store is open, ZIPS comes out and performs certification of the store manager to ensure they are fully trained.
Training materials include online video training, customer service training, and operational training for every process in the business. There are bilingual job aids at all the stations and a comprehensive operations manual to go along with sixday telephone support via 1-800 number for franchisees. The company is also working on a system that will allow multi-unit franchisees to easily keep track of what is happening in all their stores at the same time. For any franchisees that have experience running multiple units, ZIPS offers a prime opportunity to add to a portfolio. www.321zips.com/franchise.php
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Featu re
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MULTI-UNIT FEATURE
Multi-unit franchising allows a franchisee to open more than one unit. This type of operation used to be uncommon and mostly considered when franchisees were well-established in their field and ready to grow after years of practice. Nowadays, multi-unit franchising is quite usual and an opportunity a lot of franchisees consider when first purchasing their business. In fact, according to FRANdata, 52 % of all franchises are now multi-unit operations. This type of format is made for someone who is comfortable letting go of control and confident in a team of managers to operate the day-to-day business.
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With multi-unit ownership, franchisees will be responsible on other levels of operation. There are many pros to owning a multiunit franchise. A franchisee who has owned and operated a single unit in a specific field and further develops in that area is well-versed in the market. They know which customers are interested in their business, what areas to invest in and where their strengths and weaknesses lie in the industry. They are familiar with the brand, the operation, the marketing and all other aspects of the business. They may even have created a strong customer base that can be brought fourth to other units. They would take a lot less time to train and develop, but rather can use their expertise and experience to create a successful outcome. Franchisees can train their managers and staff on site efficiently and easily. They can also apply their
direct familiarity with the business to help develop their employees. Owning many units can obviously increase profit and it is likely that the business is doing well if it is developing further. Depending on the business and the franchisee, units can cross multiple locations. This can be either positive or negative, subjective to the owner. Some people are able to stay within their hometown and operate a business from their office. Between webinars, conference calls and technology, operating many units across the country has become easily plausible. It’s common for many businesses to function nationally by taking advantage of technology and connecting on many other levels. However, this could be time consuming and franchisees will have to make location visits and clock a lot of hours on the road. With time and investment, franchisees will be able to balance the many units, whether
they are spread far and wide or within the same town. Franchisees will have to invest more money to secure more locations and some franchises offer discounted prices with more purchases. Owners will have to use their profits to continually invest and for the first while, cash flow may be tighter but as success continues, so will accessible money. Some of the cons are dependent directly on the capability of the franchisee and the business in which they invest. Those interested in multiunit franchises have some past experience in corporate business and can accommodate easily to large-scale ownership. This truly limits opportunity for those considering further development and may decrease the chances of success. Multiunit training is limited and franchisees are expected to understand how to take on the business, since they have managed to run a successful single
By investing in many units, a franchisee is multiplying their risk. This pressure can be handled by someone willing to invest in their managers and staff and willing to allow them to take over the business. unit operation. Though the franchisee will take on a whole different level of responsibility, they will work with the franchisor more directly but are expected to understand how to juggle many units at once. Starting a franchise can be a risky endeavor, though it is usually successful. By investing in many units, a franchisee is multiplying their risk. This pressure can be handled by someone willing to invest in their managers and staff and willing to allow them to take over the business.
Those interested in multiunit franchises should truly grow their first unit to ongoing success. If their first unit can function profitably and properly without the franchisee onsite, with a dedicated and self-sufficient staff, the owner can confidently walk away and consider investing in more units. A franchisee should consider how another unit will affect them personally, financially and from a business standpoint. There are many questions they should consider before growing their investment.
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Can they properly run multiple units through conference calls, emails and constant across state communication? Are they willing to travel to help set up and create a successful business? Are they willing to step aside and hire a competent staff to run the daily operations? Can they continue growth with less accessible cash flow for a short amount of time? With technology at the tip of our fingertips, investing in multiple units is easily achievable from a franchisee’s home office. Someone who is willing to train themselves on a whole other level and step out of the operations for a new experience, while also managing their profits for investment properly will successfully benefit from developing their business.
“With technology at the tip of our fingertips, investing in multiple units is easily achievable from a franchisee’s home office.”
This decision cannot be made lightly, but rather from a strategic standpoint that will consider future outcomes and selfreflection. That being said, multi-unit franchising is the new norm. It’s becoming an essential and expected investment from franchisees. Those new to the franchising world, should truly reflect on the field and brand they are purchasing and envision whether or not they could operate many units in the future. It wouldn’t hurt to talk to other franchisees about the risks and benefits they discovered throughout their journey. 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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George Knauf, Senior Franchise Business Advisor, FranChoice
5 Secrets
to Success in MultiUnit Franchises You have seen the stories about everyone from normal folks to professional athletes building big multi-unit franchise empires. It is no accident that they accomplished feats worthy of magazine articles, it is by following a process that scales their empire. These are not lottery tickets and those owners knew they were in control of their success from day one. So, what is the secret you ask? Here are your multi-unit keys to success:
1
Find a business where the role of the owner is a good fit for you. Working with franchise candidates for over 20 years I know that every franchise company has built their model to support a specific type of owner best. If they are looking for great salespeople and you don’t want to be out selling, then that would be a bad match. If they would require you to me running a restaurant daily and you don’t want to do that it would be a bad match. Build a model of how you manage, how you sell, what you want your work days to look like and what your goals are. That is a very basic version of what we do with our candidates but it will get you generally pointed in the right direction. No matter how good a business looks, if the model does not fit you then keep
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“Build a model of how you manage, how you sell, what you want your work days to look like and what your goals are.” looking for your perfect franchise! Your success story will be built around something you do well.
2
Look at the entire market for growth opportunities.
You may do best with stable businesses that could have a ten year run or longer, not just the hot sizzling concepts of the moment. When we look at concepts to present to our candidates we get cautious when a business seems to be a passing fad. Fad businesses can be rolled out as a quick hit investment, but generally even the very experienced and well-funded candidates that know how to play that game prefer to avoid them. It is a natural thought process that takes many candidates directly to restaurants for their first investigations but the franchise industry is much broader than just food brands. Over the past 30 years franchising has expanded into a multitude of retail and service categories. The way those brands build businesses has also changed so that people looking for empire building opportunities can build larger organizations and run them in a CEO role. The benefit in many of these service based concepts is that they are core needs, those services we will always use and will not run the course of a fad product or be severely impacted by the stock market. You may have the opportunity to keep this type of franchise in your portfolio for ten to twenty years, maybe more.
3
Make sure you are picking a partner you can work with.
When I look at franchises for myself, there are two main sections of the investigation for me, the information gathering section and the partner picking section. The information gathering section is simply working through a list of questions I have and information I know I want to
gather to be in a position to say yes or no. The partner picking section is far more important to me. When I become a franchise owner I want to know that whatever I need to find success will be provided. More importantly I want to know that this is a joint effort, not just me buying a manual and a logo. When I go to a Discovery Day with a franchisor I am happy to go through whatever they feel I need to see, but the most important parts of that day for me are what happens between the meetings with department heads. Having the opportunity to spend time with the franchise company senior staff, training team and support staff are critical.
4
Have a funding game plan for the first 5 years, don’t make it up as you go. Your funding plan will be just as important as selecting the right company. As you grow you want to make sure you are not hitting a point where you are tight on money and cannot execute your plan. Keep in mind that it’s often easier to get money up front than while operating in a pre-profit stage of growth. There are some creative ways to build a funding plan from SBA and conventional loans to 401K Rollovers and stock portfolio financing. Finding expert resources will be key at this stage. There are some great companies out there that specialize in franchise financing. Sometimes the perfect plan is a using a combination of resources to get to your goals with the best funding approach.
5
Know where you want to end up.
One of the big challenges we see with people beginning to venture into multiunit growth plans is that they don’t have a clear vision of what they want to build and how to get there. While the process may
George Knauf
take some time they need to be executing a plan or else they risk getting “comfortable enough” along the way and not progressing towards the vision they had when they began the process. Your plan should include both financial and lifestyle goals. Map out a plan over the first 5 or more years as to how many units you want open on a quarterly basis. Your funding plan will tie in and you will be able to set specific parameters that trigger the next unit opening. You will also want to understand the role of the owner at each step from the first unit to the last one. Initially you may be more personally involved in daily operations and eventually become the CEO. At each step in between you may find a slightly different owners role. Multi-unit franchise growth is as straight forward as building a single unit, you just need to understand the steps, have a game plan and follow the system you bought into. What will your success story be? George Knauf is a highly sought after, trusted advisor to many companies; Public, Independent and Franchised, of all sizes and in many markets. His 20 plus years of experience in both startup and mature business operations makes him uniquely qualified to advise individuals that have dreamed of going into business for themselves in order to gain more control, independence, time flexibility and to be able to earn in proportion to their real contribution. Contact the Franchising USA Expert George’s Hotline 703-424-2980. www.FranGuide.com
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Jeff Krueger, Safe Homecare
An Inside Look of the
Multi-Unit Franchisee
Operationally speaking, business minded individuals have long recognized that efficiency and effectivity are desirable objectives when striving to develop and perfect a product or service that ultimately represents “value” to consumers, and, derivatively, results in profitability for the organization. Jeff Krueger
Franchising USA
Consumers seek out “value” when deciding to purchase a product or service. While value always has a dollar component, “value” should not only be based upon the best price or least expensive product or service. The value proposition must necessarily
include multiple factors, including quality, reliability, functionality, and the softer, more intrinsic component, the satisfaction metric, which may include emotional or intellectual elements such as enjoyment, security and comfort. In deciding to franchise their business, Franchisors have determined that their business model is “franchisable” because they have quantified an existing market demand and have responded to that market need by developing the essential ingredients, processes, procedures and protocols whereby consumers will continue to find value in their product or service. Further, the franchisor knows that, provided their franchisees strictly adhere to their prescribed methodology, their customers can confidently expect the consistent high quality service that has become the brand standard. In an effort to distinguish their brand from the competition, the Franchisor should have concurrently developed a recognizable branding concept that quickly enables the consumer to identify their brand from the competition and which conveys the desired corporate messaging. The franchise industry is typically characterized by awarding exclusive and protected territories in a geographic area, typically by assigning zip codes, though other gerrymandering techniques may be appropriate (and negotiated) depending upon circumstances. Most attractive, for the “right” franchise in the “right” niche, are those franchises where territories are relatively wide open. Franchisees are generally not permitted, under their franchise agreements, to offer services or products to consumers outside their assigned territory. So despite the franchisee having a contact network and service “reach” beyond their territorial constraints, opportunities outside of their assigned territory are off limits. A disappointing reality if your franchise is in the right place at the right time in the right market. One of the most interesting strategies to counteract territorial restrictions involves the possibility of securing multiple contiguous territories. A Franchisee who is able to secure multiple territories, or said another way,
“Everyone acknowledges that an organization is only as good as its people. Accordingly, a multiunit player must have high quality management at each franchise location.” operate a multiunit franchise system in an area where he or she is well established and well connected, affords that Franchisee the opportunity to seize the benefits of both synergy and economies of scale. The most obvious synergistic opportunities involve cost savings resulting from minimizing overhead redundancy. For example, a business’s administrative functions, such as accounting, invoicing and payroll, or other support activities such as purchasing and human resources could be centralized, enabling core staff to service the multiple locations. Similarly, economies of scale could be realized by the multiunit franchisee. Negotiating for required products and support services are always enhanced when your organization represents a larger volume opportunity to your vendors. Economy of scale is nowhere better demonstrated than in looking at your advertising dollar expenditures. Advertising in area publications, where you are only permitted to service those consumers in your “assigned territory” becomes an advertising dollar inefficiency victim. Your advertising dollars are aiding non owned, but adjoining, “sister” franchisees or, worse yet, benefits your competition in the territories you cannot serve (the halo effect). Owning and controlling all of the territory falling under your advertising umbrella enables you to achieve lowest cost per “touch” results. While a multiunit franchise system enables the franchisee to attain both synergistic and economies of scale benefits, the multiunit franchisee must be cognizant of the potential downside and incumbent risks associated with the multiunit operation. Everyone acknowledges that an organization is only as good as its people. Accordingly, a multiunit player must have high quality management at each franchise location. Unfortunately, hired
management personnel are not likely to have the same vested commitment to the success of the operation as you do. That said, you as the manager of the multiunit franchise system, will have to recruit, hire, train and manage your leadership team, consequently diluting your attention and focus across a wider spectrum of activity. The risk associated with the franchise owner diluting his attention is that the quality and consistency of the product or service suffers. This is a real “nono” in the franchise world, as any franchisee who erodes the stature of the brand is a detriment to the entire system. Consequently, the franchisee who besmirches the brand will, under the terms of their Franchise Agreement, quickly find themselves in “hot water” with their franchisor, who has the unswerving responsibility to protect the brand. So if you are considering a multiunit system, and you are up to the expanded managerial challenge, you stand to be rewarded financially in multiples. To be successful in this environment, maintain your focus on quality by implementing strict quality controls. Hire right, train extensively, implement checks and balances to insure service integrity and consistency, in essence mold your culture to your own high standards. Jeff Krueger is a tenured business professional with a track record of success, growth and expansion spanning 40 years. He has held positions as CEO, COO, CFO and Corporate General Counsel for various entities, both public and private, with annual revenues ranging to over $200 million. Mr. Krueger recognized the emerging need of seniors and launched SAFE HOMECARE to provide high quality Support Assistance For Elderly (SAFE). www.safehomecarefranchise.com
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Chris Goethe, VP of Franchising, Primrose Schools
a fresh take on Approaching multi-unit franchising with a singleunit mindset Franchising USA
At Primrose Schools, we take an especially thoughtful approach to multi-unit franchising partially due to the nature of our industry. Primrose is a high-quality early education and care franchise, so our Franchise Owners have a responsibility much greater than owning a business. It is a meaningful and rewarding position, and we take the time to ensure the right people are in it. Each Primrose school is independently owned and operated by Franchise Owners, 32 percent of which own multiple schools. Our whole business approach is centered on finding passionate people who share our values, which is one reason why we apply a single-unit mindset to multi-unit franchising.
As part of this single-unit mindset, Primrose often grants just one school to new franchisees at first. Once the school is established, we have very open, honest and intentional conversations about unit expansion options if that is part of a franchisee’s long-term vision. This approach focuses on the Franchise Owner as a passionate owner-investor – examining his or her goals, motivations and the needs of the community – to foster smart decision-making and sound reasoning throughout the process. If you are interested in owning more than one franchise within a brand, you also should consider looking at opportunities through a single-unit lens.
Factors to Consider Before Growing: Industry Stage, Bandwidth and Motive If you already own a franchise, you likely explored the industry, your bandwidth and your motive in-depth before making your decision to buy. Devote the same level of analysis and thoroughness to the decision to own multiple units. Start by doing your due diligence on the industry. According to IBISWorld, there are different stages of maturity that every industry falls into. In a growth industry, revenue grows faster than the economy and new companies are constantly entering the market. An example is the children’s services franchise sector, which has grown by 35.9 percent from 2010 to 2015 (FranchiseGrade.com). A growth industry might be a good option for an entrepreneur looking to own multiple units because they are driven by high demand. Once you assess your industry, take a candid look at your bandwidth to determine if you really have enough time to devote to owning multiple units. FranchiseGrade.com notes that 79 percent of franchisees work more than 40 hours per week. Additionally, owning multiple units demands strong management skills as you devote time to overseeing and developing your leadership team and staff. Lastly, take a moment to gut-check your motive. Are you pursuing the opportunity because of your passion or simply profitability? The responsibility, time
“If you are interested in owning more than one franchise within a brand, you also should consider looking at opportunities through a single-unit lens.” and focus it takes to own multiple units will come much easier if you believe in your business and are passionate about your industry. Many Primrose Franchise Owners express the sentiment, “I would do this even if I wasn’t paid!” From the perspective of a franchisor, that’s a sign that the person is in it for the right reasons and is potentially prepared to expand.
Questions to Ask Before you consider opening multiple franchise locations, take a hard look at your current business. This is a cornerstone of the single-unit approach to multi-unit franchising and something we at Primrose do diligently as a franchisor. We work hard to empower all of our Franchise Owners to be successful, which is why we don’t take the decision to award multiple units lightly. Here are a few key questions we ask and evaluate with our franchisees to assess whether they’re ready to own multiple units: • Operationally, am I successful at delivering the service or product my business provides? Franchisees truly are stewards of the brand within their communities, so it’s important that you and your franchisor feel confident in your current role before expanding. • Am I financially sound enough to invest in another franchise location? While money shouldn’t drive your decision, it’s a crucial consideration in determining if you are able to grow. Have a conversation with your franchisor about the costs of expansion and your investment options to ensure it’s feasible. • Is there enough demand in the market to support expansion? The Franchise Owners of a new Primrose school in Burlington, Mass., approached us to open a second school after their first had completely filled up in its first year of operation. In this case, demand strongly
Chris Goethe
supported an additional location, but the market doesn’t always work this way. Your franchisor will have helpful insights on market demand.
Find Success Together Whether you want to own one unit or several, the best thing you can do is establish a great relationship with your franchisor. Open communication and goal setting together is essential to your mutual success. At Primrose Schools, we care about the people representing our brand. Our Franchise Owners share our values and believe in the high-quality early education and care that Primrose provides children and families. That’s why we take such a thoughtful approach – not just to multi-unit franchising, but to franchising as a whole. At the end of the day, it’s all about ensuring franchisees are successful both as individuals and in carrying out the unified mission of your business. As Vice President of Franchising, Chris Goethe oversees franchise recruitment for Primrose School Franchising Company. Chris calls upon 25 years of professional experience in project management and uses a relationshipbased approach to help develop the Primrose Schools Support Center Team as well as the franchise system. Read more: www.PrimroseFranchise.com
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David Banfield, President, The Interface Financial Group
Are Two Locations Better Than Just One? If two locations are better than just one, then are three or four better still? When an entrepreneur starts a new business they usually concentrate on one location, and growing that site to its maximum potential. Franchising brings a different dimension to the growth opportunity with a multipleunit option.
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“Territory is usually the overriding factor that determines whether extra units are applicable or not.� Many franchise operations are built on the premise that a franchise owner will automatically gravitate to extra units or, in fact, even acquire several unit locations at the outset.
Not all franchises, however, are created equal - some offer that multi-unit growth opportunity, whereas others are strictly a one-location venture. Territory is usually the overriding factor that determines whether extra units are applicable or not.
“One of the main areas for review in a multiunit startup - or even a situation where you add on units over a period of time - is that of management.” When you look into the world of franchising, be it a single unit or multiple units, there are always some very specific ‘due diligence’ areas that you need to cover. They cover topics such as finance, management, territory and market conditions. Reviewing all of these, and other up-front considerations is a must for a wouldbe franchisee. If at the outset you are considering a multi-unit opportunity, then these due diligence items take on an extra level of review. From the finance point of view, it is almost certain that the entry cost for several units will be greater than just one. While there may be advantages in buying several units at the outset - inasmuch as you can negotiate a better franchise fee - if you are looking at a ‘store-front’ type franchise, then your build-out expenses will certainly escalate. Likewise, working capital requirements will be that much higher. For potential franchisees looking at a single unit operation, we would always advocate that they project their franchise forward when in the planning stage to ensure that they have adequate capital for the growth that they expect in the near future - when dealing with multi-units, that advice is compounded. When considering multiple startups, the issue of territory and accessibility should be thoroughly explored. While the franchisors will easily be able to advise on availability of specific territories, from the franchisees point of view they all need to be easily accessible. Time spent travelling from location to location is usually not profitable and, as such, needs to be wellmanaged at the outset.
One of the main areas for review in a multi-unit startup - or even a situation where you add on units over a period of time - is that of management. In a franchise environment, whether you have one unit or 5 or 10 units, there is always only one franchisee. That franchisee is the owner and operator of one or more units. The area to review in this regard is how do you, as one individual owner, manage and control several units that are geographically distant from each other. The answer would seem to be that you need to build a solid and very reliable management team. In a one-unit startup the process is usually a natural evolution, with the franchisee working in the business to get it started, and then gradually delegating more and more authority to staff members as is appropriate. As we say, that is a ‘natural’ process but not necessarily one that can be replicated if you are trying to open 5 stores all at the same time. Clearly an entrepreneur taking on this type of commitment needs to thoroughly review the available human resources to ensure that there is solid and well-trained management in place at each location. Franchising again offers a level of comfort for these situations, as franchisors that offer multi-location opportunities have all gone through the learning curve with their franchisees in the past. This translates into a proven formula that the franchisor can bring to the table to assist with rapid multiple location growth. We talked earlier about financial planning to ensure that you always have adequate resources to cover your growth. Growth may come from existing units, or you may
David Banfield
have the opportunity to add or acquire units to your existing base. This again represents a potential exponential growth opportunity, and one which may not repeat itself. If other units become available in your area, you will almost certainly want to have the right of first refusal from the franchisor to allow you to consolidate your operations. Working in a multi-unit environment is clearly very different from a single unit opportunity and, as such, requires that added level of up-front review. Likewise, the multi-unit operation should yield a higher income level for the franchisee - the fact that it is a franchise with a proven history could also bring on the revenue stream in a shorter time frame than in a conventional non-franchised startup. One unit may be good, two or more may be even better - it all depends on the overall game plan and the lifestyle that the potential franchisee is looking to achieve. David Banfield is the President of The Interface Financial Group, a position that he has held for over 20 years. He has been instrumental in starting Interface as a franchise opportunity and building it to its current international status. Prior to his involvement with Interface, he worked extensively in the banking, credit and factoring financial service areas. www.interfacefinancial.com
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Bashar Bawab, Partner and Director of Operations, Hishmeh Enterprises
Trust Me, Mobile Work Management Will Chang Franchise
If there’s one thing every business owner has in common, it’s that we’ll do just about anything to make our company stronger. Frequently, that means finding ways to make our employees’ jobs easier and to improve the overall accountability of our teams. Every employee is going to make a mistake at some point, whether in execution or communication. It’s inevitable. For me, the key to improving my franchise was to equip my team with a tool for instant communication at every level. I frequently have time sensitive information
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and updates to share with my store managers, who must pass it along to the right members of their staff. In turn, staff members have to communicate updates to their managers who must share them with me. This constant back and forth is a source of frustration and often costly errors. Mobile workforce management solved this challenge for my team. It helped us become more efficient and made my teams more accountable. They understood precisely what was expected of them,
and we could ensure work was completed each day as it was supposed to be and in a timely manner. Specifically, mobile workforce management helped in these three ways.
1
Instant identification and response to retail execution errors Our stores are arranged in a way that maximizes sales and creates a good customer experience. We launch and design promotions for the same reasons.
“For me, the key to improving my franchise was to equip my team with a tool for instant communication at every level.”
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“No mobile application can solve every problem that comes along with managing a franchise. However, no store manager or owner will deny that a tool designed specifically to improve communication and retail execution could be a bad thing for their organizations.” being done properly each day. And when it wasn’t, mobility made it easier to notify the right person so someone could fix the problem quickly.
2
Better communication from the top down
Within most stores, you’re not likely to deal with more than two or three levels of employee. However, franchises have district managers, regional directors, store managers and other levels required to manage their countless locations. As a franchise owner, you’re taking directions from a number of people you report to and relaying them to your employees. You need a method of sharing information quickly and guaranteeing that everyone is kept informed. In order for these strategies to have maximum impact, our teams need to execute properly. In my stores, there were instances when promotions were constructed incorrectly or prices weren’t displayed at all. These are errors in retail execution that, while easily fixed, can go unnoticed for some time and cost stores significant amounts of money. With mobile workforce management, my team could use the smartphones they already own to take photos of their work and send it to their supervisors to confirm it was done correctly. Additionally, employees would receive daily checklists from managers or other team members so they know what’s expected of them to do. In general, integrating mobile communications into my team’s operations made it easier for me to ensure work was
Mobile workforce management tools don’t just address retail execution issues. Throughout the company, better information sharing means simpler communication at every level. It also ensures people know how to communicate effectively. Rather than using text messages or emails, which can be deleted or get lost in the shuffle, a mobile workforce management application is designed specifically for their workplace communication. When we started using the technology, we found our employees took more initiative to communicate and express problems or concerns quickly. Not only did this make our locations run better by alerting managers to problems of which they were previously unaware, it made our team more transparent and fostered accountability among staff.
3
Learning from our past to get better in the future
Store managers and other employees need to file reports on a regular basis. Some are weekly, others are monthly or quarterly. Regardless, they’re all important to measure progress and track performance. Anyone charged with filing one of these reports can tell you about the time they lost a critical piece of information or simply forgot to send it on time. Nothing can ever eliminate these issues entirely. However, mobile solutions can help companies track relevant details as needed and quickly pull up the data they need for reports. For franchise owners, it also provides a historical record, so we can make educated decisions and identify areas we need to improve. If we realize that sales shoot up on a certain day or one employee, unfortunately, routinely produces lower sales or makes more mistakes, we can use these trends and ideas to make improvements. No mobile application can solve every problem that comes along with managing a franchise. However, no store manager or owner will deny that a tool designed specifically to improve communication and retail execution could be a bad thing for their organizations. Anything that results in less time spent fixing mistakes and more time bringing your business forward is a positive for your company. Bashar Bawab is partner and director of operations for Hishmeh Enterprises, which has owned and operated Domino’s franchises in Arizona and California for more than 20 years.
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