Multi-Unit Franchisee Magazine - Issue II, 2018 by Franchise Update Media

FINANCE ■ TECHNOLOGY ■ SUCCESSION PLANNING

Multi Unit Multi-Unit

MULTI-UNIT FRANCHISEE

Franchisee ISSUE II 2018

MULTI-BRAND

M U L T I - B R A N D 5 0

Joe Bernatowicz and partners sign for 108 ZIPS Dry Cleaners in California

INSIDE: ■ HUMAN CAPITAL

Finding the best employees in a tight market

■ CAPITAL IDEAS

Getting lenders to say “Yes” to funding ISSUE II 2018

■ YEAR OF THE MULTI-UNIT? Economic trends boost growth prospects

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THE ORIGINAL.

We invented the trampoline park in 2004.

THE LARGEST.

The global leader in the industry with 200+ locations and open in 11 countries.

THE BEST.

World-class support, brand strength, and state of the art equipment.

COME STOP BY BOOTH 306! CANâ&#x20AC;&#x2122;T MAKE IT TO THE BOOTH? CONTACT: Paizley Bishop, Franchise Development Coordinator Paizley.Bishop@skzyzone.com

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+1 (505) 401-5853

3/6/18 9:40 AM

SHATTERING

EXPECTATIONS

Franchise Opportunities Store Count 900 800 700 600 500 400 300 200 100

$635K

Average Annual Company Store Sales

As of 12/31/16, there were 275 UBREAKIFIX locations in operation. As published in Item 19 of our Franchise Disclosure Document dated 3/31/17, these figures represent the actual, average total revenues for the calendar year ending 12/31/16 of all UBREAKIFIX company stores open at least two full years as of 1/1/16, and (ii) were still open as of 1/1/17 (13 stores in total). Of the included stores, four (or 31%) exceeded the stated average total revenues. Franchisee results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. **This information is not intended as an offer to sell, or the solicitation of an offer to buy a franchise. If you are a resident of or want to locate a franchise in a state that regulates the offer and sale of franchises, we will not offer you a franchise unless we have complied with the applicable pre-sale registration and disclosure requirements in your state. This advertisement is not an offering. An offering can only be made in NY by a prospectus filed first with the Department of Law of the State of New York; such filing does not constitute approval by the Department of Law.

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2011

2012

2013

2014

2015

2016

2017

2018*

STORES OPENED STORES COMMITTED *2018 growth estimate based on current store sales

Brynson Smith

877-530-6348 Franchising@uBreakiFix.com

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Multi-Unit

Franchiseecontents I S S UE II, 2018

MULTI

BRAND

COVER STORY

Multi-Brand 50 9 Multi-unit operators Joe Bernatowicz, Angelo Freites, Jake Alleman, Eric Holm (Reconnect), Robb Quinlan (Athlete), and Andrew Howell (Under 30) share their stories of franchising success. BY KERRY PIPES and HELEN BOND

LISTS

Multi-Brand 50 Rankings 48 Our annual list of top operators and their favorite brands

FEATURES

Hire, Train, Retain, Repeat 52 How multi-unit operators are coping with low unemployment and rising wages BY EDDY GOLDBERG

Capital Ideas 58 Securing funding for growthâ&#x20AC;&#x201D;lessons from operators who did it BY SARA WYKES

MULTI-UNIT FRANCHISEE IS S UE II, III, 2018 2009

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silvercrest LMap Buying Local Media P OW E R E D

B Y

Without Local Reps:

Itâ&#x20AC;&#x2122;s a Thing Now.

431 MUFC

LMap

P OW ER ED

B Y

silvercrest a

Aggregated and Simplified Media Buying Sally Facinelli, CFE VP - Strategic Growth 818-475-7624 | sfacinelli@sca-mail.com | LMap.com

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Departments CO-CHAIR’S NOTE

Welcome to the 2018 Multi-Franchising Conference! 5 ONLINE

What’s online @ mufranchisee.com 8

Columns CUSTOMER SERVICE

Return on Smiles 64

Training for politeness is a smart investment

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

BY JOHN DIJULIUS

MANAGING EDITOR Eddy Goldberg

TECHNOLOGY

CREATIVE MANAGER Kevin Waterman

Multi-Brand Loyalty 66

Combining rewards programs to drive business BY MARTY GREENBAUM

FINANCE

Loan Proposal Basics 68

Everything you need for the best application ever BY ROD BRISTOL

INVESTMENT INSIGHTS

Volatility Returns 70

It was fun while it lasted (well, sort of) BY CAROL SCHLEIF

EXIT STRATEGIES

Reps and Warranties 72

How M&A insurance can help the deal go down BY DEAN ZUCCARELLO

FRANCHISE MARKET UPDATE

Inflationary Times Ahead 74

And franchises are well-positioned to prosper BY DARRELL JOHNSON

MILLENNIALS

Story Time for Gen Y 76

Using Instagram and Snapchat to tell your brand story BY SHAWNA FORD

SUCCESSION PLANNING

Identifying Rising Talent 78

6 key indicators to evaluate future leaders BY KENDALL RAWLS

MARKET TRENDS

MAGAZINE DESIGNER Peter Tucker DIRECTOR OF TECHNOLOGY Benjamin Foley WEB DEVELOPER Don Rush WEB PRODUCTION ASSISTANTS Esther Foley Juliana Foley DIRECTOR OF EVENT OPERATIONS Christa Pulling SENIOR MANAGER, EVENTS & PRODUCTION Katy Geller SENIOR SUPPORT MANAGER Sharon Wilkinson PROJECT COORDINATOR Joanne Peralta SUPPORT COORDINATOR Leticia Pascal VIDEO PRODUCTION MANAGER Wesley Deimling GRAPHIC DESIGNER Cindy Cruz MARKETING ASSOCIATE Cameron Gustafson FRANCHISEE LIAISON SUPPORT Greg DelBene CONTRIBUTING EDITORS Rod Bristol John DiJulius Shawna Ford Marty Greenbaum Darrell Johnson Kendall Rawls Carol Schleif Dean Zuccarello CONTRIBUTING WRITERS Helen Bond Debbie Selinsky Sara Wykes ADVERTISING AND EDITORIAL OFFICES Franchise Update Media 6489 Camden Avenue, Suite 204 San Jose, CA 95120 Telephone: 408-402-5681 Fax: 408-402-5738 SEND ARTICLE INQUIRIES TO: editorial@fumgmail.com MULTI-UNIT FRANCHISEE MAGAZINE IS PUBLISHED FOUR TIMES ANNUALLY. Annual subscription rate is $49.00 (U.S.)

2018: Year of the Multi-Unit? 80

SUBSCRIPTIONS Email subscriptions@franchising.com or call 408-402-5681

BY DARRELL JOHNSON

FOR REPRINT INFORMATION CONTACT FOSTER PRINTING AT 800-382-0808 www.fosterprinting.com

Economic trends shine a favorable light on growth 4

Multi-Unit

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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Co-Chair’s Note

Welcome to the Conference!

s we wrote this, there was still time (though not much!) to register for the Multi-Unit Franchising Conference in Las Vegas April 3–6. To ensure that this continues to be absolutely the best conference of the year for multi-unit operators, the Franchise Update Media team, together with the Conference Advisory Board, was still putting the final touches on the agenda. We’re not only excited for the opportunity to learn from the many expert panelists, we’re also eagerly looking forward to hearing from the three keynote speakers: Pulitzer Prize-winning columnist George Will; NFL Hall of Fame quarterback Steve Young; and workforce trends and generational dynamics expert Seth Mattison. New sessions this year include Real Solutions to Real Challenges, where you’ll hear two case studies on how franchisees used their entrepreneurial spirit and smarts to help take their businesses to the next level; and Franchisees & Franchisors Working Together To Resolve Differences (yes, really), with a panel of legal experts discussing how franchisees and franchisors can cooperate to resolve concerns—before they escalate. Certainly all of us, no matter our position or number of units, can benefit from working together just a bit better. It’s such a simple phrase, yet “working together” with your team at all levels can be challenging—and of course there are special partners like your franchisor, banker, and suppliers. Attending the conference and hearing from your peers will give you a new perspective on these partnerships—as well as so much more about your business—which can be truly exciting if you also work with your life partner, but we digress. Do you need a new way to see an issue? Or maybe you just need to understand what the issue really is. For instance, how many of us have wondered how much of our budget should be directed toward social media, how to manage it, and how to measure its ROI and overall effectiveness? There’s a session for that. Are you looking for new team members, new customers, or maybe a new brand? The Exhibit Hall will be filled with franchisors presenting their brand opportunity, as well as suppliers who can help you solve problems, introduce you to

new ideas and technologies, and show you how they are already assisting multi-unit organizations just like yours. Where are you today, and where would you like to be in a year? Or in 5 years? Breakout sessions are structured to help you find the ones that reflect both your current stage of growth and your future goals: Growing to 10 Locations, Growing from 10 to 40 Locations, and Growing Beyond 50 Locations. Wouldn’t it be great to hear from franchisees who not only understand the growing pains you’re experiencing, but who also have succeeded in making it through to the other side? There are sessions for that! As usual, networking takes place all throughout the conference. Golfers have their own special opportunity on Tuesday to meet up on the links, share stories, and raise funds for charity. To kick off your conference experience, be sure to attend the franchisee-only Meet & Greet Tuesday evening at Carmine’s Restaurant in the Forum Shops at Caesars Palace. First-timers are encouraged to show up at 6 p.m. for a special hour where they can meet Conference Advisory Board members, each other, and get first crack at the food and drink. That’s followed by the all-franchisee cocktail evening, beginning at 7 p.m. Take a chance, introduce yourself, meet your peers. Learn a few things! Come grow and be inspired by some of the most successful franchisees in the business. And come say hi! Cheers to an incredible experience and a super 2018! See you in Vegas!

Cheryl & Joey Robinson 2018 Conference Co-Chairs

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5 3/16/18 3:19 PM

You can become a leader in the tax preparation industry, which ranks as one of the most profitable for small business owners.* How our system helps you: • • • • •

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Seasonal business Ongoing operations and marketing support National brand awareness Financing opportunities Low franchise fee and start-up costs

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SUCCESS DOESN’T HAVE TO BE

TAXING If you have an entrepreneurial spirit, we have the system that can help you succeed while still allowing you time to enjoy what’s important in life.

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Y O U D O L I F E . W E D O TA X E S.

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✓FRANCHISE OPPORTUNITIES Looking for your next franchise opportunity?

✓ CONFERENCES 2018 Multi-Unit Franchising Conference Is Here! Planning is complete for the 2018 Multi-Unit Franchising Conference, April 3–6 at Caesars Palace in Las Vegas. Keynote speakers will be Steve Young, record-setting quarterback for the San Francisco 49ers; George Will, author, sports fan, and political commentator; and trend-spotter Seth Mattison. Attendees at the 2017 conference enthusiastically told us it was a highly valuable experience, filled with educational sessions and lessons they were eager to take home for immediate implementation. This annual gathering is a unique, must-attend opportunity for multi-unit franchisees to meet and learn from the best in the business, explore new brands, and soak up invaluable expertise at the panels and sessions—not to mention the many networking opportunities, and more than 200 franchisors and suppliers exhibiting the latest opportunities for growth and solutions to your current challenges. And don’t forget the charity fundraising golf tournament! To register or keep up with the agenda, go to www.multiunitfranchisingconference.com

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

CHANGE IN MANAGEMENT

“Growing up on the streets of Brooklyn and Queens after my parents passed, it was tough, survival of the fittest. I only knew one type of management, what I used to call ‘2x4 management.’ Now I hope people think of me more as a listener, coach, and team player.” –Angelo Freites, CEO of JAF Restaurant Group, which operates 15 Checkers and has an area development agreement for 10 Del Tacos

Have we got the tools for you! Find articles on companies, concepts, industries, trends, and profiles—and search our features. Find franchisors looking for multi-unit franchisees, area reps, and area developers. Search by top opportunities, alphabetically, investment level, industry, state, and more at www.franchising.com

✓RANKINGS

Check out our annual rankings of the top multi-brand franchisees and their favored brands. This issue contains our annual MB 50 list, listing the largest multi-brand franchisees and how many units of each brand they have in their portfolios. The MB 50 also lists the 25 most popular brands these franchisees have chosen. For our Multi-Unit 50 rankings of brands with the most multi-unit franchisees, go to www. franchising.com/multiunitfranchisees/mu50.html

✓PUBLICATIONS

“Don’t just survive, thrive!” Franchise Update Media’s 2018 Annual Franchise Development Report and the best-selling book Grow to Greatness by top franchise consultant Steve Olson, offer invaluable tips for franchise sales success and unit growth. To order, visit afdr.franchiseupdate.com and www. franchising.com/franchisors/growtogreatness.html

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

INNOVATION FROM THE FIELD

“I absolutely encourage experimentation and innovation within the guidelines of my franchise agreement. If I find a way to build a new restaurant with a lower budget, deliver quality food to guests more efficiently, or to cost-effectively reduce turnover I can certainly benefit from that, and our home office wants to hear about it. Franchisors who encourage franchisees to innovate and experiment ultimately benefit the entire system.”

–Jake Alleman, 35, whose companies operate 13 Another Broken Egg Cafes and 1 Chicken Salad Chick

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MULTI

BRAND

BY EDDY GOLDBERG

One Brand Is Not Enough Passion, purpose, and persistence build success

o succeed and grow, multi-unit franchisees must learn to overcome competition, rising costs, changing consumer tastes, the unpredictability of social media, and legislative and regulatory threats—at the same time they’re busy hiring and training employees, updating menus, remodeling stores, and dealing with insurance, taxes, and suppliers. Multi-brand franchisees have the additional challenges of dealing with disparate systems, geographically dispersed locations, and different state and municipal laws and regulations. But as this issue’s interviews with multi-unit/ multi-brand operators show once again, what it takes to succeed is a unique combination of passion, perseverance, and genuine concern for others. Despite all these barriers, there are many benefits to multi-brand franchising. Financially, diversifying into different concepts spreads the risk by allowing operators to hedge their bet on any one brand. Personally, offering a variety of products and services and working with different kinds of people provides a sense of motivation and continual learning. Add to that the cross-pollination of best practices from different brands, as well as crosstraining of employees and managers to help with retention by providing a career path. Our six profiles include a mix of small and large franchisees, whose stories are united by their passion for great products and concepts, a focus on customers, an eagerness to provide jobs and advancement to their employees, and their burning desire to grow their business. • Joe Bernatowicz is the operating partner of two companies: So Cal PF which has 11 Planet Fitness gyms; and ZDRY LLC, whose partners own two ZIPS Dry Cleaners—and have signed an ambitious deal to develop 108 more stores over the next 15 years. “Our expansion plans are focused on Southern California for both models,” says Bernatowicz. “The ZIPS model was appealing because of the disruptive price point in an antiquated and very segmented industry.” • Angelo Freites, founder and CEO of JAF Restaurant Group, operates 15 Checkers. “I told my wife that I was only going to do two Checkers. She said, ‘No you’re not, that’s just not in your system.’ And you know what? She was right. Here I am a little over 2 years later with 15 restaurants.” Freites, who sold his stake as franchisee, president, and COO for 138 Wendy’s to pursue his latest venture, has plenty to keep him busy. In December he

signed an area development agreement for 10 Del Tacos to introduce the brand to the West Palm Beach market. • Jake Alleman’s first job was as a busboy at the first Another Broken Egg Cafe in Mandeville, La., nearly 20 years ago. In 2007, at age 25, he and his partner became the first franchisees to sign with the brand. Today their company owns and operates 13 of the brand’s cafes, stretching east from Louisiana to Winter Park, Fla., with plans to add five more in the next 3 years. They also have 1 Chicken Salad Chick. He says those early years taught him the value of managing growth by staying ahead of the expansion curve, instead of putting out fires caused by expanding too rapidly. • Eric Holm, our “Reconnect” profile, has graced the pages of this magazine before. We first profiled him in 2013, and again in 2015 when he was recognized with our 2015 Noble Cause MVP Award. Holm has built a $165 million empire, garnered numerous awards, and is Golden Corral’s highest-volume operator. But it’s perhaps his early experience with poverty and his compassion and response to those in need today that he is most proud of. “I’ve been broke before in my life and it was no fun,” says the 62-year-old. “But I’m proof that you can work your way out of it and have a better life, and that sometimes it helps to have a little help along the way.” • Rob Quinn, our “Athlete” profile, is comfortable wearing many hats—and gloves. The former MLB player could snag balls at first and third base, in the outfield, could take pitches as a catcher, and hold his own with a bat as a designated hitter. His all-around versatility has come in handy in his post-baseball career, where he is now a multi-unit franchisee and regional developer with The Joint Chiropractic. • Andrew Howell, our “Under 30” profile, has been in franchising for just 4 years but is making big waves in Florida with his growing chain of Tropical Smoothie Cafes. Within six months of opening his first store, it jumped to the number-one sales performer in the Orlando market, a position it has maintained. He’s now grown to four units in the area with a fifth on the way, and he has aspirations for many more. In this, our annual Multi-Brand 50 issue, we’ve teamed up with FRANdata to provide some great data on multibrand franchising. Turn to page 48 to see the rankings of the country’s largest multi-brand operators, along with the brands they’ve chosen. MULTI-UNIT FRANCHISEE IS S U E II, 2018

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How did Freshii become one of the Fastest Growing Restaurant Chains in the World?

By helping people live better, by making healthy food convenient and affordable 2018 Emerging Cult Brand - The Gathering 2018 Fast Casuals Top 100 Movers and Shakers 2018 Top 100 for Diversity & Inclusion in the Workplace - Mogul 2017 Technomics Canada's #1 Growth Chain

Over 370 locations in 15 countries

Industry leading 19 Consecutive Quarters of SSS growth

Average build-out cost of $260,000*

Award winning nutrition-led and nutritionist approved menu

Flexible footprints from 300 - 3,000 square feet

NO stoves, NO ovens, NO fryers, NO ventilation, NO freezers required

Freshii is looking for successful multi-unit partners in select markets. Please visit www.freshii.com/multiunitfranchise to learn more.

*Buildout costs can vary due to several factors. Please refer to our Franchise Disclosure Document for a complete breakdown of costs. This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. There are approximately 14 countries and 15 US states that regulate the offer and sale of franchises. The countries are Australia, Brazil, Belgium, Canada (provinces of Alberta, Prince Edward Island, British Columbia, Manitoba, New Brunswick, and Ontario), China, France, Indonesia, Italy, Japan, Malaysia, Mexico, Russia, South Korea, Spain, and the United States of America. The US states are California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states or countries, are receiving this message in one of these states or countries, or intend to operate a franchise in any of these states or countries, we will not offer you a franchise unless and until we have complied with any applicable pre-sale registration and/or disclosure requirements in the applicable jurisdiction.

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MULTI

BRAND

BY HELEN BOND

Passionate for Management

Building an empire with two disruptive brands

ast-growing ZIPS Dry Cleaners often draws comparisons to Planet Fitness for shaking up an industry with a same-day, one-price model. For Joe Bernatowicz, it’s about winning propositions as he gears up for rapid expansion—with both brands. Bernatowicz is the operating partner of two companies: So Cal PF with11 Planet Fitness gyms; and ZDRY LLC, whose partners own two ZIPS Dry Cleaners, with an ambitious plan to develop 108 more stores over the next 15 years. Yes, 108. “Our expansion plans are focused on Southern California for both models,” says Bernatowicz. “We have five Planet Fitness units planned for opening in 2018, with

several more in the pipeline. Our goal is to get to 25 units by 2021. We just opened our second ZIPS location and have a third lease signed. We’re focused on developing our infrastructure this year and start aggressively rolling out new stores in 2019.” For Bernatowicz, who grew up in Bucks County, Pa., sports and fitness have played a huge role his life. He earned an NCAA Division 1 scholarship to play football at Ohio University. But when his father got sick, he transferred and graduated from the local state school, West Chester University. His first brush with the business of fitness was as a personal trainer with LA Fitness. “I loved the social aspect of developing

relationships with my clients,” Bernatowicz says. “I was promoted to a fitness director of a club within six months, which is where I discovered my passion for managing other people.” Bernatowicz almost didn’t pursue this passion. He bounced around jobs, unsure if fitness was the right fit for a secure and stable income—until he discovered Planet Fitness, a concept founded in 1992 that began franchising in 2003. He was intrigued by how the brand was bringing fitness to the masses with affordable, hassle-free prices in a non-intimidating environment that the brand trademarked as the Judgment Free Zone. “Planet Fitness was unlike anything I had ever heard of,” says Bernatowicz, who became a general manager of a Planet Fitness in Malvern, Pa., and never looked back. He learned the Planet Fitness world from the ground up by helping the franchisee develop and oversee 11 gyms in eastern Pennsylvania over a four-year period. When offered the chance to open the first Planet Fitness in Los Angeles, he jumped at the opportunity. His decision to sign with the brand, NAME: Joe Bernatowicz TITLE: Operating partner COMPANY: So Cal PF and ZDRY, LLC NO. OF UNITS: 11 Planet Fitness, 2 ZIPS Dry Cleaners AGE: 35 FAMILY: Wife Amy, son Jackson YEARS IN FRANCHISING: 6 YEARS IN CURRENT POSITION: 6

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AMERICA’S DINER. TODAY’S FRANCHISE.

DENNY’S IS ONE OF -------------------------------------------THE FASTEST GROWING BRANDS IN FULL SERVICE RESTAURANTS

--------------------------------------------

#GreatW ayToSta

rtMyDay

#IDeserveThis

eWayIWantIt

#ComfortFoodTh

“When I started with Denny's at 16, I was a food server. Today, I'm one of the largest franchisees in the system. If that's not the American Dream, I don't know what is." Dawn Lafreeda Denny's Franchisee, Owner/Operator of over 80 restaurants in 6 states

VISIT

DENNYSFRANCHISING.COM OR CALL 800 304 0222

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MULTI-BRAND now one of the largest and fastest-growing fitness center franchisors, paid off. The success of the first location in Inglewood in 2012 was followed quickly by a second in Covina and led to an area development agreement to open an additional 14 Planet Fitness gyms in the Los Angeles area. With a solid infrastructure in place to oversee the Planet Fitness model, the partners set their sights on a new investment, ZIPS Dry Cleaning, and are committed

to opening those additional 108 ZIPS locations throughout Southern California. “The ZIPS model was appealing because of the disruptive price point in an antiquated and very segmented industry,” Bernatowicz says. “We saw a unique opportunity to develop a brand in an industry that didn’t have a brand leader. In addition, we like ZIPS’ commitment to innovation and continuing to improve the model.” For Bernatowicz, who moved across the

country to pursue his dream, growing his business in California has been extremely gratifying. “I don’t think there is anything more satisfying in business than providing others with opportunity,” he says. “We’ve been extremely fortunate to surround ourselves with like-minded individuals who are motivated to be a part of something. I’m excited for the future of our organization and what’s to come. This is just the beginning for us.”

PERSONAL First job: Grocery bagger at a McCaffrey’s supermarket.

from home.

Formative influences/events: I was involved in multiple team sports in high school and college. I learned the importance of hard work, accountability, and how to thrive in a team setting.

Exercise/workout: I try to get to the gym four or five times a week, with an emphasis on weight training, core stability, and high-intensity interval training.

Key accomplishments: My biggest accomplishment is my family. I have an amazing wife who has been incredibly supportive. And being a father to my 3-year-old son Jackson has made me more proud than I ever thought possible.

Best advice you ever got: When I first started as a general manager with Planet Fitness, the owner was adamant that we “stick to the franchise model.” I firmly believe that advice has helped me become a successful multi-unit franchise operator.

Biggest current challenge: Work/life balance. Being part of two brands that we’re trying to scale rapidly requires a lot of time, and sometimes it’s difficult to shut down when I’m home with my family. Next big goal: Planet Fitness has been very successful in creating brand awareness and becoming the industry leader. My goal is to help ZIPS get to that level of brand awareness, where it becomes a household name. First turning point in your career: I was working in sales and quit my job to become a general manager of a Planet Fitness. This gave me the opportunity to learn the business inside and out, which provided me with the opportunity of becoming a franchisee. Best business decision: I took the risk and moved from Pennsylvania to Los Angeles to open our first Planet Fitness. Hardest lesson learned: It was challenging for me to delegate responsibilities as a new manager. I quickly learned that delegating is a necessary skill in order to operate efficiently, especially when trying to grow a business. Work week: I’m kind of always on, but I try to get to the stores and gyms at least two days a week. The other days I’m either at our office or working

What’s your passion in business? I’m very passionate about putting the time into hiring, training, and building an infrastructure that can handle scaling the model, while still delivering a superior product with a high level of customer service. How do you balance life and work? Still trying to figure that out, but my 3-year-old son keeps me in the moment when I’m home. Guilty pleasure: Pizza and wine on Sunday nights. Favorite book: The Pillars of the Earth by Ken Follett. Favorite movie: “Indiana Jones and the Raiders of the Lost Ark.” What do most people not know about you? Most are very surprised that I don’t participate in any type of social media on a personal level. Pet peeve: When people don’t take accountability for their actions. What did you want to be when you grew up? A professional athlete. Last vacation: Family trip to Dewey Beach, Delaware for a family reunion. Person I’d most like to have lunch with: Michael Jordan.

MANAGEMENT Business philosophy: Business is all about creating and maintaining relationships. Management method or style: I have a very systematic approach to management. We have a set system or procedure for any situation a team member will encounter. I feel our employees thrive in an atmosphere where they understand the standards and expectations. This allows us to be accountable at all levels of our organization, as well as deliver a consistent product to our customers at all of our units. Greatest challenge: Hiring and developing staff. How do others describe you? Passionate and persistent. One thing I’m looking to do better: I’m always looking to improve

in all aspects, but one goal of mine is to be less impulsive with some of my decisions. How I give my team room to innovate and experiment: We try to create an environment where our employees are encouraged to make decisions and think outside of the box. We’re constantly asking our management team for ways we can operate more efficiently, and they’re provided with the freedom to pursue their ideas with our support. How close are you to operations? In both of the models I’m involved in, I have an individual who oversees the operations. They keep me apprised of the key points of interest at each unit on a daily basis. continued on page 16

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MEDICAL SPA

THE ART OF BEAUTY. THE SCIENCE OF YOUTH. Non-surgical, aesthetic enhancements that improve our client’s health and appearance. Clients feel better, look better and age beautifully. Since 2005, our business model has been the perfect diversification plan for seasoned entrepreneurs and physicians seeking a cutting edge offering in a new business category estimated to achieve $216 Billion by 2021.

EXCLUSIVE FRANCHISE OFFERING • Average Unit Sales $1,811,724 • Gross Sales as High as $2,950,000 • Initial Investment $458,950 to $725,500 • Impressive Location Design • 30-50% Product and Equipment Savings • Celebrity Endorsed • Extensive Training and Ongoing Support • Brand Recognition • Exciting EBITDA I have franchised many concepts in my 30 years of business and find Beverly Hills Rejuvenation Centers to be my most rewarding venture yet. Every day we are changing people’s lives by improving both their health and appearance.

Eric Werner, BHRC Franchisee

AGE BEAUTIFULLY #1 Medical Spa in the West & Middle America

#1 Hormone Therapy Center in America

(310) 579-6416 | BHRCENTER.COM FRANCHISING@BHRCENTER.COM

As published in Item 19 of our Franchise Disclosure Document, these figures represent the actual average and median gross sales for the calendar year ending 12/31/16 of 5 BHRC centers consisting of 3 affiliate-owned and 2 licensee-owned centers, each of which had been open and in operation for 12 full calendar months as of 12/31/16. Two centers exceeded the average (40%). A franchisee’s results may differ from the represented performance. There is no assurance that you will do as well. This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. IF you are a resident of or want to locate a franchise in a state that regulates the offer and sale of franchises, we will not offer you a franchise unless we have complied with the applicable pre-sale and disclosure requirements.

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MULTI-BRAND “We saw a unique opportunity to develop a brand in an industry that didn’t have a brand leader. In addition, we like ZIPS’ commitment to innovation and continuing to improve the model.” MANAGEMENT continued from page 14 What are the two most important things you rely on from your franchisor? Innovation in order keep up with industry trends, and marketing support from both a local and a national level. What I need from vendors: Competitive pricing, reliability, and I want them to care. Have you changed your marketing strategy in response to the economy? How? Yes, but not necessarily because of the economy. People are becoming more dependent on their mobile devices, so we have allocated more of our marketing spend toward digital. Our business model at both brands is based on value and being a market disruptor, which works well in any economic climate. How is social media affecting your business? Social media has become a huge part of our business. It allows us to reach our customers on multiple platforms through different marketing tactics as well as general messaging. Social media also allows us to connect with our customer base to garner feedback, whether positive or negative.

How do you hire and fire? It depends on what position we’re hiring for. If it’s an entry-level customer service representative, we typically conduct three interviews to ensure consistency. With regard to management positions, we always look to hire from within. We have found that this motivates employees and increases retention. With regard to terminations, we follow a progressive discipline schedule unless it’s deemed gross misconduct. How do you train and retain? Our team puts a huge emphasis on training. We have a strict training schedule for all new hires that has sign-offs after each new skill is learned. Additionally, we have developed a certified training club that we use to train new managers and retrain current managers. We also hold quarterly workshops with our whole management team. How do you deal with problem employees? California is a very employee-friendly state. We’re very careful with giving a “problem employee” the opportunity to improve through communication with our HR department and progressive discipline. However, operating the business is the priority, and once that has the potential to be compromised we look to separate from that employee. Fastest way into my doghouse: Make the same mistake twice.

BOTTOM LINE Annual revenue: $30 million.

lot of success with private investors.

2018 goals: Open more units than we did in 2017.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We haven’t worked with private equity to this point. We have used a variety of sources to capitalize our business. As the financial landscape shifts, I’m sure it will provide some different opportunities.

Growth meter: How do you measure your growth? Reviewing our same store sales on a monthly and quarterly basis. Vision meter: Where do you want to be in 5 years? 10 years? I want to expand our territory in each brand and build our organization to where we’re operating in multiple states. How is the economy in your region affecting you, your employees, your customers? Because of the competitive pricing and the value each brand provides, the economy doesn’t affect us positively or negatively. However, the minimum wage increase has certainly affected the way we operate. We’re focusing on different ways we can increase our operational efficiencies to deal with increasing labor costs. Are you experiencing economic growth in your market? Yes, the Los Angeles market is certainly experiencing a lot of growth. Rents are increasing, build-outs are more expensive, and we have low-cost competitors coming into our market. How do changes in the economy affect the way you do business? It hasn’t had a major impact. We certainly have dedicated more time to real estate, being that it’s more expensive. Some brick-and-mortar retailers are struggling, which provides opportunity for competition to come into our market. We’re also more diligent about competitively bidding each new build-out. What are the best sources for capital expansion? We have had a

What are you doing to take care of your employees? We try to be very involved with our team. Twice a year we take our company to an outing. Last year we did Six Flags and Disneyland. Our wages are also very competitive and we offer 100 percent healthcare coverage to our management team. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We’re looking into different opportunities to operate more efficiently, but it’s a delicate balance because it cannot affect the product you’re delivering to the customer. How do you reward/recognize top-performing employees? We promote from within so top-performing employees have the opportunity to move up in our company. We also reward team members with gift cards for performing well on mystery shops and receiving positive feedback on social media. Additionally, we have our managers post newsletters internally on a monthly basis where they can call out any top performers. What kind of exit strategy do you have in place? We’re in growth mode right now and haven’t seriously thought about our exit strategy. We’re focused on growing each brand the right way.

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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MULTI BY HELEN BOND

BRAND

50-50 Plan

Building success on street smarts, mentors, and teamwork

ngelo Freites spent years on the road overseeing restaurant operations of large franchise portfolios before he made the move to go solo so he could remain closer to home. “I told my wife that I was only going to do two Checkers,” recalls Freites, a father of three and founder and CEO of West Palm Beach-based JAF Restaurant Group. “She said, ‘No you’re not, that’s just not in your system.’ And you know

what? She was right. Here I am a little over two years later with 15 restaurants.” And growing. Freites, who sold his company stake as franchisee, president, and COO for 138 Wendy’s to pursue his latest venture, has plenty to keep him busy in the Sunshine State. He projects holdings of 25 Checkers by year-end and recently added Del Taco to the company lineup—in a big way. As part of a 10-unit development deal,

Freites is gearing up to introduce the California-based Mexican QSR brand to the West Palm Beach market. He was strategically seeking another franchise to grow, without restrictions. He fell in love with the quality and freshness of Del Taco, which is on an aggressive path to build a presence and drive unit growth in the Southeast. His plans call for 10 Del Taco restaurants to be added in the South Florida counties of both Broward and Dade, says Freites, who officially signed on as a Del Taco franchisee in December 2017. “I see JAF Group operating 50 Checkers and 50 Del Tacos, at minimum, within the next 5 to 10 years,” he says. “And that is if we don’t acquire restaurants—that is just growing organically.” The Argentinian-Italian has spent his entire career in the restaurant world that seemed destined to be part of his life journey. He was just two months old when his parents immigrated to the United States, settling in New York City’s borough of Queens. “Queens was a melting pot of different ethnicities and demographics. You quickly learned to get along with all difNAME: Angelo Freites TITLE: Founder, CEO COMPANY: JAF Restaurant Group NO. OF UNITS: 15 Checkers; area development agreement for 10 Del Tacos AGE: 51 FAMILY: Wife, Jennifer; daughters

Miranda 25 and Eva 14, son Matthew 12

YEARS IN FRANCHISING: 31 YEARS IN CURRENT POSITION: 3

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MULTI-BRAND “Queens was a melting pot of different ethnicities and demographics. You learned to get along with all types of people.” ferent types of people,” Freites says. “It expanded my talent, my tolerance, and my overall ability to relate to different people, and that really benefited me in the restaurant business.” At 14, Freites, who had suffered the untimely loss of his mother the previous year, was working as a dishwasher at the Stratton Restaurant, when he crossed paths with the first of many life-changing mentors. The businessman, a Roy Rogers franchisee, recruited Freites to the fastfood burger chain and opened the doors for him to learn the ropes of restaurant operations and management. He would also open his family’s arms to the young boy, who spent most of his teenage years in the state’s foster care system. “If it wasn’t for so many mentors in my life I wouldn’t be where I am now,” says Freites. “So now I want to give back.”

Freites rose up the management ranks of Roy Rogers and took advantage of continuing education offered by Marriott Corp., which founded the chain in 1968. When the restaurants were acquired and converted to Wendy’s, Freites followed the brand. In 1996, he became area director for 46 Wendy’s at The Briad Group. A decade later he would become a franchisee for the New Jersey-based quick-service, casual dining, and hotel operator, with 67 Wendy’s and 71 TGI Fridays. All along the way, he soaked up the life skills gifted to him by another mentor of sorts. “Growing up on the streets of Brooklyn and Queens after my parents passed, it was tough, survival of the fittest,” he remembers. “I only knew one type of management, what I used to call ‘2x4 management.’ Now I hope people think

of me more as a listener, coach, and team player. Those are the things that I aspire to be and, hopefully, show other great leaders within the organization that you don’t have to be demanding to get what you need out of an individual. They need to know you care about them individually.” Freites is on a mission to pay it forward as he builds an infrastructure poised to handle rapid growth. Ultimately, he says, he plans to transition to the role of chairman to oversee the company’s expansion. Naturally, there is mentoring involved. “I have a terrific partner in Chief Operating Officer Dave Chapman,” he says. “Dave is the best operator. He puts me to shame as far as his ability to operate, and his sheer determination and will to be successful and make others successful. I have been mentoring him and he has been mentoring me.”

PERSONAL First job: A dishwasher after school.

you have. These 11 words made a huge impact in every aspect of my life.

Formative influences/events: My parents and I are immigrants. We arrived at JFK with a whopping $150. I learned at a very young age that sheer will, passion, and hard work does pay off. Both my parents worked two jobs trying to save for a business of their own. Within nine years my dad had his own barbershop and my mother had her own jewelry business.

What’s your passion in business? Simply put, the ability to have a positive impact on people. To be able to provide a work environment where employees can grow and thrive in their professional and personal lives.

Key accomplishments: I’ve had no greater accomplishments than seeing our three kids excel in school, sports, and become productive members of society. Biggest current challenge: To recruit passionate personnel.

Guilty pleasure: Occasionally, I have to have a slice of New York pizza (or pie)!

Next big goal: Our immediate goal is to become an organization with at least 50 restaurants.

Favorite book: The Greatest Generation.

First turning point in your career: Realizing if I can dream it, I can achieve it!

What do most people not know about you? The fact that I secretly root for the New York Giants.

Best business decision: Deciding to become a Checkers and Del Taco franchisee. Hardest lesson learned: Be sure to be well capitalized, so when the storm hits, and it will, you can survive.

Favorite movie: “The Sandlot.”

Pet peeve: Doctors making me wait, even though I have an appointment. What did you want to be when you grew up? I dreamed of playing first base for the New York Mets.

Exercise/workout: Monday through Friday I get in 30 minutes of highintensity cardio and 50 minutes of weight training.

Last vacation: Checkers has an incentive for franchisees called the President’s Club. Franchisees who have earned at least 75 points on a scorecard, or open two restaurants within a single year, receive an all-expenses cruise to different locations. This year, Checkers sent my family and me on an 11-day European cruise.

Best advice you ever got: Dress for the position you want, not the one

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

Work week: I tend to work every day in some capacity—even if it’s spying on a new concept.

How do you balance life and work? As I’ve matured (some may disagree), I’ve been able to separate or disengage for hours at a time from the business. This allows me to focus on what really matters (my family and friends).

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“ARBY’S REMARKABLE RESURGENCE CONTINUES” -QSR MAGAZINE

“ARBY’S HAS THE MEATS AND A WINNING FORMULA” -FORTUNE

CONSECUTIVE YEARS OF POSITIVE SAME-STORE SALES GROWTH

22%

AVERAGE UNIT VOLUME GROWTH SINCE 2013

INCENTIVES* Waived License Fee (normally $37,500)** 1% Royalties for the First 12 Months (normally 4%)

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ArbysFranchising.com

Jodi Fraser | JFraser2@Arbys.com | 678-514-6928

3/9/18 2:34 PM

MULTI-BRAND MANAGEMENT Business philosophy: It’s simple: be tough, yet fair and communicate your intentions.

What I need from vendors: Vendors are our partners. We must treat them with respect. Each vendor should be consistent and reliable.

Management method or style: Through the years, I’ve learned that I do not have all the answers. I recruit team leaders who are smarter and better than I am. I then provide the work environment where they can thrive.

Have you changed your marketing strategy in response to the economy? How? Over the last 2 to 3 years, it has become very expensive to continue to solely use traditional marketing such as television and radio. The political environment has been a major reason for these increases. Therefore, we have switched 20 to 30 percent of our marketing dollars to digital media.

Greatest challenge: To find team members who are passionate about their work. How do others describe you? I think if you ask someone who hasn’t seen me in 25 years, they might say I was too demanding, didn’t listen, and not compassionate. I hope if you ask someone who knows me now, they would say I am a good person who listens and cares for others. One thing I’m looking to do better: I always strive to learn something new every day. Sometimes it could be from the keynote speaker at a conference or from the porter in my office building. The truth is, the day I think I know it all will be the beginning of my demise. How I give my team room to innovate and experiment: I like to hand out projects to key team leaders and ask them to figure a better way to execute the task. Then I check on them every week. I do not micro-manage. If they have the passion and will needed, they will achieve the goal. How close are you to operations? Since I grew up in the restaurant business, being in a restaurant is very comforting. I like to interact with team members. I practically have ketchup in my veins! What are the two most important things you rely on from your franchisor? Vision and relevance. The franchisor must be proactive and foresee the trends as they evolve.

How is social media affecting your business? To stay relevant with our guests, we must recognize the importance of social media—which, if handled correctly, can be very useful. How do you hire and fire? During our interview process, we look for team members who exhibit high energy, passion, and can express themselves. It really does not matter if they have the skill level needed for the position. We can teach the skill, but we cannot teach will. This practice is also used for underperforming employees. If the employee in question has been trained and we know has the knowledge, then it is a will issue. We usually move quickly to remove the employee. How do you train and retain? At minimum, we use all training tools provided by the franchisors. We also supplement the training by providing classes to enhance life skills, such as computer skills and English as a second language. How do you deal with problem employees? We place the employee on a development plan. This plan acts as a guideline. If the employee needs training, we ensure they receive it. However, if the employee has the skill and is still ineffective at their position, we ask them to look for employment elsewhere. Fastest way into my doghouse: Dishonesty!

BOTTOM LINE Annual revenue: $20 million. 2018 goals: To open 6 restaurants. Growth meter: How do you measure your growth? Growth can be measured in many ways. Our turnover needs to improve if we are to sustain restaurant growth. We also need to continually train our leaders. They must have all the tools to excel. We also look at our internal promotions. This is vital if we are going to continue to increase the number of restaurants we operate. Vision meter: Where do you want to be in 5 years? 10 years? Within 5 years, I envision our organization with at least 50 restaurants. Within 10 years, I’d like to step back and hand over the reins to my partner. How is the economy in your region affecting you, your employees, your customers? As the economy improves, unemployment decreases. This affects the employee pool to hire from. Are you experiencing economic growth in your market? Yes. How do changes in the economy affect the way you do business? When the economy is good, the employee pool is very tight. So retaining employees is a priority. We are also mindful of our menu prices, especially when the economy takes a downturn. How do you forecast for your business? We tend to be very conservative when it comes to sales projections. We would rather be happily surprised when we under-project sales. What are the best sources for capital expansion? I’ve had very

good experiences with lending institutions that specialize in our QSR space. Experience with private equity, local banks, national banks, other institutions? Why/why not? It depends on your capital needs. If you are looking for funding up to $3 million, a local community bank can fit the bill. If you need $5 million to $20 million, I would call on a national bank. What are you doing to take care of your employees? To ensure our compensation policy is up to date, we ask our fellow QSR organizations within our markets for their compensation policy. We calibrate our pay scale and benefit packages with the market. We also offer tuition reimbursement. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We must be diligent with reducing employee turnover. This helps with training cost, unemployment insurance cost, and payroll cost. How do you reward/recognize top-performing employees? We have a very generous bonus program. We often conduct manager meetings and hand out prizes for answering silly questions. We like to exceed the employee expectations. What kind of exit strategy do you have in place? My partner, Dave Chapman, is 10 years younger than I am. My vision is for Dave (currently chief operating officer) to take over the organization as the CEO. I would move to a chairman position.

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o t e c n a h c K Your A E EP

H T H C A RE

PEAK PERFORMANCE

Twin Peaks is a clearly defined brand with category-leading sales and operational metrics. Even as casual dining continues to experience sales declines, Twin Peaks is reporting 20 weeks of positive comps. Find out why several large, multi-unit franchisees made the decision to join the Twin Peaks brand. • Franchisee AUVs of $3,879,134* • Prime Costs of 56.6%** • Significant lunch sales (weekday lunch is 44% of sales) • 90% of existing units are conversions • 80 locations from Florida to California with nearly 100 units in the development pipeline

To learn more, please visit TwinPeaksRestaurant.com/Franchise Contact Franchise@TwinPeaksRestaurant.com Call 972-941-3160

*The franchise average unit volume of $3,879,134 is the actual average of 40 franchised Twin Peaks Restaurants open and operating for a full 52 weeks during fiscal 2016. **The Prime Costs of 56.6% is the average combined Total Cost of Sales and Total Labor Cost is derived from the 28 company-owned Twin Peaks Restaurants that operated during the full fiscal year ended December 25, 2016. See item 19 of our FDD for complete details. This advertisement is not an offering to sell a franchise. An offering can be made only by Franchise Disclosure Document that has been registered with and approved by the appropriate agency in your state if your state requires such registration. Individual financial performance will vary.

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2/26/18 12:11 PM

MULTI

BRAND

BY HELEN BOND

Chicken and Eggs

Southern strategy pays off for this growing duo

ake Alleman considers himself lucky for the success that has come his way. Yet when opportunity knocked, his ability to respond has been a driving force in building an expanding portfolio for the Cojak Restaurant Group, where he serves as COO. Based in Lafayette, La., Cojak is a franchisee of Another Broken Egg Cafe and Chicken Salad Chick, two Southern-inspired concepts poised for growth.

Alleman, who worked at the original Broken Egg Cafe in Mandeville, La., nearly 20 years ago, was the first franchisee to sign with the brand. Today his company owns and operates 13 of the brand’s cafes, stretching east from Louisiana to Winter Park, Fla., with plans to add five more in the next three years. His roots with Another Broken Egg Cafe run deep. In 2001, Alleman worked as a busboy and server at the brand’s first

location while attending Louisiana State University. When the brand geared up to franchise, he was approached about buying into the concept. He turned to his friend Cody Gielen (now president of their company), who scheduled a meeting with his grandfather, the late John Dan Gielen, who died this past February at 79. John Dan Gielen was a local legend who built the ShopRite and Tobacco Plus convenience stores, as well as Church Point Wholesale, into a Louisiana empire. Yet before Alleman even had the chance to try selling the elder Gielen on the venture, the businessman agreed to partner with the young entrepreneurs, saying he was eager to return the favor for all the support he had received when starting out in business, Alleman recalls. In 2007, Alleman and Cody Gielen, both 25 at the time, had just opened the doors of their first Another Broken Egg Cafe in Lafayette, when word that an existing restaurant in Panama City Beach, Fla., was up for sale. “The landlord of the complex decided he was going to try to take on the restaurant and keep it open,” Alleman says. “When I found out, I called him 32 days straight before he actually picked up the NAME: Jake Alleman TITLE: COO COMPANY: Cojak Restaurant

Group, and Cojak Investments

NO. OF UNITS: Another Broken Egg Cafe, 13; Chicken Salad Chick, 1 AGE: 35 FAMILY: Wife Katie, daughters

Charlotte 5 and Alice 1

YEARS IN FRANCHISING: 10 YEARS IN CURRENT POSITION: 10

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*See item 19 of the 2017 Franchise Disclosure Document for details. Figures reflect averages for 286 freestanding company-operated Del Taco restaurants that have been in operation for at least one year. These averages are based on a 53 week fiscal period from December 29, 2015 through January 3, 2017. Of these 286 restaurants, 137 restaurants attained or exceeded the average total unit sales. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. This information is not intended as an offer to sell a franchise. We will not offer you a franchise until we have complied with disclosure and registration in your jurisdiction. Contact Del Taco LLC, 25521 Commercentre Drive, Lake Forest, CA 92630 to request a copy of our FDD. RESIDENTS OF NEW YORK: This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the New York Department of Law. RESIDENTS OF MINNESOTA: MN Franchise Registration Number: F - 5365

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MULTI-BRAND “My passion in business is to succeed and watch our staff be successful in turn. I’m very fortunate to have the team that I do.” phone. The only thing he said was, ‘You can have it. When do you want to meet?’ That was six months after we opened our first Lafayette location. It was the craziest thing we have ever done.” For three months, the newly married entrepreneur drove six hours to Panama City to oversee the restaurant during the week, and then drove back home on weekends to pitch in at the busy Lafayette location. “That is about the time we decided that if we were going to grow this thing and these restaurants, we had to figure out exactly what it takes,” says Alleman, who would wait four years before expanding again. “We didn’t want to grow too fast. We wanted to be smart about it. Another Broken Egg was also new to the franchise process. Once they got their infrastructure in place, we decided to grow as well.” Those early years, says Alleman, taught

him the value of managing growth by staying ahead of the expansion curve, instead of putting out fires caused by expanding too rapidly. This lesson would serve him well when the company sought a new, complementary brand. So, with a solid infrastructure in place, Alleman and Gielen set out to find a second, complementary brand to invest in. From his first taste, Alleman believed that Chicken Salad Chick’s “edgy twist on a Southern classic” was a winner. When he and his partners attended the brand’s discovery day they were sold. “We loved the culture,” says Alleman. “We loved everything about it, and the family feel that makes you want to open stores with them.” (The brand was launched in the Auburn, Ala., kitchen of founder Stacy Brown in 2008.) With one Chicken Salad Chick open in Louisiana, they are shooting to become the largest franchisee of the emerging fast casual

concept and are hatching plans to add 16 more restaurants over the next five years. Culture is key for Alleman, whose life pursuit is a perfect fit for Chicken Salad Chick’s stated purpose to “Spread Joy. Enrich Lives. Serve Others.” His leadership focus now is on slow and steady growth that begins with having the right people on board from the start. “We try to hire happy people,” he says. “If our employees are happy, they are going to just turn it on, and over, to our guests. It’s a hard thing to find. The way we look at it, it is about hiring the right people, because we feel we can train them to do anything we want them to do.” Alleman sees a bright future for both brands. “For us, as long as we are doing it in the right way, and we can continue to grow, the people who work for us are happy, and my family life is still what it is today. As long as the train is rolling we are going to ride it.”

PERSONAL First job: Busboy at the first Another Broken Egg Cafe. Formative influences/events: I would have to say the loss of my son Will, and adopting my daughter Alice. It made me appreciate the value of life, and I don’t want to waste a moment of it. Key accomplishments: Having the support of my family to get to do what I love. I also host a golf tournament in memory of my son. We donate all proceeds to Dreams Come True of Louisiana, an organization that grants dreams to children with life-threatening illnesses. Biggest current challenge: Finding the right people to fit our culture while we grow two different concepts. Next big goal: To be the largest franchisee for Chicken Salad Chick. First turning point in your career: I had an amazing mentor and business partner in John Dan Gielen, who believed in me and gave me an opportunity to do something I’ve always dreamed of doing. I’m the luckiest guy in the world to have had the opportunity to work and learn from someone who had already given me so much. To have someone like him at my disposal was truly a blessing. He played a huge role in who I am today.

the P&Ls and it felt like we improved overnight. Once we finished our meeting I said to him, “If you would have said all of this sooner, we wouldn’t have lost money.” He said, “Experience costs money.” That phrase stuck with me. Every time something happened and we spent too much money, that’s what he would say. I can also promise we didn’t make the same mistake twice. Work week: Around the clock, 24/7. When you own a business, you work every day. Exercise/workout: I enjoy tennis and golf. Best advice you ever got: Keep moving forward! What’s your passion in business? My passion in business is to succeed and watch our staff be successful in turn. How do you balance life and work? I’m very fortunate to have the team that I do. They allow me to balance life and work. I also have a very supportive wife who allows me to be away when necessary. Guilty pleasure: Blue Bell ice cream. Favorite book: Good to Great by Jim Collins.

Best business decision: My best business decisions always revolve around hiring the right people to assist with our growth.

Favorite movie: “Gladiator.”

Hardest lesson learned: Experience costs money. This was something John Dan would tell us. One example early on was after opening our first location. We had great sales but weren’t making money. Finally, I’d had enough and went to John Dan for guidance. He looked at me and said, “I’ve been waiting for you to ask.” As you can imagine, I was puzzled. So we went through

What did you want to be when you grew up? I’m still trying to figure that out.

What do most people not know about you? I’m color-blind.

Last vacation: Chicago with my wife to celebrate our 10-year anniversary. Person I’d most like to have lunch with: Drew Brees.

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800-446-4368 3/13/18 9:20 AM

MULTI-BRAND MANAGEMENT Business philosophy: To be focused on quality and hospitality by spreading joy, enriching lives, and serving others. Management method or style: Participative and affiliative. I always try to build teams that feel connected to each other, creating a positive and upbeat work environment and culture. Greatest challenge: Hiring the right people to fit our culture. How do others describe you? Fair, appreciative, caring. I don’t ask anyone to do something I haven’t done or won’t do myself. I treat others as they want to be treated. I listen. One thing I’m looking to do better: Staying on task. How I give my team room to innovate and experiment: I don’t get involved in my employees’ day-to-day operations, but I act as their safety net if they need one. Ultimately, I’m their biggest cheerleader. That’s my main role. I absolutely encourage experimentation and innovation within the guidelines of my franchise agreement. I know that most innovation in our industry comes from the field and from the franchise community. If I find a way to build a new restaurant with a lower budget, deliver quality food to guests more efficiently, or to cost-effectively reduce turnover I can certainly benefit from that, and our home office wants to hear about and capitalize on it. Franchisors who encourage franchisees to innovate and experiment ultimately benefit the entire system. It’s a true win/win, but requires trust on both sides. How close are you to operations? Very close. It’s important to me that I know the nuts and bolts of the operation so I can help lead and advise our operations team. I never micro-manage. My director of operations and I talk religiously. She keeps me in the know regarding all aspects of the business, which allows me to focus on my role. In our business, and with the metrics we have at our fingertips, like guest counts, Net Promoter Scores, and turnover, it’s easy to see when a location is struggling and needs assistance. What are the two most important things you rely on from your franchisor? To operate flawlessly and to hire the best talent possible to support me and to grow my business. What I need from vendors: I consider our vendors our partners. Treat them well and with respect and they’ll treat you well. I do want our vendors to be profitable, for in turn they are stronger partners who want to support me and ensure I’m growing. My success is ultimately their success. Have you changed your marketing strategy in response to the economy? How? Yes and no. My definition of marketing is much broader than just “promotion.” Marketing to me also includes people and place. I focus

a great deal of time and attention on both, no matter the state of the economy. This business is so cyclical that I know to invest during the good times so I’m better prepared for the bad times. In the good times, I increase my development spending and budgets to improve and update my existing locations, so we’re better prepared for the bad times. I learned very early to not sit back in the good times and expect them to last indefinitely, to never become complacent. While today might be great, tomorrow might not. One of my passions is community involvement and giving back to the communities in which I do business. I think of community involvement like deposits in a trust bank that, in bad times, can help carry me through. That is the business reason to give back, but my reasons for doing so are personal. I will never stop giving back in good times or bad. How is social media affecting your business? Social media has had a very positive effect on my business. To me, it’s priceless. Through social media, I can easily share our programs and initiatives with our customers. They read it, react, and share it. It also allows me to see the impact of our sales. The impact is immediate and measurable. How do you hire and fire? We perform at least two interviews when hiring and always call their previous employers and references. I’m usually the last one to interview the prospective team member. We look for people who will spread joy, enrich lives, and serve others. We also look for people who are motivated and willing to share and spread that motivation. As for firing, we send everything to our HR director and director of training for correct documentation and coaching. Everything is documented and has a process. We coach all employees on all situations, but sometimes they fall short of our expectations and culture. If we have to make the tough decision and let them go, it’s always done face to face, with a witness present and our HR director on the phone listening. How do you train and retain? All team members go through a very detailed orientation on culture, which we believe is the most important aspect of our business. Once they understand our meaning of culture, the team member is partnered with their trainer. We are also fortunate that Chicken Salad Chick and Another Broken Egg Cafe have invested in an online training and testing program that focuses on each position. Our managers meet with the trainee daily to evaluate and give feedback based on how the shift went. How do you deal with problem employees? We follow our three methods of documentation and action: counseling, disciplinary, and termination. Fastest way into my doghouse: Any action that might have a negative impact on a guest.

BOTTOM LINE Annual revenue: In 2017, Another Broken Egg Cafe averaged approximately $1.45 million per location—an increase of $76,000 on average. AUV multiplied by 13 equaled $19 million and the average cafe increase multiplied by 13 equaled $988,000. For Chicken Salad Chick, we haven’t completed a full year, but in our first six months we had more than $1 million in sales. Growth meter: How do you measure your growth? I measure growth, or overall success, two ways. First, I measure turnover at both the management and hourly levels. Lower turnover means my “people first” focus

is working. It also reduces my recruitment and training costs. But more important, lower turnover means I’m ultimately able to provide a better overall experience for my guests and drive repeat visit frequency as well as positive word of mouth. Second, while I do closely monitor increases in top-line sales, a steady increase in guest counts truly validates the health of my business. If I can increase guest counts and PPA simultaneously with an emphasis on hospitality, higher-ticket LTOs, and brunch cocktails (versus driving incremental guest continued on page 30

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“AFTER 43 YEARS IN FOODSERVICE, THIS IS THE HAPPIEST I’VE EVER BEEN.” What attracted Mike to Tropical Smoothie Cafe? An innovative menu of smoothies and food that supports all dayparts Passionate people who care about the brand, its Franchise Owners, and the communities they serve Mike Shattuck, Snellville, GA Owner and former Tropical Smoothie Cafe Franchise or franchise company maj a for l iona rnat President of Inte

Brand positioning that speaks to today’s customers

JOIN THE FRANCHISE THAT PLAYS TO WIN! TropicalSmoothieFranchise.com 800-206-3407 This information is not intended as an offer to sell or the solicitation of an offer to buy a franchise. It is for information purposes only. The offering is by prospectus only. Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota (File No. F-4953), New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington and Wisconsin. If you are a resident of or want to locate a franchise in one of these states, we will not offer you a franchise unless and until we have complied with applicable pre-sale registration and disclosure requirements in your state. New York State Disclaimer: This advertisement is not an offering. An offering can only be made by prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law. CALIFORNIA DISCLAIMER: THESE FRANCHISES HAVE BEEN REGISTERED UNDER THE FRANCHISE INVESTMENT LAW OF THE STATE OF CALIFORNIA. SUCH REGISTRATION DOES NOT CONSTITUTE APPROVAL, RECOMMENDATION OR ENDORSEMENT BY THE COMMISSIONER OF CORPORATIONS NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING. © 2018 Tropical Smoothie Cafe, LLC. Tropical Smoothie Cafe, LLC 1117 Perimeter Center West, Suite W200 Atlanta, GA 30338.

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2/8/18 1:44 PM

MULTI-BRAND “I do want to run great restaurants, provide a great guest experience, and be the best leader I can be. I truly believe that when you give, you get back tenfold.” BOTTOM LINE continued from page 28 counts with deals and discounts), then I know my plan is working. We closely watch our Net Promoter Scores to ensure we’re generating more 5-star reviews than 1- to 3-star reviews. There is a very strong correlation between 5-star ratings and guest count growth. Vision meter: Where do you want to be in 5 years? 10 years? I had no idea when I started in my first restaurant job 20 years ago that I’d own 13 Another Broken Egg Cafes, with plans for five more over the next two to three years, and one Chicken Salad Chick with 16 more in development over the next five years. I’m invested in both businesses and am confident that I won’t be ready to retire in the next 5 to 10 years. I guess I really do need to figure out what I plan to do when I grow up! In all seriousness, I do want to run great restaurants, provide a great guest experience, and be the best leader I can be. I want to support the two brands that support me because I truly believe that when you give, you get back tenfold. For now, I plan to take it day by day and see where the future takes me. With the team we have in place I know it’s going to be great! How is the economy in your regions affecting you, your employees, your customers? My cafes are located in Alabama, Florida, and Louisiana. Unlike a few years ago, the economy in the Southeast is booming. Our visit frequency is very high, with our heaviest users visiting 10 times per month, so our employees really get to know guests and their families. I believe the recent tax cuts are already starting to have an impact on my business. People are taking home bigger paychecks, which means they’re more likely to travel. Many of my cafes are located in tourist areas, which no doubt will benefit from increased travel for spring break and the summer months. Additionally, we’re seeing increases in our higher-ticketed items as the economy is improving. People are trading up from the two-egg breakfast to a Lobster & Brie Omelette. They’re also now more likely to order a mimosa or Bloody Mary in addition to that cup of coffee. I’m also lucky my cafes are located in Southern states, as we do like to drink. Are you experiencing economic growth in your markets? Yes, and we’re capitalizing on it. We know this is a cyclical industry and what goes up will eventually come down. That’s why it’s so important to focus on the overall guest experience. We make it a priority to treat our guests as our friends, thank them for their business, and invite them to return. Those core customer service strategies never change, in good times or bad. How do changes in the economy affect the way you do business? I’m not going to say that the state of the economy doesn’t affect the way I do business, but I learned very early in my career that if I stay focused on “people first” I’m ultimately going to be successful. We’ve found in tough economic times that consumers might not dine out as much for dinner, but they still want to eat out, and dining out for breakfast or lunch is typically less expensive. How do you forecast for your business? We sit down every year and

figure out how much money we want to make for the year, per location. Then we move on to expenses. We are constantly trying to figure out how to cut costs without affecting our guests. We then forecast sales based on how we think each location will perform. We also look at our 8-week trends and adjust the budgets throughout the year. What are the best sources for capital expansion? Yourself, banks, and private investors. Experience with private equity, local banks, national banks, other institutions? Why/why not? We’ve been very fortunate to partner with a couple of regional banks in Louisiana. Luckily, we have been successful in our restaurants and they have allowed us to continue to open new locations. What are you doing to take care of your employees? I’m lucky to be in the breakfast/brunch/lunch category, open only from 7 a.m. to 2 p.m. My employees know they will always have their afternoons and evenings free to do what they want, or to hold down a second job if they need to. I make an effort to monitor the competition and their pay scale for managers and employees, to be certain that we’re staying competitive. Based on my personal experience working in a restaurant, I know that employees also want to be acknowledged and appreciated for a job well done. I recently hired a director of training for our restaurants because I know how critical great training is to retention and overall job satisfaction. The individual I hired doesn’t focus solely on the nuts and bolts of training, however, she also is the biggest cheerleader for our teams and is constantly coming up with ideas and initiatives to acknowledge and reward a job well done. We recently developed our High Five program, which consists of a card our managers complete to acknowledge strong performance above the norm. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? My “people first” strategy requires that I find other ways to manage sales and profits that don’t require layoffs or reductions in benefits or training. Happy employees correlate strongly with happy guests and increased guest frequency. I also realize I must continuously prioritize my focus on top-line sales growth, versus bottom-line cost cutting. Of course, this isn’t always easy to do. The three most important things I do to drive top-line growth are: recruit the best talent I can, pay them a fair wage, and treat them with respect and appreciation. In turn, they treat our guests with respect and appreciation. I also make sure we’re identifying and acknowledging our firsttime guests, which equate to almost 20 percent of our business, to ensure they feel welcomed and appreciated. The lifetime value of just one new guest equates to thousands of dollars, so ensuring a great first-time visit is critical to our long-term success. How do you reward/recognize top-performing employees? Along with our High Five cards, we’ve also implemented an employee incentive program with “chick cash” and “egg dough.” It allows employees to redeem their “cash” for uniforms, meals, etc. What kind of exit strategy do you have in place? Our exit strategy is to one day sell our restaurants. But we all know opportunities change daily. Maybe my daughters will want to follow in my footsteps one day.

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Want to kno w o ur secret ingredients? [ heart ‘n soul ]

I don’t believe I could put my heart ‘n soul into any other brand.” KRISTAL B., 4 LOCATIONS IN ATLANTA, GA • 750+ locations to serve our passionate BoFanatics • A menu that includes breakfast all day, every day • Three strong dayparts that fuel a best-in-class AUV

800.908.5939 BOJANGLES.COM/FRANCHISE

Do up to 38% of your business before competing brands have even opened their doors!

© 2018 Bojangles’ International, LLC. This franchise sales information does not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Currently, the following states regulate the offer and sale of franchises: California, Hawaii, Illinois, Indiana, Maryland, Michigan, Minnesota, New York, North Dakota, Oregon, Rhode Island, South Dakota, Virginia, Washington, and Wisconsin. If you are a resident of one of these states, we will not offer you a franchise unless and until we have registered the franchise (or obtained an applicable exemption from registration) and complied with the pre-sale disclosure requirements that apply in your jurisdiction.

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3/9/18 9:55 AM

BY KERRY PIPES

MULTI BRAND RECONNECT

Giving and Growing

Eric Holm continues his quest to help others

ric Holm has graced the pages of this magazine before. We first profiled him in our Q4 2013 issue, then recognized him with our 2015 Noble Cause MVP Award and profiled him again. He has built a $165 million empire, garnered numerous awards, and is Golden Corral’s highest-volume operator. But it’s perhaps his own experience

with poverty and his compassion and response to those in need today that he is most proud of. “I’ve been broke before in my life and it was no fun,” says the 62-year-old. “But I’m proof that you can work your way out of it and have a better life, and that sometimes it helps to have a little help along the way.”

NAME: Eric Holm TITLE: Owner/Manager COMPANY: Metro Corral NO. OF UNITS: 33 Golden Corral, 4 Krispy Kreme, 1 Marriott Fairfield Inn & Suites AGE: 62 FAMILY: Wife Diane; daughters

Danielle, Erin, and Erica; grandsons Kyle 17 and Eric 3

YEARS IN FRANCHISING: 21 YEARS IN CURRENT POSITION: 21

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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3/16/18 3:27 PM

YOU could be the next Checkers/Rally’s franchisee

GET THERE FASTER WITH CHECKERS & RALLY’S! Checkers & Rally’s franchisees achieve their financial and growth goals faster with us because of our low initial investment, strong return on investment, nimble modular building construction, and competitive franchise growth incentives. ■ Seven Consecutive Years of Same-Store Sales Growth1 ■ New Modular Building Design —Quicker to Develop and Costs Less —Building Cost $279,9002 ■ 50% Off Royalties For New Restaurant Openings Up To 18 Months3 ■ BEST FRANCHISE DEAL –

Magazine 4

■ 62.2% Return On Investment1

Visit owncheckersfranchise.com/Update or Call 888-913-9135 © 2018 Checkers Drive-In Restaurants, Inc. 20180103 4300 W. Cypress St., Suite 600, Tampa, FL 33607. 1. Per Item 19 in Checkers & Rally’s 2017 Franchise Disclosure Document (FDD). Same-store sales results are measured by combining 2017 FDD, 2016 FDD data, and the Company’s 2017 fiscal year end data. 2. Per Item 7 Checkers & Rally’s 2017 FDD; Reflects modular building increase of $10,000 as of October 2017. 3. Per Item 6 Checkers & Rally’s 2017 FDD. 4. Best Franchise Deals by QSR Magazine 2017 & 2016. Written substantiation will be provided on request. This advertisement is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for information purposes only. The franchisor, Checkers Drive-In Restaurants, Inc. is located at 4300 West Cypress Street, Suite 600, Tampa, Florida 33607, and is registered as file number F-4351 in the state of Minnesota. In New York, an offering can only be made by a prospectus filed first with the Department of Law, and such filing does not constitute approval by that Department.

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3/6/18 9:33 AM

MULTI-BRAND

RECONNECT

“I’ve been broke before and it was no fun. I’m proof that you can work your way out of it and have a better life.” In 1992, he founded “Helpings from the Heart” as a way to give back to the community and thank The Salvation Army, which provided a Thanksgiving meal to his own family when he was a child growing up in a single-parent home. Over the past 25 years, Holm and area nonprofit organizations, corporations, and local businesses have helped serve alongside more than 1,000 volunteers, dishing up more than 25,000 free Thanksgiving meals each year at the Orlando Salvation Army. On the business front, Holm has been busy growing and diversifying since we last spoke with him in 2015. “I’ve added three more Golden Corrals and have another scheduled to open later this year,” he says. He’s excited about the new location because it will feature the brand’s new restaurant design. In May 2016, Holm ventured into a second brand, Krispy Kreme, purchasing four of the donut shop’s

locations. That same year, he also purchased land near his Golden Corral in Celebration, Fla., where he built and opened a Marriott Fairfield Inn & Suites. “Each of these brands offered me a great opportunity to get in and grow,” he says. In fact, he says, he’s planning to open additional Krispy Kremes and says he will continue to expand his Golden Corral portfolio. Meanwhile, he continues to operate his own barbecue restaurant, and recently renamed it from Daytona Pig Stand to Colt’s Pig Stand. He says the name change is part of a plan to expand the concept. From his humble beginnings, Holm has found success on many levels. Whether it’s offering quality food for his customers, providing jobs to more than 3,000 people, or serving hot meals at Thanksgiving, he understands that one of the keys to life is helping people. That, he says, is the measure of true success.

PERSONAL First job: I was a busboy at Sonny’s Barbecue in Gainesville, Florida, where my mother worked as a waitress.

a business partner of mine when I was an independent restaurant owner, told me I should never run out of cash.

Formative influences/events: Getting into franchising. That helped change my career for the better.

What’s your passion in business? To be able to provide career opportunities for others.

Key accomplishments: Having a successful marriage and raising our daughters.

How do you balance life and work? Cautiously. It can be a challenge managing both. I’m not sure if I do a great job of it, but my wife helps me quite a bit.

Biggest current challenge: Maintain growth for our team across all of my businesses.

Favorite book: The Bible.

First turning point in your career: Turning around two underperforming Golden Corral restaurants shortly after I bought them.

What do most people not know about you? That I serve on the National Advisory Board of The Salvation Army.

Best business decision: Joining the Golden Corral family in 1996. Hardest lesson learned: Having two of my businesses fall into bankruptcy. Work week: I work as long as needed to serve our guests and get the job done.

Guilty pleasure: Riding in my Challenger 350 jet.

Next big goal: Opening the new Golden Corral restaurant prototype in Gainesville, Georgia later this year.

Favorite movie: “It’s a Wonderful Life.”

Pet peeve: Mean people. What did you want to be when you grew up? Nothing specific, but I knew I wanted to be successful in whatever I did.

Exercise/workout: Need more.

Last vacation: We took a trip to London, Barcelona, and the Amalfi Coast in May 2017.

Best advice you ever got: James Maynard, founder of Golden Corral and

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

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Ranked #1 in category Entrepreneur’s, 2018 ‘Franchise 500’

2018 IS THE YEAR OF THE DOG

$1,124,799 TOP-25% SYSTEM SALES*

SEVEN consecutive years, same store sales increase**

Highly profitable QSR with industry low food costs

Small real estate requirements and low cost build-out

Simple operations, quality menu, little competition

949-892-2629

franchising@wienerschnitzel.com

www.wienerschnitzel.com

*Average of unaudited gross sales shared by top 25% quartile of 317 open Wienerschnitzel restaurants between January 1, 2017 – December 31, 2017. Your actual sales and performance will vary, and in no way are guaranteed. This information is not an offer to sell a franchise. We will not offer you a franchise until such time we have complied with FTC disclosure requirements, and you have met our application and approval process to be awarded a franchise license. **Same store sales reflective of past seven consecutive years through December 31, 2017. Please request and read our Franchise Disclosure Document for more information.

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3/6/18 9:45 AM

MULTI-BRAND

RECONNECT

“Positive reviews on Facebook or Yelp are great for the restaurant, but negative reviews can be hurtful and just plain ugly.” MANAGEMENT Business philosophy: There is no finish line!

increased competition by elevating the buffet experience.

Management method or style: Fair but firm.

How is social media affecting your business? Social media can have both a positive and negative effect on the business. Positive reviews on Facebook or Yelp are great for the restaurant, but negative reviews can be hurtful and just plain ugly.

Greatest challenge: Being able to increase sales in a saturated market. How do others describe you? A good person who wants to give back and help others. One thing I’m looking to do better: Take more quality time off. How I give my team room to innovate and experiment: By asking questions and listening to my team’s suggestions. How close are you to operations? Very close. I love to visit our teams in the field. What are the two most important things you rely on from your franchisor? Innovation and marketing of our business, and field operations.

How do you hire and fire? Very carefully. We use several different prescreening tools and e-verify all candidates. We have hired HR staff to assist us with terminations. How do you train and retain? We provide the best training tools available for this business and we have a very attainable bonus program to earn more.

What I need from vendors: Honesty is my top priority. I also want them to follow through on what they say they will do.

How do you deal with problem employees? Every solution is different and requires a great deal of thought and consideration. Each employee is different and we deal with them on a case-by-case basis.

Have you changed your marketing strategy in response to the economy? How? The company has changed strategy slightly in response to

Fastest way into my doghouse: Failing to live up to company standards and take care of our co-workers and guests.

BOTTOM LINE Annual revenue: $165 million.

this year.

2018 goals: Continue to grow my three businesses: Golden Corral, Krispy Kreme, and Marriott. Successfully open Golden Corral’s new restaurant prototype in our new location in Gainesville, Georgia.

What are the best sources for capital expansion? Regions Bank and Wells Fargo Bank.

Growth meter: How do you measure your growth? By profit dollars.

Experience with private equity, local banks, national banks, other institutions? Why/why not? We do not have experience with private equity, but we do have good experiences with the local banks.

Vision meter: Where do you want to be in 5 years? 10 years? God willing, still be in the saddle operating each of my businesses.

What are you doing to take care of your employees? Giving them a safe and friendly place to work and offering a generous benefits package.

How is the economy in your region affecting you, your employees, your customers? It has been a tough few years recently, but things are improving. Are you experiencing economic growth in your market? Yes. There is a lot of construction in the Orlando area. If wages follow, restaurants will feel the economic growth. How do changes in the economy affect the way you do business? When the economy is booming, we will spend more money on building our business and hiring and training employees. How do you forecast for your business? There is a lot of optimism about business right now, and that is why we are predicting an increase in sales

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We are optimistic that there will be positive changes in the healthcare plan. We are also cross-training our employees to make them more productive and using software programs to assist with scheduling. How do you reward/recognize top-performing employees? We provide them with personal recognition and bonuses. We routinely give cash bonuses and gift cards to our top performers. What kind of exit strategy do you have in place? It is a work in progress. We are currently in negotiations to add more Golden Corrals and Krispy Kremes to our portfolio. Any plans for an exit strategy will have to come at a later date.

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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For more information, visit lamadeleine.com/franchise *This advertisement is not an offering to sell a franchise. An offering can be made only by Franchise Disclosure Document that has been registered with and approved by the appropriate agency in your state if your state requires such registration. Individual financial performance will vary. A copy of the FDD is available by contacting Sheryl Fox, Vice President Business Development at La Madeleine 12201 Merit Drive, Suite 900 Dallas, TX 75251 http://lamadeleine.com/franchise. Â© 2017 La Madeleine de Corps, Inc. All rights reserved.

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3/6/18 9:32 AM

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

Playing the Back Field R

Making the shift from MLB to franchisee

obb Quinlan is comfortable wearing many hats—and also many gloves. The former Major League Baseball player could snag balls at first base, third base, and in the outfield, could take pitches as a catcher, and hold his own with a bat as a designated hitter. His all-around versatility has come in handy in his postbaseball career, where he is now a multi-unit franchisee and regional developer with The Joint Chiropractic. The 40-year-old Quinlan played his college ball at the University of Minnesota where he was named to the Big Ten All-Star team in 1997, 1998, and 1999, and was named Big Ten Conference Player of the Year in 1999. That same year, he was drafted by the Anaheim Angels. (His older brother, Tom, also played in the majors.) He worked his way up through the farm system before making his MLB debut in the summer of 2003. Though he went on to play in the majors for several more years, it was an injury in 2004 that limited his playing and ultimately pointed the way to his next career. “I tore my oblique in August of 2004,” he says. “That ended my season and put my neck and spine out of alignment.” But there was a silver lining: the injury introduced him to the world of chiropractic care. “When I was home that year during the offseason, I found a chiropractor. It helped tremendously with my rehabilitation,” he says. Quinlan went on to have a solid 2005

season and says his 2006 season was probably the best of his career. Altogether, he played 8 years in the big leagues before retiring in 2011. In that time he had become a firm believer in chiropractic care and the difference it had made in his life. So when he discovered The Joint Chiropractic, he was sold. He opened his first location in Eagan, Minn., in November 2013. He now has four locations of his own and is the brand’s regional developer for Minnesota. He says he’s hoping to be part of growing the Minnesota territory to 16 clinics. “People come in complaining about back pain they’ve had for years,” Quinlan says. “They see what we have to offer and within a few visits they see results.” NAME: Robb Quinlan TITLE: Regional developer, franchisee COMPANY: The Joint Chiropractic NO. OF UNITS: Owner of 4, regional developer for 8

clinics AGE: 40 FAMILY: Wife Amanda 40, daughter Caroline 6 YEARS IN FRANCHISING: 5 YEARS IN CURRENT POSITION: 5

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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12/19/17 9:28 AM

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

PERSONAL First job: Coaching youth at a baseball camp. Formative influences/events: Parents, daughter. Key accomplishments: Playing Major League baseball. Biggest current challenge: Maintaining my schedule between personal and professional. Next big goal: Growing the Minnesota region to 16 clinics. Best business decision: Getting involved in The Joint Chiropractic brand. Hardest lesson learned: Not everyone is going to like the way you do things. Work week: 30 hours. Exercise/workout: Need to do a lot more! Best advice you ever got: Focus on what you can control. What’s your passion in business? Seeing patients getting better. I take a lot of pride in hearing how coming to The Joint has positively affected their lives. How do you balance life and work? I try to maintain a healthy flexibility of both. I try not to get too stressed out. Favorite movie: “The Shawshank Redemption.” What did you want to be when you grew up? I always wanted to play baseball and be successful in something after baseball. Last vacation: Disney World with family. Person I’d most like to have lunch with: Michael Jordan.

BOTTOM LINE 2018 goals: I want to get a new location up and running and work with new franchisees to help grow the region. Growth meter: How do you measure your growth? By percentage growth and number of members we have from year to year. Vision meter: Where do you want to be in 5 years? 10 years? I’d like to have 8 locations and have grown the region to 16 locations in total. In general, I’d like to have a successful region and be happy with what we have created. Are you experiencing economic growth in your market? We continue to grow every year. How do changes in the economy affect the way you do business? We have not seen much with the economy affecting us. How do you forecast for your business? We usually base it off the trends and growth percentage from the year before. What are you doing to take care of your employees? I am trying to keep them happy by encouraging them and rewarding the effort and accomplishments they make. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? There’s not much you can do about it. We just need to constantly keep growing so we can take care of our staff. How do you reward/recognize top-performing employees? We give out awards and bonuses at the end of the year. Additionally, we’re trying to do quarterly contests among our clinics for prizes. What kind of exit strategy do you have in place? I’m looking to grow the region first. After that I will look to find other franchisees who would take over, or doctors who love the model and would buy us out.

MANAGEMENT Business philosophy: Take care of your employees and they will take care of the patients. Management method or style: I’m laid back and let people do their jobs. Greatest challenge: Keeping everyone on the same page all the time. How do others describe you? Good person who likes to be around others. One thing I’m looking to do better: Keeping focused on the growth of the region. How I give my team room to innovate and experiment: I like to let my team take the lead on things and create new ideas to see if they work. How close are you to operations? I help oversee operations, but my business partner, Angie Selander, does a great job with daily operations. What are the two most important things you rely on from your franchisor? Advice if we are having any problems, and making sure we are getting the best practices from around the country. What I need from vendors: To be able to provide product easily, and that they are responsive to our needs. Have you changed your marketing strategy in response to the economy? No. It has been pretty consistent. How is social media affecting your business? Social media is a must in our business. It is by far the easiest way to connect with new patients and create a brand in the market. How do you hire and fire? We have our managers meet the new staff and make most of those decisions since they will be working with them. As franchisees, we do the firing. How do you train and retain? We have corporate training that each employee goes through, and our managers do the in-person training with each new person. How do you deal with problem employees? We try to be up front and honest with them. We express our concerns, and also listen to them to get their side of the story. Fastest way into my doghouse: Not showing up for work!

SPORTS & BUSINESS What skills/experience from sports have carried over to operating a business? Teamwork is key. You have to work together to build a successful business. Which do you find more competitive, sports or business? I felt sports was a lot more competitive. It felt like your job was constantly on the line. Why did you choose franchising as an investment option? I wanted to have a model that we could follow, and I liked the model that The Joint offered. How did you transition from sports to franchising? I took about a year off work altogether, and then started exploring franchise opportunities. What was your greatest achievement in sports and what has been your biggest accomplishment as a franchisee? In sports, my greatest achievement would be making it to the Major Leagues and playing for eight years, with many of those years making the playoffs. On the business side, my biggest accomplishment is running a good business, being able to employ people, and helping patients get better.

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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3/9/18 9:56 AM

UNDER BY KERRY PIPES

Quick Study

Young TSC operator flourishes in central Florida

ndrew Howell, 29, has been in franchising for just four years but he is making big waves in Florida with his growing chain of Tropical Smoothie Cafes. Within six months of opening his first store it jumped to the number-one sales performer in the Orlando market, a position it has maintained ever since. He’s now grown to four units in the area with a fifth on the way, and he has aspirations for many more. Howell believes his diehard dedication to the stores was a large factor in his quick success. “I was there every single day for months, often open to close,” he says. “I got to know our customers and really pushed to make things right every time.” He was drawn to Tropical Smoothie, he says, because he wanted a brand where customers wanted to come in and be happy. “I like hearing the stories of customers’ weight loss and journeys to being healthier. I didn’t want to feel like I was fattening America,” he says. Before franchising, Howell spent time at The Walt Disney Company. “All through college I worked for Disney in one form or another. It was tons of fun, and I think what I really learned was truly how to deliver worldclass service, knowing how to deal with upset customers or how to do little things that make the experience better. I bring that to my cafes and push for my staff to understand and deliver the same.” One of Howell’s locations is a non-traditional unit on the campus of the University of NAME: Andrew Howell TITLE: Multi-unit franchisee COMPANY: Tropical Smoothie Cafe NO. OF UNITS: 4, with another license

to build AGE: 29 FAMILY: Kara Howell, wife YEARS IN FRANCHISING: 4 YEARS IN CURRENT POSITION: 4

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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3/3/18 9:38 4:21 AM PM 3/6/18

UNDER Central Florida, inside UCF’s College of Nursing. He says he purchased the existing unit because he saw the potential and believed he could ramp up operations. “It’s slower in the mornings since it’s on a college campus, so we pushed a lot of catering through that store in the mornings,” he says. He also made some staffing changes and rethought the marketing plans. The store is currently up 40 percent in sales over the previous year, he says. His newest location is only a mile-and-a-half from campus, a site he hopes will provide additional brand awareness to UCF students. Howell doesn’t shy away from big goals. He says he wants to see his Kirkman Road location, in southwest Orlando, hit the million-dollar mark soon, but recognizes that he and his crew will have to push hard to get there. “If we stay on the same comp sales path and can add an additional 75 cents per check, we’ll hit it. I’m pushing harder on the catering sales to give us an extra bump to make sure we reach that goal,” he says.

30 UNDER 30

How did you get into franchising at such a young age? My father had been in franchising since before I was born, so the lifestyle and style of work was ingrained into me from day one. In fact, after he was able to see the success I had with the brand, he became a Tropical Smoothie franchisee in the Fort Myers market. Was becoming a franchisee something you’d planned on? As I grew up I obviously explored lots of possibilities, but I think given my family’s business background, it was almost inevitable. Did you have a mentor or inspiration for getting into franchising? My father for sure. He has been very successful in multiple brands. And, as I mentioned, from day one I saw the long hours and hard work it takes to succeed, so the hard work of self-employment was always visible to me. What jobs, skills, and experience have helped you operate a franchise business? I’m a people person. I can talk to anyone. It helps a lot with my staff. I know what their needs are, and their frustrations, so I can better lead. I also worked for Disney throughout college, so customer service was always seen as the key to success. What kinds of obstacles did you face in franchising at such a young age? Financing was the first hurdle. A bank doesn’t lend hundreds of thousands to a 24-year-old typically. My dad was huge in securing the capital. How would you describe your generation? Unorthodox. We like to work from our phones at random times. We don’t want to be bossed around—we want to be taught what to do and why we need to. We use technology all the time for good and bad. We’re always accessible. Do you see franchising as a stepping-stone or a career for you? I see franchising as my career. I don’t see any reason why I shouldn’t be able to continue to grow within Tropical Smoothie, 5, 10, 25 stores, just keep pushing.

PERSONAL First job: My first job was at a funeral home. I did grounds work during the day and was a valet in the evening. Formative influences/events: My wife is always there for me. When it’s really tough she always keeps me calm, and when things are going well she pushes me to keep going and move the needle a little more. Key accomplishments: Within only six months of opening my first store it was number-one in sales in the Orlando market and has continued to hold that position ever since. I turned a profit on two stores I purchased from another franchisee, one of which is currently up 40 percent in comp sales for the year. I was also nominated for Franchisee of the Year in 2015. Biggest current challenge: Trying to find a great drive-thru location. I’ve been hunting for that perfect property at the right price but it’s not easy to find. Next big goal: Pushing my first store to break the $1 million sales mark. First turning point in your career: Going from a single-unit operator to a multi-unit operator. Best business decision: Sometimes you have to know when to hold and when to fold. When I was operating five locations it required more TLC than I was able to give at the time. I’ve since been able to sell it to a single-store operator who is doing a great job there. It allowed me to free up and refocus my efforts into growth in a different direction. Hardest lesson learned: The first winter was tough. I learned how to adjust my workforce and cut labor quickly. I know my labor goals now and I rarely miss them. Work week: I leave Mondays open on my schedule to solve any problems that may have come up over the weekend to get that out of the way early. I typically pick a store the rest of the week to work from. I can do computer work from anywhere, but sitting in a cafe allows me to see more of what’s happening. I then jump in at lunch, our busiest time, and run a station, typically the register so I can

talk to customers and monitor the lobby. Exercise/workout: I do yoga. While it’s physical, it makes me mentally check out and just focus on the simple task at hand. Best advice you ever got: Surround yourself with people who are good at your weaknesses. What’s your passion in business? People. I enjoy the customers and the employees alike. How do you balance life and work? If my phone is on I’m probably doing some type of work, email, checking sales and labor, something workrelated. My wife and I make sure we take one really good vacation a year where I turn my phone off for 10 days. It’s something I would recommend to everyone— getting away from social media and just being present with the world around you. Guilty pleasure: Pizza. Despite owning healthy restaurants, I love a good pizza. Favorite book: The Sun Also Rises by Ernest Hemingway. Favorite movie: “Top Gun.” What do most people not know about you? I really enjoy classical music. I listen to Wagner and Mozart at home a lot. Pet peeve: Poor English. What did you want to be when you grew up? For the longest time I wanted to be a pilot. However that changed for me when I was 14 years old, having overheard a conversation between my dad and the CEO of his previous franchise company. The interaction between the two of them and the business discussions they had just captivated me. Last vacation: My wife and I spent 10 days in Kuala Lumpur, Malaysia. Person I’d most like to have lunch with: Ernest Hemingway. His adventures just fascinate me.

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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UNDER

MANAGEMENT Business philosophy: People first, always. Management method or style: My role as the owner is to take care of my managers. If they’re happy my staff will be happy, and if my staff is happy my customers are happy. Greatest challenge: As I said, trying to find a drive-thru location at the right price in Orlando. How do others describe you? I actually cheated on this question and asked a few of my closest managers. They all said personable and enjoyed how much I cared about everyone. One thing I’m looking to do better: I need to be more organized. I tend to be doing several things at a time, and that leads to missing a few things here and there. How I give my team room to innovate and experiment: Any team member who has an idea is always encouraged to bring it to the managers or to me. I’ve had great ideas come to me simply because someone is working on something and says, “This might be faster.” They’re the ones on the food line every day so I trust their ideas. How close are you to operations? Five days a week I’m in a store. I make sure I’m always in a store for lunch during the weekdays no matter what. We live and die by our lunch rush, so I make sure I’m there. What are the two most important things you rely on from your franchisor? Quality of menu is crucial. I’m not a chef, but I need to know the items we get are quality. Supply chain is huge. I need to know that when we have a new item our distributor has it and I can order it whenever I need.

What I need from vendors: Punctuality. If a vendor says they’re sending a part or a piece of material on Tuesday, I need it there that day since I will have scheduled myself to handle that task on that day. Have you changed your marketing strategy in response to the economy? How? I try to avoid coupons. The economy is no longer in a situation where everyone is saving all their pennies. I like giving samples at events. The products sell themselves. How is social media affecting your business? It keeps you focused on quality. You can make 500 items perfectly, but if number 501 is not right that could be the one someone Instagrams and shows to a million followers. Since every customer has a voice to the world, it leaves no room for carelessness. How do you hire and fire? Our CEO, Mike Rotondo, once said: “Hire smart or manage tough.” I have to remember that. No matter how short-staffed you are, never just hire to fill a hole. Find the right person. How do you train and retain? Inspect what you expect. The trick is making sure people don’t fall into bad habits and shortcuts. When you see bad habits arise make sure to reiterate proper procedure. How do you deal with problem employees? I try to talk them through it first. I never like to see someone fail. However, sometimes the inevitable happens. Fastest way into my doghouse: Don’t do your job. We all succeed or fail together. I have to rely on everyone doing what they’re supposed to so I can focus on what I’m supposed to.

BOTTOM LINE Annual revenue: I anticipate $1.4 million in 2017 for my two traditional cafes currently open. 2018 goals: I just opened a new store about a mile from UCF’s main campus. This is my fourth cafe and we are confident, given the location and our expertise, that it will take off quickly. Another major goal for 2018 is I will be pushing my first store to break the $1 million mark.

What are the best sources for capital expansion? BB&T has been my bank of choice. I continue to build my relationship with my banker. I share sales and now we’re on a texting basis.

Growth meter: How do you measure your growth? Comp sales are huge. I know I’m growing if I can maintain 10 to 15 percent over the previous year.

Experience with private equity, local banks, national banks, other institutions? Why/why not? As noted, BB&T has been my bank of choice.

Vision meter: Where do you want to be in 5 years? 10 years? In 5 years I would like to be debt-free. In 10 years I have some political aspirations, but that’s a conversation for another time.

What are you doing to take care of your employees? I listen to their needs. It’s a young staff and if they’re stressed about a relationship or a test, sometimes they just want to talk and ask my opinion. It helps build a level of trust, too.

How is the economy in your region affecting you, your employees, your customers? Orlando is a young city and there is a ton of growth. Lots of people come here for school, which makes hiring easier. The boom of the city, though, also brings in loads of competition. Are you experiencing economic growth in your market? Absolutely. The entire city is growing and is one of the largest tourist destinations in the world. How do changes in the economy affect the way you do business? Rent factors change. As the economy has turned in the last few years, you can see the price of rent climbing. How do you forecast for your business? I keep an eye on weather

and school schedules. Spring break or exam week will affect us differently. Knowing when the colleges and high schools have breaks can help prepare for sales changes.

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We slightly raise prices once a year so that helps. We just have to really be mindful of labor control. How do you reward/recognize top-performing employees? I try to reward and recognize those who stand out. We provide gift cards to people who go above and beyond. We have the SMG surveys and we post the compliments about employees on the board. What kind of exit strategy do you have in place? Retirement is at least 35 years away for me, so who knows how many stores I’ll own by then? But after I’m completely done with the business world, my hope is to become a professor.

MULTI-UNIT FRANCHISEE IS S UE II, 2018

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206 161 45

33 KONSTANTINO SKRIVANOS DUNKIN’ DONUTS BASKIN-ROBBINS

197 151 46

34 PACIFIC BELLS TACO BELL BUFFALO WILD WINGS KFC

193 153 39 1

35 MITRA QSR KFC TACO BELL

190 146 44

36 FRAUENSHUH HOSPITALITY GROUP DQ GRILL & CHILL DQ TREAT

188 187 1

37 BORDER FOODS TACO BELL CHURCH’S CHICKEN KFC AU BON PAIN

187 178 4 2 3

38 COTTI FOODS WENDY’S TACO BELL PIEOLOGY

183 92 82 9

39 FALCON HOLDINGS CHURCH’S CHICKEN LONG JOHN SILVER’S CARL’S JR. HARDEE’S

180 74 42 37 27

40 SUNDANCE TACO BELL KFC PIZZA HUT

176 165 8 3

40 APPLE INVESTORS GROUP APPLEBEE’S BURGER KING IHOP PIZZA HUT STEVI B’S PIZZA BUFFET

176 54 93 7 18 4

42 NORTHWEST RESTAURANTS TACO BELL KFC A&W

171 88 54 12

PIZZA HUT LONG JOHN SILVER’S

10 7

43 WKS RESTAURANT GROUP EL POLLO LOCO WENDY’S KRISPY KREME DENNY’S

169 62 52 29 26

44 BRIAD RESTAURANT GROUP WENDY’S TGI FRIDAYS

168 111 57

45 CELEBRATION RESTAURANT GROUP/CFL PIZZA/ BRAVO FOODS 164 PIZZA HUT 131 TACO BELL 33 46 HAMRA ENTERPRISES WENDY’S PANERA BREAD NOODLES & COMPANY HOLIDAY INN EXPRESS

157 90 57 9 1

47 JRN KFC PIZZA HUT

156 154 2

48 DOHERTY ENTERPRISES APPLEBEE’S PANERA BREAD NOODLES & COMPANY

154 106 43 5

49 SERVUS! (BR ASSOCIATES)/SIDAL LONG JOHN SILVER’S WENDY’S DENNY’S GRANDY’S

146 87 33 21 5

50 INTERFOODS OF AMERICA (SAILORMEN ) POPEYES LOUISIANA KITCHEN BURGER KING

143 128 15

50 SUMMIT RESTAURANT GROUP PIZZA HUT LONG JOHN SILVER’S

143 130 13

TOP 25 BRANDS OF THE 2018 MULTI-BRAND 50 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 25

PIZZA HUT 3,921 TACO BELL 2,010 BURGER KING 1,596 KFC 1,315 WENDY’S 1,141 SUBWAY 867 APPLEBEE’S 775 POPEYES LOUISIANA KITCHEN 684 ARBY’S 541 PANERA BREAD 530 IHOP 257 LONG JOHN SILVER’S 254 EINSTEIN BROS. BAGELS 251 LITTLE CAESARS 250 DQ GRILL & CHILL, DQ TREAT, DAIRY QUEEN 235 JACK IN THE BOX 227 DUNKIN’ DONUTS 189 CHICK-FIL-A 183 CINNABON 180 A&W 142 TGI FRIDAYS 132 T-MOBILE 127 PAPA JOHN’S 101 CHESTER’S CHICKEN 98 CHARLEYS PHILLY STEAKS 87 GNC 87 Source: FRANdata and Franchise Update Media

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3/16/18 9:42 AM

THERE ARE NO BORDERS WHEN IT COMES TO FLAVOR

Quesada is the fastest growing Mexican franchise in Canada with locations coast to coast. We’ve recently opened our 100th restaurant. NUMBER OF LOCATIONS

9 2012

19 2013

2014

2015

78 2016

92 2017

100+

2018

What’s our secret? It’s our wholesome, quality ingredients and our “made fresh daily” philosophy. Visit quesada.ca/franchising Tom O’Neill, President 1-866-854-2400 ext. 101 tomoneill@quesada.ca

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3/6/18 3:16 PM

3/16/18 6:34 PM

LOOKING FOR

WORKERS? Hiring the best in today’s tight job market BY EDDY GOLDBERG

ow unemployment and rising minimum wages are making it difficult to find and keep quality employees in 2018. Increased labor costs are also having an effect on the bottom line, even as many franchisees increase their sales or raise prices. This trend also is slowing expansion plans for some as they struggle to find qualified staff for proposed new locations. We asked three franchisees with six different brands what they are doing to become the employers of choice in their markets. Unemployment’s effects “The single biggest topics of discussion in our restaurant business are centered around quality staff—not just the number of quality staff, but how long we can keep them,” says Tamra Kennedy, a Taco John’s franchisee who employs 150 people in her 9 restaurants. Eight are in the Twin Cities and the other is in Iowa.

“Our stores are located in a cross-section of communities, so we have rural, urban, and high-density stores. We’re seeing the same thing across all of them. No one store is having any better luck hiring,” she says. Kennedy sees this as the “new normal” for today’s workforce challenges, particularly for the fast food industry, which has long provided a first job to many young people. What’s also different today, she says, is that young people are entering the workforce at a later age than they used to. “Even 5 years ago, we had quite a few more applications and interest in starting positions at a younger age,” she says. “We do hire young people at 15 years old and give them a chance to start learning the basics of employment within their limited hours. Even 16- and 17-year-olds are applying less.” Anecdotally, she says, the starting age is moving up. “I would suggest we did well as a generation of parents to offer

the conveniences of being a young person who doesn’t have to go to work. Our generation has done well to provide for our children.” But from an employer’s point of view, that reduces the pool of unskilled entry-level workers. And with demand for good employees high, it means jobhopping is easier. “More and more our focus today is on retention so employees don’t leave as frequently and so that we become known as an employer of choice,” says Anne Lalinde, vice president of human resources at LSGF Management in Norcross, Ga. “Having a good and strong onboarding process is something we are becoming focused on, as those first impressions are so critical to long term-retention.” The company has 154 units spread across three brands: T-Mobile, Great Clips, and Smoothie King, and employs Above: Tamra Kennedy training staff

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B:7.875” T:7.375” S:7.125”

FAST FACTS: FRANCHISING SINCE: Founded in 1916, franchising since 1960 MULTI-UNIT FRANCHISEE OPERATING UNITS: 15% TOTAL OPERATING UNITS: 300 COMPANY OPERATING UNITS: 5 CAPITAL INVESTMENT: $62,500 to $200,000+, excluding real estate & construction costs

While rich in history and tradition, Nathan’s Famous is a company forever looking forward. From a single restaurant on Coney Island, Brooklyn in 1916, Nathan’s has grown into an international corporation serving all facets of the food service industry. Today, Nathan’s reaches millions of customers through traditional and captive market restaurant operations. Nathan’s proudly serves the highest quality, world famous beef hot dogs, golden crinkle cut fries and a wide variety of menu items.

T:4.625”

ROYALTY FEE: 5.5%

OPPORTUNITY DESCRIPTION

ADVERTISING FEE: 2% EARNINGS CLAIMS: Yes BUILD-OUT OPTIONS: Free-standing, inline, malls, travel, non-traditional, food trucks and carts AVAILABLE TERRITORIES: Northeast, southeast, midwest, mid-atlantic, southwest, west

CONTACT | DWAYNE HOFFMAN | Senior Director of Franchise Development (516) 338-8500, ext. 306 | dhoffman@nathansfamous.com | nathansfamous.com/

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3/1/18 10:15 AM

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Jack in the Box is offering a unique opportunity to franchise with one of the most popular Fonts:and innovative brands in the quick-serve Gotham (Bold, Medium,a Medium Italic, Black) restaurant (“QSR”) industry. If you’re multi-unit franchise operator of a non-competing brand, or a chain restaurant professional seekingImages: a financial partner -- contact us!

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Live: 7.125” x 4.375” Jack in the Box was Trim: 7.375” x 4.625” franchising experience. Bleed: 7.875” x 5.125” Folded: None

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3/6/18 9:43 AM

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B:5.125”

S:4.375”

FRANCHISE FEE: $30,000 for full menu restaurant; $15,000 for limited menu

LOOKING FOR WORKERS? about 950 people. The hiring situation is watch their labor costs continue to rise as a different at each of the company’s brands. percentage of their cost of doing business. Great Clips, she says, has the most At their gyms, the biggest expense used specific hiring needs because applicants to be rent, says Boomer, followed by labor. need a cosmetology license, resulting in a The minimum wage has risen steadily in limited group of potential employees. “So the past 3 years in Maryland, where all we have to go about recruiting differently but one of their Retro Fitness units is loand are more focused on building relation- cated. Again, good for employees, not so ships with people in our market who are good for employers. Today labor is their biggest expense. licensed cosmetologists,” she says. “Employee referrals are “The unfortunate part,” increasingly important to us says Boomer, “is that the emas our employees spread the ployees don’t get any better, message that we are a great you just have to pay them place to work.” more.” He says the rationale The company also has startwas that higher wages would ed offering signing bonuses for bring higher-quality people well-qualified hourly candiinto the labor force, but he dates. “If somebody is teeterisn’t seeing that. ing between working for us “This really squeezes franor somebody else, we will use Anne Lalinde chisees whose prices are set a signing bonus as an incentive,” she says. at the franchisor level,” he says, and has That sometimes comes in the form of pay- put a lot of pressure on the gym business. ing for the new employee’s cosmetology “It’s one reason among a million we went license if they’re relocating from out of state. into the dry cleaning business,” he says. For example, if a Great Clips employee At Retro Fitness the monthly price is set from the Midwest relocates to Georgia, at $19.99, and while prices at his Marythey already know the system, but their land ZIPS are up from $1.99 to $2.29 per state license will cost them $100 to $300. item, he’s still feeling pressured by higher Competitors aren’t offering this, she says. labor costs. At LSGF, “We are having to increase The requirements for their T-Mobile stores are simpler: a sales background base pay and decrease variable pay,” says and familiarity with the technology. For Lalinde. With this change we are having Smoothie King, she says, “We’re just look- to performance manage to an even greater ing for the walkup applicants because we extent since variable can train a wide segment of the popula- pay is not as large tion.” However, she says, “We are seeing and not as motivatthe low unemployment rate affect the ing a factor.” number of walkups.” “It definitely Allan Boomer and Tiffany Hawkins, affects our busifranchisees of four Retro Fitness gyms ness model,” says and two ZIPS Dry Cleaning stores with Kennedy. “It’s more a third opening soon, say the low unem- money up front, at ployment rate hasn’t affected them yet. a higher cost to the One reason is they’re looking for a niche business than we group of experienced dry cleaners for their used to have to ofZIPS stores. And at Retro Fitness they’ve fer to compete and Allan Boomer and worked hard to create a culture that keeps hire, so there’s less money for other things employees happy. we’d like to get to.” Today, she says, “We have a retention “We view culture as part of our competitive advantage. If you can create a strong goal more than a hiring goal. We want culture, it will attract the right people and people to stay while they pursue their repel the wrong people,” says Boomer. “It outside interests, like school or family. So may seem like an insignificant thing, but if we’ve built our pay system around that. We you have people who know that you care pay more than minimum not because we about them, they’ll work harder for you.” have to, but because we should.” Minimum wage blues While minimum wage hikes are putting more money in workers’ pockets, it’s tough for even the most generous franchisees to

us down,” she says. “In 2017, we opened a restaurant that we had knocked down and rebuilt. Now, a little more than a year later, we’re not fully staffed. I could not be more thrilled by the response from the community, but we are challenged to meet the fast, friendly service standards we’re known for.” Probably the biggest takeaway, she says, is having to backfill from other stores to staff the new one. “We used to put up a sign, ‘Opening a new store,’ and the applications would flow in.” Not today. “I can see how it would be a struggle for somebody opening their first restaurant. We’re lucky to have other restaurants to draw from and train in.” Nevertheless, she adds, this limits her growth model because the new units must be in close proximity to her existing restaurants. “We have heard some of our peers have had to reduce operating hours and are struggling to keep the doors open because of staffing challenges,” says Lalinde. “While our group has not yet encountered this, we are very aware that the trend could hit us, so we are trying to be as proactive as possible. It is definitely something we need to be cognizant of moving forward.”

Technology—a mixed bag Raising prices can help, but you can only do it so much before customers begin to seek out lowercost competitors. As minimum wages rise, turning to technology and automation to reduce labor costs has become an increasingly attractive option. But there are tradeoffs, and some industries are more suited than Tiffany Hawkins others to benefit. For instance, it’s not currently an option at her company, says Lalinde. Haircuts by robot still feels like bad science fiction. And despite advances in artificial intelligence, the T-Mobile stores need live, tech-savvy sales people. There might be some room for automation at the Smoothie Kings, but she can’t see it happening any time soon. For their new ZIPS store, Boomer and Hawkins have purchased a $14,000 maExpansion takes a hit chine that will automatically recombine The shortage of entry-level workers is a customer’s items after they’ve been dry having an effect on some franchisees’ ex- cleaned. “It now pays to look into autopansion plans, says Kennedy. “It does slow mating processes to cut your labor hours,”

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3/16/18 7:09 PM

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LOOKING FOR WORKERS? says Boomer. “We spend about $400,000 a year on labor, so if we can save 5 or 10 percent a year it will be a really strong ROI.” Investing in the automatic sorting machines has an additional benefit—on the human side, says Hawkins. Being a presser is hot, demanding work and anything to improve the working environment can go a long way to both retain good pressers and attract new ones to their stores as they expand. “It is, literally, a sweatshop,” says Hawkins. Even so, they do their best to provide the best working environment possible, she says. “We treat them well and have been able to get a lot of good professional pressers, which can cut labor costs by 30 or 40 percent.” She says they strive to do the same at their Retro Fitness locations, resulting in a very low turnover based on the culture they’ve created at both brands. “We’d love to invest more in technologies around the workforce, but we need

to generate more profit,” says Kennedy. One recent step is paying off, she says. “We have just invested with our brand in a new training technology.” The videobased online training platform is working well, she says. “Our team enjoys it. We’re already seeing positive results compared with reading a traditional manual. We’re excited to have done this.” She’s also continuing to explore other technologies to save time and money, including digital recruiting platforms and finding ways to use social media more efficiently to recruit employees. But when it comes to the quality of the food she serves her customers, Kennedy thinks automation may hurt more than it will help. “We still hand fry our taco shells and cut our tomatoes and onions,” she says. “I could buy pre-cut, but it loses on quality. I still say the best food is made by hand. But if there aren’t people, we’ll have to go to automation. That worries me.” On the other hand, she says, “I’m ex-

Entry Level as Apprenticeship “I

f you’re interested in learning about rest of their life. business, or have a dream of your Kennedy, an IFA Board member and own,” says Tamra Kennedy, “there are Vice Chair of the Franchisee Forum, also three things we can teach you: how to is Minnesota’s state captain for FAN, manage money, how to manage people, the Franchise Action Network—and a and how to manage inventory. If you tireless advocate for the value of franmaster those three, you can run any busi- chising as the number-one job training ness in the world—and you can learn resource for young Americans. “From all three on any given day an apprenticeship perspecin our restaurants.” tive, I would love to see the Kennedy then adds a fast food business lead in fourth: learning to work well talking about what we ofwith others. For many young fer,” she says. “I believe that as an inpeople, she says, a job in a fast food franchise is their dustry we need to do better first opportunity to work at tooting our own horn. as a team with others they We offer so many good did not necessarily choose. foundational lessons. If we “They’re walking into a spent more time talking Tamra Kennedy group of people they really about them, clarifying them don’t know anything about—it could with the public, and proving that we’re be seniors working to augment their a good place to begin your working income, professional adults (manag- journey,” she says, people would have ers), and young people from all walks a greater appreciation for—and attracof life.” She contrasts that with going tion to—franchising. online to form their own, self-selected “I’ve been doing this a very long communities. Onboarding, she says, is time and I’m always proud to say I not just the paperwork, but introduc- work in the fast food industry, specifitions and finding comfort and things cally because we offer those very first in common with people different from steps in a person’s career. Our goal is yourself—an important life skill that that when they leave they take all they will serve that young person for the can with them.”

cited about online ordering or ordering at a kiosk. Customers like to choose how they want their food built, and if you’re ordering at a kiosk you can add or subtract ingredients. We don’t have them yet, but I’m eager to learn more as they become available. That would take a spot that would normally go to a human being.” Employer of choice “We treat everybody like human beings,” says Hawkins. “We want them to have a good time at work as much as possible.” This includes scheduling flexibility, days off, a holiday party at a local hotel with their families, even taking employees to a baseball game. “From what we hear from employees, those are the types of things that make them not want to leave,” she says. “We’ve learned it’s not just about pay and benefits,” she says, especially for Millennials. “It doesn’t seem to be about money. They really want to like their workplace; they appreciate recognition and knowing that somebody knows their name.” And while the $2.29 price and one-day service are important at ZIPS, it’s very much about the people, says Boomer. “Any business needs to differentiate itself in one way or another. We’ve gone into an industry that is notoriously bad at people.” Their hospitality background on the Retro side has helped greatly in creating a positive work environment at ZIPS, he says. “Happy employees will smile at the cash register.” At LSGF, providing that personal touch also is important in attracting and retaining employees at all three brands. “Ownership and senior-level management know many of the employees by name and reach out directly,” says Lalinde. “Leadership sends notes of encouragement to employees facing challenges such as medical issues, and when employees have had critical hardships the company has provided personal loans. We really keep the employees front and center in the organization.” In one of their brands, says Lalinde, “We recently rolled out a 401(k) plan specifically to be more competitive in our recruiting efforts.” And looking forward, she says, “We are discussing tuition reimbursement and employee hardship funds as future potential benefits. We ensure that we are continually rewarding and recognizing employees for their achievements.” The hardship program under consideration could provide grants of $500 or $1,000 that don’t need to be paid back.

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2/14/18 11:44 AM

TOP FAST CASUAL SEAFOOD FRANCHISE OPPORTUNITY

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thecatchfranchising@gmail.com | thecatchusa.com *7 affiliate-owned and franchised restaurants open the full 12 months of 2017 had average gross sales of $1,263,550 for the 12-month period from 1/1/2017 through 12/31/2017. Your financial results may differ from those stated above. See item 19 of our 8/29/2017 franchise disclosure document for important assumptions and qualifiers relating to this. The information presented in this advertisement is general information only and is not intended as an offer to sell or the solicitation of an offer to buy a franchise. Certain jurisdictions regulate the offer and sale of franchises. If the offer or sale is regulated by any of these jurisdictions, we will not offer or sell you a franchise unless and until we have complied with all applicable requirements.

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3/6/18 9:35 AM

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CAPITAL IDEAS How to get lenders to “Yes” BY SARA WYKES

n his late 20s, Glen Johnson fell in will be paid back in a timely love with the Tropical Smoothie manner. Cafe brand. He moved quickly, and Johnson, however, went in just a handful of years expanded to the bank with a little exto 26 Tropical Smoothie locations. This tra something in his pocket: winter, he merged with Nick Crouch, backing from the Henry Inanother Tropical Smoothie franchisee, vestment Group. How did to create the DYNE Hospitality Group, he get that? “Talking about where the partners now serve as co-CEOs. it,” he says. “They found With 41 units in 5 states (Florida, me because they knew a Georgia, Texas, Oklahoma, and Arkansas) friend of mine I’d been and more than 700 employees, DYNE talking to about growth. I is now the largest Tropical Smoothie just got a call from them Nick Crouch franchisee. The newly merged company one day. They started askplans to reach 100 restaurants in “a few ing questions, they chipped in, and that short years” through new builds or ac- made it a lot easier to get bank financing in place.” quisitions, says Johnson. Not a bad growth trajectory for the Johnson obviously did an effective 35-year-old. He knew he could expand job of broadcasting his needs to improve by a small number of locations without the odds that an unexpected funding redebt, but his goals were more ambitious. source might find him—but he also did “I wanted to grow quickly,” a good job at the basics. he says. “It was a big chalThose basics may be obvious, but they are worth lenge to find money for doing right. that growth.” Standard procedure The basics for obtaining capital for franchise growth typically Johnson’s serendipitous includes a visit to a bank route to private equity loan officer, armed with a investment can be hoped strong presentation of your for, but it can’t be counted financial track record and on or planned for, so it operational acumen. This makes sense to start with builds trust and earns the the absolutes. Ron Feldlender’s confidence they Glen Johnson man is chief development

officer at ApplePie Capital, an early online lending pioneer dedicated solely to franchising. ApplePie’s client history includes Jimmy John’s, Jersey Mike’s, and Marco’s Pizza, among others. Feldman, who joined ApplePie after serving as chief development officer for FRANdata and principal and co-founder of Franchise America Finance, suggests starting your search for growth capital by looking close to home. “Your franchisor may have a list of lenders familiar with your brand. That familiarity can help expedite the process,” he says. SBA loans, Feldman says, are more onerous in terms of documentation and time to approval than conventional bank loans, but they do allow more flexible credit criteria, which may mean a greater chance of success for a first-time franchisee or someone seeking to add a second or third unit. “Look for a Preferred Lender within the SBA network,” he says. Online lenders can work well for firsttime franchisees or franchisees expanding at a pace faster than traditional lenders

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may be comfortable with, states in the Midwestern as well as for franchisees and Western U.S. While looking for a simpler and his perspective on financfaster process. Additioning growth is that of a large al leverage may be found operator, he says many of with franchisors who have the same disciplines and established relationships practices apply to both with lenders. And some large and small operators seeking funds. banks have special groups or departments specializ“When we begin laying ing in franchise lending, the groundwork for financwhere the loan officers ing, we have a regimen we understand the franchise go through that helps us business model. If you’re Ron Feldman be ready for those initial an experienced multi-unit meetings with our lendoperator, your track record should carry ers,” says Davis, chairman of U.S. Beef, sufficient weight with conventional bank a family-owned business established in loan officers, or perhaps you already have 1969. That regimen covestablished a trusting relationship with ers three areas essential to your own preferred lenders. convincing a lender that Home equity or a securities-backed you’re a trustworthy inline of credit may also be tapped for vestment, even at the size funding, but if you have no experience and stage of a company in business finance, Feldman believes like U.S. Beef. that intermediaries or brokers could be First, says Davis, if useful in securing the growth capital you’re a franchised busiyou’re seeking. ness, understand your As a further alternative, Feldman sug- brand’s potential, the gests looking into the pros and cons of strength of your franchiROBS (Rollovers as Business Startups)—a sor, and the unit economics specialty finance vehicle that allows en- of your brand. trepreneurs to capitalize their business Second, prepare a com- Jeff Davis using funds from their 401(k) or IRA. mentary on the state of your business and Several companies specialize in this why you want to borrow. “We’re very lending niche, with a focus on franchis- aware going in of how this incremental borrowing will help grow ing. However, Feldman our business,” he says. cautions, do not use your local CPA or attorney for And, finally, “Make sure this unless they specialize your financial statements in structuring ROBS, or are current and accurate. you may find yourself in Generally, three years of trouble with the IRS. financial statements will be Regardless of who required.” Aspiring franchiyou are or where you are sees seeking to fund their seeking capital from, says first unit will have to proGiovanna Koning, CFO of vide other evidence of their Falcon Holdings, the largability to repay the loan. est franchisee of Church’s Feldman offers specific Chicken, another imporadvice for these first-timtant factor plays a role in Giovanna Koning ers: have a loan applicaa successful working relationship with tion package that is accurate, complete, a potential lender: familiarity. “Know and that you understand 100 percent. who you are working with,” she says. Your business plan and projections will “You want people who are in the loop, be reviewed in minute detail, and you who are knowledgeable.” must be able to defend them to a bank underwriter. Be prepared If you are borrowing with the help Jeff Davis is Arby’s largest franchisee, with of an SBA guarantee, it’s best to emmore than 365 Arby’s spread across nine brace the process rather than resist it,

he says, paperwork and all. You will be given a complete financial physical and may be asked to pledge personal assets as collateral. “Those are the rules,” says Feldman, “and they cannot be waived by individual lenders.” Even if you are an experienced franchisee, some of those basic preparations do not change: you must have clear financials and tax returns for your current units ready to present to a potential lender. If there have been unusual expenses or market trends, include explanations with the loan submission up front. Also be sure to include a business plan that not only highlights your current success, but also your plans for future growth. And as you grow your number of units and begin the transition from business operator to business leader, it’s important to highlight your plan for overseeing the continuing success of your existing units as you add new ones. Honesty is best Be ready with specifics that include an explanation of downturns your business may have experienced and how you’ve addressed them, says David Harrison, a multi-unit franchisee of RNR Tire Express & Custom Wheels and the brand’s first area developer. “Have a solid business plan with projections showing your timeline for reducing debt and/or growth that increases your net worth, reducing your debt-to-equity position,” he says. Yaron Goldman has been through the expansion process many times. He’s the CEO of SD Holdings, a franchisee of McAlister’s Deli and MOD Pizza that acquired 64 Sonic Drive-In restaurants last August. He’s also opened his first Fuzzy’s Taco Shop, a brand acquired by NRD Capital in early 2016. SD Holdings’ portfolio now includes more than 100 locations in seven states. “Make sure you have your financials in good order and can easily explain any non-recurring expenses or income,” Goldman says. “This will save a lot of time during the underwriting process.” That willingness to disclose doesn’t change based on how many franchise locations you have. “The only material

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difference is the size of the banks you will be dealing with,” says Goldman. “At the end of the day, all lenders just want to be assured there is a strong financial case to approve their loan and that the collateral behind the borrowing entity can step up if there is a default.”

our industry generally have a good understanding of the negative influences that can affect our business, but they also have an expectation that you have the knowledge, talent, and track record to turn things around.” Goldman knows the value of a strong narrative. In creating trust with What else do a lender, sometimes a good lenders want? story is as powerful as good David Harrison A down payment is a familnumbers. “Beyond the fiiar concept, but its size will vary depending nancial case for your business,” he says, on who is lending you the money. “SBA “make sure to have a good operating has its own rules,” says Feldman, “but story and really leverage the strength of down payment and credit criteria are set the brand you are franchising.” by individual lenders.” He says a down Building relationships based on mutual payment can vary from 10 percent to 40 trust also can make the difference in your percent for the same loan with different loan proposal being accepted or rejected. lenders, and that online lenders typically “Lenders are looking at your financial require a 20 percent to 30 percent down condition, which is basically simple,” says payment for first-time franchisees. For Harrison. “The most important thing existing franchisees, he says, “They can is their confidence in you as the owneroffer 100 percent financing using em- operator. Lenders back people as much as they back assets.” bedded equity of the business.” And while you’re focused on how to Online lenders are more data-driven and do a significant amount of due dili- find capital to start or expand your frangence on a brand before they create a chise business, Feldman says, don’t forget financing program. Conventional lenders about the rest of your life. “You need to generally want 3 years of performance be sure that you have enough personal data before considering a loan to a fran- liquidity—cash—to continue your life chise operator, Feldman says. In that case, until your projections show the cash flow expect a personal guarantee needed to provide income at a minimum. to you,” he advises. “Generally, depending The advantage of upon the size of your busihistory ness, most require personal guarantees,” says Davis. For Harrison, finding will“Of course, leverage and ing lenders has become easdebt coverage covenants ier as he’s expanded—not are also required.” Reportsurprising, as he’s become ing covenants have also larger and can provide a increased, adds Goldman. track record that inspires confidence and trust in The big picture potential lenders. “As we “Your past performance have grown, financing has will speak volumes about Yaron Goldman become much easier. The your ability to operate a profitable busi- lenders have changed, but the process is ness,” says Davis. However, he adds, if basically the same. It’s still people and you’ve had a difficult year, or even a assets,” he says. “Earlier we dealt with string of less-than-stellar years, “Have multiple banks. Now there are particia very good understanding of why your pating lenders and single relationships.” results have not met your expectations “If you are a 100-unit operator, lendand projections—and have a realistic and ers are all calling you,” says Feldman. executable plan to achieve better results “You are probably in maintenance mode in the short and long term. Lenders to and should be able to borrow on very

favorable terms, many times without a personal guarantee.” Getting to this level of maturity isn’t easy, and some of the details can still seem daunting. Feldman offers up one more piece of advice for borrowers. “Many operators get caught up on interest rates being higher for them as growth operators, when in fact an aggressive lender that happens to be more expensive in terms of rate is actually cheaper than not having the funding to grow.” In addition, he says, it might be worth considering taking on an outside investor to fund growth or acquisitions. But don’t give away the farm. “Your business will also be attractive to private equity for investment. That is a tool you can use to take some of your equity off the table, but still operate your business and offer some liquidity to your management team.” After all, they’re the ones who have been with you as you expanded.

FULL DISCLOSURE Be ready to answer any and all questions from your potential lenders. And don’t try to hide anything (they eventually will find out anyway). “Borrowers want to know everything,” says Glen Johnson. In his experience with the financing process, he says, “There was nothing they didn’t want to know.” This taught him the valuable lesson that understanding every detail of his business—and how to share that knowledge with a loan officer or other potential lender—was his best defense against the inevitable (and necessary) barrage of questions he had to answer. “If you don’t know your business, they won’t lend you the money. I knew everything, but I couldn’t articulate the details very well,” he recalls. That meant having to return more than once to lenders. By the time he was ready for the merger to create DYNE, he had hired a financial consulting company with experience in putting loan packages together. (See page 68 for how to create a loan proposal your banker will love.)

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CustomerService B Y

JOHN DIJULIUS

Return on Smiles Training for politeness is a smart investment

ow many times have you heard, “A smile is free. It costs absolutely nothing to give but can mean the world to the person who receives it?” I agree with the second part, that it can mean the world to the person who receives it. However, I do not agree with the first part that a smile costs absolutely nothing. Maybe from a personal standpoint, yes, it costs us nothing to smile at one another. In a business sense, however, this is not the case. Think about the friendliest businesses you deal with, where it would be hard to find an employee who isn’t smiling. Examples include Disney, The Ritz-Carlton, Southwest Airlines, or Chick-fil-A. (Disclosure: Some of these companies are currently clients.)

The investment for the business is that it must recruit better, hire happier employees, and train more than everyone else. To get all your employees to consistently smile comes at a significant cost to both the business and its customers. The investment for the business is that it must recruit better, hire happier employees, and train more than everyone else. That investment means these businesses will have to charge more for their services and products. So in reality, the customers (gladly) pay more for smiling faces. Don’t be mistaken, it is one of the greatest investments you can ever make. According to “The 2016 QSR DriveThru Study” (QSR magazine), of the 15 firms surveyed, Chick-fil-A was the most polite chain in the category. Employees at Chick-fil-A were the most likely of the chains surveyed to say “please” and “thank you,” and to smile at customers.

“We know our customers appreciate that we can be nice while being fast and accurate,” says Mark Moraitakis, senior director of customer and market insights at Chick-fil-A. “Eye contact and smiling go a long way in the drive-thru experience.” The reason behind the brand’s success in being “nice” while still being “fast and accurate” is certainly not the pay. According to the job-finding and review site Glassdoor, Chick-fil-A doesn’t pay much more than the industry average. So why is Chick-fil-A consistently the highest-rated chain in customer satisfaction? Because the restaurant chain invests more than other companies in training its employees and helping them advance their careers—regardless of whether those careers are in fast food. Return on smiles Does this obsession with the customer experience and fanatical attention to detail really pay off? Yes. The chain consistently ranks first in restaurant customer service surveys (Consumer Reports). In recent years, Chick-fil-A generated more revenue per restaurant than any other fast-food chain in the U.S. The numbers speak for themselves. The chain’s average sales per restaurant reached nearly $4 million, compared with the average KFC, which sold $1 million. Customer service is the key to Chick-fil-A’s success. Superior customer service drives higher sales per unit, contributing to the chain’s ability to generate higher annual sales than KFC, Pizza Hut, and Domino’s—even though each has more than twice as many U.S. locations and Chick-fil-A is famously closed on Sundays. Bonus: video clip Watch this 90-second video on why you should train your front-line employees to never point or say “No”: https://www. youtube.com/watch?v=WysPQXkPOt8. John R. DiJulius III, author of The Customer Service Revolution, is president of The DiJulius Group, a customer service consulting firm that works with companies including Starbucks, Chickfil-A, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or info@thedijuliusgroup.com.

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Technology BY MARTY GREENBAUM

Multi-Brand Loyalty Combining rewards programs to drive business

he emergence of multi-brand franchising conglomerates has created a wide range of economies of scale for those companies that have found diversification a key to their growth strategy. Smart companies are leveraging those economies of scale with internal resources, corporate staff, better vendor buy rates, and so much more. Although there are many opportunities to reduce costs, the nature of the business model also creates opportunities for increased sales and customer retention—especially when the franchisor has a number of brands in compatible verticals. Multi-brand customer loyalty creates a great way for franchisees to cross-pollinate customers and grow revenues. A multi-brand customer loyalty platform provides an incredible opportunity to enhance the value of your existing customer loyalty program and share the customers’ love (and wallet) across noncompeting brands. And whether your business is in the restaurant, service, salon, automotive, or other vertical, there likely is an opportunity to create a crossbranded loyalty program. For example, say you’re a flooring business franchisee of a multi-brand service franchisor—flooring, house painting, and window coverings—each with a significant database of happy customers. Wouldn’t it be fantastic if you could gain referrals from your sister brands? And doesn’t it make great sense to keep business “in the family,” instead of letting it go to local competitors? If the three brands were part of a multi-brand loyalty program, customers, franchisees, and the franchisor would all win. Implementing a multi-brand loyalty program provides a foundation for referrals that allows a customer to use the rewards earned from one or more of the sister brands to save money on your services. And from a business perspective, as long as that savings remains under or close to your average cost per new cus-

tomer, why wouldn’t you support such a loyalty program? Structure and redemption One of the biggest challenges with multibrand loyalty is developing a rewards structure that franchisees will accept, while also making the rewards valuable to the customer. As noted above, your new customer acquisition cost is one of the best starting points for determining how much in rewards a customer should receive, and what those rewards could be redeemed for from a sister brand. Restaurant multi-brand franchisors (especially QSR) typically can develop a rewards structure that works well across all brands, while other verticals need to get a little creative. Depending on variables such as average check and frequency, rewards may have to be structured uniquely to each brand. Good for franchisees? The notion of multi-brand loyalty is an attractive one for most multi-brand franchise conglomerates. However, is it good for the franchisees? In most cases the answer is yes, because it makes great sense to leverage the customer goodwill of one brand to generate business for another. Even if you are the franchisee of the flagship brand in the multi-unit franchisor’s portfolio, multi-brand loyalty is a great long-term strategy and can generate some of your strongest referrals. Once the program is structured and operating, customers can be cross-marketed (in good taste) and new business will come your way. Launching a multi-brand customer loyalty program takes commitment from the top down, where loyalty isn’t just a strategy but part of the culture. As a franchisee, your success will come from your front line with their ability to register new members and provide an incredible customer experience. Customer loyalty, especially multi-brand loyalty, allows you to give your customers more value from their relationship with you. Customers

appreciate when you have their best interests at heart, even if it benefits you. Invaluable data source Loyalty platforms by nature provide great insight into customer performance. Most loyalty platforms have comprehensive dashboards and easy access to reports that provide metrics on customers, franchise units, and system-wide data. What’s best about the metrics you’ll gain through loyalty programs is the ability it provides your business to market more effectively, boost ROI, and drive real revenue growth. The customer data acquired will help you understand customer frequency, average spend, and more. Multi-brand customer loyalty opens the door to cross-brand marketing like never before. Customer loyalty members have opted into your marketing and typically have a higher response rate than those who haven’t. You’ve earned their trust and your communications are valued. Cross-promoting complementary brands to your most loyal customers makes great sense and can deliver new customers to each of the brands. Where do you go from here? The growth of multi-brand franchise conglomerates has opened the door to bigger and better loyalty programs. Sure there are complications when merging different brands into one loyalty program, but the benefits can be huge for all those who participate. There are always integration and technical issues, but we can leave that up to the franchisor’s CIO and the loyalty vendors to figure out. There are always a handful of franchisees who resist change, but with the right people championing the program you can persevere and succeed. Lead the movement in your franchise organization to create better relationships with fellow franchisees and their customers. Share the “love” and see revenues climb. Marty Greenbaum is president and senior strategist of FPN Loyalty, a marketing technology company serving the franchise community with customer loyalty solutions. Contact him at marty@ fpnloyalty.com or 702-580-0663.

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Finance BY ROD BRISTOL

Loan Proposal Basics What your banker needs to say “Yes!”

o you want to get financing to grow your business. What does your bank want from you in your loan proposal? Answers to the five key borrowing questions: 1. How much do you need? 2. What will you do with it? 3. When will you pay it back? 4. How will you pay it back? 5. What if something goes wrong? The proposal is presented in an outline format. Each section, if applicable, should be included. • Purpose of loan. Your company is seeking to: (purpose of loan). • Repayment. Repayment on longterm financing will come from continuing net profits; of a seasonal credit line from liquidation of inventory and receivables. • Corporate data. Name, address, phone, date established, and form of organization. • Description of your business. Location, type of business, typical customer, estimated sales for 2018, primary focus, payment terms, distribution channels, type of premises, etc. • Product. A narrative discussion of: 1) the business performed as indicated by the NAICS, including principal products sold or services rendered; 2) general development of the products and/or services in the past 5 years; 3) relative importance of each principal product or service to sales and profits; and 4) a tentative 5-year plan of the objectives and goals of the company, including anticipated revenues and earnings. • Employment. Include: 1) total number of employees at application, or expected employment for a new venture; 2) description of the critical skills required in the business and their availability in the present work force or local labor market; and 3) a description of labor relations (including any previous difficulties) and a copy of any current union contract. • Source of supply. Include: 1) a brief description of the significant materials and supplies employed or to be employed; 2) names of major suppliers,

including disclosures of any single or limited sources of essential materials; and 3) adequacy of available storage and materials handling facilities. • Management. Include: 1) detailed biographies of all officers, directors, owners, and key personnel, including degree of ownership; 2) any contract or proposed contract between the company and any member of management and/or outside consultants including name(s) of accountant and/or attorney. • Marketing and distribution. Narrative discussion of: 1) the type, number, location, and financial strength of customers and potential customers indicating the percentage of gross revenue they account for; 2) a marketing survey and/ or economic feasibility study commensurate with the size of the company and proposed investment; 3) a brief description of the actual or proposed terms of payment by customers if other than cash; 4) how the products or services are now (or will be) provided to customers, including physical distribution facilities; 5) a description of the techniques presently used (or to be used) to create demand for the products or services; and 6) any significant seasonal aspects pertaining to marketing the products or services. • Competition. A descriptive summary of the competition. • Facilities. Include: 1) a detailed description of the real and physical property and equipment (age, condition, insurance coverage, and adaptability to the principal business); 2) copies of agreements pertaining to any encumbrances on property or equipment owned, or lease or rental agreements on non-owned property; 3) the same information for property proposed to be used by new ventures; and 4) copies of any franchise agreement, distributorship, dealership, royalty contract, or similar contract with other companies. • References. Include: 1) a minimum of one banking, one business, and three personal references for each member of management and each principal owner (also list the company’s key advisors such as CPA, attorney, etc.); 2) a credit

report on the principals and company; and 3) a discussion of the company’s reputation from a sampling of suppliers and customers on the company’s reliability, creditworthiness, fair business practices, etc. • Financial information. Include: 1) historical data (when available) such as balance sheets and P&L statements (preferably from an independent public accountant) for a minimum of the last 3 fiscal years or from inception, including the latest interim period, and your latest aging of accounts receivable and payable; 2) a pro forma balance sheet that includes the effect of the financing, supplemented in the case of new ventures with a description of the source of the original funds and assets; 3) cash flow (a detailed projection by month of anticipated revenues and expenses and a schedule of cash receipts and disbursements for a minimum of 12 months); 4) personal financial statements for the principals; 5) use of proceeds (reasons for the request for funds and a description of the proposed uses, including timing); 6) salaries and benefits (schedule of past, current, and proposed salaries and other benefits of each member of management and/or owners, including bonuses, free arrangements, profit sharing, stock options, etc.); 7) statement of the enterprise’s capacity, both current and subsequent to the financing, including the current and expected rate of utilization of such capacity and current backlog of orders; and 8) a description of all outstanding debt or commitments for funds, including the original balance, current balance, interest rate, and amortization schedule, and a copy of the instrument. This loan proposal, completed and presented in this format, will go a long way toward getting your banker to Yes. Rod Bristol is executive vice president at Profit Mastery. For over 30 years, franchisors and franchisees have improved their financial performance and unit profitability by following the Profit Mastery process: financial training, benchmarking, and accountability/bankability modeling. Learn more at www.profitmastery.net, 800-488-3520 x13 or email bristol@brsseattle.com.

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diversify your portfolio There’s never been a better time to diversify your franchise brand portfolio with Saladworks. Not only are we the original entrée salad destination, we’re also the leading salad-centric, fast-casual franchise in America. Why diversify now? Consider these impressive facts. • The entrée salad sector is the fifth fastest-growing in a fast-casual landscape that’s otherwise overbuilt with burger, sandwich and pizza concepts. • Driving this growth are the growing Millennial and Gen Z consumer segments, half of whom buy 3+ entrée salads per week away from home. ©2018 Saladworks LLC.

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2/26/18 11:16 AM

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2017 Annualized Unit Volume for All Evolution Design Restaurants percent higher than All Non Evolution Design Franchised Restaurants that were in operation at least 4 months during Huddle House Inc.’s last fiscal year ending April 29, 2017. Some outlets have sold this amount. There is no assurance you will do as well. See Item 19 of our August 9, 2017 Franchise Disclosure Document. 2 2017 Average and Median Food and Paper Cost for 12 Company Owned Restaurants operated by Huddle House Inc. for the entire last fiscal year ending April 29, 2017. Six of the 12 Company Owned Restaurants have Food and Paper Cost greater than the average and median of 28.7%. The highest was 30.5% and the lowest was 26.4%. Some outlets have sold this amount. There is no assurance you will do as well. See Item 19 of our August 9, 2017 Franchise Disclosure Document. 1

Copyright © 2017 Huddle House, Inc. This does not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Certain states require that we register the FDD in those states. This communication is not directed by us to residents of any of those states. Moreover, we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law.

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3/16/18 9:40 AM

InvestmentInsights BY CAROL M. SCHLEIF

Volatility Returns It was fun while it lasted (sort of)

ost U.S. stock market indexes achieved a notable record by late January, having amassed nearly 400 days without a measurable pullback of more than a few percentage points. Such a long period with no measurable declines is unusual and had lulled many into a distinct aura of complacency, a disconcerting place, as we wrote warningly in last quarter’s column. Wait… stability is disconcerting? Yes, in that it’s not a normal state of affairs for economies or markets to be in. When markets are steady for a very long time, it can lull investors into believing this abnormally benign period can go on forever. In classic “It’s all good” mentality, time horizons can lengthen and worries can be minimized. However, when investors “wake up” after such a period and reassert their right to worry, the initial response can be abrupt. As Nassim Nicholas Taleb, author of The Black Swan reminds us, “Don’t confuse lack of volatility with stability, ever.” Smooth markets don’t change the fact that underlying economic fundamentals are necessarily lumpy—ebbing and flowing with changes in weather, time of year, natural disasters, demographics, geopolitics, and a host of other things. Underlying almost every function of our economy are individual human decisions. And those, as we well know, can be anything but smooth, rational, or predictable. The key when dealing with markets in general and individual investments in specific is to keep one’s focus squarely on the basic relationship between underlying fundamentals relative to what investors are paying for those fundamentals and to ignore the swings. In fact, volatility and mispricing create opportunity and are not to be feared for those with a long-term time horizon. Take the trading on February 2, 2018, for example, when the Dow dropped more than 650 points and most other major indexes declined in similar fashion. The downturn seemed especially sharp because we had become so used to markets moving only in one, northerly direction. The pullback was attributed by many to be fear over rising rates spawned by stronger

economic numbers, specifically related to wage growth. Let’s reevaluate this reasoning: 1) Isn’t faster wage growth a good thing? 2) Won’t faster wage growth in the long run lead to employees with more purchasing power? 3) Isn’t a bit higher rate of inflation a good thing, in that it allows companies some pricing flexibility? Getting from where we were to the new “normal” is likely going to be a lumpy process, but in the end it should result in more people with jobs, more consumers, and a country in a much healthier and sustainable place.

Volatility and mispricing create opportunity and are not to be feared for those with a long-term time horizon. Jobs and taxes The jobs numbers have been improving as we’ve clawed our way out from the doubledigit unemployment rate recorded just after the financial crisis of 2008. Competition for workers has been fierce, and incentives (in the form of hiring and retention bonuses, expanded leave policies, and other benefits aimed at attracting workers) were occurring even before the Tax Cuts and Jobs Act was passed in December 2017. With a number of states, companies, and municipalities raising their minimum wage on January 1, 2018, is it really that surprising there has been a bit of upward pressure on wage growth? We have a new tax law whose implications are still being worked through by both corporations and individuals. Between changes to tax rates, overseas earnings, changes in debt deductibility, and even such things as legal expenses and the ability to absorb some longstanding employee perks (such as parking or bus passes) on a pretax

basis, no one is quite sure until hundreds of scenarios are run what the net impact will be. Companies are noodling all sorts of different combinations to maximize their businesses under this new tax regime in an attempt to find the optimal combination of actions—increasing wages, enhancing training, increasing dividends, installing new technology—that will yield them the best total stakeholder response. While tough to predict with specificity, it would seem only common sense to presume that upward wage pressure will continue as 2018 progresses. So what next? Among the few claims we as prognosticators can lean toward, then, are directionality and that economic activity seems to be on a more upward-sloping trajectory than we’ve experienced over the past 10 years; and odds are the new tax law will support that uptick, at least on the margin. As companies contemplate where to put new production lines, whether or not to do a capital-intensive acquisition, or how to retain workers, the tax law seems to be helping sway many of those decisions into investing in the U.S. and its workforce. We understand there are a lot of “ifs” and “unknowns” in the mix, and in that murkiness lies investor angst. So although we believe that underlying fundamentals remain solid and the direction of economic activity is likely to move ahead, there is plenty to keep an eye on to ensure timing and progress remain directionally appropriate. The extent to which markets continue to swing more widely provides ample opportunity for investors to deploy sidelined cash, rebalance regularly, and take advantage of market swings that are out of sync with improving long-term fundamentals. Watching those fundamentals and the host of critical potential bottlenecks or crossover points will keep us all busy as the year plays out— most likely with a higher degree of volatility than we have become accustomed to. Carol M. Schleif, CFA, is deputy chief investment officer at Abbot Downing, a Wells Fargo business that provides products and services through Wells Fargo Bank and its affiliates and subsidiaries. She welcomes questions and comments at carol.schleif@abbotdowning.com.

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ExitStrategies BY DEAN ZUCCARELLO

Reps and Warranties M&A insurance (if truth not be told)

ctivity in the multi-unit space has been significant and growing for years, with seemingly all industry participants eager to get deals done. Franchised concepts are a hot commodity, and there’s no shortage of buyers and sellers looking to engage. Yet despite all this interest, we still see a number of challenges arise over the course of any deal. While there are a variety of reasons both buyers and sellers alike will face difficulties when working to close a deal, purchase agreement negotiations typically turn out to be the most arduous part of the process. In recent years, one of the aspects that has required a lot of attention has concerned “reps and warranties.” Reps and warranties [a term used to describe assertions made by a buyer and/ or seller in a purchase and sale agreement] weren’t always such a point of contention. It wasn’t long ago that transactions had an air of “buyer beware” attached to the due diligence proceedings. True, sellers have always been legally required to disclose any and all information about their business that could have a future impact or economic effect post-close, but over the years these discussions have become increasingly more burdensome. Sellers no longer have the power to tell buyers to do their due diligence carefully and thoroughly, because after the deal closes, it’s done. These days, reps and warranties have taken on a much larger and more onerous position within purchase agreement negotiations. Often, it’s no longer a straightforward discussion between the buying and selling parties, but instead a battle between their legal teams. Having a trusted lawyer in place for purchase agreement negotiations is crucial to any transaction’s success. However, there are certain points of discussion, like those over reps and warranties, that can become unnecessarily long and drawn out in the process. Depending on the severity, this kind of occurrence regularly creates deal

fatigue, ultimately having a negative impact on both parties and even interfering with a successful close. Now we are seeing a trend in the industry, with one option in particular becoming more and more prevalent in today’s market: rep and warranty insurance. With its ability to mitigate some of the otherwise laborious negotiations on the matter, and the inherent feeling of security that comes with being insured, rep and warranty insurance is an important topic to examine. RWI: Ask an expert To gain greater insight on the matter, I decided to reach out to one of the industry’s leading insurance companies providing rep and warranty insurance in the M&A market today. Trisha Lee, the senior vice president of Lockton Companies, was gracious enough to contribute the following: “Rep and warranty insurance (RWI) is at the forefront of merger and acquisition activity. RWI is a tool sellers use to transfer their escrow requirement to an insurance policy, thereby freeing up sale proceeds at closing. This enables a cleaner exit and locks in returns. From a buyer’s perspective, this insurance mitigates counter-party risk and strengthens the relationship with management rollovers by eliminating potential clawbacks. Claim examples could include a seller breaching the condition of assets representation, resulting in unexpected capital expense, or the financial statement representation such that the EBITDA determining the enterprise value was misrepresented. The insurance provides coverage over the general, fundamental, and tax representations with matching survival periods. Coverage can be structured for a specific representation or on a blanket basis. The process generally requires two weeks, and insurers look to the quality of the buyer’s third-party diligence work for their underwriting. It is most likely used on transaction sizes

of $40 million and above. Markets that write these policies are varied, and are written in U.S. markets or foreign markets. Claims are being paid, and this policy is designed to respond for financial loss arising from a breach of a rep or warranty from an unknown pre-closing issue. From 2014 to 2016, premiums written increased from $46 million to $400 million, and the number of policies in that time frame rose from 95 to more than 500. Driving this growth is the product’s acceptance in the legal community as an effective M&A tool, along with improvements in the ease of placement and broader coverage language.” Conclusion RWI is certainly an effective tool to carry in your deal-closing arsenal, as well as a wise and prudent choice for prospective buyers and sellers today. It’s especially worth considering when you take into account RWI’s ability to streamline the purchase agreement negotiation process, essentially eliminate unnecessary points of contention, and keep deal momentum up. Because no deal is the same and each transaction requires its own unique strategy, I can’t say for certain that rep and warranty insurance is right for everyone. What I can say is that I believe RWI is truly a beneficial mechanism, and it’s certainly worth exploring if you’re pursuing a transaction in the M&A space today. I would like to extend my sincerest appreciation to Ms. Lee for her contribution to this article. If you have any further questions, reach her by email at trisha.lee@lockton.com. Dean Zuccarello is CEO and founder of The Cypress Group, a privately owned investment bank and advisory services firm focused exclusively on the multi-unit and franchise business for more than 25 years. He has more than 35 years of financial and transactional experience in mergers, acquisitions, divestitures, strategic planning, and financing in the restaurant industry. Contact him at 303680-4141 or dzuccarello@cypressgroup.biz.

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FranchiseMarketUpdate BY DARRELL JOHNSON

Inflationary Times Ahead Yet franchises are well-positioned to prosper

e are finally entering a cycle of higher inflation expectations. Is that good for franchising? That’s not a trivial question as it can significantly affect unit performance and expansion decisions. Following the last recession, the Fed was very concerned about deflation and used monetary policy to steer us away from a downward spiraling of the general price level of goods and services. It took years, but it worked. We have been in a low inflationary environment for nearly a decade, and now attention is focused on the pace of rising levels of consumer and business prices. To understand how that will affect franchising, we first need to understand what the near-term inflation expectations are for both consumers and businesses, and the psychology of expectations surrounding further increases. Both inflation that consumers expect and that businesses are experiencing are on the rise, but at different paces. The University of Michigan’s consumer sentiment survey and the Conference Board’s measure of consumer expectations both show about a 2.7 percent rise in inflation over the next year. While up from a post-recession low of 2.3 percent in 2017, this is still a subdued level by historical standards. Businesses are also feeling higher levels of inflationary pressures and are starting from a lower level, but that is changing. Various business surveys are showing a more rapid rise in expected inflation, driven by rising producer prices from cyclical input price increases, tough tariff talk, a weak dollar, rising wage rates, and real estate costs that have risen steadily in recent years. Of particular note are rising wage rates and real estate costs. According to NFIB survey data, the net share of firms expecting to raise wages over the next three months rose to 24 percent, the highest reading since 1989. Substantially influenced by wage rates, the Federal Reserve Bank of Atlanta busi-

ness survey shows inflation rising to 2 percent in February after holding steady for much of the past 3 years. This puts it on a rate of change that is troubling because it is rising faster than consumer expectations. Commercial real estate also has seen stronger percentage gains in recent years, squeezing business profits with, until recently, little ability to increase prices. At least real estate gains are unlikely to continue because of the significant shift

The extended period of relatively flat business costs is coming to an end. in retail space demand as companies shrink footprints or exit some locations entirely, taking some of the business cost pressure off. In the next 5 years more than a trillion dollars of commercial real estate will need to be refinanced. Lenders will be forced to pick winners and losers among properties, with little inclination to fund properties that are not cash flowing. Inflationary squeeze play? This brings us back to the comparison between consumer expectations and rising business costs. If business cost expectations are rising at a faster pace than consumer expectations, we will have a squeeze play for businesses: rising costs with a lack of pricing flexibility because of consumer expectations. Unlike past periods when the two tended to align in a matter of a year or two, the combination of years of subdued inflation and improved consumer buying technology (the “Amazon effect”) of the past few years has made it harder for businesses to raise prices.

Consumers have come to expect low prices, and technology has provided them with the ability to seek competing prices for just about everything. However, businesses simply can’t absorb rising costs without some ability to pass rising costs along to consumers. Fortunately, the psychology of inflationary consumer expectations is showing signs of tolerating some price increases, and franchising should benefit. Consumer sentiment, especially among Millennials, values time and customer care. While product/service pricing is a focus, if customer satisfaction is achieved, some higher pricing levels are tolerated. Franchising puts a premium on creating a consistent level of customer expectations, achieving that through a combination of uniformity and marketing. I think we will begin seeing that franchise marketing departments, with their ability to address customer expectations, will lead price signaling across an entire sector, putting franchise brands in positions to price above non-franchise competitors because of their ability to project brand expectations. As a by-product of brand marketing, we should see franchise systems testing price increases in different markets, just as the airlines have done for decades. (One airline will raise prices in a market and see if others follow.) If they do, a new price level is established. If others don’t, the price comes back, but often not all the way. The extended period of relatively flat business costs is coming to an end. With rising business costs already happening and the pace rising, the ability to raise prices will be necessary for the long-term health of franchisees. Fortunately, the franchise business model, and in particular franchise marketing departments, are ready to take on that challenge and win. Darrell Johnson is CEO of FRANdata, an independent research company supplying information and analysis for the franchising sector since 1989. He can be reached at 703-7404700 or djohnson@fran data.com.

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Millennials BY SHAWNA FORD

It’s “Story” Time! Using Instagram and Snapchat to tell yours

s of 2015, Millennials are the largest living generation in the United States. The generation doesn’t currently match its money to its population numbers, however. They hold only about one-sixth of the country’s wealth, but that will be changing quickly in the coming years. By 2025, when Millennials will account for 75 percent of the workforce, their purchasing power and share of wealth will more evenly match their numbers. Millennials are finally seeing the light at the end of the economic tunnel, so to speak, and marketers should work to earn their loyalty and recognition now—before they really start spending those earnings. The easiest place to work toward that goal is social media. Facebook and Twitter have been known players in social media marketing for a while now, but we’re going to skip those two and talk about Instagram and Snapchat for the moment. Why? Because they’re quickly gaining large numbers of followers, especially among Millennials. Instagram is currently ranked second for social media usage with this age group according to Pew Research. Snapchat, though not as large or well-researched, is gaining ground too. The difference between these two sites and other social media is that they are geared specifically to promote images and video. Marketers, given fewer words to work with, must grab a viewer’s attention with a simple image or the first frames of a video. Many people feel this doesn’t work for all products or services, but I’d like to disagree. Think back to some of the most innovative or attention-grabbing TV commercials you’ve seen. Not all of them, or even most of them, were for items that are easily shown with a video or image. I’m thinking of Apple’s iconic Super Bowl commercial, Monster.com’s “When I Grow Up” commercials, and Allstate Insurance’s mayhem series.

With the semi-recent release of Story features from Instagram and Snapchat, brands can craft content and get it in front of consumers in a quick and easy format that caters to the mediums most young people are looking at anyway. Instagram stories come with notifications and the ability to link to other content or guide

Millennials are seeing the light at the end of the economic tunnel, and marketers should work to earn their loyalty now—before they start spending those earnings. viewers to the link in your company’s bio. Snapchat has a similar Stories section that can be used in a very similar manner. For example, I follow a popular cupcake bakery on Instagram, along with my friends and family. I follow it for the obvious reason that I like cupcakes a bit more than is probably healthy and I want to know when they’re debuting new flavors. However, I’ve also found myself getting lured in by their Stories lately. They don’t post every day, but when they do it tends to be a series of short clips about their flavor of the day or brand boosting videos of how their products are made or glimpses of their company culture. The clips are brief, eye-catching, product- or consumer-focused, and send a clear message. They’re doing this the right way. Here are a few things to keep in mind if you’re thinking about jumping into Instagram advertising.

• Start your efforts with regular posts and gain followers that way. • Make sure your images or videos are designed to quickly grab attention. Images should be sized to fit properly on the page. • If you link, use a link shortening service that can track clicks, such as Bitly (bit.ly) or Google’s URL Shortener (Goo. gl) to properly attribute traffic from your social efforts. I suggest using a different link for each social media site you post on. • Make your videos work with or without the sound on. A lot of people watch videos in public or at work without sound, so you may need a bit of copy to make the message clear. • In the copy that goes along with your standard Instagram posts, try to use trending hashtags if possible. However, make sure there isn’t any controversy behind them. Many companies have fallen victim to this by jumping on a hashtag bandwagon without researching it first. • Don’t post excessively. If you have a great story to tell, tell it—but don’t bog down consumers with filler material because you feel you must post every day. • If you decide to use sponsored ads, make sure you nail down your targeting so you aren’t advertising to people who are unlikely to need your product or service. As with every other marketing effort, keep in mind that you want to plan, implement, test, analyze, and adjust as needed. Instagram is a great way for nearly any business to get into the social marketing field with only a few images and a bit of copy. Even FedEx is doing it. Just keep in mind, as FedEx has, that your content must be engaging and share-worthy. If you’re promoting trucks, you can’t just put pictures of trucks on your page. You need to use a bit of creativity to pull consumers into the story behind the truck or its travels. Create a narrative with images and videos. That narrative is what will bring in the younger viewers and foster the loyalty you’re looking for. Shawna Ford is a marketing coordinator at Mindstream Media and has a background in social media marketing and copywriting. To learn more about Mindstream, call 800-548-6214 or email inquiries@mindstreammedia.com.

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Succession Planning BY KENDALL RAWLS

Identifying Rising Talent 6 key indicators to evaluate future leaders

any business owners continue steadfastly as the only key leader in their company, failing to develop employees and managers who have leadership potential. This sort of top-down, or hub-and-spoke structure inhibits growth and organizational longevity because the business eventually grows beyond the capacity of the owner, and when the time comes to transfer leadership there is no “bench” to step up. This does not mean giving up control of their franchise organization before they are ready; instead, it could mean freeing themselves up to do more to grow their portfolio. If as an owner you hold the reins too tightly and have not worked to identify and develop your successor(s) or leadership bench strength, it’s time to step up and get to work. Depending on the maturity of your business, you may be required to conduct a talent search. Otherwise, if you have the time, look inside your business for leadership potential. In either circumstance, here are six key indicators (the 6 C’s) to help you evaluate and identify your next generation of leaders. 1) Capacity. One of the core components of identifying rising stars is their growth potential and versatility in an environment of continuous learning and adaptation. There are seven specific characteristics to evaluate potential leadership candidates, who must already possess or have the capacity to learn them. • Intellectual capacity: to effectively understand, manage, oversee, and make decisions pertaining to the unique body of knowledge important to the business. • Big picture understanding: the ability to see the organizational “big picture,” which enables the successor to multitask and effectively work with a diverse group of managers, employees, and vendors, all of whom bring different talent and perspectives to the organization and its processes. • Social versatility: the capacity to develop and maintain positive inter-

personal relationships with individuals critical to the success of the business. • Patience: the ability to patiently take the steps necessary for leadership growth, trusting that over time they will receive increased responsibility. • Collaborative mindset: the ability to work as both a member and a leader of a team. • Influence: the ability to gain the respect and leadership skills to favorably influence those who are crucial to

No matter where you are in your career as an owner, it is important to identify your rising leaders, including your successor. the continued success of the business. • Coachability: the willingness to be coached from the experience of others. 2) Commitment. Next-generation leaders, and specifically someone who would take on the owner’s role, should have enough passion for the business that they are willing to be a role model and think like an owner. This means throwing their unreserved commitment into the business. 3) Character. One of the fundamental roles of a future leader is the ability to both lead and motivate. Core beliefs and practices influence the organization and convey trust and respect (or lack thereof). A positive character in your future leader is critical to ensure that your team is led along a consistent and compatible path of ongoing success. 4) Competence. A person you are evaluating for a key leadership role, and specifically your successor, must have the intellectual ability to know what is critical to the business, as well as being self-aware. This positions them to not

only assemble the right team, but also to address all essential and complex components required for achieving long-term business goals. 5) Confidence. It is important for both you as the franchise owner and your future leaders to recognize that you will become partners during the development process. Solid relationships built on trust and confidence will ensure a smooth and successful transition of leadership. 6) Community. In addition to developing leaders who are “owner-minded,” they must also be community-minded. They must be team players who have at heart the best interests of all parties who depend on the ongoing continuity of the business. Conclusions No matter where you are in your career as an owner, to ensure the sustainability and growth of your franchise operations, it is important to identify your rising leaders, including your successor. If you are developing people to take over your role in whole or in part, you will increase your opportunities to continue to grow as an entrepreneur. While the 6’s C’s are attributes every rising leader, and specifically your successor, should be evaluated against, it is not critical that they be “perfect” in each area. What should be expected is that your rising stars or next-generation leaders are not totally blind, ignorant, unconcerned, or apathetic about their weaknesses and are willing to work on them. Analyzing the 6 C’s is the first step in identifying your next generation of leadership. The next step is to understand and identify the management style that will work with you and your multi-unit franchisee organization well into the future. Kendall Rawls understands the challenges that affect the success of an entrepreneurially owned business. Her unique perspective comes not only from her educational background, but from her experience as a second-generation family member and employee of The Rawls Group, a business succession planning firm based in Orlando. For more information, visit rawlsgroup.com or email info@rawlsgroup.com.

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Market Trends BY DARRELL JOHNSON means for multi-unit operators. That is really a franchise business model evolution question. So far this has been the century of multi-unit franchisees. They’re the darlings of franchise development officers. For established brands it has meant less training and lower performance risk. For emerging Brands Starting to Franchise Each Year brands it has meant even more: brand validation. Now the economy is handing them another positive: full employment. While many operators struggle with rising employee costs, full employment also is reducing the number of prospective new franchisees. That pool expands more slowly and even declines during periods of sustained economic expansion. With more job opportunities and rising wages for skilled labor, fewer people are enticed by the entrepreneurial spirit that drives the prospective franchisee pool. The result is that they have the Top Ten Sectors for New Franchise Brands pick of the 300-plus new brand litter. The even better news is we’re seeing a trend with new brands being more prepared, which means faster growth, greater market awareness, and a litany of functional efficiencies like technology and advertising. Multi-unit operators continue to grow their influence in franchising. Importantly, that puts more responsibility for the health of the business model in their hands. Picking the right sectors and the best brands in those sectors is falling more and more on their shoulders. Multi-unit franchisees Franchise Development in First Five Years Franchising will substantially influence emerging franchisor winners and losers. The next few years may indeed become the Multi-Unit Golden Period. n

Year of the Multi-Unit? Economic trends will boost their growth

hat do the economic tea leaves tell us is going on below the surface in franchising? Let’s start by following the money. Where is franchise money being invested? At the brand level, FRANdata identifies and verifies more than 300 new entries per year. The majority, roughly twothirds, are in sectors outside the food industry. The biggest concentrations of new franchise brands involve health and related fitness sectors. A more generic evaluation of the commonality of these sectors is that they mostly involve services aimed at the individual. This leads us to the all-important question: Why is money going there? The demographic answer is that it appears Millennials are having their long-anticipated spending impact, and that money is focused primarily on self. In effect, we have demand in a barbell fashion, with Millennials on one end and Boomers on the other. The Gen X crowd, with about a third less population than either of the other two, just doesn’t seem to matter as much—despite being in their prime spending years now. The message on sector/brand targeting is pretty clear: a la Willie Sutton, go where the money is. Since it’s in the hands of Millennials and Boomers, follow their trends and you have your answer. MUFs in the driver’s seat Finally, we have the question of what it

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

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US Advisors

Vitality Bowls

81 67 55

FAZOLI’S 27

PJ’s Coffee of New Orleans, LLC

Wetzel’s Pretzels

FRANdata Corporation

Pollo Campero USA

Whimsy Cookie Co c/o Pink Laurie Brands

ProSource Wholesale

Wienerschnitzel 35

Quesada Burritos - Tacos

Zaxby’s Franchising

ZIPS Dry Cleaners

Freshii

77 10 - 11

Golden Corral Buffet & Grill

Great Harvest Franchising, Inc.

Saladworks 69

SPREAD THE HEALTH. JOIN THE MOVEMENT.

NAMED A TOP NEW FRANCHISE BY ENTREPRENEUR MAGAZINE, BRING VITALITY BOWLS, A FRESH, FAST-CASUAL SUPERFOOD CAFÉ, TO YOUR NEIGHBORHOOD!

• Low start-up costs • Positive year over year growth

855-925-2224

• Large territories available • Healthy concept with a talented team of current franchisees

franchise.vitalitybowls.com

This advertisement is not an offering to sell a franchise. An offering can only be made by a Franchise Disclosure Document that has been registered with and approved by the appropriate agency in your state, if your state requires such registration. Such filing does not constitute approval of the app applicable state agency.

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MULTI-UNIT FRANCHISEE IS S U E II, 2018

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3/17/17 10:05 AM

It’s not just a membership. It’s a partnership. For over 57 years, the International Franchise Association (IFA) has worked to promote, protect and strengthen franchising worldwide. With our legislative and advocacy arm fighting for you on key issues, top-notch educational opportunities, and access to a network of business leaders through events and the IFA community, you’ll receive tangible support and information to grow your business. Because of partners like you, IFA is the world’s oldest and largest trade association representing the franchising community. Together, we can continue to move franchising forward.

JOIN IFA TODAY franchise.org/join-ifa

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1/16/18 3:57 PM

Thank You 2018 Sponsors & Exhibitors PLATINUM SPONSORS

MONEY ROOM SPONSORS

BREAKOUT VIDEO SPONSOR

LOUNGE SPONSORS

ApplePie Capital Bank of America The Horowitz Group Spirit Realty Capital Sterling National Bank Franchise Finance Office Evolution

TD Bank - Restaurant Franchise Finance Group Texas Capital Bank West Star Capital

Inngi Float

REGISTRATION DESK SPONSOR Black Bear Diner

AGENDA AT A GLANCE/BADGE SPONSOR Bojangles’ Famous Chicken ‘n Biscuits

KEYNOTE SPEAKER SPONSORS

CONFERENCE GUIDEBOOK SPONSOR Chop Chop Rice Co.

COFFEE CUP SPONSOR Broken Yolk Cafe

MULTI-UNIT FRANCHISEE MAGAZINE, ISSUE II COVER CARD SPONSOR

GOLD SPONSORS

FOCUS Brands

ANNUAL BUYERS’ GUIDE COVER CARD SPONSORS IceBorn, An Ice House America Franchise

FRANCHISEE OPENING SOCIAL SPONSORS

CONFERENCE ADVISORY BOARD MEETING SPONSORS Franchise Grade Freshii

The Rawls Group – Business Succession Planners

LANYARD SPONSORS FRANCHISEE LUNCHEON SPONSORS

FisherZucker

Zaxby’s

FRANCHISEE TOTE BAG SPONSOR Jersey Mike’s Subs

FRANCHISOR TOTE BAG SPONSOR FRANCHISOR LUNCHEON SPONSORS

FRM Solutions

CUBE SIGN SPONSORS Capriotti’s Sandwich Shop

C SQUARED

Inspire Brands

ESCALATOR BANNER SPONSOR

ADVISORS, LLC

Inspire Brands

SILVER SPONSORS

EXHIBIT HALL BANNER SPONSOR Inspire Brands

BRONZE SPONSORS

Franchise Business Intelligence

MVP AWARDS SPONSOR American Family Care

CHAIRMAN’S DINNER SPONSOR HSBC Bank USA, N.A.

LAW ROOM SPONSORS Einbinder & Dunn LLP Marks & Klein, LLP Monroe Moxness Berg

Paris Ackerman LLP Stark & Stark

Bulk TV & Internet Cinnzeo Bakery Cafe Copper Branch Cowboy Chicken Dog Haus F45 Training Inc. FC Dadson Fish Consulting Franchise Business Review Hughes I Heart Mac and Cheese iFixandRepair & Gear LemonShark Poke

Main Squeeze Juice Co. MFV Expositions MSA Worldwide Mspark, Inc. Next Force Technology, Inc. Pizza Hut Quesada Burritos Tacos Señor Frog’s Sydnee’s Pet Grooming Take 5 Oil Change Taziki’s Mediterranean Cafe Zen Ecosystems

2018 Multi-Unit Franchising Conference MU2_SPONSORS.indd 1

3/16/18 12:33 PM

2018 EXHIBITORS 7-Eleven, Inc. AAMCO Transmissions & Total Car Care Ace Hardware Altitude Trampoline Park Amazing Lash Studio Franchise American Family Care Angona Commercial Contracting, Inc. ApplePie Capital Arby’s Restaurant Group B.GOOD Bahama Buck’s Original Shaved Ice Company Baja Fresh Bar Louie BBVA Compass Food Franchise Finance Beverly Hills Rejuvenation Center Bin There Dump That Bojangles’ Famous Chicken ‘n Biscuits Brass Tap Brazilian Franchising Association - ABF BrightStar Senior Living Franchising Brixmor Property Group Brixx Wood Fired Pizza Broken Yolk Cafe Buffalo Wild Wings Buffalo Wings & Rings BURGERFI International Buttry & Brown Development, LLC The Camp Transformation Center Capriotti’s Sandwich Shop, Inc. Captain D’s The Catch Checkers & Rally’s Restaurants Chicken Salad Chick Choice Hotels Chronic Tacos Church’s Chicken Cinnabon CKE Restaurants Holdings, Inc. The Coffee Bean & Tea Leaf Concept Development Solutions (CDS) Coolgreens Cousins Maine Lobster Crew Dairy Queen The Dapper Doughnut Del Taco Deliver Media Denny’s, Inc. Dessange Group North America direct2you

DRNK coffee + tea / QWENCH juice bar Dunkin’ Brands Eagle Eye Networks Einbinder & Dunn LLP Elements Massage Entrepreneur Media, Inc. ESET Express Oil Change & Tire Engineers Fazoli’s Restaurants FRANdata Freddy’s Frozen Custard Freshii FSV Payment Systems Fuddruckers Fuzzy’s Taco Shop G6 Hospitality (Motel 6 / Studio 6) The Gents Place Global Cash Card Global Franchise Group Go Go Curry Golden Corral Granite Telecommunications Grease Monkey / SpeeDee Oil Change Great Harvest Franchising, Inc. Ground Round Grill & Bar Guggenheim Retail Real Estate Partners GUINOT Harland Clarke - TranSource Heritage Parts Hooters of America HOTWORX HuHot Mongolian Grill The Human Bean Hungry Howie’s Pizza IceBorn, An Ice House America Franchise IMPACT MAILERS, LLC INFINITI HR International Franchise Association IOA- Insurance Offices of America Ivy Kids Early Learning Center J.D. Byrider Franchising Jack in the Box Inc. Jackson Hewitt Tax Service Jamba Juice Jersey Mike’s Subs Jobcase Johnny’s Italian Steakhouse The Joint Corp Joyal Capital Management, LLC K9 Resorts Daycare & Luxury Hotel Kiddie Academy L.A. Bikini la Madeleine French Bakery & Café

Launch Trampoline Park The Learning Experience Lennys Grill & Subs Leon Capital Group Liberty Tax Location3 Long John Silver’s MAACO Marco’s Franchising, LLC Massage Envy MASSAGE HEIGHTS body + face McAlister’s Deli Meineke Melt Shop Mirus Restaurant Solutions Modern Business Associates Modern Promos Moe’s Southwest Grill MOOYAH Burgers, Fries & Shakes MY SALON Suite and Salon Plaza MyTime N3 Real Estate Nathan’s Famous Nekter Juice Bar Netspend Newk’s Eatery Old Chicago Pizza & Taproom One Source Communications OVISS Labs Inc. Oxi Fresh Franchising OXXO Care Cleaners Pancheros Mexican Grill Panini Kabob Grill Patriot Creative Group Paycor PCS VoIP Pearle Vision Penn Station Inc. Pet Supplies Plus Peterbrooke Chocolatier Pita Pit USA PJ’s Coffee of New Orleans Pollo Campero Proliant Inc. Pronto Insurance ProSource Wholesale Quaker Steak & Lube R Taco Rallyware The Rawls Group – Business Succession Planners Rent-A-Center, Inc. Restaurant Facility Management Association (RFMA) Retail Data Systems Retail Food Group Retail Solutions Retail Strategies RNR Tire Express Rock & Brews Restaurants Rosati’s Pizza

April 03-06, 2018 | Las Vegas, NV

Russo’s Restaurants Saladworks Salsarita’s Fresh Mexican Grill SBARRO Schlotzsky’s Scissors & Scotch Scooter’s Coffee Shoney’s Restaurants SIB Fixed Cost Reduction Siempre Tax+ Signal Health Group Silvercrest Advertising Sirius Day Spa SiriusXM-Music For Business Sky Zone Smiling Moose Smoke’s Poutinerie Smoothie King SOCi Sonic Drive-In Steak ‘n Shake Stretch Zone Sunny Street Cafe Sweet Charlie’s Taco Bueno Restaurants Taco Johns talentReef TEMSCO Solutions Teriyaki Madness Thai Express TITLE Boxing Club Tommy’s Express LLC Tony Roma’s Restaurants Toppers Pizza TPx Communications Trion Group, a Marsh & McLennan Agency Tropical Smoothie Café True REST Float Spa TuneUp Salon Twin Peaks Restaurants Überrito Fresh-Mex uBreakiFix United Franchise Group Urban Bricks Pizza Village Inn Waterman Steele Real Estate Advisors Waxing the City Wayback Burgers Which Wich Superior Sandwiches Wienerschnitzel Wingstop Restaurants Wireless Zone Workpulse Zaxby’s Ziebart ZIPS DRY CLEANING ZUUS Dynamic Scheduling

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The Internatio nal Franchise Expo is the p connect with erfect platform prospective fr to an ch is ee s, master licen multi-unit own sees and ers. Connect fa ce-to-face with prospects who highly qualified are looking to take the next business owner step towards ship.

MAY 31-JUNE 2, 2018 • THE JAVITS CENTER • NEW YORK, NY R E S E R V E YO U R B O O T H T O DAY ! EMAI L exh i b i t @ m f vexp o.co m