Should You Join a Franchise?

Weathering the Storm: Part III

Advocating and promoting women leadership in the c-store sector is crucial

In this third and final installment of a series of articles exploring how convenience stores are coping with the unique challenges they face in the year ahead, Convenience Store News examines the need for greater reliance on women leaders in this changing industry.

By Debby Garbato

BACK IN THE 1960S, Casey’s was a rural chain serving small midwestern communities. Today, small towns represent about half of its locations, with Casey’s General Stores Inc. also operating in Chicago, Omaha, Kansas City, and other larger markets with diverse populations. Serving customers efficiently requires a diverse workforce with myriad backgrounds and perspectives. Underlying that is a flexible corporate culture that embraces change from the corner office on down.

But being based in Ankeny, Iowa, limits Casey’s pool of diverse candidates. So, the convenience store retailer’s leadership has broadened some of its searches to a nationwide audience to attract talent of varied backgrounds, skills, viewpoints and experiences, as well as diversity by gender, sexual orientation, race and ethnicity. Today, 33 percent of its corporate officers and 50 percent of its board members are women. Among the Casey’s team as a whole, 14.5 percent identify as diverse. an in-house women’s organization, which offers networking, educational and philanthropic opportunities. The group is known as iWill, which stands for Women Inspired to Lift and Lead.

“In New York, it may be easier to more readily enhance diversity within an organization,” said Julie Jackowski, Casey’s chief legal officer and secretary, who last year was honored as one of five Women of the Year in

JULIE JACKOWSKI Convenience Store News’ Top Women in Convenience (TWIC) awards program. “However, because Iowa has a less diverse population, over the past two years, we’ve been doing more nationwide searches, especially for the professional positions, looking at diversity in terms of gender, race, diversity of thought, and people from various business

experiences so we don’t become stagnant. Diversity brings different ideas and approaches, which ultimately works to better serve the wants and needs of our guests.”

Historically, Casey’s has promoted from within. But with 2,300-plus stores across 17 states and increased demand for specialized skills, it needed to cast wider nets. “Many people ‘grew up’ at Casey’s and worked their way up the chain, which led to more men in leadership positions,” said Jackowski, who became Casey’s first female corporate officer in 2004. “As an emphasis has been placed on hiring for specialized skills and a diverse team, Casey’s has become even more successful in creating a culture that promotes diversity, equity and inclusion (DEI).”

Many c-store chains tell similar stories. They started as family businesses, handing the reins over to male heirs. But over the past decade or so, many have grown through acquisitions while others were gobbled up by competitors or corporate investors with aggressive growth plans. Moving beyond their home markets increased competition and brought varied customer bases. This has made them less driven by operations and more focused on branding and marketing — and this new strategy demands a flexible, diverse workforce.

“Most companies had humble beginnings. Now, they’re on their second or third generation of family leadership or were acquired by major companies,” said Haskel Thompson, president of his eponymous Fort Myers, Fla.-based executive search firm. “They’re trying to go beyond Bubba and transition to create a diverse business. Will it be brand and technology driven? Have new concepts and drive-thrus? You must change the culture to make this work. This must be top-driven. But the industry continues to be male dominated. The shift only began over the last 10 years.”

HASKEL THOMPSON

Champions of Diversity

Today, many c-stores and their constituents have diversity strategies, some more formal than others. Some companies have appointed people to executive positions focused on DEI. Others are more focused on networking and mentoring groups headed by volunteers.

In May, Performance Food Group Co. (PFG) named Claudia Mills vice president of diversity and inclusion. Mexican-born Mills was formerly director of inclusion, diversity and equality at Altria Group Inc. At Naperville, Ill.-based Eby-Brown Co., part of the PFG family of companies, another TWIC Woman of the Year Sarah Bibbs, vice president of merchandising, noted that many companies in the industry are now beefing up diversity efforts.

“Over the past 16 to 18 months, it’s been exciting to see many corporations acknowledge and implement changes,” Bibbs said. “Many have followed CSNews’ lead in acknowledging top women in the industry. That’s extremely encouraging.”

In the fall of 2020, Des Moines, Iowa-based Kum & Go LC named Heather Schott manager of equity, diversity and inclusion. Schott spent 23 years at Principal Financial Group, where she held various positions, including AD of diversity and inclusion, and chaired the company’s GLBTA Employee Resource Group.

“Diversity has been a priority,” said Niki DePhillips Mason, a 2016 TWIC Woman of the Year and Kum & Go’s senior vice president of store development. She’s also executive sponsor of the retailer’s Women’s Network. “This places someone in the organization to really resource to. [Heather has] done much programming to see how we can bring additional perspective to associates.”

Sixty-four percent of Kum & Go’s leaders are female, including store managers. “Different perspectives can lead to better outcomes for employees and customers,” DePhillips Mason added. “It starts with recruiting and how we develop people.”

In addition to being a senior female executive, DePhillips Mason is one of few women in retail real estate, overseeing development of 20 to 30 new stores annually.

“My parents made me believe I could do anything,” said the senior VP, who joined Kum & Go 19 years ago. “Retail real estate is definitely male-dominated. There are many men on my team. There’s been a few instances where we’ll be doing an in-person deal and the property seller talks to my male counterpart the entire time, not me. It’ll come to the point of decision and the male associate looks at me for answers.”

But DePhillips Mason loves her job. Like Casey’s, Kum & Go is serving a more diversified customer base today and in May 2020, she opened the chain’s first urban walk-up store in downtown Des Moines. The non-fuel location is in the Edna Griffin Building. When this site was occupied by a drug store in 1948, Edna Griffin initiated lunch counter sit-ins after the diner refused to serve ice cream to the Black woman and her companions. Art at the store created by Des Moines-based artist Jordan Weber honors Griffin.

Women Helping Women

Some companies have created internal organizations to help women network, expand their skillsets, and find mentors. Formed seven years ago, Kum & Go’s Women’s Network emphasizes personal and professional development and community service. Events, group discussions, speaker forums and volunteerism cover everything from mental health and balancing home/work life to systemic racism and how COVID-19 is affecting individuals.

“It’s a safe place where people can talk,” said DePhillips Mason.

Women’s Network discussions have impacted store-level employees, too. Women workers are now eligible for six weeks of paid maternity leave, plus an additional six weeks at half pay. The store-level workforce also went from being 30 percent full-time to 70 percent.

“We flipped that,” said DePhillips Mason. “More people now receive benefits. A set schedule gives them a predictable paycheck and facilitates childcare.”

Casey’s year-old Leadership Excellence Certification Program helps managers examine how different teams can work together. Its High Potential Program identifies emerging talent and makes sure individuals have development opportunities.

And iWill, the women’s affinity group, promotes mentorship, cross-departmental networking, and philanthropy. “It lets people from different parts of the company come together and discuss what’s top of mind or needs more development or education,” said Jackowski.

On the supplier side of the c-store industry, the operating companies of Winston-Salem, N.C.-based Reynolds American Inc. have also made strides in diversity. Today, 35 percent of its management is female. The company’s goal for 2025 is 45 percent.

“A diverse organization brings diversity of thought to the table, which is important for an organization to grow and thrive,” said Amanda Hughes, senior scientist in scientific and regulatory affairs at Reynolds.

Founded in 2019, Reynolds’ Women’s Employee Resource Group (ERG) supports female employees with networking forums, opportunities to learn about other departments, discussion groups, and community engagement. Hughes is the group’s co-chair.

In March, the ERG celebrated Women’s History Month and International Women’s Day by nominating coworkers who represent the ABCs of success: authentic, brave and confident. And for the second year, the group conducted a virtual 5K fundraiser to benefit LEAD Girls of North Carolina, which provides resources to help high-risk teens and girls become active citizens and community leaders.

The ERG boasts 400 members. “It’s a place to find support and development,” said Hughes. “We’re our own cheerleaders, supporting and building each other up.”

The group caters to women seeking early leadership training, too. This year, Reynolds is expanding its Women’s Leadership Development programming.

AMANDA HUGHES

A Less Formal Approach

Not all companies have specific diversity programs or leaders. At Marietta, Ohio-based Par Mar Oil Co., diversity defines both the workforce and the retailer’s 164 very individualized stores. Sixty-nine percent of employees are women, including Nichole Evans, vice president of accounting and finance; Terri Caldwell, director of retail operations; and Desira Stiers, director of accounting. Over the past five years, Par Mar has made 113 acquisitions across every type of market. Product mixes encompass common c-store merchandise and, in some cases, specialty food, hardware or pig feed. “It’s a big challenge to bring everyone together, particularly when locations have something different,” said Stiers, who joined Par Mar 10 years ago. “Diversity brings a variety of experience, which is essential to growing and adjusting in an everchanging world.”

Five years ago, at both the store and corporate levels, Par Mar began training people to perform multiple functions. “Taking them out of their comfort zone helps build them,” noted Stiers. “We’re always looking at who, in the future, might provide the best options for advancement.”

At Carol Stream, Ill.-based Saverino & Associates Inc., JoAnn Saverino is the unofficial diversity champion. Started by her former in-laws in the 1980s, Saverino & Associates went from being a three-person local broker to a comprehensive organization that procures food products for c-stores and vending machines in 25 states.

Joann began as an office worker in 1988 before joining the salesforce. She rose to sales manager and started recruiting women. Today, as vice president of sales and marketing, she is one of two female VPs. Two out of six territory managers are also women, as are 10 out of 23 sales reps.

“Thirty years ago, it was just the three of us and they kept hiring men. Many women’s skills were overlooked. It was all about, ‘Can they lift a roller grill?’ As time went on, it became more about sales ability. The Saverinos support my recruitment efforts,” she said.

Still, Joann acknowledges she is sometimes ignored at client meetings involving male subordinates. “Even though I’m a VP, one distributor spoke directly to my salesperson,” she recalled.

But she believes the industry is changing. “It’s common now to attend meetings with female category managers. The industry realizes the job is the job and gender doesn’t matter,” she said. “Some really smart women are getting the opportunity to show how smart they are.” CSN

DESIRA STIERS

“Diversity brings different ideas and approaches, which ultimately works to better serve the wants and needs of our guests.”

— Julie Jackowski, Casey’s General Stores Inc.

Should You Join a Franchise?

Small operators considering a branded c-store network are wise to do their homework

By Renée M. Covino

IN THE RETAIL WORLD, it is often more profitable to lead than follow. However, there is an exception to that rule if you are a small operator belonging to a successful franchise network.

“In most cases, the franchisor has already made, and corrected, many of the business mistakes you would likely make, so you can now avoid those mistakes without learning the hard way,” said Dallas, Texas-based attorney Ryan C. Whitfill, a partner at Culhane Meadows, who focuses on all aspects of franchise law. “You also have support of the franchisor and other franchisees to assist you and give advice.”

Single-store and small operators in the convenience store industry who are considering joining a branded network must do their homework. Like any business decision, there are pros and cons to consider. On the plus side, small operators can increase their brand recognition — and thus, their sales and customer base — by joining a franchise network. They can also purchase gas and other products cheaper due to the purchasing power and economies of scale that are not possible for a mom-and-pop shop. On the minus side are giving up control over operational issues and paying a franchise fee.

Green Lights

A franchise network generally provides a tried-and-tested and proven business model with an existing successful track record of product innovation, successful pricing strategies, and a proven promotional paradigm.

“This greatly increases the chance of success for franchisees operating under this mantle of goodwill, as opposed to venturing off and starting a new concept without many answers to the foregoing disciplines,” noted Kevin Burke, managing director at Boston-based financial brokerage firm Citizens Capital Markets Inc.

The franchisor is responsible for products, pricing and promotions, while the franchisee is responsible for quality, service and cleanliness, which attract traffic.

“When both of these partners ‘swim in their own lane,’ it produces synergies and harmonies that can grow

a company much more rapidly than if one were to embark on a business plan without the benefit of a franchise network,” Burke said.

And ultimately, the biggest reason to join a robust franchise network is to cut down the time needed to break even on the initial investment and start making a profit, according to Fazun Kamal, CEO of The Franchise Pros, where she coaches people on making the transition from employee to entrepreneur.

“An established brand’s proven processes and systems allow a franchisee to get up and running and make money as quickly as possible,” Kamal pointed out.

While many small businesses didn’t make it through the COVID-19 pandemic, most franchises did, noted Mandy Rowe, a franchise development expert in retail. “Franchise networks were able to rely on each other to support innovation, COVID cleaning protocols, PPP loans, and so much more,” she said.

In fact, some franchise networks flourished during the pandemic. “Especially those at the heart of a community, selling fresh and other produce and providing a delivery service,” added Penny Hopkinson, a franchise specialist based in the United Kingdom.

Red Flags

On the other side of the coin, the main drawbacks of joining a franchise, according to Whitfill, are giving up control over operational issues and paying franchise fees. “As a franchisee, the mom-and-pop, which has been 100 percent in control, will be required to change how they do things, and they will be subject to franchise fees and royalties that do not apply to independent businesses,” he explained.

Also, while a small operator will still own their business, it is important to understand that a franchised business must operate in accordance with the franchisor’s standards and specifications. “Some franchisees make the mistake of buying a franchise and then trying to operate it outside of the standards and specifications established by the franchisor. That approach usually does not turn out well; it can lead to poor performance, as well as disputes,” Whitfill advised.

New York City-based attorney David Azrin, who heads up Gallet Dreyer & Berkey’s franchise law practice and represents startup and established convenience franchisors and franchisees, offers a “cautionary tale” of becoming a franchisee.

“For someone who already has an existing retail business, they will basically be handing over the business to the franchisor by joining a franchise network,” he told Convenience Store News. “In a franchise arrangement, the franchisee does not truly own the business; rather, the franchisee only gets to use the name and the system for a specified period of time. When it ends, the franchisee can no longer stay in that type of business because the franchise agreement contains a non-competition provision, which prevents the former franchisee from operating in that business at that location or nearby. In contrast, if a person owns their own retail business, they truly ‘own’ it in the sense that they control the inventory, pricing, the lease, and they can pass it down to their children.”

Azrin has heard people say that being a c-store franchisee is like paying to be an employee. “Many convenience store franchisors control every aspect

The Top 10 Gas Station Franchises for 2021

The best gas station franchises in the United States incorporate petroleum, a convenience store, and a fast-food restaurant business, according to TopFranchise.com. Franchise leaders in the industry also o er a reputable brand name, experience in choosing a location and store design, proven suppliers, assistance with registration, and more.

For 2021, the top 10, as rated by the worldwide franchise directory, are:

• Shell

Founded in 1833

Franchising since 1907

• BP

Founded in 1909

Franchising since 1996

• Chevron/ExtraMile

Founded in 1879

Franchising since 2007

• Phillips 66

Founded in 1927

Franchising since 2012

• 7-Eleven

Founded in 1927

Franchising since 1964

• Circle K

Founded in 1951

Franchising since 1995

• ampm

Founded in 1975

Franchising since 1979

• Street Corner

Founded in 1988

Franchising since 1995

• Dash In

Founded in 1979

Franchising since 1979

• RaceTrac

Founded in 1934

Franchising since 1934

Source: TopFranchise.com, as of April 2021

of the business — the franchisor controls the building and leases it to the franchisee, the franchisor orders and selects the inventory, the franchisor controls the money coming in and going out of the business account, [and] the franchisor controls pricing and marketing.”

He strongly urges operators considering the option to ask themselves what they will get out of the arrangement that they are unable to do themselves. As Azrin sees it, where such an arrangement makes sense is if an operator does not have “the entrepreneurial spirit” or if they are looking for training and “handholding.”

The best advice, according to Azrin and many experts, is to talk to as many current and former franchisees as possible. “The franchise disclosure document contains a list of current franchisees and the franchisees who left the system in the past year,” he said. “Talk to as many of them as possible. Just pick up the phone and call them. That is the only way to really find out what it is like to be a franchisee for that system.”

Whitfill agrees, but emphasizes that small operators considering joining a franchise system should talk with existing franchisees of that system who were specifically independent operators before joining the franchise. “Those franchisees will have great insight into the pros and cons and can provide real-world advice on how best to make that transition a successful one,” he said.

“An established brand’s proven processes and systems allow a franchisee to get up and running and make money as quickly as possible.”

— Fazun Kamal, The Franchise Pros

Ask Before Leaping

Before jumping on a franchise opportunity, potential c-store franchisees need to ask tough questions, both of themselves and of the franchise network they’re considering.

Burke of Citizens Capital Markets said operators should examine the brand strengths, market share, product innovation capabilities, and the recurrent sales, margin and cash flow from franchise networks before they make any decision.