Multi-Unit Franchisee Magazine - Issue IV, 2023 by Franchise Update Media

Multi-Unit

Franchisee ISSUE 4, 2023

March 19–22, 2024

Real estate: To buy or not to buy? Ranking the 2023 Dominators

Gary Avants

BUILDING A FAMILY LEGACY

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Contents Multi-Unit Franchisee | Issue 4, 2023

Gary Avants left the insurance business to open the 17th Zaxby’s ever. Now, he owns 35 units in six states, and his adult children work by his side, building a family legacy.

When crossing state lines, testing and licensing requirements can differ, tax liabilities can shift, and minimum wages can fluctuate. For some, that’s all part of the game.

Should you buy or lease? It’s a big question with short- and longterm implications. Each franchisee must decide what’s in the best interest of their business.

TAKING THE LEAP

2 | Multi-Unit Franchisee | Issue 4, 2023

BORDER CROSSINGS

DITCH YOUR LANDLORD?

Multi-Unit Franchisee Issue 4, 2023

Contents

04 CHAIRMAN’S NOTE

Elevate your franchise journey at MUFC 2024! 08 MU PROFILE

38 MU PROFILE

70 COLUMNS

Team approach drives this growing 7-brand empire

Leveraging your locations for growth

Vik Patel

42 RANKINGS

Gary Avants

Leaving the day job for the franchise life

12 MU PROFILE

Jeremy Music

From an IT desk job to multi-brand entrepreneur

18 MU PROFILE

Michael Fay

72 COLUMNS

Finance

Dominators

Franchising’s largest MSAs and operators ranked by state and region

48 FEATURE

Border Crossings

Keep your eyes on the dashboard to drive success

74 COLUMNS

Investment Insights

Different states, different rules!

There’s no such thing as a normal period of history

56 FEATURE

76 COLUMNS

Lease or buy, location is still the king

Best selling advice if you own real estate

Ditch Your Landlord?

Trusting smart people to grow a diverse portfolio

Real Estate

Exit Strategies

26 MU PROFILE

64 COLUMNS

77 COLUMNS

Fully engaged in operating 3 successful food brands

Attracting top talent in a tight job market

To make the best decisions, align all your stakeholders

30 MU PROFILE

Customers Count

78 COLUMNS

Following in his family’s entrepreneurial footsteps

68 COLUMNS

Valued employees seldom seek greener grass

34 MU PROFILE

Defending franchising from coast to coast

80 COLUMNS

People

Roger Wagner

66 COLUMNS

Every employee serves your customers!

Sedrick Turner

IFA Legislative Update

Talisin Burton

Market Trends

Franchisee Tactics

Succession Planning

Conflict doesn't have to torpedo your family business

Former Marine Corps helicopter pilot soars as an operator

Our Team CHAIRMAN

Gary Gardner CEO

Therese Thilgen EXECUTIVE VP OPERATIONS

Sue Logan

EVP, CHIEF CONTENT OFFICER

Diane Phibbs

VP BUSINESS DEVELOPMENT

Barbara Yelmene

BUSINESS DEVELOPMENT EXECUTIVES

Krystal Acre Jeff Katis Judy Reichman

EXECUTIVE EDITOR

Kerry Pipes

MANAGING EDITOR

DIRECTOR, EVENT OPERATIONS

Katy Coutts

SENIOR SUPPORT MANAGER

M. Scott Morris

Sharon Wilkinson

ASSOCIATE EDITOR

SENIOR SUPPORT COORDINATOR FRANCHISEE LIAISON

Eddy Goldberg

CREATIVE DIRECTOR

Cindy Cruz

Leticia Pascal

VIDEO PRODUCTION MANAGER

Article Inquiries editorial@franchiseupdate.com

WEB DEVELOPER

Greg Delbene

WEB PRODUCTION ASSISTANTS

Chelsea Weitzman

Esther Foley

EVENT OPERATIONS MANAGER

Juliana Foley

CONTRIBUTING WRITERS

Colleen McMillar Sara Wykes

Michael Llantin

Don Rush

John DiJulius Jesse Keyser Barbara Nuss Kendall Rawls Paul Wilbur

SENIOR GRAPHIC DESIGNER

DIRECTOR OF TECHNOLOGY

Benjamin Foley

CONTRIBUTING EDITORS

Mary Lou Atkins Jason Fefer Pat McCauley Matthew Haller Carol Schleif

EVENT PRODUCTION COORDINATOR

Lillian Swenor

Subscriptions subscriptions@franchising.com 408-402-5681 Issue 4, 2023 | Multi-Unit Franchisee | 3

Chairman's Note

2024 MUFC: The Place to Be for Multi-Unit Franchisees Written by JESSE KEYSER

In the swiftly evolving landscape of multi-unit franchising, those who stay informed and adaptable are the ones who thrive. The Multi-Unit Franchising Conference encapsulates this spirit, offering a holistic experience tailored for forward-thinking franchisees. Let me offer deeper insight into the myriad benefits of attending.

5. Unparalleled networking opportunities. The path to growth often lies in collaboration and shared wisdom. At the conference, you’ll interact with peers from various brands and industries, extracting lessons and forging partnerships that might define the next phase of your business journey.

1. Targeted content. The strength of our conference lies in its targeted content. We understand the diversity of our attendees. We’re curating pathways based on specific needs, interests, and sectors. Each franchisee will find a unique journey tailored for them. This comes from your feedback as well as our Advisory Board of high-performing franchisees.

6. Celebrate excellence. Our awards transcend mere recognition. They serve as a deep dive into the workings of the best in our industry. Too often we are only recognized within our own brands for excellence and achievement. Understand their successes, learn from their journeys, and extract strategies that can be seamlessly integrated into your operations.

2. Actionable takeaways. Abstract knowledge pales in comparison to real, on-the-ground experiences. We’re not about generic industry talk; we’re about driving real, palpable change. Every session, panel, and interaction is geared toward providing you with tangible, implementable insights. Delve into detailed analyses of franchisees who faced challenges head-on, pivoted with innovative strategies, and forged paths to success. This, coupled with extensive industry research, ensures relevance to franchisees of all scales. Whether you’re navigating the challenges of your 10th unit or strategizing the launch of your 100th, we have insights waiting for you.

7. Exclusive access to vendors. The Expo Hall isn’t merely a place—it’s an opportunity. Engage with leading vendors who are keenly attuned to the needs of multi-unit franchisees. Discover products and services that can elevate your operations, enhance customer experiences, and drive efficiencies.

3. Personal growth. As leaders, continuous self-improvement is paramount. Engage in sessions that touch on effective leadership, conflict resolution, and more. It’s about ensuring that as your business grows, so do you—in capability and vision. Learn from those who have already walked in the shoes you wish to wear. 4. Dive into the future. With technology and consumer trends reshaping the franchising landscape, staying ahead is imperative. We bring you face-to-face with the innovations and practices set to redefine our industry over the next decade, ensuring you’re not just in the loop, but ahead of it. 4 | Multi-Unit Franchisee | Issue 4, 2023

8. The best cocktail hour in Vegas. We believe in active dialogue. The conference is not just about disseminating knowledge, but also about catching up with old friends and making new friends. That’s why we paired great hors d’oeuvres and an open bar with our vendor area in the Expo Hall. It’s the perfect place to meet up and finalize dinner and entertainment plans. The 2024 Multi-Unit Franchising Conference is more than an annual gathering—it’s the heartbeat of our industry, a catalyst for innovation, and a cornerstone for future-ready franchisees. Be there, be informed, and be ready to elevate your franchising journey.

JESSE KEYSER 2024 MUFC Chair

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Gary Avants

“To help retain employees, we strive for a fun and friendly environment and offer excellent benefits and scholarships.”

Taking the Leap

Ditching his day job to build a legacy family business Written by SARA WYKES

GARY AVANTS

Founder & President

Company: Avants Management Group No. of units: 35 Zaxby’s Age: 63 Family: Wife Sharon, 2 daughters, Melissa Crowe and MaryStuart Hulsey, 1 son, Jordan Avants Years in franchising: 26 Years in current position: 26 8 | Multi-Unit Franchisee | Issue 4, 2023

hen Gary Avants told his wife he was walking away from a successful career selling insurance to open a franchised chicken-focused restaurant, she began to cry. It was a classic midlife crisis, he admits, but he also had a better sense than most about the franchise business, especially one in particular. He had sold car and homeowner’s insurance to the two founders of Zaxby’s. As he saw how well the franchise was doing, he considered his options. The insurance business was quite competitive, while the chicken restaurant franchise appeared to have the potential to do something that was—and remains—important to him: building a business that his children could join.

The first year was hard work, he says. It was early days for Zaxby’s, which now tops 900 locations. His first Zaxby’s was the brand’s 17th. The training was not what it is today, and Avants found himself at the restaurant from opening to closing and learned by doing. For instance, he realized he couldn’t take the best cooks or cashiers and make them managers. The skills they had in one area did not necessarily translate into the leadership skills managers needed. Avants persisted, and he has not lost his enthusiasm. “I love what I’m doing, and I like this brand,” he says. And his dream of building a business his children could join came true. “I didn’t force it or push it,” he says, “but I did share and show them the business.” He also told them they couldn’t come into the business unless they were qualified. “They all worked their way up,” he says. Now, all three are involved in key positions, and Avants is looking to his grandchildren to one day join the family business. “We are building a future,” he says. And, as you may have guessed, his wife dropped her objections years ago. PERSONAL First job: Group benefit underwriter, Confederation Life Insurance, 1983. Formative inf luences/events: I’m blessed to have had many formative influences. I always strive to surround myself with positive and successful individuals. I was greatly influenced by my high school football coaches, who preached hard work and discipline. They taught me that if I wanted to play the game, I had to outwork my competitors. This lesson has served me well in business. Key accomplishments: Being married for 40 years to my high school sweetheart, Sharon, and having all three of my children in key management roles in our growing family business. Biggest current challenge: Hiring enough quality team members to support our stores. Next big goal: Build two Zaxby’s per year with 50% or more cash and reduce debt.

MU Profile–Gary Avants First turning point in your career: I opened my first Zaxby’s in Milledgeville, Georgia, at age 37 after being in the insurance industry for 14 years. Best business decision: Investing in the Zaxby’s brand and owning the real estate for my locations as we have grown. Hardest lesson learned: Growing too fast and not having the infrastructure in place to support the growth. Also, I became more humble after thinking every deal would be a home run. Work week: At 63, I try to perform work-related business during the week (Monday to Friday). However, I find myself working on the weekends at times. My goal is to have a great management team that can handle the day-to-day operations. Exercise/workout: I play tennis and pickleball and enjoy taking walks. Best advice you ever got: Quit talking and start doing. The good Lord gave each one of us a gift, and we need to use it. What’s your passion in business? Growing the business with my children and for our future generations. How do you balance life and work? Work-life balance is very important to me. I find that when I consistently incorporate exercise into my routine—whether tennis, pickleball, or walking—I am at my best. Guilty pleasure: Southern soul food. Favorite book: The Bible. Favorite movie: Any movie featuring Tom Hanks. What do most people not know about you? I have a koi pond, and I like to spend time doing quiet thinking at the pond. Pet peeve: Poor attitudes. What did you want to be when you grew up? A football coach. Last vacation: This past spring, my wife and I celebrated our 40th anniversary on a boat cruise down the Rhine River, visiting Amsterdam, Germany, and France. Person you'd most like to have lunch with: Warren Buffet. MANAGEMENT Business philosophy: Growth, creating wealth, investing excess profits into other investments, providing employment opportunities for family and non-family members, and giving back to the community.

Management method or style: Hire the best and let them manage. Greatest challenge: Not getting complacent. How do others describe you? (My daughter, Melissa Crowe, AMG vice president, answered this.) Gary’s team describes him as caring. Gary is a leader who understands that great things in business are never done by one person; they are done by a team of people. Gary is great at empowering others to do their best and giving them the resources and support they need to succeed. One thing you're looking to do better: I’m always looking to be a better leader, friend, parent, and husband—not just one thing. How you give your team room to innovate and experiment: We have biweekly meetings to keep clear lines of communication open at all times. We want managers to find solutions to problems, instead of leadership pointing them out. In our meetings, we discuss the issues with our team and how we can offer support and tools for them to deploy their own solutions. How close are you to operations? Seven days a week, 24 hours a day, I can be reached with issues, and I stay in touch with what’s happening operationally at all times. What are the two most important things you rely on from your franchisor? Trust and communication. What you need from vendors: Trust and communication. Have you changed your marketing strategy in response to the economy? How? Yes. We’ve shifted away from large corporate sponsorships and redirected our efforts toward local community involvement. Our main emphasis lies in partnering with local schools. They encompass a substantial portion of our customer base, including students, families, and staff. While we continue to fundraise for various groups, we’ve also increased our commitment to providing in-kind donations whenever feasible. Our goal is for our partners to enjoy our delicious food, rather than solely making monetary contributions. How is social media affecting your business? Social media is a powerful tool for local store marketing, helping us foster positive community relationships. With dedicated social media platforms for each

of our locations across our six states of operation, we share the Zaxby’s brand story locally, celebrate community partnerships, recognize exceptional employees, and promote exclusive events and offers. It’s also a direct line for issue resolution, showcasing our commitment to providing an exceptional guest experience. Our aim is to show every community we serve how much their support means to our family-run stores. How do you hire and fire? We hire via Workstream, Indeed, and Snagajob. We have a clearly written termination policy we review with prospective employees as part of the hiring process. How do you train and retain? We use online training accompanied by shoulder-to-shoulder training. For management training, we use training stores. Training stores are run by our top general managers, who are passionate about training and set the standard and expectations for our company. To help retain employees, we strive for a fun and friendly environment and offer excellent benefits and scholarships. How do you deal with problem employees? We train and retrain as a first course of action and then follow our termination policy afterward. Fastest way into your doghouse: I would say the same as my pet peeve answer: poor attitudes and negative energy. COVID-19 How did Covid-19 affect your business? We had to close our dining rooms and lost employees because of people being fearful of working or being unable to work because they had contracted Covid-19. Although we had to close our dining rooms, we were lucky to have a drive-thru option in our stores, which kept our business prospering. With so many restaurants having dining rooms closed throughout the pandemic, a lot of traffic came our way because of our drivethru. We executed very well once we adjusted our operations to accommodate this change and took the necessary steps to keep our employees and guests safe. How have you responded? After managing drive-thru operations at a high level, our next priority was to work hard to get our dining rooms safely reopened. Face-toface interaction with our guests is vital to our business success, so opening the doors and welcoming everyone back to the dining room was a must. With Covid, the added Issue 4, 2023 | Multi-Unit Franchisee | 9

MU Profile–Gary Avants

steps in cleanliness were of the utmost importance, so coming out of that Covid mindset, it was very important that we kept that cleanliness mindset at the forefront. What changes do you think will be permanent? With Covid, we introduced outside order taking and curbside for our guests. These options have become a big part of our daily operations and will only continue to grow. BOTTOM LINE Annual revenue: $90 million-plus. 2023 and 2024 goals: I’ve challenged our team to increase sales by 5% in 2023 over 2022, but it has been a roller coaster. A lot of it has to do with food costs. For instance, I just got an email that chicken costs are going up. So setting goals for 2024… I just don’t know. Growth meter: How do you measure your growth? Sales, net income, and transactions. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, I’d like our company to be at 50 stores with $150 million in sales. In 10 years, I’d like us to be at 70 stores with $210 million in sales. Do you have brands in different segments? Why/why not? We have no other brands in our portfolio at this time. Zaxby’s growth plans for sales and territory, along with my goal of owning our locations’ real 10 | Multi-Unit Franchisee | Issue 4, 2023

estate, fit well with our business success model. Additionally, our company has a strong relationship with the franchisor. How is the economy in your regions affecting you, your employees, your customers? While hiring is improving across our operation, the cost of utilities, labor, food, repairs, taxes, and higher interest rates is having an impact on our bottom line. We had two menu price increases in the past 12 months to help offset these costs, but this affects our guests because they have to pay more. Are you experiencing economic growth in your market? Our data currently shows that we are experiencing higher growth in our suburban areas and flat growth in our urban markets. How do changes in the economy affect the way you do business? There is a lot of competition in our business. We see fewer guests dining in and an increase in drivethru and online ordering. To achieve the highest satisfaction for our guests, we must be quick to get the order out while simultaneously ensuring the food is at the right temperature and the entire order is correct. We also are training hard on guest service, which drives guest loyalty and retention. How do you forecast for your business? Our leadership team meets with each department in our company regularly to discuss

any trends that might affect sales, labor, food costs, etc. These include finance, operations, human resources, marketing, and construction. We also review P&Ls for the preceding 12 months to determine our forecast. What are the best sources for capital expansion? We currently have a $25 million line of credit with Synovus for growth. Experience with private equity, local banks, national banks, other institutions? Why/why not? We used local banks to grow our business in the past, but 2 years ago, we refinanced everything with Synovus. In return, we eliminated personal guarantees and appraisals and opened a large line of credit to support our expansion plans. What are you doing to take care of your employees? For all our salaried employees, the company pays 100% of their health, dental, vision, life, and long-term disability benefits. We also match up to 6% of their salary in our 401(k) program. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Mostly, we try not to pay overtime, which helps labor costs. During Covid, we had a lot of overtime because we did not have enough team members. What laws and regulations affect your business, and how are you dealing with them? Our HR department does a great job of keeping up with all current laws and regulations. Our insurance company, which provides employment practice coverage, also provides good consultation to ensure we stay compliant. In the last few years, any changes to the laws and regulations have had minimal impact on our operations. How do you reward/recognize top-performing employees? By giving back 10% to the management team. We believe that when a store is meeting its goals and performing at a high level, it is important to share our profit with them. We also utilize our recognition culture weekly, and it is a part of every upper management meeting. We use unique awards to make the recognition personal and fun. What kind of exit strategy do you have in place? Our family has been working steadily on our succession plan for the past 3 years. So far, we’ve identified who will take my place, set up different trusts to offset taxes, and transferred ownership, and we are in the process of creating family and business covenants. 

A FRANKLY SIMPLE ROI. $1,572,851 AUV *

Simple Operations Low Food Costs Best in Industry Incentives **

- 4-years of Discounted Royalties, First 3-Stores - $20,000 Local Marketing Spend - Owner/GM Training Fee Included

Call ted

Director of Franchise Development

(714) 423-6171 wienerschnitzelfranchise.com

tmilburn@galardigroup.com

*AUV refers to average unit volume of unaudited gross sales shared by the top 25% of 303 Wienerschnitzel restaurants open for the entire calendar year of 2022. Your estimated sales and operating costs can and will vary. This information is not an offer to sell you 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 pre-approval process to be awarded a franchise license. Please read Item 19 in our Franchise Disclosure Document. **New franchisees must pay initial franchise fees and meet development schedule to achieve incentives. Qualified candidates and domestic U.S. markets will be reviewed on a case-by-case basis. These incentives are only available for franchising in the United States. Please request our Franchise Disclosure Document for terms and conditions on this limited-time, limited-incentive offer.

Jeremy Music

“I strive to be overly communicative with my employees. I want my team to be part of the decision-making. I value everyone’s input and opinions.”

From IT to Latte

Living out his entrepreneurial dreams Written by SARA WYKES

JEREMY MUSIC

Franchisee

Company: Front Porch Coffee No. of units: 16 Scooter’s Coffee, 1 Wingstop, 1 Billy Sims BBQ, 1 Jersey Mike’s (under construction) Age: 45 Family: Wife, 3 children Years in franchising: 7 Years in current position: 5 12 | Multi-Unit Franchisee | Issue 4, 2023

eremy Music went to college, earned a master’s degree, and knuckled down to a job in the field he’d trained for— medical IT. “It was fun for a little while,” he says. But there were things he didn’t like. Going to meetings, sitting at a desk, and staring at his computer all day was not the life he wanted. He began to devise a plan to never have to punch a time clock again. Music had built his first home on his own, and his banker gave him an idea: invest in real estate. He started doing just that. “I’ve built spec houses and condos and owned apartment buildings,” he says. “I’ve always been an entrepreneur.” Seven years ago, however, he took another

turn—into franchising. “When I started researching franchises, I thought, ‘Well, maybe that’s a route I could take to add to what I’m already doing,’” he says. “Real estate is a long-term investment, and I wanted to get into something that was more short-term, something that would allow me to work for myself the way I’m doing now.” He started modestly with Wingstop and Billy Sims BBQ. In 2018, he took a bigger step, signing on with Scooter’s Coffee. “I started researching a lot of different coffee concepts and visited multiple places, but I just kept coming back to Scooter’s. The brand always bubbled to the top of the list.” Music, who now has 16 Scooter’s and a development schedule to open 45 stores, says he’d like to reach the 25 mark in a year. “Every conversation I had with the people at corporate, I was impressed,” he says. “Being part of other concepts, I had a frame of reference. They definitely impressed me a lot. They know what they’re doing.” He’s also adding Jersey Mike’s Subs to his portfolio, with his first set to open this fall. “I was attracted to Jersey Mike’s because they give back a lot,” he says. “They remind me of Scooter’s. They know what they’re doing, they have a clear vision, and I agree with it.” PERSONAL First job: I went to the University of Iowa and got a degree in management information systems. I worked for a hospital and eventually got my master’s in medical informatics. Formative influences/events: The landlord of where I put my Wingstop and BBQ concepts owns the whole complex and really wanted a coffee concept in the front part of the complex. I got to talking to the guy who runs my other concepts and thought, “You know, if they want something new, we might as well own it since we’re already here.” At that point, I started researching a lot of different coffee concepts and visited multiple places, but I just kept coming back to Scooter’s Coffee. Key accomplishments: Some of my biggest accomplishments as a Scooter’s franchi-

FRANCHISE OPPORTUNITY

CATCH A WINNER UNIQUE MENU. * & WITH A $3.45M AUV LOW STARTUP COST. ** $338K AVERAGE EBITDA. $3.77M AUV. Now’s the time to get your claws on a family-friendly, seafood boil franchise that’s cracked the code on proﬁtability and bold Asian-Cajun ﬂavors guests love. As the conversion experts in second generation restaurant sites, you’ll shell out less on your buildout while dramatically shortening the time to start bringing in the clams.

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Net a great opportunity.

angrycrabfranchise.com | 586-907-6404 *This figure represents the net sales achieved for calendar year 2022 at five (5) affiliate owned restaurants and ten (10) franchised restaurants. **This figure represents the average EBITDA achieved for calendar year 2022 as a percentage of consolidated net sales at the same five (5) affiliate owned restaurants and nine (9) of the ten (10) franchised restaurants. *** This figure represents the Median Initial Investment to open the same five (5) affiliate owned restaurants and eight (8) of the same ten (10) franchised restaurants above, all of which were opened in Second Generation Sites. Second Generation Sites are restaurant locations where the operator utilized a premises that was previously operated as a restaurant and therefore requires less initial investment to open and operate. Most Angry Crab Shacks are opened in Second Generation Sites. Each of the included restaurants were open for all of calendar year 2022. This information appears in Item 19 of our Franchise Disclosure Document (FDD). You should review our FDD for details about these results. Your results may differ. There is no assurance that you will do as well. ©2023 Angry Crab Franchise Opportunity. Angry Crab Franchise LLC. All rights reserved. 2345 S. Alma School Rd. Suite 106, Mesa, Arizona 85210

MU Profile–Jeremy Music see include being named Franchisee of the Year a couple of years ago and also receiving their Growth Award. In 2021, we had put in the most stores that year. I believe we added seven that year. Biggest current challenge: Finding locations is probably my biggest challenge right now. You want the A+ location, and that spot will go for a premium cost. And the cost of construction has at least doubled for me in the last two to three years—and that’s to build the same kiosk. Next big goal: We’re hoping to have 25 stores open in about a year. Then we want to have 45 stores not too long after that. First turning point in your career: One day I just realized that I didn’t want to sit behind a desk anymore. I didn’t want to sit in meetings all the time. It’s just not who I am anymore. I like meeting new people. I like going out and looking at locations. I like construction. I like all the parts of the process. I am exactly where I want to be. That’s for sure. Best business decision: I hired a multistore leader to oversee my stores early on. I was still working full-time and the stores needed more attention than I could give them. If I wanted my business to grow and be successful, I needed to be a year or two ahead in planning. So I hired a very experienced leader who has been in the coffee industry for years and worked for a franchise group for a long time. That’s probably been my best business decision yet. Hardest lesson learned: Trusting the process. With my first store, I really questioned how well it was going to do. In the first year, it wasn’t doing as well as I wanted it to do. And so I had really candid conversations with headquarters, and it came down to, “You need to get the speed. Your team needs to get faster.” I had to just step back and trust what they said. I invested in more labor to get that speed of service where it needed to be, and we’ve grown ever since. Work week: Almost every day is different. At least once or twice a week, I’m traveling to different areas of Iowa and Illinois—mainly Illinois because that’s where most of our growth is coming from—and I’m looking for new locations. Multiple times during the week, maybe every day, I’m talking to my banks or with my accountants to figure out where we’re going to get capital. Exercise/workout: I really love swim14 | Multi-Unit Franchisee | Issue 4, 2023

ming. Breaststroke is my favorite swimming style. I love being outdoors, so anything outside is what I like doing. I do a lot of landscaping. I enjoy hiking. We actually live on some acreage, so we get to go exploring a bit. Best advice you ever got: The best advice I ever got was from a leader I worked with probably 10 to 15 years ago. She said, “You can actually learn more from a bad leader than a good one because you learn how you don’t want to be.” I now make sure I strive to be the best leader I can. I really try to listen to people. That would be my best advice to anybody else, just listen. Have you had a mentor or role model? I built my first house when I was 23, and my banker was about my age. I got to know him pretty well, and he owned a lot of rental properties. He’d bought one house at a time and really hustled outside of his banking job. That got me thinking, “I can do this.” We got to be good friends. What’s your passion in business? I enjoy the challenge of trying to always improve the business. I love taking something and making it better. How do you balance life and work? Maintaining balance is easier now because when I worked full-time and did all this stuff on the side, I worked all day, all night, weekends, all the time. At least now, sure, I do work every day, but now it’s on my schedule, on my timeline. I can take my kids to doctor’s appointments now and don’t have to worry about a meeting coming up on my calendar. Favorite movie: “Tommy Boy” is probably my favorite movie. It’s just stupid funny. I love stupid comedies. What do most people not know about you? Well, we’re pretty private people. Most people around here probably don’t know that I own a bunch of Scooter’s Coffee locations. They don’t know I own multiple businesses outside of Scooter’s Coffee. Pet peeve: Probably laziness. What did you want to be when you grew up? A police officer. Last vacation: We just got back from our last trip! We went to Gatlinburg, Tennessee. It’s a really pretty area. We’ve been there before and really enjoyed it, so we decided to make our way back. Person you’d most like to have lunch with: My grandpa. He passed away a few years back.

MANAGEMENT Business philosophy: Treat your employees as well as you can. I try to add a new benefit for employees every year. You attract great people and retain them when you provide benefits. I truly think that if you treat your employees well, they will take care of your business. Management method or style: It’s changed. It used to be lead by example when I was closer to the operations and really in the weeds. As the business has grown, I’ve gotten further removed. Now, I strive to be overly communicative with my employees. I want my team to be part of the decision-making. I value everyone’s input and opinions. How do others describe you? When I was working for others, you might hear the words “intelligent” and “dependable.” Within the business I’ve created, I think most would say that I’m nice and easy to get along with. One thing you're looking to do better: I’d like to see my employees more and get more of a chance to interact with them. It’s harder now with stores being farther away from where I live. When I had stores only in my hometown, I was able to stop in regularly. My team knew me. How you give your team room to innovate and experiment: We give our employees goals, and we give them the latitude to make decisions depending on their level of management. We definitely empower our employees to let us know if there’s something that we can do better. How close are you to operations? I’m definitely a lot further removed than I ever have been. I have multiple district managers and a VP who run about 99% of the operations. Right now, I’m finding locations and working with the banks to build them. What are the two most important things you rely on from your franchisor? Industry trends and innovation. What do you need from your vendors? People may not know this, but Scooter’s owns it all. It’s a vertically integrated supply chain, so in a sense, it’s all the same vendor. I like that model. When your franchisor is controlling your supply chain, you know your interests are aligned. Have you changed your marketing strategy in response to the economy? How? I don’t know if it’s because of the econ-

Profile omy or just because we’re learning more, but we definitely have changed a little bit. We get out into the community more. We want our managers out in and interacting with the community. We make it a priority to give back. How is social media affecting your business? We are affected by reviews on Google or Yelp. If someone has a bad experience, there’s a process. If they call or email, we’ll be notified. We call those people and find out how we can make it right. That’s the only way we’re going to get better. We take that very seriously. How do you hire and fire? We take our time when we hire. We really vet the candidate to make sure we get the right person. We try not to fire too much, but if we do, we like to fire fast. How do you train and retain? We’ve been building a training program that will be standardized for all new employees. One of my managers has transitioned to become the head of training. One of our stores has become a training store for corporate as well. We retain our employees by offering flexible schedules and benefits. How do you deal with problem employees? Depending on the issue, the district manager or a VP will be involved. They do a good job of taking care of it. Fastest way into your doghouse? Not being nice. I went to our district manager after I had an unpleasant experience at the Scooter’s in my hometown—an employee at the window who was unpleasant—she wasn’t even smiling. COVID-19 How did Covid-19 affect your business? Scooter’s, as a strictly drive-thru operation, wasn’t affected like many other businesses were. In fact, it really had the opposite effect. Covid seemed to accelerate our growth. I worried that sales would slow when everything started opening up again, but they didn’t. They’re still growing. How have you responded? Scooter’s implemented safety protocols surrounding the contact between the customer and the barista. What changes do you think will be permanent? Staffing has changed from four people to two or three people. And the new stores are bigger.

BOTTOM LINE Annual revenue: Right about $13 million. 2023 and 2024 goals: We are trying to get another three or four stores open by the end of this year. I am hoping to get to 20 stores. I am buying land now for next year, and as soon as the ground here thaws, I can start building. My goal is to get a couple of Jersey Mike’s up and seven to 10 Scooter’s. Growth meter: How do you measure your growth? The number of stores as well as year-to-year sales growth. But also, the personnel growth. I like seeing employees who have been with me for a while grow and advance in the organization. Vision meter: Where do you want to be in 5 years? 10 years? My 5-year plan is to be a $100 million company. My wife and I are both trying to retire in 10 years when we are 55. I will still be involved, but not in the same capacity as I am now. I’ll have managers in place to handle operations. Do you have brands in different segments? I also have Wingstop and Billy Sims BBQ, and we started building our first Jersey Mike’s in September. How is the economy in your regions affecting you, your employees, your customers? I would say employee pay is probably the biggest thing it’s affecting. Wages are going up for everyone. Trying to balance what we can afford versus what people need to survive and to do better in their lives, that’s tough. How do changes in the economy affect the way you do business? We are fortunate. We’ve realized people are going to get their cup of coffee regardless of their bank account and their debts. What are the best sources for capital expansion? We have been selling, doing some sale-leasebacks on some of our properties to raise that capital, so we don’t have to borrow any more money. We’re trying to borrow as little as possible. Once you get to 20 or 25 stores, a lot of them will pay for themselves anyway. Experience with private equity, local banks, national banks, other institutions? In my opinion, if you can work with the local bank, you work with the local bank. I feel like they get to know you. They care about you. We have used a capital group and they were fine, but you’re definitely just another number to them.

What are you doing to take care of your employees? We evaluate every quarter and award one manager a gift card. We give bonuses. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We’re in two different states: Iowa and Illinois. Iowa’s minimum wage is $7.25, and in Illinois, it’s $13 and going to $14 at the beginning of the year. It’s tough. We just have to accept that the margins are different between the two states. What laws and regulations are affecting your business, and how are you dealing with them? The employment and labor laws are very different between the two states. So we have to be very aware of them. We’re lucky that we don’t have a lot of fulltime employees. Most of our employees are part-time on purpose because we have shorter shifts. We have HR consultants we can talk to for help navigating that. How do you reward/recognize top-performing employees? We praise the employees who go above and beyond, not only by telling them, but also by offering rewards. Sometimes, we’ll have contests between the stores, and the winner gets a pizza party or the chance to go bowling. We also give out gift cards, little stuff like that. What kind of exit strategy do you have in place? Our strategy is changing. We’ve kicked around the idea of having another group purchase the majority of the business and operate it while we keep a minor share. We also thought about keeping the real estate and selling the business. That’s changed a little bit because of the cost of building and the value of these buildings, because we are in them, is just astronomical. I’ve got people coming to me wanting to buy them. Then last year we started thinking about sale-leasebacks. I really don’t know where we’ll land. 

Issue 4, 2023 | Multi-Unit Franchisee | 15

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Michael Fay

“Hire smart people and then let them be smart and try new ideas. Most of the evolution of this business is from others, not me.”

Culture Champion

Growing a diverse portfolio by trusting smart people Written by SARA WYKES

MICHAEL FAY

CEO/Franchisee

Company: MTF Companies No. of units: 25 Subway, 11 Little Medical School, 3 Overtime Athletics, 1 Flex Enrichment Age: 38 Family: Single, miniature schnauzer Mackenzie Years in franchising: 5 Years in current position: 5 18 | Multi-Unit Franchisee | Issue 4, 2023

arly in Michael Fay’s career, he had good bosses who encouraged his willingness to learn. Because he asked questions, he says, “They were willing to help.” He made it a regular practice to absorb whatever he could about running a successful business. Now, at 38, he has a multi-unit portfolio of restaurant and childcare-focused brands. Fay discovered franchising in college when he was the manager of a Subway shop. He quickly saw the value of the franchise business model as a vehicle for making money, he says. When he became a Subway operator, he applied what he’d learned, and four Subway units to 25 in less than two years.

In addition, he’s the largest Little Medical School franchisee, with territories in Montgomery County, Maryland, Fairfax County, Virginia, Houston, and Denver. Little Medical School is a Loyalty Brands concept that teaches medicine, science, and the importance of health to children. Fay’s strategy of diversification also includes Overtime Athletics and his own concept, Flex Enrichment, a before- and after-school care, tutoring, and vacation camp. “I needed more than one egg in the basket,” he says, and choosing childcare-focused brands made sense to him. “I’d worked in the child space for years—and kids aren’t going anywhere,” he says. “I never want to be in a position where I’m relying on all my income to come from one source.” He describes his management style as being a “culture champion” who makes sure the whole team is on the same page. That’s important because he trusts his leaders to make many of the decisions. “I really feel lucky to be doing what I’m doing,growing my own business,” he says. With franchise locations now in 10 states, Fay says he doesn’t want to grow just to reach a number. However, he does want to grow. “I want revenue and overall profitability to be at least 1.5 times my current numbers within 5 years," he says. PERSONAL First job: Toy store cashier. Formative influences/events: 1) Working at a day camp in high school and seeing the power of what happens when kids are engaged and having fun. 2) Managed a Subway in college and saw the opportunity to make real money in franchising. Key accomplishments: Largest franchisee of Little Medical School, and going from four Subway units to 25 in less than two years. Biggest current challenge: People, people, people. In the service business, it is all about delivery, and this isn’t possible without good people. It seems to be more and more difficult to find high-quality team members.

MU Profile–Michael Fay Next big goal: I would like us to double our business in the next 4 years. First turning point in your career: I spent several years working my way up at Blockbuster and saw the negative impact of not being innovative and pushing to keep improving. I promised to myself to never get comfortable and always push to do better in my business and life. Best business decision: Officially becoming a Subway franchisee. This opened up so many more opportunities in both Subway and the education space. Hardest lesson learned: Cash is king. You need to be sure to have a solid reserve in case emergencies happen. While Covid was, hopefully, a once-in-a-lifetime event, I’ve made sure my business could weather the storm much better this time around with money in the bank. Work week: I like to exercise for an hour every morning and then start the day by 8:30 a.m. I normally work until about 7 p.m., take a break, and then come back to it. I really enjoy what I am doing, so most days it goes by fast. One thing I found helpful is to take a break for lunch every day. I read the WSJ and do not respond to work calls or emails. Exercise/workout: I walk for several miles outside at least six days every week. Best advice you ever got: My father told me, “Be a fountain, not a drain.” I try to be solution-oriented in everything I do. What’s your passion in business? People. I really like the opportunity to work with so many talented and fun colleagues. How do you balance life and work? Not an area of strength for me. Not having a family and traveling about 44 weeks each year, it isn’t easy. I do like spending time in my pool on the weekends. Guilty pleasure: My mother introduced me to the Dateline NBC true crime podcast series. I am hooked now and sometimes drive a few extra minutes to finish one. Favorite book: The Five Dysfunctions of a Team by Patrick Lencioni—really all Patrick Lencioni books. Favorite movie: “Up in the Air.” What do most people not know about you? I have never cooked a meal in my life. Literally, I eat all meals out. Pet peeve: Being late to a meeting or a call. 20 | Multi-Unit Franchisee | Issue 4, 2023

What did you want to be when you grew up? To have a career in public relations. Last vacation: All-inclusive in Mexico, my first vacation in a long time. I limited myself to one hour of work each day. Person I’d most like to have lunch with: Greg Flynn, the largest franchisee in the world. MANAGEMENT Business philosophy: Find smart people and get out of the way. Management method or style: I view my role as the culture champion, making sure we are all rowing in the same direction. I don’t make many decisions, but instead trust the leaders I have in the business. Greatest challenge: Ensuring that everyone knows they don’t work on an island and always have support if needed. How do others describe you? Engaging, decisive, and fun. One thing you're looking to do better: We do a good job of communicating with the leadership of each part of the organization, but between the businesses we have hundreds of team members. I’d like to improve how and when we communicate to those individuals working in restaurants and schools. How you give your team room to innovate and experiment: Typically, we have a conversation about the idea or experiment, the desired outcome, and the backup (in the event it doesn’t work). From there, I am good. It’s more about a discussion than approval. Hire smart people and then let them be smart and try new ideas. We can always fix it. Most of the evolution of this business is from others, not me. How close are you to operations? I am involved with the leadership of each division daily and connect with all leaders periodically. You must be careful not to get too deep in the details. What are the two most important things you rely on from your franchisor? Clear communication and support if we run into a challenge. I am very fortunate to say all the brands I am involved with check both of these boxes. What you need from vendors: To do what they say they will do. Most of the time this means being on time.

Have you changed your marketing strategy in response to the economy? How? On the restaurant side of the business, we continue to offer local promotions in addition to ones from Subway. We always did some, but are doing it more frequently to drive traffic. On the childcare/enrichment side of the business, it is about providing a unique experience. Enrichment programs can be a luxury, so we want to make sure families see the value. As a result, we communicate what happens each day and week and provide “take home” items. How is social media affecting your business? It can help grow the business if used effectively for marketing. On the flip side, if something negative happens, the world can find out in minutes. Fingers crossed—the world has only heard positive feedback so far. How do you hire and fire? I don’t do a lot of either at this point, although I am part of the hiring process. I base it less on the resume and more on the questions, “Could I work with this person? Do they fit our culture?” Fortunately, I have not personally had to let anyone go in a long time. How do you train and retain? All of our franchisors do a nice job of providing training tools, which is helpful. I also see a lot of value in learning from a peer, so in all our businesses, we do shadowing as much as possible. How do you deal with problem employees? I find having direct, specific conversations quickly will often solve the issue. Either behavior changes or the problem employee departs on their own. Everyone is at least owed the opportunity to improve. Fastest way into your doghouse: Being consistently late or being a drain (and not a fountain). COVID-19 How did Covid-19 affect your business? It affected both our in-person child services and our restaurant business in huge ways. How have you responded? Innovation! On the childcare side, we began offering virtual classes. They might not have been the same experience, but they still offered students the opportunity to learn and connect with others. On the Subway side, we leaned into pickup and delivery, and it continues to be a strong part of the business.

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MU Profile–Michael Fay

“The focus on the employee is critical. It is still hard to find good people, so as a result, we are thinking more about culture, growth opportunities, and, of course, compensation. These have always been important, but in the current climate are essential.” What changes do you think will be permanent? Third-party delivery and the use of an app to order food will continue to be a strong part of the Subway business. BOTTOM LINE Annual revenue: $12 million-plus. 2023/2024 goals: We are on track this year to do about 40% more than in 2022 and want to make sure we finish strong. Next year, I think it’s all about continued growth, so I’m hesitant to put a specific number on it. Growth meter: How do you measure your growth? Bottom-line growth. Yes, top-line revenue is important, but my gauge is year-over-year profitability. Vision meter: Where do you want to be in 5 years? 10 years? I am always hesitant to list specific numbers because I don’t want to grow just to hit a number. I do want revenue (and overall profitability) to be at least 1.5x the current numbers within 5 years. This growth is so much fun to me. I hope to be doing it for well for at least 10 more years. Do you have brands in different segments? Why/why not? Yes, in childcare and restaurants. While they seem so different, there actually are a lot of similarities, and there is lots of space to grow in both segments. How is the economy in your regions affecting you, your employees, your 22 | Multi-Unit Franchisee | Issue 4, 2023

customers? I don’t see a lot of differences between regions, and we operate in 10 states. The focus is on value (both dollars and experience) and finding good people while paying competitively. Are you experiencing economic growth in your market? Yes. Each segment of the business is up double digits over last year. How do changes in the economy affect the way you do business? The focus on the employee is critical. It is still hard to find good people, so as a result, we are thinking more about culture, growth opportunities, and, of course, compensation. These have always been important, but in the current climate are essential. How do you forecast for your business? At this stage, we have a playbook for both segments of the business, so we can look at history to help us predict future growth (both organic and through acquisition). What are the best sources for capital expansion? I have a great relationship with a lender who has helped me grow both parts of the business. Experience with private equity, local banks, national banks, other institutions? Why/why not? I have used a national bank, but it can be difficult to obtain

financing quickly. On the Subway part of the business, equipment financing has been a great tool to grow the business. What are you doing to take care of your employees? There is never too much you can do. We offer incentive programs, competitive pay, team events, benefits, and a clear path to advancement. One of the benefits of growth has been the number of individuals I have been able to promote internally. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? This is top of mind for me, and I do not foresee it getting better anytime soon. The goal is to manage costs as much as possible, pay a little more for stronger people, which ultimately pays for itself, and pass some of it on to the customer. How do you reward/recognize top-performing employees? Money is important, but I focus a lot on celebrating the success of everyone. Maybe we go to dinner, send a thank-you note, or give an extra day off accompanied by specific feedback on a job well done. Sure, money helps, but I really don’t believe it is the be-all and end-all. What kind of exit strategy do you have in place? I have been approached about selling a few times, but I’m having too much fun to be thinking about an exit! 

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Roger Wagner

“I realized that I needed to give people the autonomy to fail. Otherwise, they’d never be able to make important decisions on their own.”

Situational Leadership

COO finds the fun in operating 3 brands Written by SARA WYKES

ROGER WAGNER

Chief Operating Officer Companies: BRG, M2R, W2B No. of units: 20 Burger King, 12 Moe’s Southwest Grill, 5 Tropical Smoothie Cafe Age: 59 Family: 6 kids Years in franchising: 31 Years in current position: 13

24 | Multi-Unit Franchisee | Issue 4, 2023

oger Wagner’s story follows the well-trodden path of many other franchisees. He was firmly set on a career that no longer felt like a good fit. When he looked for a business opportunity that would provide him with the independence he sought, he discovered franchising. On the verge of 60, Wagner oversees a portfolio of 37 franchised units, with more on the way. He’s diversified his portfolio with Burger King, Moe’s Southwest Grill, and Tropical Smoothie Cafe. He likes the fact that more than 75% of the smoothie brand’s franchisees are multi-unit owners. Wagner isn’t thinking of slowing down. “It’s when you don’t stay in tune and you

disconnect that it becomes difficult to be an effective leader,” he says. And he is fully engaged, even testing the limits of Tropical Smoothie’s drawing power by opening new locations in the northern climate of metropolitan Detroit. Those units now have some of the biggest sales volumes in Wagner’s TSC portfolio. His goals for the future are basic. “The simple execution of all the core pillars of the brands we work with: hospitality, quality, service, and cleanliness, ” Wagner says. Enduring Covid and its ongoing impacts have added challenges to what he calls the new normal, but he’s always up for the challenge because, he says, “the business is exciting.” PERSONAL First job: Little Caesars in metro Detroit. Formative inf luences/events: A big influence in my career happened on the corporate side. I’d taken an FBL (franchise business leader) position where I was working alone and supporting franchisees. After a couple of years, I decided I wanted my team to be able to develop further into their own careers, so I slowly transitioned into what I do now. Key accomplishments: A huge accomplishment for me was simply making it out of the pandemic and not putting any of my businesses at risk. It certainly changed the restaurant industry’s landscape, with the boom of third-party delivery, smaller buildout options, and more. On a more general scale, I’d say it was a massive accomplishment to move from one brand to adding a second and a third. It meant so much to our organization to be able to scale as quickly and safely as we did, especially given how high our standard for excellence is. Biggest current challenge: Commodity and labor costs continue to be a challenge for restaurant owners. The big obstacle is navigating how to get higher sales without increasing the controllable cost of business. Next big goal: To develop more Tropical Smoothie Cafe locations because we love the brand and believe that it truly has the legs

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Visit petsuppliesplusfranchising.com and wagnwashfranchising.com * This information can be found in Item 19 of the 2023 Franchise Disclosure Document issued by WNW Franchising, LLC. The data reflects the calendar year beginning January 1, 2022 and ending December 31, 2022, and shows the data for 10 reporting stores which were open and operating 12 months as of December 31, 2022. 60% of reporting stores achieved or surpassed this figure. A new franchisee’s results may differ from the represented performance. The discounted initial franchise fee applies only to franchise agreements executed on or before September 30, 2023; no other discounts apply.**This information can be found in Item 19 of the 2023 Franchise Disclosure Document issued by PSP Franchising, LLC. The data reflects the calendar year beginning January 1, 2022 and ending December 31, 2022, and shows the data for 320 reporting stores which were open and operating 12 months as of December 31, 2022. 42.8% of reporting stores achieved or surpassed this figure. A new franchisee’s results may differ from the represented performance. There is no assurance you will do as well. This is not an offer to sell you a franchise. Franchises are offered by prospectus only through the delivery of a franchise disclosure document. Certain states require that we register the franchise disclosure document in those states. The communication is not specifically directed to the 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 franchise disclosure document to the prospective franchisee in compliance with the applicable law. © 2023 PSP Franchising, LLC and WNW Franchising, LLC. All rights reserved.

MU Profile–Roger Wagner

“A huge accomplishment for me was simply making it out of the pandemic and not putting any of my businesses at risk. It certainly changed the restaurant industry’s landscape, with the boom of third-party delivery, smaller buildout options, and more.”

to stand in any market we’d want to open in. Each location we’ve opened thus far has proven to be successful in a very short time, so that’s been exciting to see. We have several in development, and I’m very eager to see them open as soon as we can. First turning point in your career: When I worked in the banking industry, there was a merger, and the higher-ups gave the promoted position to someone who was more tenured. But they weren’t performing as well as I was. From that point on, I realized that I needed to be able to determine my own destiny based on my own performance. Best business decision: When I got an offer to relocate to North Carolina. After speaking with my family, we decided to stay in Syracuse. That led me to every opportunity I’ve received today, and I’m thankful that this is the route my life went. Hardest lesson learned: Trying to be everything to everybody. I took decision-making away from my team and was incredibly involved. I realized that I needed to give people the autonomy to fail. Otherwise, they’d never be able to make important decisions on their own. This played a huge role in developing my current leadership style and philosophy. 26 | Multi-Unit Franchisee | Issue 4, 2023

Work week: There is no such thing as a work week. I work every single day. Exercise/workout: I play pickleball multiple times a week. I also coach indoor field hockey and referee field hockey. Best advice you ever got: Inspect what you expect. What’s your passion in business? Developing people while being financially viable. It’s important to me that we see career path progression with everyone who works on my team. I believe deeply in taking people to the next level and getting them to excel. How do you balance life and work? For me, they intertwine. I may be off doing something with my kids, but I’m still able to be available and help guide people through synergistic conversations and making good decisions. With today’s technology it’s easy to balance both at the same time. Guilty pleasure: Pizza, classic pepperoni. Favorite book: Fundamentals: 9 Ways to Be Brilliant at the New Basics of Business by Jim Sullivan. The book talks you through how to re-implement accountability without losing structure in your business. Favorite movie: I don’t have a favorite, but I’m a huge fan of any action movie.

What do most people not know about you? I coached ice hockey for 12 years and went to seven state championships. I spent every single night on the ice for six consecutive years. Pet peeve: Cleanliness and organization (or lack thereof) in our stores. What did you want to be when you grew up? In college, I wanted to be a doctor, but obviously, that has changed quite a bit. Last vacation: Boston. All of my vacations are centered around my kids’ sporting events, and we typically stay in the city for an extra few days to explore and sightsee. Person you'd most like to have lunch with: My father. We enjoy sharing stories together. MANAGEMENT Business philosophy: There are a few basic tenets to my business philosophy: integrity, hard work, and execution in the pursuit of excellence and financial delivery. We aim to treat our people well while also maintaining high standards and consistency. Management method or style: Situational leadership. Every person is going to respond to your approach differently, so it’s important to know them on a deeper level.

Let’s Make Tracks together

156

Locations

States

28 Years

Served All-Day!

Proven Operational Model Territories Are Now Available With Plenty Of Room To Own – And Grow – Your Own Market New Efficient Prototype Design For Ground-up Construction “The financial model is there, and it’s a strong P&L situation. If you’re going to be part of something,

this is the brand to be part of.” Tim Augustine – Multi-Unit Franchise Partner

BlackBearDinerFranchise.com This advertisement is not the offer of a franchise. An offering can only be made after you have received a franchise disclosure document. 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 FINANCIAL PROTECTION AND INNOVATION NOR A FINDING BY THE COMMISSIONER THAT THE INFORMATION PROVIDED HEREIN IS TRUE, COMPLETE AND NOT MISLEADING. Minnesota Reg. No. File No. F-4953. Florida Advertising ID No: BF46341. BBDI LLC, PO Box 991850 • Redding, CA 96099-1850, [530-243-2327].

MU Profile–Roger Wagner It helps me know what buttons to push to get them to excel and deliver their best work. Greatest challenge: Without a doubt, the greatest challenge was staying afloat in the early stages of the pandemic lockdowns. How do others describe you? Driven, tough but fair, high integrity, and knowledgeable. One thing you're looking to do better: I’m constantly learning how to manage and build relationships with my now adult children. How you give your team room to innovate and experiment: Creating synergistic relationships. The more people involved in the decision-making process, the better the outcome tends to be. I also try to allow my team members to become as entrenched and knowledgeable in their fields as possible. It really allows me to release the reins. It doesn’t always have to go my way as long as our team ends up getting the right result in the end. How close are you to operations? Daily. I’m very close to operations. What are the two most important things you rely on from your franchisor? Structure and marketing are the most important things your franchisor can provide. My end goal is to continue increasing transactions in each individual location we own. What you need from vendors: Responsiveness and communication. Have you changed your marketing strategy in response to the economy? How? I’ve found that it’s extremely important to use marketing to connect to small towns and become ingrained locally in what’s going on. Being able to show up and support the local community through fundraisers and charities makes them not only trust you, but see you as part of their hometown. Nothing can beat that type of loyalty. How is social media affecting your business? I’ve invested a lot of time into learning about social media and its effects. You simply cannot reach the same number of people without using social media. It’s an incredibly effective tool to build excitement around openings and promotions. Marketing your business has become so much easier the more common social media has become in the past decade or so. How do you hire and fire? We hire when we have opportunities and develop within. 28 | Multi-Unit Franchisee | Issue 4, 2023

We find that promoting within drives the best results. I believe employees typically fire themselves. If they’re not performing up to standard, we let them know what to do and how to improve. It’s up to them whether or not they want to act on that. How do you train and retain? We develop within, so people who already understand our processes and systems tend to be very loyal to our organization. We also make a huge effort to treat our people well and create environments that benefit each individual. I have a giant whiteboard in my office that has the name of every single contact for each of our 37 restaurants. Once or twice a month, I’ll call each contact and check in with them to see what they need from us, how they’re developing, and how we can make their career paths move forward. How do you deal with problem employees? We try to find a root cause or catalyst for problem employees and move forward from there. Fastest way into your doghouse: Lying or being dishonest in any way. BOTTOM LINE Annual revenue: $50 million (approx.). 2023 goals: My goals for the remainder of 2023 focus on the simple execution of all the brands we work with. Hospitality, quality, service, and cleanliness are the core pillars of that mindset. Vision meter: Where do you want to be in 5 years? 10 years? Ten years is a target retirement timeline, but I don’t think of these time markers too often. I like to stay in the here and now. Do you have brands in different segments? Why/why not? Yes, and that was intentional. We didn’t want to put all of our eggs in one basket. Each one of our brands allows us to serve a wide range of demographics. Any given person can find something they’ll love from our three brands. How is the economy in your regions affecting you, your employees, your customers? The economy in New York has affected us greatly, largely because of the minimum wage increases. I’m obviously in support of our crew members being compensated fairly, but it would be dishonest of me to say that hasn’t influenced the way we’re operating. We’re constantly working to adjust our pricing to make it fair not only for employees, but for guests, too. We’re

very fortunate that we’ve been able to take this on and still come out the other end very profitable. How do you forecast for your business? Forecasting for our business is crucial to our success. You must be paying attention to the way things are shifting on a daily basis, as it can be easy to lose sight and fall behind the curve. Annually, we start compiling all information from the past 2 years. From there, we’ll build out projections for the upcoming year. We look at business trends, competitors in the area, operating hours, and so much more. We forecast not only for each brand, but for all 37 individual locations. What are the best sources for capital expansion? Having long-term relationships with local and regional banks. What are you doing to take care of your employees? The environment we offer sets our people up for success. I’ve worked very hard to have a relationship with each person who enters our system. This allows us to understand them and their performance on the job. Aside from that, we offer top-tier benefits to our employees. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? It’s a balance between controlling costs and watching everything on a microscale. How do you reward/recognize top-performing employees? Aside from bonuses or monetary compensation, I make sure the employee being rewarded feels seen. For example, when we get a positive comment or review from a guest, I personally thank the employee responsible for treating our guests to excellent service. What kind of exit strategy do you have in place? I really don’t have one. I’m working to ensure that, when I do eventually leave, we have the right people in place to continue this legacy of excellence. 

FIRE UP THE STOVE! Discover Good Vibes and Great Operations with Potbelly $1.3MM+ AVERAGE GROSS SALES * *Top 25% of franchised Potbelly shops operating during the 12-period timeframe in 2022

400+ Shops

States

46 Years

SEASONED LEADERSHIP TEAM WITH 150+YEARS OF COMBINED EXPERIENCE DOUBLE-DIGIT SAMESTORE SALES GROWTH

EXCELLENT SALES-TOINVESTMENT RATIO

SCAN FOR FRANCHISE INQUIRIES The information herein is for informational purposes only and is not directed towards the residents of any particular jurisdiction. It is not an offer to sell a Potbelly® franchise which can only be made through the delivery of a franchise disclosure document. Certain states require franchise registration or an exemption therefrom. We will not sell or offer to sell a franchise in any such state, until we obtain an effective registration in that state or qualifies for an exemption therefrom.

Sedrick Turner

“Encourage open communication, recognize their hard work, and offer extra support when needed.”

Team Turner

Following in his family’s entrepreneurial footsteps Written by SARA WYKES

SEDRICK TURNER

President/Owner-Operator Company: Global Midsouth Corp. No. of units: 8 Checkers (with 1 under construction), 6 Rally’s Age: 53 Family: 2 daughters, Alexandria, 25, and Kennedi, 13; parents, Teresita and William Turner; 2 brothers, William and Wendell; 1 sister, Maria Years in franchising: 30 Years in current position: 30 30 | Multi-Unit Franchisee | Issue 4, 2023

edrick Turner comes from a family with a long entrepreneurial history. He remembers spending time in his childhood with his grandmother, a strong woman who raised a large family and dreamed of what might have been. “She used to talk to me about the things she wished she had had the resources to do,” he says. That planted the seed in him to one day own and operate his own business. Turner also was inspired by watching his father, a retired Air Force master sergeant who worked as a postal carrier and operated other businesses, including a grocery store. His brothers followed their dad’s example

by starting up the first beeper and paging service in Memphis, and Turner worked for them during his summer vacations from college. In his senior year at Tennessee State University, he investigated franchise giant Subway for a research project. In the following years, he operated as many as 14 Subways, 2 Red Robins, and 8 Hot Wings, his own franchise concept. These days, Turner is focused on expanding his portfolio of Checkers & Rally’s restaurants, most of which are in Mississippi. He’s also teaching his daughter the business and continuing his work as vice president of operations for a group that supports veterans reentering the workforce. Turner says he follows one basic tenet for business success: “It’s a team.” PERSONAL First job: Sacker/cashier at a local grocery store. Formative influences/events: Growing up, I was greatly influenced by my father, watching him own and operate his own businesses. Key accomplishments: I am a first-generation college graduate. Biggest current challenge: Keeping my weight under control. Next big goal: Add more locations through development and acquisition. First turning point in your career: When I had to close my first franchise restaurant with another brand in 2001– 2002 because of a recession. Best business decision: Joining the Checkers & Rally’s family. Hardest lesson learned: When you face adversity, you need to hit it head-on, embrace it, learn from it, and grow from it. Work week: Seven days a week because I’m passionate about what I do. I’m always trying to find things to do better for myself and the company. Exercise/workout: I love a long walk or jog after a nice, long day at work.

MU Profile–Sedrick Turner Best advice you ever got: Stay persistent and follow through on your dreams. What’s your passion in business? To succeed and to do whatever it takes to provide for my family while taking care of my team members and guests. It’s a blessing to be a blessing. How do you balance life and work? Scheduling activities outside of work and taking time off for several vacations throughout the year. Guilty pleasure: Junk food. Favorite book: The Audacity of Hope by Barack Obama. Favorite movie: “Bad Boys.” What do most people not know about you? I may come off as shy, but I have a high energetic spirit, and I love to make those around me laugh. Pet peeve: No excuses. What did you want to be when you grew up? Entrepreneur. Last vacation: Europe. Person you’d most like to have lunch with: Warren Buffett. MANAGEMENT Business philosophy: To witness success, you must fail so that you can be a testimony for yourself and others. Surround yourself with people who share your core values of God first, giving back to the community we serve, and taking care of our guests. Management method or style: I have a democratic management style. Greatest challenge: Recruiting and retention of talented team members. How do others describe you? God-fearing, generous, loving, kind, and hard-working. One thing you're looking to do better: Reach customers in more than one way. How you give your team room to innovate and experiment: Team member-building activities. How close are you to operations? Very close. I’m a hands-on guy when it comes to my business. What are the two most important things you rely on from your franchisor? Ongoing support and continued proven plans for success.

32 | Multi-Unit Franchisee | Issue 4, 2023

What you need from vendors: Quality, consistency, and service. Have you changed your marketing strategy in response to the economy? How? Yes. I established and joined marketing co-ops in both of the markets my stores are located in. How is social media affecting your business? It’s increasing business through our new rewards and mobile app. We are able to reach those who don’t see our television commercials or receive coupons by mail. We also use social media to post news of our growth and breakthroughs. How do you hire and fire? Our hiring process is done through Indeed, and our general managers will schedule interviews with candidates they see fit. After the interview, if the candidate is chosen, an offer letter is presented with a start date. When firing an employee, we give specific reasons for the decision and provide documentation, such as performance reviews or writeups. Once termination is completed, we make sure to collect any items the employee has access to. How do you train and retain? We have adopted new comprehensive onboarding and LMS programs. How do you deal with problem employees? Get to the root of the problem, provide clear instructions and expectations, be proactive, and stay calm and respectful. Fastest way into your doghouse: Excuses and failure to complete whatever task is asked of you. COVID-19 How did Covid-19 affect your business? Checkers is one of the only QSRs to adopt a drive-thru-only concept that we perfected and others are just learning. We were able to operate business as normal because we were drive-thru-only. What changes do you think will be permanent? Continue to elevate guests’ drive-thru experiences. BOTTOM LINE 2024 goals: Open more Checkers & Rally’s locations and improve current operations. Growth meter: How do you measure your growth? Revenue, profit/sales, and customer traffic.

Vision meter: Where do you want to be in 5 years? 10 years? Retired and enjoying my future grandbabies. Do you have brands in different segments? Why/why not? No, but looking for new opportunities. How is the economy in your region affecting you, your employees, your customers? In a positive manner. Sales are increasing. Are you experiencing economic growth in your market? Yes. We opened four new freestanding locations in 2022. How do changes in the economy affect the way you do business? It may affect our profit at times, but at those times it allows us to increase efficiency. How do you forecast for your business? By creating budgets and measurable goals. What are the best sources for capital expansion? Certain banking partnerships. Experience with private equity, local banks, national banks, other institutions? Yes, local and national banks. What are you doing to take care of your employees? Encourage open communication, recognize their hard work, and offer extra support when needed. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Increasing menu prices. What laws and regulations are affecting your business, and how are you dealing with them? Keeping up with current and changing labor laws. How do you reward/recognize top-performing employees? We have a bonus program in place. Each category a manager meets is rewarded with a different dollar amount. We also have a team outing every month (bowling, dinner, etc.). At the end of the year, we also have a Christmas party. We give out awards to our team members and managers. It’s a big celebration. What kind of exit strategy do you have in place? Currently, I’m teaching my daughter Alexandria everything she needs to know about the business. In the next 5 years, I plan to pass the torch to her. 

$2.6 MM average AUV* (all stores… not just the top quartile)

8-hour operating day 50% royalty reduction for first 2 years (for area development agreements signed by 12/31/23)

*average of all stores open full year 2022

Talisin Burton

“With trust comes the ability for the team to try things and fail without the thought that it was negligent.”

High-Flying Operator

Former helicopter pilot soars by building his business Written by SARA WYKES

TALISIN BURTON

Managing Member Company: Burton Foods No. of units: 14 Dunkin’, 1 Baskin-Robbins, 1 Jimmy John’s Age: 44 Family: Wife Megan, 4 children, Talisin Jr., 13, Greyson, 11, McKinley, 10, Harley, 6 Years in franchising: 8 Years in current position: 8 34 | Multi-Unit Franchisee | Issue 4, 2023

alisin Burton is a U.S. Naval Academy graduate who became a Marine Corps helicopter pilot and completed two tours of duty in Iraq. When he returned to the U.S. to be a flight instructor, he also started an executive master’s degree program at the University of Southern California. His thesis fit right in with some thinking he’d been doing about business: He wrote about Dunkin’ and where it might find its future. The answer was in California, and with Burton. He was helped along the way by Bob Fox, the father of one of Burton’s longtime friends and the owner of several Wendy’s. Step by step, Burton established a portfo-

lio of Dunkin’ locations. He made a short sidestep into ownership of a couple of other brands, but didn’t like the results. But when Inspire Brands bought Dunkin’ and Burton saw Jimmy John’s in Inspire’s expanding portfolio, he thought the two brands might click. He also found that the San Diego area needed more sandwich shops. He started with one location in San Clemente, and that became the baseline learning experience for the 27-unit Jimmy John’s development agreement Burton is carrying out. Eight years in, Burton is no longer a franchise newbie. He is balancing work and family and says he’s figured out what works for both. “I try to make $100 mistakes, not $1,000 ones,” he says, and emphasizes that opening more stores will never come at the cost of his family. PERSONAL First job: USMC officer, UH-1N pilot. After I graduated from the Naval Academy, I was commissioned a second lieutenant in the United States Marine Corps. From there I went to flight school to fulfill my lifelong dream of becoming a pilot. Formative influences/events: Bob Fox, mentor/business partner. I grew up with Chris Fox, Bob’s oldest son. I was always impressed that Bob never missed a single basketball game that Chris played in. That flexibility of schedule—while also being able to give an opportunity to so many great people at the stores—really drove me to learn from Bob and to find my way to the QSR industry. Key accomplishments: I have been blessed with a wonderful family, a great and patient wife, four awesome kids, and a job that I truly love. It is my dream and my best accomplishment to bring those two loves together and to have my children working with me and eventually take over this company. Biggest current challenge: Doing business in California. The legal landscape and laws that had good intentions but have become get-rich-quick schemes for lawyers are a huge challenge to any growing business

Diversify your Franchise or Real Estate Portfolio

About a MY SALON Suite Franchise:

94.5%* Average Occupancy

265+

Locations

• Semi-Absentee: No on-site staff

43.4%

EBITA

200+

Under Development

• Multi-unit expansion available nationwide • Recession Resistant "You're making an investment that helps a lot of other people start their small businesses for themselves. It allows them to check that box of what their dreams and goals are for their business." Jenn Navarro, Franchisee Suburban Square, Lawrence Park Abington and Conshohocken, PA

*Per the 2022 Franchise Disclosure Document. The following figures are only estimates, and there is no assurance you will do as well if you rely upon our figures. If you rely upon these figures, you must accept the risk. Average gross sales are based on the gross sales reported by 146 locations, and average owner benefit is based on the unaudited operating statements supplied by the 146 locations open for the entire year ending December 31, 2021. Average owner benefit is calculated based on the 2021 year-end benchmark study from Item 19 of the 2022 Franchise Disclosure Document.

Chris Davenport: chris.davenport@propelledbrands.com • 214-346-5644 MYSALONSUITE.COM MY SALON Suite is part of the Propelled Brands portfolio which is the Franchisor of NerdsToGo® and FASTSIGNS® International, Inc.

MU Profile–Talisin Burton trying to employ large numbers of people in California. We have lawyers sending us legal cases for employees that never even worked with us. We have to spend time and money to prove that they didn’t work here. It’s a system that needs to be addressed—not only for business owners, but also because it hurts the individual employees. Next big goal: Continue our growth and add 100 new jobs in San Diego in 2024. First turning point in your career: Understanding that hiring good people is the first step to success. I used to only hire people with restaurant experience, but what I learned is that good people who have drive, even without experience, will do more in the long run than an unmotivated person who has experience. Best business decision: Having a mentor and surrounding myself with people I can trust. Hardest lesson learned: You can’t trust everyone. Coming from the Marine Corps, we inherently trust those around us to do the right thing even when no one is looking. It was my expectation that such trust was a human trait, not just a Marine Corps trait. While there are wonderful people I do everything I can to surround myself with, there also are people who will cut corners or worse. You have to be aware of that to be a business leader. Work week: Even when the stores are closed, we continually have people baking and cleaning, so we really don’t have a work week. But I do my best to block time for my family and to coach my boys in lacrosse and my girls in soccer. Exercise/workout: Not as much as I should, for sure, but I do play old-man hockey on Thursday nights and coach a bunch of my kids’ teams. For the most part, the job keeps me on my feet and the kids at home keep me running around, so I tend to rely on that for PT. Best advice you ever got: Celebrate the successes and don’t get bogged down by the setbacks. Early on, it is really easy for business owners to concentrate on the issues. One major setback can kill a company, but I was told a while back that if that is all you concentrate on, you will run yourself and your people out. What’s your passion in business? Great food, great people, great relationships. We 36 | Multi-Unit Franchisee | Issue 4, 2023

serve the best quick-service food in the business. No one ever should leave a Dunkin’ without more joy than when they entered it. We serve products that make everyone happy. Our people are the backbone of the business, and we have some really great ones. I am blown away daily by our folks. How do you balance life and work? I would say I’m getting better at it, but you should really ask my wife. I think early on it is really hard when your business is a newborn and takes a ton of attention 24/7. As the business matures, just like any child, it requires less and less from the parent. Guilty pleasure: Chicken wings. Originally, I’m from Rochester, New York, about an hour from Buffalo, so I can’t go very long without a dozen wings as hot as we can make them. Favorite book: Oh, the Places You’ ll Go! by Dr. Seuss. I know it’s a children’s book, but I think in the end that the message is that you will have ups and downs. You will see a lot in your life, but it is what you do with those experiences and how you interpret those experiences that will define you. Favorite movie: Memphis Belle and Gettysburg. Both are historical dramas. They are what this country was built on, overcoming struggle in the defense of others. What do most people not know about you? My first job out of the Marine Corps was writing spine surgical techniques for Alphatec Spine (now ATEC Spine). Pet peeve: People who want things but don’t want to work for them. What did you want to be when you grew up? A pilot. My grandfather took me to the Wings of Eagles Air Show when I was around 7, and I knew from then on that I wanted to fly. I would draw all sorts of airplanes, but it wasn’t until after college that I had the time or money to become a pilot. Last vacation: Last weekend, my wife, kids, and I went to Launch Pointe at Lake Elsinore, California, and rented a tent. It was a blast. We spent most of the day in the lake. That night, we had a campfire and just hung out as a family. Person you'd most like to have lunch with: My grandmother and grandfather. They were a huge driving force in my life. But as a young kid and then young man, I don’t think I learned as much as I should have from them. I would like to have that opportunity back.

MANAGEMENT Business philosophy: Hire trustworthy people who are smarter than I am. I can teach anyone this business, but to perfect it takes a special, dedicated person. Management method or style: I am pretty hands-on. My partners and team do their best to give me information before I ask so that I don’t get too far into the weeds on things that don’t need my attention. If I could, I would be working the drive-thru every day and greeting customers, but that is not scalable. Greatest challenge: The evolution from a small business to a larger business. As a small business, it is possible for someone with drive to muscle a business out of trouble. If an employee calls, then no problem—jump in and fix it. But in a large business, you can’t single-handedly plug those holes. So you need great people and processes that allow others to make decisions. How do others describe you? I hope trustworthy, loyal, and compassionate. One thing you're looking to do better: Listening. How you give your team room to innovate and experiment: With trust comes the ability for the team to try things and fail without the thought that it was negligent. How close are you to operations? I work with the team daily to recognize successes, address challenges, and push forward on improvements. What are the two most important things you rely on from your franchisor? We ask them to be good partners. In the end, they influence our operations and sales daily, whether positive or negative, through decisions we have little or no control over, so we rely on them to make the best decisions possible for the entire network. What you need from vendors: Reliability. Fulfill the contract or task you have been assigned. It seems simple, but things happen. Unfortunately, if my vendors don’t do their jobs, we are the ones in front of the customer. We can’t say, “Sorry, we don’t have that. The truck didn’t come.” The customer doesn’t normally care why and will place the blame, right or wrong, on the name on the building. 

Vik Patel

“I am intense and driven, but intense in a good way. Approachable, big heart, thoughtful, caring about people.”

Sustainable Growth

“If you do right by people, good things happen” Written by SARA WYKES

VIK PATEL

No. of units: More than 245 across various brands: 98 Dunkin’, 64 Rent-A-Center, 38 Popeyes (with 45 by EOY), 28 RimTyme, 23 Take 5 Oil Change (with 30 by EOY), 6 American Family Care (18 more coming, with half already in the works), 2 Brass Tap Craft Beer Bar Age: 46 Family: Married, 2 daughters Years in franchising: 19 Years in current position: 17 38 | Multi-Unit Franchisee | Issue 4, 2023

hen Vik Patel takes a look at how his life has changed over the past two decades, he can’t quite believe what he sees. “I never in my wildest dreams thought we would get to where we are now,” says the 46-year-old multi-brand operator with nearly 250 units. He is especially proud of the number of jobs his franchise locations have created in that growth process. He says he thinks he knows what led to his success: “If you do right by people, good things happen.” Patel had no formal business training, but while working in a commercial brokerage, he was inspired—and learned from—the entrepreneurs he encountered. “I must have

met more than 100 business people who had varying degrees of success,” he says. He made two vows: The first was to remember how others had gone wrong, and the second was to always share his knowledge with people beginning in business. When it comes to that second vow, Patel says he makes sure “to give them a reality check, to not let the Hollywood side of it influence them. There’s a lot of hard work that goes on.” He recalls the first weekend of franchise ownership that he and his wife, Sneha, now the CFO of the Patels’ business, shared. “We said, ‘What are we doing?’” he says of that overwhelming feeling. But they worked on and prospered. When the portfolio expanded to 40 units, Patel says he realized, “If we really want to scale this thing, I have to start trusting the people around me. I started hiring people and bringing people on and promoting from within.” With each growth spurt, Patel has brought on new people to support the larger size of the portfolio. “We recently hired a vice president of construction,” he says. “You do get wiser, although it’s pretty hard not to make mistakes. But when I do, I analyze them and try not to make the same ones again.” Patel’s ambitions for ongoing growth are tempered by what he has learned is a healthy pace his team can sustain, which is between 5 and 10 units per quarter. He is sensitive to the work all of his employees do. “We wouldn’t be here without all our wonderful teams,” he says. “It’s been a team effort.” PERSONAL First job: Portfolio manager at Trust Bank in New Jersey. Formative influences/events: My father was a businessman, and in my job as a broker, I met so many business people who influenced my viewpoint. I took notes. I still learn from everyone I encounter, in particular from people who do things that I admire. Key accomplishments: I set an initial goal to build a $100 million company, and hit it. Some of my staff have been with me since the start, and we wouldn’t be here with-

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MU Profile–Vik Patel

out some of those people and the work family we’ve built. My wife is actively involved in the business. I am most proud that people to this day want to be a part of the journey/ growth. Philanthropy and giving back to the community: I am actively involved with a children’s hospital and my children’s school. We use the platform we built to give back. My grandmother told me once to give back, so I want to always do that. Next big goal: Continuing to grow the brands we have, working toward becoming a $500 million company, and being successful in all those brands. First turning point in your career: The recession in 2008. Everything crashed. I had to make payroll from my own pocket. We had some tough moments there, and that galvanized us to not ever to be in that position again. We learned from it. Yes, I’ve made mistakes. We all do. Not every business decision is the right one. I make them once and learn from them. That’s helped us. Best business decision: Getting started. Doing it with my wife. A lot of people questioned working with her, but there isn’t anyone on the planet I trust or respect more. Hardest lesson learned: During the 2008 recession, I had to cover payroll out of my pocket but we survived. After that, I realized I always need to have a backup plan in case it happens again. I’ve put myself in 40 | Multi-Unit Franchisee | Issue 4, 2023

a position where we are not going to be impacted by economic conditions. Work week: I try to make weekends family time. I still run the development side, and all VPs and COOs report to me. Best advice you ever got: It came from my dad. Never be jealous of anyone. If you want what someone has, ask them how they did it and go do it. What’s your passion in business? I have strong values about giving back. Like with American Family Care, we know it is here to stay, and it is way to provide a service and fits with my mantra about giving back to community. How do you balance life and work? On Monday through Friday, I don’t completely switch off. The reality is there are people who need me on the work front. The virtual world helps a lot, and I’m able to spend time helping with the kids as a result. MANAGEMENT Business philosophy: You are going to be as successful as you want to be as long as you take care of your people. Listen to them and connect with them. When it comes to operating multi-units in multiple states, the common denominator is people. We have 3,500 people working for us now. We take care of them. Management method or style: I’m a social person. I like to be around people,

connecting with people, building a chemistry and a bond. How do others describe you? I think they would say I am driven. I want people to feed off the energy I bring into the room. I am intense and driven, but intense in a good way. Approachable, big heart, thoughtful, caring about people. COVID-19 How did Covid-19 affect your business? During Covid, our staff worked their tails off and put their health at risk daily. They put themselves in the line of fire every day. I will never forget. It makes me proud. We limited travel and still do more Zoom conferences. What changes do you think will be permanent? We try to be more cognizant of employee flexibility and time. We recognized the emotional side of the business. BOTTOM LINE Annual revenue: Approaching $250 million. 2024 goals: I just want a clean year without Covid, hiring struggles, stimulus checks, hurricanes in Florida. That would be great. We’re setting ourselves up for 3 to 5 years. Let’s be ready to take advantage of it, get ready for what is about to come, and train them better for what I believe will be a gangbuster 3 to 5 years. 

92%

FRANCHISEE SATISFACTION 1

THE SECRET TO BECOMING LODGING INDUSTRY ICONS:

PERFORMANCE also includes

The brand that created the Upscale Economy® segment

75.8 $55.00 75.8 % % $55.00

OUTSTANDING REVPARREVPAR OUTSTANDING BRAND BRAND 2 2 3 104.7%) 3 (INDEX(INDEX 104.7%) CONTRIBUTION CONTRIBUTION

$ 40.79 54.754.7 % % $ 40.79

OUTSTANDING OUTSTANDING REVPARREVPAR BRAND BRAND 2 2 3 103.9%) (INDEX(INDEX 103.9%) CONTRIBUTION CONTRIBUTION

a ls o i n c lu des Contact Matthew Hostetler, Chief Development Officer, mhostetler@redroof.com / redrooffranchising.com also i ncludes

Celebrat in g

welcoming years.

2022 Franchise Survey. 2 STR Average Revenue per Available Room Index based performance for all Affiliate-Owned and Franchised Red Roof hotels open and operating for at least one full year, and all of calendar 2022 with any temporary closures being less than 90 days, 575 hotels for Red Roof Inn and 76 hotels for Red Roof PLUS. 3 The Brand Contribution is the percentage of room revenue generated for the properties through the Red Roof Inn website, call center, group bookings, National Sales, Global Distribution system (GBS), third party web sites and by RediRewards® members booked directly with Affiliate-Owned and Franchised properties in the U.S. open and operating for at least one full year, and all of calendar 2022 with any temporary closures being less than 90 days, 575 hotels for Red Roof Inn and 76 hotels for Red Roof PLUS. This is not an offer. No offer or sale of a franchise will be made except by a Franchise Disclosure Document first filed and registered with the applicable authorities. For New York: An offering can only be made by a prospectus filed first with the Department of Law for the State of New York. Such filing does not constitute approval by the Department of Law. For Minnesota: #F-5824. Red Roof Franchising, LLC, 7815 Walton Pkwy New Albany, Ohio 43054. © 2023 Red Roof Franchising, LLC

2023 DOMINATORS LIST LARGEST FRANCHISEES BY STATE STATE (and D.C.)

LARGEST FRANCHISEE

UNITS

ALABAMA

PREMIER KINGS

ALASKA

MICHAEL DAVIDSON; SUBWAY DEVELOPMENT OF ALASKA (tie)

122 21

ARIZONA

DESERT DE ORO FOODS

172

ARKANSAS

K-MAC ENTERPRISES

CALIFORNIA

G & M OIL CO

COLORADO

FLYNN RESTAURANT GROUP

STATE (and D.C.)

LARGEST FRANCHISEE

UNITS

MISSOURI

FLYNN RESTAURANT GROUP

212

MONTANA

MERIDIAN RESTAURANTS UNLIMITED

NEBRASKA

THE DHANANI GROUP

NEVADA

DIVERSIFIED RESTAURANT GROUP

279

NEW HAMPSHIRE

NGP MANAGEMENT

137

NEW JERSEY

THE BRIAD GROUP

NEW MEXICO

MERRITT GROUP

NEW YORK

METRO FRANCHISING COMMISSARY

139

NORTH CAROLINA

CARROLS RESTAURANT GROUP

157

GREAT AMERICAN DONUT/ICA CONNECTICUT DONUTS/VALLEY DONUTS/D&D PLAINVILLE

D.C.

KOVAN GROUP

DELAWARE

NISTAZOS AND SONGS FRANCHISE MANAGEMENT SERVICES

MIDWEST SUBWAY DEVELOPMENT

FLORIDA

SUMMIT RESTAURANT GROUP (NEIGHBORHOOD HOSPITALITY/ ARGONNE CAPITAL)

NORTH DAKOTA

216

OHIO

THE COVELLI FAMILY LIMITED PARTNERSHIP

135

GEORGIA

GPS HOSPITALITY

137

OKLAHOMA

FLYNN RESTAURANT GROUP

113

HAWAII

KAZI FOODS

OREGON

JCK RESTAURANTS/KB RESTAURANTS

IDAHO

FLYNN RESTAURANT GROUP

ILLINOIS

THE DHANANI GROUP

208

INDIANA

FLYNN RESTAURANT GROUP

139

IOWA

MERCHANT INVESTMENTS

KANSAS

ROTTINGHAUS COMPANY

150

KENTUCKY

FOURTEEN FOODS

LOUISIANA

GPS HOSPITALITY

119

MAINE

MDM MANAGEMENT GROUP/MYSTIC VALLEY MANAGEMENT

MARYLAND

FLYNN RESTAURANT GROUP

PENNSYLVANNIA FLYNN RESTAURANT GROUP

123

RHODE ISLAND

DAN’S MANAGEMENT COMPANY

SOUTH CAROLINA

CAROLINA RESTAURANT GROUP

SOUTH DAKOTA

CAVE ENTERPRISES OPERATIONS

TENNESSEE

CARROLS RESTAURANT GROUP

127

TEXAS

THE DHANANI GROUP

712

UTAH

SIZZLING PLATTER

VERMONT

VERMONT DONUT ENTERPRISES

VIRGINIA

BODDIE-NOELL ENTERPRISES

176

HK ENTERPRISES; CAPE COD ENTERPRISES/COUTO MANAGEMENT MASSACHUSETTS GROUP/DARTMOUTH MANAGEMENT GROUP/CAPE MANAGEMENT TEAM (tie)

WEST VIRGINIA LITTLE GENERAL STORE

MICHIGAN

TEAM SCHOSTAK FAMILY RESTAURANTS

133

WISCONSIN

CAVE ENTERPRISES OPERATIONS

108

MINNESOTA

THE DHANANI GROUP

106

WYOMING

GRAND MERE RESTAURANT GROUP

MISSISSIPPI

CARLISLE

42 | Multi-Unit Franchisee | Issue 4, 2023

WASHINGTON NORTHWEST RESTAURANTS

106

AMERICAN FREIGHT

FURNITURE • MATTRESS • APPLIANCE

ENTIRE U.S. MSA

FRANCHISED UNITS

LOS ANGELES-RIVERSIDEORANGE COUNTY CA

19,204

NEW YORK-NORTHERN NEW JERSEY-LONG ISLAND NY-NJCT-PA

18,834

CHICAGO-GARY-KENOSHA IL-IN-WI

11,175

WASHINGTON-BALTIMORE DC-MD-VA-WV

10,639

DALLAS-FORT WORTH TX

10,421

HOUSTON-GALVESTONBRAZORIA TX

9,452

ATLANTA GA

8,609

MSA

FRANCHISED UNITS

PITTSBURGH PA

2,832

MSA

FRANCHISED UNITS

CHATTANOOGA TN-GA

936

WICHITA KS

935

EL PASO TX

935

2,392

HARRISBURG-LEBANONCARLISLE PA

920

JACKSONVILLE FL

2,316

BAKERSFIELD CA

918

SALT LAKE CITY-OGDEN UT

2,262

OKLAHOMA CITY OK

2,086

PROVIDENCE-FALL RIVERWARWICK RI-MA

917

WEST PALM BEACH-BOCA RATON FL

2,057

RICHMOND-PETERSBURG VA

1,956

NORFOLK-VIRGINIA BEACHNEWPORT NEWS VA-NC

2,801

COLUMBUS OH

2,737

MILWAUKEE-RACINE WI

MADISON WI

901

STOCKTON-LODI CA

842

AUGUSTA-AIKEN GA-SC

840

DAYTONA BEACH FL

839

ALLENTOWN-BETHLEHEMEASTON PA

837

GREENVILLE-SPARTANBURGANDERSON SC

1,877

HARTFORD CT

1,818 1,788

MELBOURNE-TITUSVILLEPALM BAY FL

818

SAN FRANCISCO-OAKLANDSAN JOSE CA

7,781

BOSTON-WORCESTERLAWRENCE MA-NH-ME-CT

7,347

GREENSBORO-WINSTONSALEM-HIGH POINT NC

PHILADELPHIA-WILMINGTONATLANTIC CITY PA-NJ-DE-MD

7,106

LOUISVILLE KY-IN

1,667

LAKELAND-WINTER HAVEN FL

809

DETROIT-ANN ARBOR-FLINT MI

NEW ORLEANS LA

1,656

6,447

MEMPHIS TN-AR-MS

1,619

FAYETTEVILLE-SPRINGDALEROGERS AR

802

PHOENIX-MESA AZ

5,968

OMAHA NE-IA

1,467

JACKSON MS

794

SEATTLE-TACOMABREMERTON WA

1,453

769

5,054

BIRMINGHAM AL

TOLEDO OH

1,445

SAVANNAH GA

755

DENVER-BOULDER-GREELEY CO

4,951

GRAND RAPIDS-MUSKEGONHOLLAND MI KNOXVILLE TN

MIAMI-FORT LAUDERDALE FL

4,657

MINNEAPOLIS-SAINT PAUL MN-WI

4,646

TAMPA-SAINT PETERSBURGCLEARWATER FL

4,515

SAN DIEGO CA

3,860

CHARLOTTE-GASTONIA-ROCK HILL NC-SC

3,822

ORLANDO FL

3,754

SAINT LOUIS MO-IL

3,715

CLEVELAND-AKRON OH

3,526

PORTLAND-SALEM OR-WA

3,358

LAS VEGAS NV-AZ

3,255

CINCINNATI-HAMILTON OHKY-IN

3,220

INDIANAPOLIS IN

3,184

SACRAMENTO-YOLO CA

3,071

SAN ANTONIO TX

3,056

AUSTIN-SAN MARCOS TX

2,999

NASHVILLE TN

2,991

KANSAS CITY MO-KS

2,964

RALEIGH-DURHAM-CHAPEL HILL NC

44 | Multi-Unit Franchisee | Issue 4, 2023

2,933

HUNTSVILLE AL

752

1,445

PENSACOLA FL

749

DAYTON-SPRINGFIELD OH

1,337

FORT WAYNE IN

720

TULSA OK

1,285

SYRACUSE NY

707

CHARLESTON-NORTH CHARLESTON SC

1,283

MCALLEN-EDINBURGMISSION TX

701

SARASOTA-BRADENTON FL

1,239

MYRTLE BEACH SC

700

LITTLE ROCK-NORTH LITTLE ROCK AR

1,177

WILMINGTON NC

690

FRESNO CA

1,164

PROVO-OREM UT

684

COLORADO SPRINGS CO

1,155

SCRANTON-WILKESBARRE-HAZLETON PA

659

FORT PIERCE-PORT SAINT LUCIE FL

648

MODESTO CA

644

SPOKANE WA

642

RENO NV

642

JOHNSON CITY-KINGSPORTBRISTOL TN-VA

635

FORT MYERS-CAPE CORAL FL

1,146

TUCSON AZ

1,144

COLUMBIA SC

1,131

DES MOINES IA

1,119

ALBUQUERQUE NM

1,116

BUFFALO-NIAGARA FALLS NY

1,088

BATON ROUGE LA

1,071

HONOLULU HI

1,063

BOISE CITY ID

1,028

LEXINGTON KY

991

ROCHESTER NY

988

MOBILE AL

980

ALBANY-SCHENECTADY-TROY NY

973

SPRINGFIELD MO

635

LAFAYETTE LA

630

MACON GA

615

YOUNGSTOWN-WARREN OH

603

LANSING-EAST LANSING MI

593

APPLETON-OSHKOSHNEENAH WI

592

FORT COLLINS-LOVELAND CO

591

LIMITLESS OPPORTUNITIES

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LARGEST FRANCHISEES BY

U.S. REGION MOUNTAIN WEST

WEST

(CO, ID, MT, UT, WY)

(AK, CA, HI, OR, WA)

UNITS

UNITS G & M OIL CO

279

FLYNN RESTAURANT GROUP

HARMAN MANAGEMENT

244

SIZZLING PLATTER

118

AMERICAN WEST RESTAURANT GROUP

233

HARMAN MANAGEMENT

106

FLYNN RESTAURANT GROUP

222

ALVARADO CONCEPTS

AKASH MANAGEMENT

211

MBN BRANDS

SOUTHWEST

245

PLAINS

(AZ, NV, NM)

(IA, KS, MO, NE, ND, OK, SD)

UNITS

DESERT DE ORO FOODS

182

FLYNN RESTAURANT GROUP

490

MERRITT GROUP

143

ROTTINGHAUS COMPANY

285

DIVERSIFIED RESTAURANT GROUP

LOVE’S TRAVEL STOPS & COUNTRY STORES

177

TERRIBLE HERBST

K-MAC ENTERPRISES

162

STINE ENTERPRISES

FUGATE ENTERPRISES

138

MIDWEST

SOUTH

(IL, IN, MI, MN, OH, WI)

(AL, AR, FL, GA, KY, LA, MS, NC, SC, TN, TX, VA)

UNITS

UNITS 999

DHANANI GROUP

460

FLYNN RESTAURANT GROUP

810

FLYNN RESTAURANT GROUP

322

SUN HOLDINGS

662

CARROLS RESTAURANT GROUP

294

CARROLS RESTAURANT GROUP

546

KBP BRANDS

277

KBP BRANDS

496

ALLINE SALON GROUP

212

DHANANI GROUP

NEW ENGLAND

EAST

(CT, ME, MA, NH, RI, VT)

(DC, DE, MD, NJ, NY, PA, WV)

UNITS

UNITS FLYNN RESTAURANT GROUP

262

NGP MANAGEMENT

CARROLS RESTAURANT GROUP

229

CAFUA MANAGEMENT COMPANY (CMC)

117

FQSR (dba KBP BRANDS)

143

THE DHANANI GROUP

104

METRO FRANCHISING COMMISSARY

139

HK ENTERPRISES

113

CAPE COD ENTERPRISES/COUTO MANAGEMENT GROUP/DARTMOUTH MANAGEMENT GROUP/CAPE MANAGEMENT TEAM

BRIAD RESTAURANT & LODGING GROUP

123

Source: FRANdata Note: Data based on most current FDDs

JOIN THE T SECRET IN PIZZA V P U A E M K M 8 T 2 . 1 BES $

• Over 535 stores in 21 states • Ranked #9 in U.S. pizza sales* • Strong sales to investment ratio • 1,500 sq. ft. carryout/delivery concept INTERESTED IN LEARNING MORE?

Scan the QR code for more information. Steve Clough Director of Franchise Development (248) 414-3300, ext. 242 franchising.hungryhowies.com • sclough@hungryhowies.com *Source: 2022 Technomic **Based on Gross Sales of the top performing 25% (or 71 units) of Hungry Howie’s Franchised Units that were open for the entire 52-week period from December 27, 2021 through December 25, 2022. Franchised Units* means all Hungry Howie’s Units that were open and reporting sales to us for the entire fiscal year, and excludes units in the State of Florida, affiliated units, units which opened or closed during the entire fiscal year, legacy units which are not obligated to and do not report sales to us, and units that were closed for more than ten consecutive days during the entire fiscal wear due to a force majeure event (e.g. COVID- 19). The Franchised Units are in 20 states. These Franchised Units have reasonably similar operations as those being offered for sale. See Item 19 of Hungry Howie’s 2023 Franchise Disclosure Document for additional information. This information is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. It is for informational purposes only. 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 complied with applicable pre-sale registration and disclosure requirements in your jurisdiction. All stores are independently owned and operated. ©2023 Hungry Howie’s Pizza & Subs, Inc. All rights reserved. Hungry Howie’s® and its related marks are trademarks of Hungry Howie’s Pizza & Subs, Inc. Use of the trademarks in the State of Florida are under license to HH Pizza, Inc. Hungry Howie’s locations are franchised to independent owners and operators by Hungry Howie’s Pizza & Subs, Inc. located at 30300 Stephenson Highway Suite 200, Madison Heights, Michigan 48071 (248) 414-3300. Stores located in the State of Florida are franchised by HH Pizza, Inc. located at 2109 -D Main Street, Dunedin, Florida. 34698 (727) 734-8800. STATE OF CALIFORNIA: 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. Hungry Howie’s Pizza & Subs, Inc., 30300 Stephenson Highway, Suite 200, Madison Heights, MI 48071, 248-414-3300.

Border ssings o r C Different states, different rules Written by M. Scott Morris

48 | Multi-Unit Franchisee | Issue 4, 2023

Multi-State Operators When it comes to operating a business with locations or territories in multiple states, franchisees can face several hurdles, some expected, some not. Testing and licensing requirements can differ, tax liabilities can shift, and minimum wages can fluctuate. However, dealing with different rules and regulations is the price some operators are willing to pay to grow their businesses.

the most restrictive. We’re going to make that our base,” he says. “Once we set the parameters in place, we operate with those.” To use pesticides in Connecticut, the company needs a supervisor's license, and each individual technician needs a junior operator’s license. In Massachusetts, there’s a different type of license available after taking a relatively challenging test. “We try to get all of our technicians licensed in both states so we’re not limiting where they can treat,” says Clark. “We can work out one guy’s route so half of the day’s in Massachusetts and half of the day’s in Connecticut, as long as they have both licenses.” Connecticut requires all businesses to display a registration number on signs, billboards, trucks, and any leave-behind material. It’s not necessary for Massachusetts, but they get it anyway. “We’re required to leave a paper invoice in Massachusetts,” Clark says. “In Connecticut, we can send it digitally, but it makes more sense to just keep doing the paper for both sides.” When it comes to payroll, employees are taxed for the work they do in each state. Clark puts in the extra time to log each employee’s hours. “They have to fill out a W-2 for both states, so it’s a little bit of a pain,” he says. “But where we live a lot of people work in both states, so they’re used to it.”

Working out the bugs In the Northeast, Joe Clark and his family own the franchise rights to four Mosquito Squad territories that straddle two states. “Looking at a map,” says Clark, director of operations for Mosquito Squad of Hartford-Springfield, “there’s I-91, which goes pretty much north and south through our territory, and then we branch off left and right from there.” The company is based in Agawam, Massachusetts, just north of the Connecticut border, so every time its trucks hit the road, the rules change in slight, but significant, ways. “We have trucks that treat for mosquitoes and ticks in both states on the same day,” says Clark. “We try to do it as efficiently as possible.” That means knowing the different rules and training the drivers to follow them. In 2017, when the family opened the business, they weren’t entirely up to speed about all the paperwork that would be required. “We figured it out before we got into any issues, but it wouldn’t have deterred us,” says 1,000 miles apart Clark. “We’d rather do things the way we’re Jay Palmer, who owns 14 Floyd’s 99 Barsupposed to than have people from either bershops, says the extra work and red tape necessary to run his business in two states is state come knocking on the door.” definitely worth the effort—even though his Connecticut and Massachusetts have a territories are more than 1,000 miles apart. variety of different rules and regulations, of Palmer got his start with Floyd’s in Colocourse, so Clark says his team simply goes rado, where he has 11 stores. His other three with the rules that are most complicated. are in Kentucky, which came about after “We’ve erred on the side of whatever one is Palmer got a call from the franchisor about a franchisee who wanted out of the business. “I made a really lowball offer on the space, and he took it,” Palmer says. “We had about a week and a half to get the store back open.” It was a busy time of hiring staff and dealing with regulatory hurdles. “Every state has different laws, and Kentucky’s laws—I’m sure there is a reason for what they do—are very difficult to work with,” he says. “Not the people, just the laws themselves.” In his home state of Colorado, the DepartDirector of Operations | Mosquito Squad ment of Regulatory Agencies oversees everything. He can pay a $50 fee online and get a license to operate. “In Kentucky, you have

Joe Clark

Jay Palmer Franchisee | Floyd’s 99 Barbershop

to have a state plumbing inspector come out and make sure the store’s plumbing is safe,” Palmer says. “They also send someone from each board to come out and inspect to make sure you have everything set up properly. So you would have a state barber inspector and a state cosmetology inspector come by and check it out.” In addition, each store needs a manager with a cosmetology license and a barbershop license. “So if your manager quits, then you lose your license,” he says. “You have seven days to fix it.” However, the move into a new state also has a significant upside. Kentucky has plenty of available workers. “We’re having a hard time finding staff in Colorado,” he says, “but Kentucky is different. That’s been a relief for us.” With an area manager based in Kentucky, Palmer says the company is poised for growth. He’s signed a new agreement to build another eight stores in the Bluegrass State.

"Managing from afar, yes, we have some hurdles to climb over, but for the most part, things run pretty smoothly. It’s really turned out to work well." — Palmer

Issue 4, 2023 | Multi-Unit Franchisee | 49

Multi-State Operators

Karen Lossing Franchisee | Mathnasium

“Managing from afar, yes, we have some hurdles to climb over, but for the most part, things run pretty smoothly. It’s really turned out to work well,” he says. Expect the unexpected In 2013, Karen Lossing followed her passion and opened her first Mathnasium. What started with one tutoring service in San Diego has expanded to 14 locations across California, Arizona, Colorado, and Texas. “The first thing that scared me in just owning one location was that if you don’t pay your payroll taxes on time, the fines are significant,” she says. “I never wanted to deal with that, so I decided to hire a third party so we’re always compliant. If they mess something up or something’s lost in the mail, it’s not on me, it’s on them.” Hiring a third-party vendor alleviates some of the difficulties of working across state lines, but not all. When Arizona raised the minimum wage, she had to redo her annual budget.

“People say, ‘How do you do it? How in the world can you manage? It’s just having good infrastructure. If you don’t have good infrastructure, it’s not going to work.” — Avants

50 | Multi-Unit Franchisee | Issue 4, 2023

“So all of that planning we did meant nothing. We had to readjust everything,” Lossing says. “Sometimes you get that curveball.” State lines aren’t Lossing’s only concern. In California and Colorado, some of her lo“So all of that planning cations are considered to be within city borwe did meant nothing. We ders, while others are considered suburban, had to readjust everything. which affects how people are paid at differSometimes you get that ent locations. “You really do have to stay on top of those things,” she says. curveball.” Lossing’s son oversees the Mathnasiums in — Lossing Texas, and her daughter has the Arizona territory. A longtime employee was elevated to regional manager in California, so Lossing is free to focus where it’s most needed. “We meet through monthly Zoom meetings, and I visit all of my centers,” she says. “I’m the Infrastructure rules type of owner who gets on a plane.” Gary Avants is president of Avants ManageOver the years, the franchise agreements ment Group in Athens, Georgia. When he have been changed, and now Lossing, her opened his first Zaxby’s in 1997, it was the husband, and their children are included. brand’s 17th franchise location. After openTheir plan is for the parents to step back and ing another, he decided that acquiring and let the next generation take over, but Lossing building more would be a good way to build wants to make sure her kids fully understand a legacy for himself and his family. However, what they’re getting into and don’t repeat by that point he faced a new problem. mistakes she’s made. “I waited a little bit longer to grow,” he says. “You learn the hard way sometimes. We “And when I started to grow, the whole state did a buildout where we didn’t realize we of Georgia was taken.” had to pay for the HVAC,” she says. “I’d nevSo when he was ready to pursue opportuer done that before on six buildouts. I never nity, he had to follow it across state lines. His had to pay for the HVAC. It was always part company now has stores in six states: Georof the deal, and I didn’t think to ask.” gia, Alabama, Tennessee, South Carolina, When encountering unexpected obstacles North Carolina, and Texas. In November, or other challenges, Lossing says, it helps to he expects to open his 35th Zaxby’s. reconnect with the passion that led to open“People say, ‘How do you do it? How in the ing her first Mathnasium. “You’re helping world can you manage?’” he says. “It’s just kids and then you see there are more kids having good infrastructure. If you don’t have who need help,” she says. “We definitely want good infrastructure, it’s not going to work.” to continue growing and helping them.” When it comes to managing Zaxby’s locations across six states, modern technology makes it possible to do it efficiently. Avants has access to reports from all his stores and keeps a close watch on what the KPIs tell him. “We have a lot of things that will warn us pretty quickly if we have an issue,” he says. “If food costs start to go up, it could be a lot of waste; or we have a lot of new people and they’re not being trained in making orders and throw meals away and redo them; or we have some theft with them walking out the back door.” If labor costs are too low, it probably means not enough people are working President | Avants Management Group during a shift, which hurts customer service. If the labor costs are too high, the

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Multi-State Operators

“We’ve erred on the side of whatever one is the most restrictive. We’re going to make that our base. Once we set the parameters in place, we operate with those.” — Clark

manager isn’t doing a good job of scheduling staff, which hurts the bottom line. “That’s why you must have a good reporting system and good reports to alert you so you can attack these issues quickly,” he says. “I look at them every day.” If needed, he’ll hop on a plane and visit a problematic or underperforming location. He makes it a point to visit each store twice a year, and members of his family visit quarterly. He also hires a third-party vendor to conduct unannounced inspections. The key to overall success when running more than 30 restaurants in six states, he says, is to have a solid infrastructure of quality people in place. “We really lean a lot on our district managers. We tell them, ‘Listen, I can’t be out there every day looking at the stores. That’s your job,’” Avants says. “The district managers will do a weekly inspection of each store. It’s their job to visit the stores a couple of nights a week and once on weekends.” When it was time to grow in a serious way, Avants had to leave the comforts of his home state. Now, he and his family oversee a business that employs 1,100 people and continues to expand. “We really didn’t have a choice. If we wanted to grow, we had to go to other states,” he says. “It would definitely be easier to be in one place, but it’s been fun, and it’s all we know.” (Read more about Gary Avants on Page 08) 

New Country, New Rules There have been times in every multi-state operator’s life when they wondered what it would be like if all the states had the same rules and regulations. Whether they knew it or not, they might have been thinking about Australia. “In Australia, it’s not as hard as in the U.S.,” says Adrian Mahendrata, a partner and CEO with Oishii Group Holdings. “In Australia, everything is standardized. All states will have the same health regulations. They will have the same tax rates.” His company, a Pepper Lunch master franchisee, runs 12 locations in Australia spread out from Perth on the west coast to Sydney on the east. Mahendrata and his partner thought Americans would appreciate a new type of Asian food experience, so they crossed the Pacific Ocean with their concept, which originated in Japan. “We saw an opportunity in the U.S. There was no one else in the country with Pepper Lunch,” he says. “We were given territory in California and Texas. That’s how it all started.” However, when opening the first U.S. location in 2018, he was not prepared to find different rules in different states. He later learned that different cities in California also have specialized requirements. “For Irvine, we had to have an automatic hood system to be on when heat is detected,” he says, “whereas in Alhambra, there is no such rule.” Even with the additional red tape, the move made sense. Mahendrata has five Pepper Lunch locations in the U.S. and plans to expand further. He says there are two reasons for that. “The first is market size. The whole population of Australia is 27 million, whereas California alone is 46 million. Also, the cost of doing business in America is still lower compared with Australia where we have a minimum wage of $30 an hour.” Mahendrata makes his life easier by outsourcing payroll and bookkeeping, which gives him more time to travel to his stores and train staff properly. The difficulties of running a multi-state operation in the U.S. are nothing compared with the rewards. “Obviously, we want to grow,” he says. “We’re also looking to bring more brands from overseas and introduce them to the American market. We see a lot of opportunity.” For Mahendrata, international borders and state lines don’t get in the way of good business.

52 | Multi-Unit Franchisee | Issue 4, 2023

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Ditch Your Landlord? Lease or buy, location is king Written by Colleen McMillar

54 | Multi-Unit Franchisee | Issue 4, 2023

Real Estate—Own or Lease?

ot too long ago, Cyril Thomas, a restless entrepreneur with a background in healthcare and consulting, was casting about for a new challenge. He found it in the restaurant industry. In 2018, Thomas became The Toasted Yolk Cafe’s first franchisee. His Katy, Texas, restaurant had been in operation for two years when he opened a second Toasted Yolk 20 miles to the north in Cypress. A third location is currently under construction with a fourth to follow. While Thomas plans to stick with the Toasted Yolk brand, there will be something very different about the two cafes that have yet to open. For those, he’s decided to ditch landlords. Cyril Thomas, lessee, will become Cyril Thomas, lessor. It’s a question many franchisees have wrestled with: To lease or buy the space they need? The right answer depends on who’s asking and when. For Thomas, building equity in an asset made more sense than forking over rent money to someone else. “After you lease the 5,000-square-foot space and you continually are writing checks for $20,000-plus, you’re thinking, ‘Wow, that’s a lot of eggs,’” he says. Still, Thomas and others are quick to point out that not every franchise operator can—or even should—come to that same conclusion. For franchisees deciding whether to own or lease their space, there are pros and cons to each scenario. Leasing means lower up-front costs and less capital tied up, which can enable franchisees to grow the number of units

they have more quickly. There also are more leasing options available—often at the most desirable commercial sites—which increases the chances of finding prime locations that best match an operator’s needs. The flip side is that lease payments go on forever, meaning a site can cost more in the long run. While buying real estate requires putting up significantly more money initially, franchisees are paying for space they’ll eventually own. It’s an asset that can appreciate in value. And there are tax breaks for interest and depreciation. Franchisees who have chosen the ownership route say they also are buying themselves some peace of mind, knowing their rents won’t increase and they won’t have to depend on someone else if property improvements are needed. Issues to consider If you can do it, why not do it? That was his thinking when Thomas decided to buy land in Richmond, Texas, construct a retail strip center, and lease to himself. Finding the right location presented a challenge, however. “The more developed an area is, the harder it is to find a really good piece of land,” he says. “If I wanted to go and lease, there are lots of developed strip centers out there ready to be leased.” It took about six months to settle on a piece of property, followed by a multitude of permits and licenses to secure while dealing with engineers, architects, builders, and inspectors. “Building has its own set of issues and a completely different timeline,” Thomas says.

" Cyril Thomas

Franchisee The Toasted Yolk Cafe

That’s an incentive for me because I know if it takes me $1 million to build it, once it’s fully leased out, I could probably sell it for $3 millionplus, including the land value.”

Dustin Mullis Franchisee Zaxby's

“We were supposed to open in 2023—not gonna happen. We have to push it to 2024 just because the process is a little bit longer than anticipated.” Once the building is up and running, Thomas will lease out the extra square footage, creating another source of income. His restaurant will occupy 4,500 of the 12,000-square-foot development. “The plan is that the strip center is big enough that it can produce enough revenue so other tenants cover the note payment,” he says. He’s also looking at the long term. “I’ll be able to sell the strip center for probably four to five times what it cost me to build it,” he says. “That’s an incentive for me because I know if it takes me $1 million to build it, once it’s fully leased out, I could probably sell it for $3 million-plus, including the land value.” Location is everything Dustin Mullis’s company, Coup Management, owns the real estate for four of its metro Atlanta Zaxby’s restaurants, as well as for one under construction. At its two other Zaxby’s locations, the company secured ground leases. The brand’s popularity prompted him to look for land in relatively underdeveloped areas. “Zaxby’s is a very hot brand. It’s very difficult to buy stores, especially good stores, in a core market. The metro Atlanta area stores often go very quickly, and they go for very high dollars,” he says. “There weren’t a lot of opportunities to buy, so we just decided to go the ground-up route, acquire our land, and build our sites.” Issue 4, 2023 | Multi-Unit Franchisee | 55

Real Estate—Own or Lease?

Steve Kulawik

Franchisee Children's Lighthouse Early Learning School Mullis sees clear advantages to buying the property instead of leasing it. “On the sites where I own the real estate, I’m paying myself rent. So I’m on both sides of the equation,” he says. However, he continued, there are definitely times when the better decision is to lease. “Sometimes, people make a mistake and

It wasn’t efficient. If we wanted to do some remodeling or updating, it didn’t feel right putting money into somebody else’s property. In fact, at one point, I actually went and protested the landlord’s property taxes because I’m the one who had to pay them.” — Kulawik 56 | Multi-Unit Franchisee | Issue 4, 2023

will choose an inferior site to be able to own it,” he says. “My opinion is that the bread and butter come from the operation of the restaurant; they come from my day-to-day sale of chicken tenders. So you should always choose the best piece of real estate. If that piece of real estate can be bought, great. But the right decision, as a restaurant operator, is to always choose the right site, regardless of owning it or leasing it.” For franchisees looking to add units and expand quickly, owning might not be the best route, says Mullis. “If I’m going to buy a piece of real estate, it’s going to take a lot more of my money in the deal versus leasing,” he says. “So the best use of capital is something you have to weigh out. But I certainly think with all that factored in, I prefer to own the real estate. I’d rather be the landlord. I’d rather control both sides of the equation so that protects me on downside risks.” Financial benefits of owning Steve Kulawik and his wife, Stefani, built their first Children's Lighthouse Early Learning School in 2006 in San Antonio. In the ensuing years, they opened another two in the area and later sold one of them. In September, they were in the midst of negotiating a land deal for another center. The franchisor’s support has allowed them to have the type of childcare facility they envisioned. In fact, they say, they couldn’t be happier that they signed with Children’s Lighthouse instead of taking the mom-andpop route they initially thought they would. Now, Kulawik says the real estate their childcare franchises sit on has become an important part of their long-term goals. “We thought that the real estate portion would be a good investment, along with the business, of course,” he says. “So leasing never really entered our minds.” The land they’ve purchased is in the northern part of San Antonio, an area of tremendous growth. “When we were looking, one of the things we considered was where would this area be in 5 years, 10 years?” he says. “For instance, our second Lighthouse we built was in an area where there was nothing really around us at the time. It was up-andcoming. Fast forward 14 years, and it’s the fastest-growing area in the entire San Antonio metropolitan area. So once again, the foresight about the investment in real estate was a good play.”

That acumen paid dividends when they decided to sell one of their three centers. They made more money on the land than on the business, Kulawik says. For a while, they did lease a Lighthouse before deciding to buy it. Never again, says Kulawik. “You’re responsible for the maintenance, the property taxes, the insurance, and then, of course, the lease payment,” he says. “It was exponentially higher than what our note payments were on the building that we owned. I didn’t like the arrangement. It wasn’t efficient. If we wanted to do some remodeling or updating, it didn’t feel right putting money into somebody else’s property. In fact, at one point, I actually went and protested the landlord’s property taxes because I’m the one who had to pay them.” Today, Kulawik has no doubts that, despite the up-front costs, there are more financial payoffs down the road if franchisees can afford to buy their space. If nothing else, the tax benefits and long-term gain both are better, he adds. “When you lease a building, your rent is 100% deductible. At the same time, you’re not getting the equity that you’re putting in,” he says. “If you own the building, you don’t get to write off the entire note payment, just the interest portion. However, it should be depreciating, and that depreciation can be a great deal more than the lease payment that the other guy is getting to deduct.” Experience is key Patrick Shannon wanted the control that came from buying instead of leasing. Once he and his partners started expanding—going from their first Hungry Howie’s pizzeria to six in Michigan and Ohio, with three under contract—the benefits became even clearer. While they can’t purchase the strip malls that some of their Hungry Howie’s stores are in, they try to buy sites whenever practical. “Our first store opened in Milan, Michigan, in ’96. We rented, like most people do,” Shannon says. “After the first 5 years, the landlords weren’t fixing up the building, weren’t doing anything to it. They decided we were doing so well they wanted to raise our rent. We got to 10 years, and they were going to try to do it again. We said, ‘You’re either going to sell to us or we’re moving out.’” They ended up buying the building. Their next land purchase was an old bank. It needed extensive renovations to convert

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Real Estate—Own or Lease?

Patrick Shannon Franchisee Hungry Howie’s

it into a pizzeria, but they knew it was the right location. “We built this amazing-looking building,” Shannon says. “The first week open, we set national records for sales. So, again, we knew what we were doing. We’ve had great success. It was our first store where we put in a drive-thru. That was another key thing, too, for being where we’re located. We get parents who don’t want to get out of their cars because they have their kids in there. The 58 | Multi-Unit Franchisee | Issue 4, 2023

drive-thru was another reason we picked that building.” One of their owned sites has three tenants. Shannon doesn’t consider that ideal, although he knows some would love to be in that situation. “For me, specifically, I don’t really want to be a landlord. I don’t want to have to deal with all these other issues,” he says. “However, that was the only way we were going to buy this building. It just made sense to do it.” Although it’s worked out well for him and his partners, Shannon says some people should not look to buy property, especially new franchisees. “If you don’t have experience going into it, if this is your first thing, you’re putting up a lot of money,” he says. “If your business is failing, you have this building that you can’t make payments on. I would never recommend that to anybody just getting into business.” Some have questioned whether Shannon and his partners should be buying land and building instead of continuing to lease at some of their locations. However, he points out, he’s learned a thing or two during his time in the restaurant business, especially since that first restaurant in Milan. “We’re actually building two buildings now from the ground up. People tell me,

‘Hey, what if you fail?’ Well, I’ve been in pizzas for 39 years. It’s very unlikely that I’m not going to succeed,” he says. “But that brings us to purchasing locations. Before, it would have been we’d just find a location that was available and take it. Now it’s, ‘Let’s find the right location, and let’s buy that location.’” 

If your business is failing, you have this building that you can’t make payments on. I would never recommend that to anybody just getting into business. — Shannon

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CONTACT OUR TEAM AT FRANCHISING@BONCHON.COM *Figure reflects the average annual Gross Revenues for 105 of the 122 franchised Bonchon restaurants in the system that were in operation from January 1, 2022 through December 31, 2022 (each a “Mature Restaurant”), as published in Item 19 of Franchise Disclosure Document dated March 7, 2023, as amended June 12, 2023. Of these 105 Mature Restaurants, 45 (43%) met or exceeded the 2022 yearly average Gross Revenues during the reported period, with the highest Gross Revenues earned being $3,785,506 and the lowest Gross Revenues earned being $424,677. The financial performance representation contained in Item 19 of our Franchise Disclosure Document dated March 7, 2023, as amended June 12, 2023, also includes the average and median annual Gross Revenues information for our Mature Restaurants in operation in the United States during the 2019, 2020 and 2021 fiscal years. 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. ** 5 year growth rate is based on number of units for the year ended December 31, 2022

People

Hiring Tips from an HR Pro Attracting top talent in a tight job market Written by MARY LOU ATKINS

t our company, our goal is to provide every guest a superb experience that creates a lasting memory. This is done largely with the help of friendly, attentive team members in our restaurants. Current trends make it tempting to hire team members quickly to fill vacant spots, but it is crucial to focus on recruiting the right talent to join the organization. What characteristics are you looking for in an employee? You can determine the right characteristics by examining successful team members already in the company and comparing the characteristics that employees have in common. Look and listen for friendly facial expressions, eye contact, neat appearance, positive demeanor, outgoing personality, thoughtful communication, personal stories of helping others, polite conversation, attention to detail, and a purpose-driven reason for wanting to work. Reactive vs. strategic sourcing Once you have identified the qualities you are looking for, then you can ask the second question: “Where do you find them?” There are two types of sourcing practices: reactive and strategic. Reactive sourcing is when you try to find suitable candidates for a role or roles that are already open. This is more of a short-term approach and is typically used when unexpected and unplanned vacancies arise. Strategic sourcing fills the pipeline with people who may be suitable for positions when they become available. It’s a long-term approach that helps to accelerate your time to hire. It is easy to become reactive in sourcing candidates, but you should challenge yourself and your managers to be proactive. Since you are actively looking for candidates in everything you do, you have the time and opportunity to decide who fits the characteristics of your ideal candidate. Hiring just 60 | Multi-Unit Franchisee | Issue 4, 2023

to fill a position will likely result in your having to hire again soon. Beyond having to rehire, other team members’ productivity may decrease if new recruits are not suited for the role. A candidate who is not actively looking for a job may be interested in accepting a new position if it is better than their current role. Passive candidates may also be interested in part-time positions that allow for scheduling around their current positions. Always having a pool of candidates ready to move into new positions is a huge benefit and creates “bench strength.” The best football teams have players waiting to move into positions as needed. Remember that proactive sourcing is not only for outside hires. You should continually train your current team, so they are ready to take on new responsibilities. Always be ready Always keep an eye out for potential candidates. Keep your business cards on you because you never know when the right candidate will appear. If the person you’re recruiting is not available or interested, ask if they know someone else who would be a good fit. It also helps to inform your current team about open positions. Add a poster on your bulletin board and talk about it during shift meetings. Put an employee referral program together to encourage employees to recommend other superstars. Many other avenues can be used to proactively source candidates. Your guests. Every guest can be viewed as a potential candidate. Guests can also recommend friends or family. Where you shop and dine. When that special person gives you “wow” service, give them a business card. Invite them in for lunch to open a dialogue.

Schools. A fantastic way to increase your applicant pool is to become friendly with local school guidance counselors and coaches. Build relationships with high schools and colleges. Friends and family. Consistently ask friends and family members if they know of anyone looking for work. Job fairs. Local colleges and government employment services often host job fairs. Military establishments. This may be a good tactic when seeking candidates for part-time work. Additionally, many military programs assist veterans in transitioning back to the private sector. Visit https:// www.dol.gov/agencies/vets/employers/hire for more. Job board posts. Examples include Indeed, Workstream, and Facebook. Track your return on investment by comparing how much you spend to how many hires you make. Community groups. Introduce yourself and the brand to local caretaker groups, Nextdoor, city websites, etc. Post open positions on discussion boards. Senior activity centers. This is a great option for locating part-time day positions. Hispanic resource centers. Here you will often find programs that help integrate new citizens into the workforce. People with disabilities. Several programs help people with disabilities gain work experience. Check out this Department of Labor resource for information: https://www.dol.gov/general/topic/ disability/hiring. Rehires. Consider contacting previous employees who left on good terms.  Mary Lou Atkins sHRBP is the vice president of human resources at Chicken Salad Chick. Mary Lou is a seasoned and strategic HR executive with 40+ years of experience in the restaurant industry. She is skilled in talent and performance management as well as employee relations. Mary Lou joined Chicken Salad Chick in 2019 as human resources director, previously holding various positions within operations, training, and HR at Popeyes over the course of 35 years.

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Join our Franchise Family sharing the fun and craveability of the tropics to Inspire Better.® tropicalsmoothiefranchise.com | (770) 580-2333 *$1,245,078 Top 50% Average Net Revenues. $992,613 System Wide Average Net Revenues. Based on our fiscal year ending 12/25/2022 and includes 950 Restaurants that were open for at least 12 months as of 12/25/2022. Excludes nontraditional locations and Restaurants that were not open for at least 357 days in 2022. This information appears in Item 19 of our Franchise Disclosure Document. Your results may differ. 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. 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-9894), 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.. ©2023 Tropical Smoothie Cafe, LLC, 1117 Perimeter Center West, Suite W200, Atlanta, GA 30338.

Customers Count

RECOGNITION FOR ALL Every team member matters

Written by JOHN DIJULIUS

n most businesses, the frontline employees typically get the recognition and glory. However, those we refer to as invisible service providers are rarely praised for the parts they play in the customer experience. A receptionist is like an offensive lineman. The only time their name gets called is when they’ve screwed up. The dozens of times they played their position well went unnoticed. Yet for the highest levels of employee engagement and job satisfaction, it's crucial that business leaders make every team member understand how their job affects customers. Every human being wants to know their hard work contributes toward something that goes beyond business outcomes. All employees tend to thrive on meaningful feedback—sometimes even more than monetary rewards—and their dedication (or lack thereof) strongly affects the overall quality of customer experience and company reputation. “People want to be part of something larger than themselves. They want to be part of something they are proud of, that they’ll fight for, sacrifice for, that they trust,” said Howard Schultz, former president and CEO of Starbucks. Crucial contributions No phone call ever surprised me more than the one from A-T Solutions. A-T stands for “anti-terrorism” training and consulting. I was positive that this company, run by ex-military personnel, mistook the title of my book, Secret Service. However, I soon realized that the founder and CEO, Ken Falke, was serious about making A-T Solutions a world-class customer service organization. Company leaders realized growth can be difficult when trying to get hundreds of employees, including front-facing customer service representatives and project teams, to buy into their organization’s philosophy. One of my projects was to help tie their departments together and demonstrate how 62 | Multi-Unit Franchisee | Issue 4, 2023

all people across the organization contributed to the overall purpose and upheld the company’s core values. During one workshop, I showed a picture of an A-T Solutions trainer conducting a typical training program with military personnel. I then flashed to a picture of a soldier deployed in Afghanistan. Next, I showed a picture of a soldier stepping off a plane and being greeted by his wife and 9-month-old son, whom he had never met. I followed that photo with a family vacationing on a beach. A-T Solutions doesn’t “sell” anti-terrorist training. As a result of what they provide, soldiers come home safely to their families and Americans travel safely. The company's high level of customer service makes these things possible. Despite limited customer interaction, the receptionist can be proud because she plays her part in A-T Solutions’ overall purpose. Affecting customers’ lives In Built to Serve, Dan Sanders shares a great example of this. Medtronic manufactures prosthetic valves for use in hearts. Shift workers spend long hours on assembly lines, putting pieces and parts into boxes and shipping them off. It does not seem directly related to providing excellent customer service. However, Medtronic employees did not see themselves as producing heart valves. Rather, they believed they were helping save lives. Their approach to quality included putting their own hearts into their work. Medtronic holds an annual event where employees meet patients who are alive because of transplanted artificial hearts containing Medtronic technology. They make emotional connections with patients who share stories with Medtronic employees of how they were able to walk their daughter down the aisle at her wedding because of the attention to detail employees had for their jobs. Talk about a boost in employee morale—not to mention customer service motivation!

It is a remarkable illustration of a company applying emotional intelligence to its organizational goals in a way that will directly impact customer care. Bringing customer support representatives and other employees face-to-face with the people who so greatly benefit from their efforts allows Medtronic to provide a context of higher purpose for its workforce. Such interactions with customers result in focused and fulfilled employees. Company values become team values. Celebrate outcomes In The Experience Maker, friend and author Dan Gingiss shares an excellent example of how Motorola does this for employees. “Motorola Solutions is a telecommunications equipment provider that largely sells to other businesses and municipal or government units like public safety (it is no longer related to the smartphone manufacturer),” Gingiss writes. “Its products aren’t sexy, but they are critical and often lifesaving.” Many business-to-business marketers feel at a disadvantage to those at business-to-consumer companies whose products or services can be advertised in a more exciting way. However, “Motorola Solutions proved this theory wrong with a fantastic video that didn’t feature its products so much as it featured the outcomes that its products provide,” Gingiss writes. “The video, titled "Moments that Matter," shows police officers, firefighters, teachers, and medical professionals using Motorola Solutions equipment in their daily jobs and achieving extraordinary results.” These are people for whom experiencing bad customer service or unresolved customer issues could mean the difference between life and death. By showcasing extraordinary solutions to common issues—particularly ones impacting physical and psychological safety— Motorola is clear about its company goals, promising excellent service that will meet and even exceed customer expectations and undoubtedly have a major effect on the company's customer satisfaction score.  John DiJulius III, author of The Customer Service Revolution, is president of The DiJulius Group, a customer service consulting firm that works with companies such as Starbucks, Chick-fil-A, Ritz-Carlton, Nestle, PwC, Lexus, and many more. Contact him at 216-839-1430 or info@ thedijuliusgroup.com.

IFA Legislative Update

Joint Employment, NLRB, & the FTC:

The final frontier for the franchise model? Written by MATTHEW HALLER

lot has happened over the past few months—from the anticipated joint employer rule from the National Labor Relations Board (NLRB), to continuing action from the Federal Trade Commission (FTC) following its RFI earlier this year, to our own IFA Advocacy Summit in Washington, D.C. To be in franchising these days requires staying on top of the latest policy challenges and understanding their impacts on how we do business. We soon expect the NLRB to issue its final rule on joint employment, returning us to the harmful, expanded joint employer standard first imposed in 2015. Under this new definition, joint ownership takes away the very autonomy that franchising seeks to provide. The 2015 change cost franchise businesses $33 billion per year in operational costs, led to 376,000 lost job opportunities, and resulted in a 93% increase in lawsuits over 2 years. Clearly, there are ample reasons why the IFA fought extensively against this standard then, which was eventually overturned by the previous administration. Instead of franchisees being able to control their own workplace and employment decisions, this new rule threatens to turn them into middle managers, rather than owners of the businesses they have spent their careers building. That’s why it’s no surprise that 74% of franchisees expressed a high level of concern at the prospect of increased franchisor control, as our new research from Oxford Economics shows. This means they may face restrictions on how they engage with and support their local communities, how they interact with their employees, and how (and how long) they ultimately stay in business. In addition, with the increased threat of litigation, franchisors will have no choice 64 | Multi-Unit Franchisee | Issue 4, 2023

but to become involved in the day-to-day decisions of their franchisees—or limit the support they offer to their franchisees for fear of being sued. The IFA is committed to stopping this rule through any measure available, including a legal challenge and urging lawmakers to use their congressional authority to stop this action that will hurt businesses in their states and districts. As a first step, during the Advocacy Summit, we garnered bipartisan support to overturn the rule. Yet to truly be successful, we need you. One of the biggest problems we face as a sector is that when most people hear the word “franchise,” they think of big-name retailers and restaurants instead of brands looking to expand their reach by providing local business opportunities. They also don’t consider the underserved and underrepresented—women, people of color, and veterans, to name a few—who benefit from franchising as a unique opportunity to become first-time business owners with an established brand. It is up to us to change that mentality. As I’ve mentioned, we know all too well that the misguided policies in Washington stem from this confusion and misunderstanding of the franchise business model and from those who actively work against it. Evidence of these misconceptions became clear in the FTC’s RFI earlier this year. In it, a series of questions were framed in a way that could only produce biased outcomes, instead of objective and constructive discourse. The simple difference between “How do franchisors exercise control over the wages and working conditions in franchised entities other than through the terms of

franchise agreements?” and “Do franchisors exercise control over the wages… if so, how?” speaks volumes as to what answers they expected and were trying to achieve. To that end, the IFA and our members worked tirelessly to counter this narrative and are proud of the thousands of positive experiences franchisors and franchisees included in the comments to the RFI. This is essential to preventing irreparable damage to the model as the FTC finalizes the Franchise Rule and considers any other potential regulation of the franchise model. While these two issues were the focus of our day on Capitol Hill, the IFA has also successfully prevented Julie Su from serving as U.S. Secretary of Labor, and we will continue fighting to ensure she does not overstep her authority in her role as acting secretary. We’re also continuing our efforts in California to mitigate the damage from the state’s targeting of quick-service restaurants, ensuring that franchisees, their employees, and their customers are all protected from the harm these misguided bills (and similar copycat bills following suit in other states) could bring. The symbiotic relationship between franchisors and franchisees has become a cornerstone of modern commerce. Yet, amid the promise and potential, it is up to us to safeguard the future of franchising. It was so powerful to see hundreds of business owners and franchise leaders at the IFA Advocacy Summit hitting the halls of Congress to make sure their stories are told and our business model is understood. It was a striking reminder of how many voices it takes to inform and, therefore, protect, enhance, and promote the franchise business model. When we work together to protect franchising, we preserve our own businesses and the dreams and aspirations of countless individuals who dare to carve their path in the business world—and of the millions they serve and benefit in the process.  Matthew Haller is president and CEO of the International Franchise Association.

Real Estate

Scaling Your Real Estate Leveraging your locations for growth Written by JASON FEFER

n recent research from the International Journal of Hospitality Management, Kyung A. Sun highlights that one of the key drivers of franchising a business is to achieve economies of scale. This not only boosts product output, it also increases efficiency and amplifies bargaining clout. With this powerful idea in mind, let’s dive deeper into how franchisees can use real estate to realize a similar advantage in their own business. Unpacking economies of scale Franchisees dream of expanding their empire, transforming a single unit into a network of thriving outlets. This journey of expansion inevitably intersects with the idea of economies of scale. At its most basic, “economies of scale” is a straightforward concept: It’s the principle that as you produce or purchase more of something, the cost for each individual unit goes down. One soda might cost $1, but buy them in a pack of 20 and each might cost just 75 cents. It’s an elementary principle that has profound implications in the complex realm of franchising and real estate. Integrating economies of scale Real estate, often the most significant investment for a franchisee, directly affects profitability and growth. But how does it intertwine synergistically with economies of scale? • Strategic centralization. Consider the potential of a centralized system. By choosing locations strategically, franchisees can centralize some of their services. For instance, a centralized kitchen could service multiple nearby restaurant locations, ensuring consistency in quality and reducing production costs. Similarly, a centralized warehouse could distribute stock to retail franchises in a region. By spreading the cost of these centralized services across multiple outlets, the cost per outlet decreases. 66 | Multi-Unit Franchisee | Issue 4, 2023

• Strength in numbers. A more substantial franchise presence means more significant bargaining power. Franchisees looking to open multiple locations can negotiate deals with property developers for several units at once, possibly obtaining discounted rates or better lease terms. By securing multiple locations under a single negotiation, you’re essentially “buying in bulk.” And just as in our soda analogy, you might get a better deal. • Replicability. Once you’ve successfully launched a unit with a working model, the real estate strategy can be replicated across different locations. The design, layout, contracts, and even service blueprints can be reused, saving on design and legal costs for subsequent outlets. Making it happen Now that the what and the why are clear, let’s navigate to the how. Successful franchising leans heavily on understanding local dynamics and adapting accordingly. This means comprehensive studies into: Demographics. What is the age group predominating in the area? Young professionals might be drawn to quick service or techintegrated outlets, while families might prefer sit-down restaurants or entertainment hubs. Psychographics. Beyond age and income, what are the interests, habits, and activities of your target market? A community heavily invested in fitness might welcome health-oriented food franchises. Economic indicators. Is the local economy growing, stable, or declining? A booming economy might mean more disposable income, making it ripe for luxury or niche franchises. Digital bottlenecks. With the rise of apps and the increasing desire for an interaction-free experience, can your real estate support new tech or integrate with popular delivery platforms?

Space dynamics. As the concept of ghost kitchens (kitchens that primarily serve delivery orders) gains traction, does the space allow for this kind of restructuring? From idea to action History, especially in the business world, offers a treasure trove of lessons. While the Starbucks of the world provide insights into masterfully leveraging real estate for brand dominance, there are countless “Blockbuster -esque” examples of ventures that expanded too rapidly without adequate market research or that fell short of adapting to new norms and faced setbacks. So, armed with a deeper understanding, it’s time to put theory into practice. 1. Initiate in-depth research. To understand potential markets, engage in both qualitative (surveys, focus groups) and quantitative (demographic studies, sales data) research. 2. Forge connections. Networking isn’t just about growth; it’s about learning. Connect with existing franchisees and industry experts. More importantly, connect with the communities in your prospective markets. Understand their needs and preferences. This not only ensures a loyal customer base, but can lead to local partnerships that reduce operational costs. 3. Start small. Diving into the deep end is a choice, and it’s rarely a smart one. Before making a major investment in a new market, consider testing the waters with a pop-up shop or a short-term lease. Takeaways Remember, as a franchisee, real estate is more than just a physical space to operate in. It’s an asset, a tool, and a strategy. By intertwining real estate decisions with your scaling objectives, you can truly harness the power of economies of scale, growing not just in size, but in strength and resilience.  Jason Fefer is an associate director of Marcus & Millichap’s Net Leased Property Group on a large team alongside his partners Robert Narchi and Tyler Bindi. They structure sale-leasebacks and negotiate leases on behalf of some of the largest franchisees across all sectors including the restaurant, automotive, and retail space. He can be reached at 818-669-2388 or jason.fefer@ marcusmillichap.com.

14.9% SAME-STORE

SALES GROWTH IN NORTH AMERICA

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Finance

Eyes on the Dashboard Monitoring the indicators that drive success Written by BARBARA NUSS

wners with investments in multiple states learn to lead from afar with management depth. This may include store managers and district managers who are accountable for the profitable growth of locations. To keep the team on track, clear goals, communication, and management structures are essential. But goals are not enough. Strong financial performance starts with the right monthly dashboard. The low-hanging fruit for monitoring financial results includes sales, gross profit margin, marketing spend, operating profit, accounts receivable, and accounts payable aging. While these are easy to measure, they are lagging indicators. To change results, focus on leading indicators, the activities that drive success. Growth is not optional, so unit sales are always an appropriate focus. You can’t manage sales, but you can manage the activities that drive sales. Your dashboard should measure the true leading indicators: • Selling activities—leads, conversions by lead source, and customer growth by channel • Marketing activities—ground game, digital marketing, networking, cost per lead, and new customer acquisition cost • Customer satisfaction—net promoter score, retention, transaction frequency, and range of services consumed • Transaction value—average ticket, units per transaction, item growth, and average item price • Production efficiency—sales per labor hour, overtime management, and revenue per vehicle Know your benchmarks A benchmark is a point of reference that provides perspective, preferably one that comes from outside your four walls. When 68 | Multi-Unit Franchisee | Issue 4, 2023

choosing a benchmark, ask, “What is a good number?” or “What do the best in the business achieve?” Franchisees have an advantage when system-wide results are available. Ask for the franchise benchmarks for your key leading and lagging indicators and use them to gain perspective on your results. Accountability meetings Monthly meetings to review the dashboard provide a structure for accountability and professional development opportunities for managers. Review progress against monthly goals using your dashboard. Use charts and graphs, so everyone can quickly comprehend unit and team performance. Help your team identify profit leaks and support each other to overcome roadblocks. If they need training on the financial side of the business, help them get it. Without the discipline of regular checkins, teams lose traction with their goals. You will be amazed at how much progress people make the day before the meeting! If the meetings are getting stale, liven them up. Don’t consider skipping them—create and stick to a standing monthly appointment on everyone’s calendar. Coach them up Starting on a positive note encourages engagement and establishes a constructive atmosphere. Use an icebreaker that builds personal connections or ties to the main meeting topic. This will break your team’s preoccupation with their latest distraction and set a tone of collaboration. Ask managers to share wins they experienced since the last meeting. Research shows that remembering a successful time from our past engages the part of the brain that helps with creative problem-solving. Then get to the good stuff, your SMART (specific/measurable/ambitious/realistic/ with timeline) goals. Multi-unit groups benefit from goal-setting disciplines that require

collaborative planning and commitments and periodic accomplishments. Encourage traction with written calls to action. The meeting is where the dashboard and the CTAs converge. Team members update the group on their results and progress. Don’t allow excuses. If people seem stuck, ask the group for input. Don’t lose focus on the dashboard. This does not mean “recite numbers at the meeting.” Instead, use open-ended questions aimed at the dashboard to spark productive conversations. Ask team members who met their goals to share what worked. If they are vague—they probably will be—ask clarifying questions to help them get specific. Invite the team to share challenges too. If they aren’t meeting their goals and don’t volunteer to talk about it, consider how you can open the discussion without putting someone on the spot. When you have cultivated a culture of collaboration, support, and accountability, managers are more likely to engage. They will feel more comfortable discussing a challenge they bring forward compared to one you identify. Open-ended questions are your friend. And remember not to start with “Why?” Don’t ask, “Why are your sales falling?” Instead ask, “What do you think is getting in the way of a winning sales month?” Stay in the lanes Your dashboard tells you if you’re staying in the lanes defined by your goals. It’s a great tool for giving you and your team feedback—are you on or off course?—but it will not keep you in the lanes. That takes collaboration, motivation, skills, support, and coaching. If coaching your team to peak performance is not your forte, consider improving your leadership skills. You also could hire or promote a leader to provide structure and support. How you provide the culture and structure your team’s needs is up to you. But setting goals is just the beginning.  Barbara Nuss is the president and founder of Profit Soup, a financial training firm specializing in providing developing skills for franchisors and franchisees that enable them to trust their numbers, focus on priorities, make better decisions, and earn more profit. Visit www.profitsoup.com.

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Franchise With District Taco!

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Leader in Authentic, Fresh, Mexican Food

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$2,535,665 AUV*

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70 units in development

Propietary tech platform

Turnkey restaurant opening program

DON’T MISS THE CHANCE TO OWN YOUR MARKET

2023 2024 2025 2026 2027

franchising.districttaco.com I 855-234-9985 ‘

2022 average gross revenue for top tertile, corporate-owned restaurants operating for a full year. The full financial performance representation, along with its bases and assumptions, is included in Item 19 of our current FDD. 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. An offer is made only by a Franchise Disclosure Document (FDD) in those jurisdictions that require it.

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SCAN ME

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Investment Insights

Life in a New Normal Navigating our way into an uncertain future Written by CAROL SCHLEIF

“There is no such thing as a normal period of history. Normality is a fiction of economic textbooks.” —Joan Robinson

ver since the pandemic began, pundits have been trying to predict the glide path for returning to normal, with “normal” implicitly defined by the way things were in the before times. The problem is the way of life we knew—socially, culturally, economically—has irrevocably changed. It’s impossible to go through a major collective event, such as the pandemic, without having alterations to the way we view… everything. For investors and business owners, this has made the intervening years exceedingly treacherous to navigate. The rules seemed to have changed overnight about how consumers purchase, how (and where) employees want to work, and how suppliers want to do business. Millions of decisions, large and small, had to be renegotiated not just once, but many times. As we approach another year-end, it might be helpful to highlight some of the ways things have changed and how a “new normal” might evolve. Central banks as data-dependent While central bankers in specific (and economists in general) are fond of using a variety of statistical models to inform their decision-making, many of these tools seem less relevant today. The jobs market bounced back more quickly and with vastly more strength than models predicted; supply chain issues went parabolically up and then quickly down; the real estate market is entirely upended with office vacancies in double digits even as retail vacancy is in the low single digits; and the housing market stayed strong, despite mortgage rates more than 2–2.5x higher than 18 months ago.

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The unreliability of historic models has forced central bankers to focus more intently on parsing the composition of each data point to help inform policy. This is unlikely to change until there are enough years of data to inform new models. Inflationary adjustments Inflation’s “neutral rate” is most likely well above the 0% we’ve anchored to over the past 10 to 15 years. For most of that period, the Fed struggled to get inflation to its 2% target. Now a 2% to perhaps 2.5% rate is likely to be a core rate with inflation stacked on top, bringing the nominal rate closer to 4%-plus. As we’ve written before, a bit of inflation in the system is arguably healthier than no inflation as it facilitates pricing power, wage gains, and a well-functioning business environment. Real estate Commercial and residential real estate is going through a remake, and it’s a bit early to tell exactly what will emerge. It pays to be vigilant and not overly bearish. Demand for living space (single- or multi-family) coupled with a dearth of supply since 2008–09 is apt to keep housing numbers strong once purchasers rejigger their affordability assumptions. Commercial real estate is already in the process of being “rehomed” and reformed. The jury is still out on RTO’s long-term impact. The first recession is likely to jumpstart management desires to get more seats back in seats, but it is early for that swing. Meanwhile, plans are already being drawn to reshape the composition of spaces that can accommodate new uses. Certain areas of most downtowns—those that artfully combine specialty shops, restaurants, working, and living spaces—are thriving. Government spending Infrastructure and green grid spending enabled by various federal programs under the

Infrastructure Reinvestment Act, the Jobs Act, and the Chips Act arguably form the biggest investment in U.S. productive capacity in 70 years. The primary gating factor here may be sufficiently skilled labor to build and maintain the systems. This tees up a host of attractive opportunities for the nimble to home in on local markets as plants, generator stations, data processing hubs, and a host of other improvements take place. Globally, the U.S. fared better than much of the rest of the world both during and coming out of the pandemic because of such factors as the higher percentage of fiscal and monetary policy that tried to prevent loss of income/housing; support to keep key industries (e.g., airline, trucking) afloat; and a much more consumer- vs. manufacturing-driven economy. These factors teed us up on the backside to lift off a higher plane than other developed or emerging market countries. Unwinding that policy has been fitful and is not finished, so it bears watching as student loan debt deferments and childcare support are suspended. Final thoughts Demographics and generational preferences are combining with pandemic lessons to prompt changes in priorities and habits. Building memories with friends and family through experiences takes precedence over buying more stuff. Working for an employer that prioritizes a balance of profit and purpose and minimizing environmental footprints are moving up the priority scale for many. Yes, there were supply chain bottlenecks, inventory excesses, and employment pinches, but business leaders pivoted, and pivoted quickly. I suspect many a case study will be written about such feats in the years to come. While commentators look to tweak old models to fit a new economy, I would much rather focus on individual economic threads and the implications they hold for what a new normal might look like—and where the (vast?!) opportunities lay.  Carol Schleif is chief investment officer at BMO Family Office, a wealth management advisory firm delivering investment management services, trust, deposit, and loan products and services through BMO Harris Bank. To learn more, visit www.bmofamilyoffice.com.

Franchise with the Most Trusted Brand in Health & Wellness “We love that you can successfully facilitate a franchise with a staﬀ of fewer than 10.”

Anna & Mike Dey Franchisees

$411,633

Top Store Average Contribution*

M U LT I - U N I T I N C E N T I V E S AVA I L A B L E

Fewer than 300 exclusive territories available. Scan to Learn More * This information reflects the Average Revenue and Average Contribution of The Vitamin Shoppe company-owned stores with a Contribution of $300,000 or more which were open for more than a year as of fiscal year-end 2022 and were operating in at least 3,000 sq ft of space. Of these 118 stores, 49 attained or surpassed the Average Revenue, and 42 attained or surpassed the Average Contribution described above. Contribution is defined as Total Revenue less the sum of Total Cost of Goods Sold and Total Expenses. We refer you to Item 19 of our 2023 Franchise Disclosure Document for additional information. A NEW FRANCHISEE’S RESULTS MAY DIFFER FROM THE REPRESENTED PERFORMANCE. This is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. Offerings made by prospectus only and in compliance with the applicable pre-sale registration and disclosure requirements in your state.

Exit Strategies

Best Selling Advice Real estate ownership provides options Written by PAT MCCAULEY

perators with a desire to grow their business often must be opportunistic when it comes to expansion. There may be limited growth opportunities in their core market or with the brand they operate, so they look for opportunities to purchase or develop units in new markets, add a new brand, and/or buy real estate. When multi-unit operators in multiple markets or with more than one brand decide to sell their real estate holdings, they will have several things to consider. Risks of expansion Before entering a new market or adding a new brand, multi-unit operators must carefully consider all aspects of expansion, particularly operational infrastructure. To ensure consistent quality across the entire organization, operators must have strong processes, procedures, management oversight, and personnel in place. If the operational infrastructure is inadequate to take on new markets or brands, the expanded market or brand may underperform and cause the operator’s core market to suffer. In addition, if existing resources are being disproportionately allocated to the new business venture, the value of the entire business could be negatively affected. Further, franchisors and/or lenders may not support a transaction that has an inadequate team or a stretched infrastructure that will transition upon the sale. Multi-unit operators who operate across a vast geographic area or who have multiple brands will most likely have more than one buyer upon the sale of their business. In almost every case, it is more streamlined and less expensive to close a transaction with a single buyer. However, if the network is spread across several states and brands with a significant number of units, it may be difficult to identify one purchaser with the capability—and desire—to buy and gain approval to purchase all the units. 72 | Multi-Unit Franchisee | Issue 4, 2023

In transactions with multiple buyers, one buyer may be ready to close while others may not. This may be a result of attorney delays, lack of available financing, interest-rate risk, or a change of commitment by one party. Sellers must be prepared to continue to operate the units if closing dates are staggered to accommodate different timelines. Delays in closing also increase the risk of purchase price reductions, especially if the financial performance of the units significantly declines. Real estate options Owning real estate provides sellers with options and flexibility. Sellers may decide to

keep the real estate and sell the operations, sell the real estate and keep the operations, or sell both. All options provide different benefits and risks. Sellers who decide to maintain their real estate holdings and sell their operations may no longer have the desire to operate the units—particularly in a challenging economic environment with rising operational costs, lack of qualified labor, regulatory constraints, and brand reinvestment requirements. These sellers may require a source of income after the transaction closes, so they become a landlord on the properties they own. The value of the real estate may increase after the operations are sold. If the tenant has

a strong credit profile (e.g., a franchisor or large multi-unit franchisee), the value of the real estate will most likely increase. Sellers have the flexibility of keeping the real estate and receiving rent from the new buyer, or they may decide to liquidate properties over time to mitigate risks. Owning real estate doesn’t come without some level of risk. The value of the real estate is directly tied to the tenant. If the tenant is not operating the business effectively, has other businesses that are underperforming, or is overleveraged, the value of the real estate could be negatively affected, especially if the tenant files for bankruptcy or is forced to close because of noncompliance with brand standards. Operators who elect to sell some or all of their properties without selling the operations may elect to do so to inject cash into the business. In sale-leaseback transactions, operators may be required to use some of the proceeds to pay down debt. Any excess proceeds can be used to fund working capital needs, toward remodel projects, or for new unit development. These multi-unit owners want to remain in the business but need the liquidity to support it. Operators who decide to sell their operating business and real estate may prefer to exit a brand entirely if they don’t want to assume any future risks related to the brand. In addition, they may have a certain value they want for the business, and to achieve that they must sell the real estate. Sellers can reinvest the proceeds from the sale into different investments to maximize returns while maintaining diversification. When it comes time to sell, there are many things multi-unit operators have to consider, particularly when the real estate is owned. However, one thing should be clear: Make sure value is maximized as you only get one chance to sell.  Pat McCauley is a principal with C Squared Advisors, an advisory firm that focuses on multiunit franchisees and franchisors. He has spent more than 20 years assisting clients in selling and buying units, as well as in raising debt and equity capital to support strategic initiatives. Contact him at 614-787-2576 or patrick@c2advisorygroup.com.

Market Update

It’s Complicated Aligning stakeholders’ many voices Written by PAUL WILBUR

franchise system is a huge web of businesses, owners, associations, and executives with a wide range of experiences and responsibilities. A franchisor can have a complex departmental structure, operational divisions, corporate/platform parent companies, investors (private or public), franchise affiliates, nonfranchise retail affiliates, and supplier affiliates. Large franchisees can be just as complex. A multi-unit, multi-brand owner group can have executive management and divisions based on brand affiliation, geography, or maybe traditional vs. nontraditional locations. They can have investors who influence operations or not. Some are family-run, some are partnerships, some are corporate-run, some are a mix of all those. Units can be managed individually or as groups. While this complexity might seem daunting, it’s also one of the strengths of the franchise model. Franchisees benefit from access to a wide range of resources and advisors who can provide valuable insights when making critical business decisions. Collaboration and knowledge sharing are fundamental components of the franchise ecosystem. The IFA’s 2023 Annual Franchisee Survey underscores the significance of knowledge exchange, with 76% of franchisee respondents acknowledging it as a key strength of the franchise business model. Best practices are shared on various fronts, from strategies for navigating challenging labor markets to exploring opportunities with new brands. Events like industry conferences, including the Multi-Unit Franchising Conference, serve as fertile grounds for this exchange of ideas and experiences. However, the very diversity and richness of the franchise ecosystem can also pose challenges in decision-making. The multitude of voices and perspectives can easily become a cacophony, making it difficult to discern the right course of action.

74 | Multi-Unit Franchisee | Issue 4, 2023

To illustrate the complexity of decision-making within franchise systems, let’s examine a case study from the QSR industry. A couple of years ago, FRANdata produced a white paper for Comcast Business, seeking insights from executives in QSR systems regarding technology purchases. The study aimed to understand who the key decision-makers were in shaping brand-wide technology strategies and funding. Each of the groups had varying degrees of influence, and their priorities could differ significantly. For instance, the franchisor’s technology department and executive office were seen as highly influential by some respondents, while others placed greater importance on advisory committees or multiunit franchisees. In an environment with so many different advisory groups, it’s imperative to navigate this complex landscape effectively. Decision-makers must follow a disciplined process that includes the following steps. 1. Defining needs. Clearly articulating the specific needs and objectives of the decision-making process is the first step. This helps in focusing efforts and aligning stakeholders. 2. Gathering data. Access to relevant data and information is crucial for making informed decisions. Suppliers, franchisors, and franchisees must collaborate to ensure that the right data is available and accessible. 3. Objective analysis. Objective analysis of information is paramount. Decision-

makers should prioritize evidence-based decision-making and avoid biases that can cloud judgment. 4. Consensus building. Given the diversity of voices within the franchise ecosystem, consensus building is essential. This involves active communication, negotiation, and compromise to align stakeholders’ interests. 5. Iterative process. Decision-making in franchising is often an iterative process. It requires continuous monitoring, evaluation, and adaptation to changing circumstances. Navigating the complex world of franchise decision-making is both an art and a science. The intricate web of businesses, owners, associations, and executives within franchise systems adds richness and depth to this landscape. While this can be challenging, it is also highly rewarding for those who understand how to harmonize the diverse perspectives and voices. Market research plays a pivotal role in providing the insights needed to navigate this complex terrain effectively. It enables suppliers and decision-makers to cut through the noise, identify key influencers, and develop strategies that resonate with the varied stakeholders in the franchise ecosystem. In the ever-evolving landscape of franchising, market research is not just a tool. It’s the key to unlocking success and making smart decisions that drive growth and profitability. Find the full white paper, “Technology in the Quick Service Restaurant Industry,” at business.comcast.com.  Paul Wilbur is COO of FRANdata where he is instrumental in building the company’s research and consulting framework. He manages the research, information management, marketing, and IT departments and plays an integral role in the strategic development of FRANdata’s suite of franchise solutions. Contact him at 703-740-4700.

CAN YOU RANK THE IMPORTANCE OF KEY DECISION-MAKERS WHEN IT COMES TO BRAND-WIDE TECHNOLOGY STRATEGIES AND FUNDING? (1 = Least Important, 5 = Most Important) 1

Franchisor’s technology department

7.7%

11.5%

23.1%

38.5%

19.2%

Franchisor’s executive office

7.7%

11.5%

7.7%

23.1%

50.0%

Technology advisory committee

15.4%

19.2%

30.8%

23.1%

11.5%

Marketing advisory committee

19.2%

26.9%

15.4%

19.2%

Multi-unit franchisees

11.5%

30.8%

34.6%

Franchisee advisory board

28.0%

16.0%

20.0%

16.0%

2024 Events

IFA ANNUAL CONVENTION

February 17-20, 2024 | Phoenix, AZ

FRANCHISE CUSTOMER EXPERIENCE CONFERENCE

The International Franchise Show

June 18-20 | Atlanta, GA

Partnership event with MFV NSE

Franchise Expo South

April 12-13 | London, England

Partnership event with Franchise Update Media.

September 6-7 | Ft. Lauderdale, FL

MFV FRANCHISE EXPO WEST

Partnership event with MFV Expositions/Comexposium

April 12-13 | Los Angeles, CA

Partnership event with MFV Expositions/Comexposium

IFA ADVOCACY SUMMIT

September 9-11 | Washington, DC

LEGAL SYMPOSIUM

FRANCHISE LEADERSHIP AND DEVELOPMENT CONFERENCE

May 5-7 | Washington, DC

IBA/IFA JOINT CONFERENCE

October 16-18 | Atlanta, GA

May 7-8 | Washington, DC

Partnership event with Franchise Update Media

MFV INTERNATIONAL FRANCHISE EXPO May 30 – June 1 | New York, NY

Partnership event with MFV Expositions/Comexposium

EMERGING FRANCHISOR CONFERENCE November 18-20 | Austin, TX

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Franchisee Tactics

Well-trained, Well-paid

Valued employees seldom seek out greener grass Written by M. SCOTT MORRIS

avid Plait, a Michigan-based multiunit franchisee with more than three decades of experience, says there’s a myth about franchising that needs to be debunked. The franchise industry and franchisees should be celebrated for providing many people with their first jobs, but they also provide team members with a living wage for raising a family. Plait says multi-unit operators like him require well-paid and well-trained team members—aka, professionals—in order for their businesses to function. He says employees who serve their communities at a QSR or other franchise should be proud of their jobs, but not everyone sees it that way. “People just don’t see these business models as a path to make a good, secure living,” he says. “When consumers look, that’s not what they see either.” A Hungry Howie’s franchisee, Plait says he makes sure to provide his core group of full-time employees with good, competitive wages and benefits, so there’s no incentive for

76 | Multi-Unit Franchisee | Issue 4, 2023

them to see if the grass is greener somewhere else in a competitive labor market. “I want my people to earn as much as someone working at PNC Bank or whatever,” he says. “We can’t have them looking around. If I want to grow, I’ve got to have people who are truly proud of their accomplishments and willing to follow a proven template, making certain our guests’ expectations are exceeded every day.” Recently, he’s been in contact with another operator whose business has lost approximately $1 million in value because, in part, the owner didn’t look after his employees, his greatest asset. Without a core group of solid performers, the value drops steeply. “That’s a huge part of what I’m buying,” Plait says. “When it comes to many business models, who are the people operating it? If you don’t have incredible people who come with the business, you truly don’t have squat.” Early in Plait’s career, a mentor, who was also a surrogate father, explained things simply. “He said, ‘Who is your best guy?’ I told

him,” Plait recalls. “He said, ‘You need to make sure your best person earns as much next year as you made this year.’” Plait followed that advice with one employee and later followed it with another. “Those two people are still with me today,” he says. “That’s given me the opportunity to grow and spend quality time with my family.” This philosophy should be contagious. The franchising industry offers far more opportunities than many consumers and potential employees recognize. In some cases, workers can be embarrassed by their jobs because family and friends rely on stereotypes about what it means to earn a living from a QSR or other franchise, Plait says. “But the truth is our industry can give these people productive and financially secure lives,” he says. “I’ve got many people— many, many people—who have been with us for 20 years plus. They took advantage of the opportunity we were offering.” Those long-serving team members are key to changing perceptions. Every franchise, Plait says, needs a core group of proud people who earn nice livings while making sure the business runs well. “They give our newest workers, those parttime people, something to aspire to,” Plait says. “They see that they can work at A&W or Wendy’s or Fantastic Sams or whatever and earn the same as someone at PNC Bank or in a trade.” 

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Succession Planning

Working Together Conflicts don’t have to torpedo family businesses Written by KENDALL RAWLS

unning a family multi-unit business comes with specific challenges. When family members work together in a high-stress environment, conflicts can arise from differences in opinions, generational gaps, role ambiguity, or even personal issues that spill over into the workplace. However, with effective communication, conflicts can become opportunities for growth, understanding, and improved relationships. Conflict is a natural part of any human interaction, and family multi-unit franchise ventures are no exception. It can manifest as minor disagreements or significant disputes that threaten the harmony of both the family and the business. Generational differences. Younger family members may have different ideas and approaches than older generations. Role ambiguity. Unclear job descriptions and responsibilities can result in confusion and frustration, especially if family members feel their contributions are undervalued. Business decisions. Disagreements regarding important business decisions, such as expansion plans or investments, can lead to conflicts. Personal issues. Family dynamics can spill over into the workplace, causing conflicts based on grievances unrelated to the business. Unresolved conflict can result in decreased morale, reduced productivity, and financial losses if critical decisions are delayed or made hastily due to emotional disputes. Communication’s role Effective communication strategies are the cornerstone of conflict resolution. It’s about truly understanding one another’s perspectives and finding common ground. Research shows that businesses with strong communication skills experience fewer conflicts and enjoy more productive teamwork. According to a study by McKinsey, companies with effective communication 78 | Multi-Unit Franchisee | Issue 4, 2023

practices are 50% more likely to have lower employee turnover rates. The Harvard Business Review reports that businesses with open and honest communication enjoy 47% higher total returns to shareholders over a five-year period. Communication is critical. It’s not just about the words we use; it involves active listening, nonverbal cues, and creating an atmosphere where family members feel safe to express concerns. Active listening. Listening is just as important, if not more so, than speaking during a conflict. Practice active listening by giving full attention to the speaker, making eye contact, and nodding to show understanding. Avoid interrupting and genuinely seek to comprehend their point of view. Using “I” statements. Instead of making accusatory statements like “You never listen to me,” use “I” statements to express your feelings and needs. For example: “I really need to talk to you about something that’s been bothering me.” Nonverbal communication. Be aware of your tone of voice, facial expressions, and body language. Your family members are likely attuned to your non-verbal cues, so ensure they convey openness and receptivity. Be aware of how your nonverbal cues may be interpreted. A simple sigh or eye roll can convey unintended messages Describe your feelings. Expand your emotional vocabulary to better express your feelings. Instead of saying, “I’m upset,” be more specific: “I feel belittled” or “I’m frustrated.” Be succinct and specific. Avoid beating around the bush. Clearly state the issue or concern, and be specific about why it’s important to you. Face difficult conversations. Don’t shy away from difficult conversations out of fear of the response. Sometimes, addressing uncomfortable topics is necessary.

Creating a safe space Open and honest communication can only thrive in an environment where family members feel safe to express themselves. Define rules for communication during conflicts. For instance, agree not to interrupt each other, maintain confidentiality, and avoid personal attacks. Instead of relying on spontaneous conversations, dedicate times for family meetings. Use these opportunities to discuss important matters, including conflict resolution. Consider forming a family business council for addressing communication issues and improving overall family dynamics. If conf licts persist or are deeply entrenched, consider involving an external mediator or therapist with expertise in family business dynamics. They can help facilitate productive conversations. Prevent future conflicts Conflict resolution is essential, but it’s equally important to prevent conflicts from arising. Schedule periodic family meetings to discuss personal and business matters, and encourage all family members to share their thoughts. Define roles and responsibilities within the business to reduce ambiguity. Establish clear expectations for business performance and individual contributions, and set achievable goals to work toward collectively. Running a family multi-unit franchise venture comes with unique challenges, including conflicts that can threaten the family and the business. By recognizing the importance of effective communication and practicing active listening, using “I” statements, and creating a safe space for dialogue, conflicts can be resolved. Moreover, proactive communication strategies can prevent future conflicts and keep the peace. Kendall Rawls knows and understands the challenges that impact the success of a family-owned business. Her unique perspective comes not only from their educational background, but more importantly, from her experience as a second-generation family member employee of The Rawls Group—Business Succession Planners. For more information, visit seekingsuccession.com or email info@rawlsgroup.com.

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Grow With Us and Spread More Joy to More People Every Day! We have opportunities in select, prime markets and non-traditional venues for qualified restaurant operators and developers with varied incentives for development.* WE ARE: • A dynamic brand that aims to deliver on popularity, relevancy, adaptability, and support • A loved place where guests can enjoy classic favorites and craveable menu innovations any time of day • An established franchise system with a business model and flexible design—from conversions to freestanding, endcap, in-line and non-traditional—adaptable across varied venues • An integrated franchise support system—Operations, Marketing, Training, Architecture & Design, and Development*

*Subject to Franchise Agreement and Development Agreement Terms © 2023 IHOP Franchisor LLC. This is not an offer to sell a franchise. An offer can be made only by means of a Franchise Disclosure Document that has been registered and approved by the appropriate agency in your state, if your state requires such registration, or pursuant to availability and satisfaction of any exemptions from registration. IHOP Franchisor LLC, 10 W. Walnut St., 4th Fl., Pasadena, CA 91103. (866) 995-3463"