Multi-Unit Franchisee Magazine - Issue I, 2015 by Franchise Update Media

MAKE OUR HOUSE, YOUR HOUSE! Huddle House is America’s favorite breakfast franchise and we are serving up single and multi-unit franchise opportunities. • • • • •

Attractive unit level economics. Half-century of tradition and proven success. Nearly 400 restaurants nationwide. Breakfast, Lunch and Dinner, 24-Hours/Day. Affordable initial investment compared to other full-service restaurant brands. • Flexible format, easy conversion, fits most markets. • Seed/Refranchise opportunities available in select markets.

For more information call 800.868.5700 or visit huddlehousefranchising.com We’d love to hear from you! Copyright © 2014 Huddle House, Inc. This does not not constitute an offer to sell a franchise. The offer of a franchise can only be made through the delivery of a Franchise Disclosure Document (FDD). Certain states require that we register the FDD in those states. This communication is not directed by us to residents of any of those states. Moreover, we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law.

Multi-Unit

Franchiseecontents I S S UE I , 2015

COVER STORY

Mega 99 10 Six successful multi-unit franchisees—Shahid Hashmi, Michael Orcutt, Richard Paek, Steve Sager, Anand Gala, and Ken Leese—tell how they did it (and so can you!) BY KERRY PIPES and HELEN BOND

LISTS

Mega 99 Rankings 40 Ranking the top U.S. franchisee organizations—and their brands

FEATURES

Fund-amental Change 48 Is Aziz Hashim’s new fund for franchisees a game-changer? BY EDDY GOLDBERG

Just Be-Cause 66 Cause marketing makes a difference in lives—and in business BY KERRY PIPES

MULTI-UNIT FRANCHISEE IS S UE I, III,2015 2009

ENGAGING purposeful INTIMATE GET GREAT

RETURN FUN INSPIRING from a

S.T.E.M. funENRICHES exciting entertaining LIVES. franchise that

INSPIRING

LOW COST franchise – mobile/home base business LOW FIXED OVERHEAD Large TERRITORY exclusivity FAST RAMP UP – high profit margins One of the FASTEST GROWING 610+ FRANCHISES SOLD IN 35 COUNTRIES IN THE PAST 5 YEARS. RANKED IN #1 CHILDREN’S ENRICHMENT FRANCHISE, JANUARY 2014 ENTREPRENEUR #2 BEST PERSONAL FRANCHISES, SEPTEMBER 2013 MAGAZINE #5 BEST NEW FRANCHISE, MARCH 2013

Bricks 4 Kidz® provides project based programs to teach principles and methods of engineering to children, ages 3 to 13+, using LEGO® Bricks, through enrichment classes in preschool, public and private elementary schools, middle schools, off-campus locations, in-school field trips, holiday and summer camps, birthday parties and other programs.

For franchise information, call (904) 824-3133 or visit bricks4kidz.com/franchise-info LEGO® is a registered trademark of the LEGO® Group of companies which does not sponsor, authorize or endorse these programs. Creative Learning Corporation common shares are listed on OTCBB under the ticker symbol CLCN. © 2013 Bricks 4 Kidz

Departments CHAIRMAN’S NOTE

Join your peers in “Shaping the Future” at the 2015 Multi-Unit Franchising Conference 6 ONLINE

What’s online @ mufranchisee.com 8

Columns CUSTOMERS COUNT

Make It So! 70 Customer growth lessons from Amazon BY JACK MACKEY

PEOPLE

Franchisee CHAIRMAN Gary Gardner CEO Therese Thilgen EXECUTIVE VP OPERATIONS Sue Logan EXECUTIVE VICE PRESIDENT Diane Phibbs VICE PRESIDENT BUSINESS DEVELOPMENT Barbara Yelmene BUSINESS DEVELOPMENT EXECUTIVES Jeff Katis Judy Reichman EXECUTIVE EDITOR Kerry Pipes MANAGING EDITOR Eddy Goldberg DESIGN & PRODUCTION Peter Tucker DIRECTOR OF TECHNOLOGY Benjamin Foley WEB DEVELOPER Don Rush WEB PRODUCTION ASSISTANT Esther Foley TECHNOLOGY PRODUCTION ASSISTANT Juliana Foley MANAGER, SOCIAL MEDIA Cheryl Ryan

Now Hiring! 72

SENIOR SALES, EVENT & OPERATIONS SUPPORT MANAGER Sharon Wilkinson

Recruiting and retaining the best Millennials

SENIOR PROJECT MANAGER, MEDIA AND BUSINESS DEVELOPMENT Christa Pulling

BY ADAM PIERNO

SECURITY

Is Your POS System Safe? 74 5 critical questions to ask your POS vendor BY BRAND BARNEY

FINANCE

Boosting Unit Profitability 76 Tips for improving your bottom line BY STEVE LEFEVER & ROD BRISTOL

EXIT STRATEGIES

Thinking of selling? Get the right attorney! 78 Franchise deals require industry-specific expertise BY DEAN ZUCCARELLO

FRANCHISE MARKET UPDATE

2015: Year of the Franchisee? 80 Protecting the franchise business model BY DARRELL JOHNSON

Multi-Unit

MULTI-UNIT FRANCHISEE IS S UE I, 2015

MARKETING ASSISTANT, SPEAKER LIAISON Katy Geller FRANCHISEE LIAISON, SUPPORT COORDINATOR Leticia Pascal CREATIVE PRODUCTION ASSISTANT Phi Le MARKETING ADMINISTRATIVE ASSISTANT Lisa Crystal CONTRIBUTING EDITORS Brand Barney Rod Bristol Darrell Johnson Steve LeFever Jack Mackey Adam Pierno Jim Sullivan Thomas J. Winninger Dean Zuccarello CONTRIBUTING WRITERS Debbie Selinsky Helen Bond VIDEO PRODUCTION MANAGER Wesley Deimling ADVERTISING AND EDITORIAL OFFICES Franchise Update Media 6489 Camden Avenue, Suite 204 San Jose, CA 95120 Telephone: 408-402-5681 Fax: 408-402-5738 SEND ARTICLE INQUIRIES TO: editorial@fumgmail.com MULTI-UNIT FRANCHISEE MAGAZINE IS PUBLISHED FOUR TIMES ANNUALLY. Annual subscription rate is $49.00 (U.S.) FOR SUBSCRIPTIONS EMAIL sharonw@franchiseupdatemedia.com or call 408-997-7795 FOR REPRINT INFORMATION CONTACT FOSTER PRINTING AT 800-382-0808 www.fosterprinting.com COVER PHOTO: FaceFirstPhotos.com

"As a new franchisee, I was drawn to the leadership position Denny's has in family dining. I love the food, the people and the growth potential. No other brand has this much to offer!" Donnell Thompson

Denny's Franchisee, Former McDonald's franchisee, 12-year NFL veteran

. R E N I D S â&#x20AC;&#x2122; A C I R E M A NCHISE. A R F S â&#x20AC;&#x2122; Y A D O T UR O G IN

N O I L L I M C

DU O R T IN

RA G O R EP

TI N E C IN

Denny's is celebrating 60 years of connecting with diners of all ages! We've been growing since 1953, and today, more than 90% of Denny's restaurants are owned and operated by franchisees. Our commitment to long-term market share growth is supported by the industry's leading program offering up to $1 million of incentives for New & Emerging markets.

We are America's Diner. Come see why we're Today's Franchise. LEARN MORE

DENNYSFRANCHISING.COM 800 304 0222 ÂŠ2014 DFO, LLC 203 East Main Street, Spartanburg, SC 29319. This advertisement is not an offer to sell a franchise. The savings estimate of up to $1 million is based on the potential savings of developing, opening and operating six Denny's restaurants under the New and Emerging Markets incentive program, in comparison to developing, opening and operating five Denny's restaurants without the incentive program. The estimated savings include reduced brand building and royalty fees calculated using the $1,409,000 average unit volume of franchised Denny's restaurants nationwide in 2013, as published in Item 19 of Denny's 2014 Franchise Disclosure Document. Of the nationwide franchised outlets whose data was used in arriving at the 2013 franchised restaurant sales figure, 620 franchise units, or 45% of the franchised restaurants, actually attained or surpassed the indicated sales results. Individual restaurant sales performance will vary. There is no assurance that you will do as well or achieve the estimated potential savings. You must accept this risk. See Denny's Franchise Disclosure document for complete program details, including restrictions such as applicable geography and development time frames. Limited time only.

Chairman’sNote

MUFC 2015: Shaping the Future

o those familiar with the old proverb, “Man plans; God laughs,” it may smack of hubris to believe that any one or more of us can actually shape future events. However, there is a way to chart your course through the future and greatly increase your probability of success, even in the face of unplanned challenges: intensive preparation. Preparation consists of many elements, but perhaps the most important are becoming educated and marshaling adequate resources. The theme of this year’s Multi-Unit Franchising Conference (MUFC)—“Shaping the Future”—aims to provide opportunities for these very things. Attending the MUFC over the past several years has better prepared many multi-unit franchisees and franchisors to overcome obstacles our industry has faced. Whether as a result of attending the educational sessions offered on talent recognition and management, nuances in financing arrangements, or simply meeting and getting to know franchise leaders who have provided sage advice, attending the MUFC has become a staple in preparedness. I don’t believe there is a problem I have faced that at least one of the friends I’ve made at this conference has not already conquered—and who was willing to share their story with me. Franchisees have also discovered innovations in products and services from vendor partners that have helped to protect and expand our enterprises. To further assist franchisees in preparing to face the coming headwinds in our space, we have added a new element to the conference this year: Meet the Speakers. This roundtable event will make many of the conference’s most successful multi-unit franchisees available for informal discussions with other fran-

MULTI-UNIT FRANCHISEE IS S UE I, 2015

chisees to dive more deeply into topics covered at the general and breakout sessions. We have seen panelists overwhelmed by lines of people after presentations, and attendees unable to get quality one-on-one time with speakers. This new feature provides an additional opportunity for follow-up questions and networking. Arming attendees to strengthen their businesses is an important goal of the conference, and we believe this opportunity will help to achieve that. Recent headlines surrounding our businesses herald a multitude of threats, not only to our margins but, if some have their way, to our very existence. The MUFC is an excellent opportunity for us to come together to collaborate on the solutions that will see us through these issues. The conference provides speakers and resources that deal with all of these matters and sets a platform for our continued success. Indeed, one obvious attribute shared by the regular attendees is their track record of consistent achievement and growth, even in the face of, and often because of, adversity. There is no better place to be, nor a better group of people to be with, to address these headwinds and to turn them to our advantage. I wish all of you safe travels to the 2015 Multi-Unit Franchising Conference this spring in Las Vegas. And I look forward to working together with you to prepare for a long and prosperous future.

Robert Branca, Jr. Chair, 2015 MUFC

Looking to add more flavor to your portfolio?

Growth, Profitability, 20+ Fresh Ingredients

RANKED #1 Mexican quick-service category by Entrepreneur ® magazine for 2013, 2011

RANKED #1 Top Mexican Chain by Technomic in 2013

(Technomic “Consumer Restaurant Brand Metrics” Report for 2013)

$1,242,729* Average total annual gross sales

Average EBITDA $188,577* (15.2%)

580+

RESTAURANTS And more than 200 in development

NT E M P O L E DEV S

E V I T N E C N I I- U N IFIED M U LT TO QUAL

TO IT OPER A

FOR MORE INFORMATION, CONTACT:

404.705.2051 • requests@moes.com

*Figures reflect averages for 150 franchised restaurants that were in operation continuously for 3 or more years and that provided us with complete financial information for the full calendar year of 2013, as published in Item 19 of our April 2014 Franchise Disclosure Document. These averages are based on a 52-week annual period from January 1, 2013 through December 31, 2013. Of these 150 restaurants, 64 restaurants (or 42.7%) attained or exceeded the average total gross sales and 69 Restaurants (or 46%) attained or exceeded the average EBITDA. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. This offering is made by prospectus only. This information is not intended as an offer to sell. We will not offer you a franchise until we have complied with disclosure requirements in your jurisdiction. FOR THE STATE OF NEW YORK: This advertisement is not an offering. An offering can be made only by a prospectus filed with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law. FOR THE 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. Moe’s Franchisor LLC, 200 Glenridge Point Parkway, Suite 200, Atlanta, GA 30342. ©2015 All rights reserved.

OPPORTUNITIES ✓FRANCHISE Looking for your next franchise

opportunity? Have we got the tools for you! Find

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

Multi-Unit ✓CONFERENCES Franchising Conference Ahead!

Franchise Update Media’s annual Multi-Unit Franchising Conference took Las Vegas by storm last year, setting records for both attendees and suppliers. Total attendance was nearly 1,400. More than 550 were franchisees, representing more than 400 franchisee organizations, more than 10,000 operating units, more than $10 billion in annual system-wide revenue, and jobs for more than 200,000 people. Mark your calendar for this year’s MUFC, April 8–10 at Caesars Palace in Vegas. Need a reminder about why? Take a look back at the 2014 conference at www.multiunitfranchisingconference.com

✓ONLINE Multi-Unit Community Grows

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

ONLINE VIDEOS ✓NEW EmpireBuilders.tv Expands Great entrepreneurs build great organizations. They possess a knack for making smart business decisions, building great teams, and creating successful companies. But as we’ve learned from years of interviewing successful multi-unit franchisees, they’ve also struggled, doubted, and made more than a few mistakes—yet they’ve soldiered on, persevered, and ultimately come out on top. To provide a deeper sense of their journeys, insights, and personalities, we’re selecting franchisees from our most inspiring print interviews and creating a new series of online videos of these franchisee leaders—who we call Empire Builders. www.franchising.com/empirebuilders

MULTI-UNIT FRANCHISEE IS S UE I, 2015

✓

RANKINGS Check out our annual rankings of top franchisees and their multi-unit brands

and find out “Who’s on first.” Find the Multi-Unit 50 at www. franchising.com/multiunitfranchisees/mu50.html and the new Mega 99 rankings in this issue and any time at www. franchising.com/multiunitfranchisees/mega99.html

OFFICE ✓PRESS “Don’t just survive, thrive!”

Franchise Update Media’s 2015 Annual Franchise Development Report and the best-selling book Grow to Greatness by Steve Olson offer invaluable tips for franchise sales success and unit growth in today’s economy. For ordering information visit www.franchising.com/ franchisors/afdr.html and www.franchising.com/ franchisors/growtogreatness.html

✓QUICKLINK

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

UNDER THE INFLUENCE

“When I started in this business I had a ton of energy, a ton of drive, and not a lot of experience and mentoring. I feel like I did everything on my own. The biggest thing I learned was working with people and through people and not stepping in their way so they can be productive—especially if you want to be larger.” —Richard Paek, CEO of Allied Lube, which operates 75 Jiffy Lubes in California and Texas

It’s Mega 99 Time!

These multi-unit operators know how to go big

e’ve rounded up another “Mega 99” issue—and that means some big numbers. In the following pages you’ll find our annual list of the biggest players in franchising—the ones with dozens, even hundreds, of units—and plans for many more. When it comes to brands, units, and territories, these franchisees think big… and they think long. Numbers offer insights, but our readers tell us that the personal stories of the individuals we profile, with their tales of success, failure, and lessons learned, are the most powerful. And it’s in these details that the true character—and grit—of these successful multi-unit operators are revealed. Each year, we look for franchisees with the drive, determination, and that pinch of good fortune who have expanded and reaped the rewards. In each case, it’s a special combination of choosing great brands, building dedicated, hard-working teams, and attracting and retaining loyal and satisfied customers who return again and again. And, as we’ve discovered over the years, not everyone is built for success on this scale. In the pages ahead you’ll find six profiles of outstanding franchisees who pushed through innumerable obstacles to make it happen. Each has a remarkable story of how they attained success and how they are determined to keep it going. This year, along with four new profiles, we reconnected with Anand Gala and Ken Leese to learn what they’ve been up to since we profiled them a few years back. • Shahid Hashmi says he wishes he’d gotten into franchising earlier, but he’s doing a heck of a job making up for lost time. He operates in the Mid-Atlantic and Northeast and has grown to 45 Popeyes Louisiana Kitchens, 2 Burger Kings, 2 Retro Fitness gyms and, most recently, ZIPS Dry Cleaners. He has a growth plan that he predicts will top $150 million in revenue in the next 10 years. • Michael Orcutt has been on both the corporate and the franchisee sides of Domino’s Pizza—for 40 years now—and he once led U.S. store operations for the chain. Today, his “Team Cowabunga”—the largest singly owned Domino’s franchisee in the U.S.—operates 101 Domino’s locations in Georgia, Alabama, and South

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Carolina, employs more than 1,700 people, and he’s still looking to grow. • Richard Paek opened his first Jiffy Lube in 1992 and has built an empire around transparency, accountability, and consistency. Today he runs 75 locations in California and Texas. Growth at his company, Allied Lube, outpaced the 2,000-unit Jiffy Lube chain by 9 percent in 2012, 7 percent in 2013, and was on track to three-peat in 2014. For 2015, he plans to add at least 5 to 10 new locations. • Steve Sager has never thought small. As a franchisee and development director for Subway, he opened more than 260 stores in the past 30 years. Today he operates 16 Subways and 7 Auntie Anne’s. With a knack for spotting emerging brands, he recently signed an agreement to open 20 Persona Neapolitan Pizzeria restaurants. • Anand Gala has simplified his business approach since we profiled him in 2010. He sold his 19 Applebee’s stores and is now considering what he’ll do with the proceeds. In the meantime, he has doubled the number of Famous Dave’s restaurants in his portfolio to 10 and says more are likely on the way. Looking ahead, he says, “I have the luxury of being more strategic with my business right now since I have downsized, but that doesn’t mean I won’t grow again.” • Ken Leese has focused on getting his operation lean and fit since we spoke with him in 2010. He’s continued to operate his stable of Jackson Hewitt locations while moving ahead cautiously with Play N Trade. The recession challenged him, as it did many tax processing operations. But that market is picking up, and he’s grown from 40 Jackson Hewitt locations at the end of 2013 to 45 today. No matter their background, experience, or training, there are inspiring stories behind all these successful franchisees. Whether you have a single unit or dozens spread across several brands, you’re sure to find something useful, educational, and even entertaining in the stories of these six multi-unit operators. Along with our profiles, we present our annual Mega 99 list, ranking the franchisees with the most units in the country. See which brands the largest franchisees in the U.S. have chosen to build their portfolios. It’s Mega 99 time!

This could be you.

WHERE’S JOE? HE’S ROME-ING AROUND! WHEN IN ROME, DO AS CHECKERS & RALLY’S DOES

e tried to contact Rally’s multi-unit franchisee Joe Hertzman for a recent photo to be featured in this ad, but Joe’s off to Rome. A vacation awarded to top achievers, one of Checkers & Rally’s franchisee incentive programs! “Rally’s has great brand relevance, and we truly appreciate their outstanding leadership, innovative marketing, menu development, and cost effectiveness,” said Joe. “With Rally’s, we’ve had yearover-year-over-year increases. We’ve

also received the Sustained Sales Growth Award from Rally’s for achieving 42% consecutive sales’ growth over the last six years.”

■ We are the largest double drive-thru restaurant chain in the country, a recognized brand with a 25-year proven track record.

TOP OF THE FOOD CHAIN, SERVING UP FLAVOR, VALUE, AND PROFITS

■ Checkers & Rally’s is consistently ranked highest in overall value by guests in the category.3

■ Checkers & Rally’s sales-to-investment ratio is more than double the industry average.1 ■ Our franchisees have achieved three consecutive years of same-store sales growth2 and are on pace for another record year.

■ Our return on investment is 52.4%.2 ■ Checkers & Rally’s average investment is $409,000.2

Enjoy the view at the top of the food chain and perhaps even Rome, as a Checkers or Rally’s franchisee. Checkers & Rally’s has 800+ locations and top tier market availability.

Get ready for take off, call 888-913-9135 or visit owncheckersfranchise.com/update © 2015 Checkers Drive-In Restaurants, Inc. 4300 W. Cypress St., Suite 600, Tampa, FL 33607. 1: This information is based on a 2013 industry data report published by Restaurant Research LLC and comparing those results with the information we present in our 2014 franchise disclosure document. 2: Per Item 19 in Checkers 2014 franchise disclosure document. Results are an average for all franchisees. Individual results may vary. 3: Per WD Partners 2013 Consumer Picks Survey. Written substantiation will be provided on request 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. Minnesota file number F-4351. This advertisement is not an offering. An offering can only be made by a prospectus filed first with the Department of Law of the State of New York. Such filing does not constitute approval by the Department of Law.

BY HELEN BOND

Better Late Than Never!

Shahid Hashmi is making up for lost time

hen it comes to franchising, Shahid Hashmi has just one regret: he wishes he’d gotten into it earlier. Hashmi is making up for lost time in a big way. The multi-unit franchisee, whose holdings in the Mid-Atlantic and Northeast regions include 45 Popeyes Louisiana Kitchens, 2 Burger Kings, 2 Retro Fitness gyms, and, most recently, ZIPS Dry Cleaners, has hatched an aggressive growth plan that he predicts will top $150 million in revenue in the next 10 years. Armed with two MBAs and 20 years of financial experience in the telecom industry, Hashmi considered his initial foray into franchising an investment when he opened a Popeyes store in Washington, D.C., in 1994. He soon would quit his day job after discovering he needed to be more than just a weekend boss. “If you are an entrepreneur, you can’t be part-time,” says Hashmi, managing partner of Pure Foods Management, which operates in the D.C. area and NAME: Shahid Hashmi TITLE: Managing Partner COMPANY: Pure Foods Management NO. OF UNITS: 45 Popeyes, 2 Burger King, 2 Retro Fitness, 1 ZIPS Dry Cleaners AGE: 65 FAMILY: Wife Shaheen; two

children, daughter Mishell (33) and son Shahzeb (31) YEARS IN FRANCHISING: 20 YEARS IN CURRENT POSITION: 20

MULTI-UNIT FRANCHISEE IS S UE I, 2015

PERSONAL First job: Shortly after receiving my MBA from Western Illinois University, I took a job as a financial analyst for a telecommunications company in Washington, D.C. Formative influences/events: I was the oldest of seven children. We were raised by two extremely loving parents who always emphasized the importance of education, reading, and studying hard. And they taught us to dream. Key accomplishments: I’ve received two separate MBAs: the first from the Institute of Business Administration in Karachi, Pakistan, the oldest business school outside North America, and the second from Western Illinois University. My Popeyes restaurant in Providence, Rhode Island was recognized as one of the top five restaurants in the system in 2014. Biggest mistake: Had I known then what I know now, I would have started my career in franchising much sooner. Decision I wish I could do over: I wish I had started my career in franchising 10 years earlier (in 1984, rather than 1994). Work week: 60 to 65 hours. How do you spend a typical day? I’m constantly on my phone and Microsoft Surface Pro Tablet, reading and replying to emails, scheduling meetings, confirming appointments, etc. In addition, I’m constantly setting goals and strategizing for the day/week. This is vital for long-term success.

listening to music. Exercise/workout: I need to make time for this. Favorite tech toys: I would be completely lost without my Microsoft Surface Pro Tablet. What are you reading? Freedom at Midnight by Dominique Lapierre and Larry Collins. The book paints a sweeping picture of the defining moments of the end of the British Raj, the independence of 400 million people, and their division into India and the newly created Pakistan. Do you have a favorite quote? “Always work hard, be honest, and be proud of who you are.” Best advice you ever got: Never lie (from my parents). What gets you out of bed in the morning? Long ago, I developed an internal clock that wakes me up at 6 a.m. What’s your passion in business? Success. Whatever I do, I need to succeed in it. How do you balance life and work? I place equal emphasis on both. Last vacation: A couple of weeks in 2014 visiting my parents in Pakistan. Person I’d most like to have lunch with: Both my grandfathers. I never met them.

Favorite fun activities: Spending time with my family, traveling,

MANAGEMENT Business philosophy: Always be up front and honest. No perverse incentives or hidden agendas. Management method or style: Hands-on. Such management benefits employees and the organization as a whole because it builds a workforce that is empowered and well trained. Greatest challenge: Make sure I don’t make any stupid mistakes. How do others describe you? Disciplined, hard-working, and honest. How I give my team room to innovate and experiment: I give my team autonomy and empower them to make the decisions necessary to run the business. However, I expect that our procedures are consistent throughout the different brands. How close are you to operations? I don’t deal with the day-to-day operations. However, although I’m not in the stores daily, I’m always in the loop on what is going on. I’m also constantly planning and strategizing with my partner. What are the two most important things you rely on from your franchisor? Assistance and expertise for all the factors that are important in effectively running a franchise, particularly brand marketing and operational systems.

What I need from vendors: Timely delivery. Have you changed your marketing strategy in response to the economy? How? Both Popeyes and Burger King have invested more in television advertising over the last few years. This strategy not only boosted our brand awareness, but also put us in a great position as the economy rebounded. I expect the same from ZIPS as we continue to expand our national footprint. How is social media affecting your business? There is no doubt that social media is the most innovative and dramatic marketing vehicle to come on the scene since television. Through various social media platforms, we can build and promote our brands at a greater level than was ever possible before. How do you hire, fire train and retain? Our supervisors handle those issues. They are on the front lines every day. As long as they follow the guidelines put in place, the processes are much easier and less stressful for all concerned. How do you deal with problem employees? Handled by supervisors. Fastest way into my doghouse: Not following systems.

MULTI-UNIT FRANCHISEE IS S U E I, 2015

New Jersey. A native of Pakistan, Hashmi, the eldest of seven children, says his parents emphasized the traits of honest and hard work and were “hard on us” when it came to education. After earning a graduate degree from the Institute of Business Administration in Karachi, Pakistan, in 1971, Hashmi decided to move to “the land of opportunity” where he earned his second MBA in finance at Western Illinois University. He worked as a financial analyst at two large telecommunications companies before his entrepreneurial spirit took over. After 20 years in the corporate world, he found franchising appealing because of the built-in customer base that comes with a strong brand. “With good brand recognition, you can put up a sign, open the door, and people are waiting to come in,” he says. “With a non-franchise business, you have to build business gradually.” Hashmi used his own capital and understanding of numbers and projections to grow the company, starting with Pop-

eyes. He added Burger King and ZIPS Dry Cleaners in 2014 and now has two Retro Fitness gyms under construction. In five years, he hopes to have 100 Popeyes, another 50 or 60 Burger Kings, and expand the ZIPS brand into new markets. His decision to diversify was to avoid “putting all his eggs in one basket.” A former connection with Popeyes introduced him to the New Jersey-based Retro Fitness brand, which provides personal trainers, group fitness, and its Cardio Movie Theater, featuring popular movies to work out by. Initial plans are for two gyms, one in New York and one in Connecticut. Hashmi didn’t have to look far for his most recent investment. For more than 10 years, he has been a customer of a neighborhood ZIPS Dry Cleaners, which gave him a firsthand look at the same-day, low-cost, one-price business model. ZIPS has also garnered attention for its eco-friendly practices, including the use of biodegradable bags and environmentally friendly technology and cleaning techniques.

Founded in 1996 by a group of eight competing dry cleaners in the BaltimoreWashington, D.C., area, ZIPS has grown to nearly 40 locations in the Mid-Atlantic region. The company has been franchising since 2006, but growth is on the upswing because of interest from multi-unit franchisees, such as Hashmi. With ZIPS, says Hashmi, finding the right location that will also draw a loyal customer following is key. Because garments are cleaned on site, the brand requires a larger facility than a traditional dry cleaning establishment. Hashmi sees great promise for ZIPS as a multi-unit franchise. While he may not have started in the franchise business soon enough for his liking, Hashmi is taking advantages of all the opportunities coming his way. He recommends anyone looking to prosper in franchising to remember the advice of his parents and stick to the basics. “Planning and hard work are the two ingredients for success in franchising,” says Hashmi. “If you are persistent, your planning and hard work will pay off.”

BOTTOM LINE Annual revenue: $50 million.

ness pulse, look at forecasts, and adjust accordingly.

2015 goals: Grow annual revenue by 10 to 15 percent.

What are the best sources for capital expansion? We’ve been using GE Capital for the past four to five years.

Growth meter: How do you measure your growth? By number of units and volume. Vision meter: Where do you want to be in 5 years? 10 years? More than 100 Popeyes units and another 50 to 60 Burger Kings in the next 5 years, while bringing ZIPS Dry Cleaners to Connecticut and New Jersey. In the next 10 years, I would like our annual revenue to reach $150 million. How is the economy in your region(s) affecting you, your employees, your customers? Fast food restaurants tend to fare better during an economic downturn than pricier restaurants do, so we haven’t been affected much. Dry cleaning is a recession-resistant business as well. When the economy is bad, people still have to go to their jobs and job interviews. They still need clean suits. They may go to their dry cleaners a bit less often, but they’re still going in solid numbers. Are you experiencing economic growth in your market? Yes. How do changes in the economy affect the way you do business? We obviously have to take these changes into consideration and change our policies accordingly (e.g., determine how fast or slowly we should grow). How do you forecast for your business? We follow trends and busi-

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Have you used private equity, local banks, national banks, other institutions? Why/why not? They all have their place. To date, our needs have been met by GE Capital. No need to turn to anyone else. If we need to, we will. What are you doing to take care of your employees? The numberone concern of most small-business owners is the happiness of their customers. But that’s not possible unless you’re taking care of those responsible for keeping your customers happy: your employees. We provide a good work environment and offer cash bonuses based on sales and profits. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Cost of labor is always a very sensitive topic. As costs keeps rising, we naturally have to adjust our prices. While we try not to pass these costs to customers, that’s not always possible. What kind of exit strategy do you have in place? Working on it. Don’t have one right now. Hope to have something rolled out in the next 12 months.

A FRANCHISE OPPORTUNITY WITH SPRINKLES ON TOP.

SPECIAL DEVELOPMENT INCENTIVES AVAILABLE IN MINNESOTA, TEXAS AND LOUISIANA Take advantage of our growth trajectory and stake your claim now! We’re seeking experienced QSR Operators and Multi-Unit Franchisees to join our family.

RANKED ONE OF

THE TOP 100

COMPANIES FOR U.S. FRANCHISE GROWTH Nation’s Restaurant News 2014

COFFEE AND BAKED GOODS CATEGORY

Entrepreneur Magazine 2014 Franchise 500

LET’S TALK FRANCHISING For more information visit

DUNKINFRANCHISING.COM

or email us at dunkinfranchising@dunkinbrands.com.

BY HELEN BOND

Top Domino

“To be the best, you’ve gotta beat the best”

hen Domino’s veteran Michael “Mike” Orcutt made the switch from corporate executive to franchisee he was, he admits, a “little nervous” about how the managers of the nine Atlanta

pizza stores he purchased in 1990 would welcome their new boss. Orcutt gathered the group in a small hotel meeting room and gave them their first assignment: name his new company. “I said, ‘You are the ones who are

going to have to make it work. So let’s come up with something that we can be proud of and have fun with,’” recalls Orcutt, a self-described quick decisionmaker. The managers brainstormed some 200 monikers before selecting Cowabunga, Inc. Orcutt, who previously led U.S. store operations for the country’s secondlargest pizza chain, tacked on “Team” to the front of the name and never looked back. With 101 stores, Orcutt operates the largest singly-owned Domino’s franchise in the U.S. His passion for business starts with people. “We want the word ‘team’ in everything we say,” he says. “Not because we talk about team, but because to us, Team Cowabunga is about everyone having the commitment to do well.” The Team Cowabunga mantra, “To be the best, you’ve gotta beat the best,” is paying off. The company has 1,700 employees and locations in three states (Georgia, Alabama, and South Carolina) and reached a milestone with the opening of its 100th store in late 2014. With 40 years invested in the brand, NAME: Michael “Mike” Orcutt TITLE: CEO COMPANY: Cowabunga, Inc. NO. OF UNITS: 101 Domino’s

Pizza AGE: 58 FAMILY: Single, 3 children: Stacy,

29, Michael 27, Cami, 25 YEARS IN FRANCHISING: 40

years with Domino’s Pizza; franchisee since 1990 YEARS IN CURRENT POSITION: 24

MULTI-UNIT FRANCHISEE IS S UE I, 2015

STRENGTH IN NUMBERS $1,470,812*

AVERAGE GROSS SALES

25.88%*

AVERAGE FOOD AND PAPER COSTS

$318,206*

AVERAGE NET PROFIT FROM OPERATIONS (IN $)

LIMITED DEVELOPMENT AREAS AVAILABLE 800.546.6904 JIMMYJOHNS.COM

*Figures reflect averages for eighteen (18) affiliate-owned restaurants that opened before January 1, 2009 as published in Item 19 of our April 2014 Franchise Disclosure Document. These averages are based on a 52-week annual period from January 2, 2013 through December 31, 2013. Of these eighteen (18) restaurants, 8 (44%) had higher gross sales, 12 (67%) had higher food and paper costs and 11 (61%) had higher net profit percentage during the reported period. The financial performance representation contained in Item 19 of our April 2014 Franchise Disclosure Document also includes (1) average system–wide gross sales, average franchise gross sales, and the number and percentage of restaurants exceeding these averages during the referenced period and (2) average gross sales, average food and paper cost, and average net profit percentage information during the referenced period for seven (7) affiliate-owned restaurants that were opened after January 1, 2009 and before January 1, 2013. A new franchisee’s results may differ from the represented performance. There is no assurance that you will do as well and you must accept that risk. This offering is made by prospectus only.

Orcutt has a unique vantage point about what it takes to succeed in the Domino’s system. He was just 16 when he started delivering pizza in Ann Arbor, where Domino’s is based. A year later, he was named store manager, the beginning of a meteoric rise up the corporate ladder, which included a stint as Southeast regional vice president in Atlanta, where he would later return. Orcutt served as vice president of field marketing and on the corporate leadership team as executive vice president of U.S. operations. By 1989, with three children and a heavy travel schedule, he was primed

for a change. “Corporate life is great fun and glamorous on someone else’s dime, but I really wanted to be in an equity position,” says Orcutt, now 58. “I wanted to be a business owner and have an ownership stake in what I do. That was always my ambition.” These days, Orcutt is hard at work growing his team and organization, which is based in Alpharetta, Ga. Cowabunga is in the midst of a chain-wide initiative to reimage Domino’s with a more guest-friendly design, open kitchen, and new technology. He also has plans to

add 10 to 20 stores annually. Although he never set a goal for a specific number of stores, Orcutt says that when he realized how close he was to reaching the century mark, he “got this surge of energy to make it happen.” Orcutt also continues to build internally with a corporate culture and core values focused on customer service, based on the Fish! Philosophy of Seattle’s famous Pike Place Fish Market. “We have a laser focus as a company,” he says. “Our laser focus now is to be the best in class in the people funnel— and in the way we handle people.”

PERSONAL First job: Domino’s Pizza driver at 16. Formative influences/events: Tom Monaghan, the founder of Domino’s, was a tremendous influence. I was young and worked for him for 18 years. The biggest thing he taught me was the strength and tenacity to keep trying, don’t give up, and to think big. The most important thing he taught was to have character and core values in what you do. Key accomplishments: I don’t look back; I always look forward. I learn from my experiences, but I don’t keep a list of accomplishments. My biggest accomplishment is my kids and where they are today. Smartest mistake: When I was executive vice president of Domino’s, I had every store install time-lock safes for the security and safety of our people. It was a really expensive decision—millions of dollars and requirements for the franchisees—but it took away store robberies and other things like that. Decision I wish I could do over: Spend more time with my family. And spend more time with the people who work for me on my team to get to know them better. How do you spend a typical day? Get up, have coffee, and work out. I review the real-time numbers from the previous day and pick one big priority of the day. I stick with that priority until it is done. Favorite fun activities: I love boating. My kids are all over the country— Atlanta, Los Angeles, and New York City—and I love to go see them. Most of my social time is around the folks I work with, either in the company or in my franchise network. Exercise/workout: Cardio, 45 minutes a day, and weight training four days a week. Favorite tech toys: I’m stuck on my phone—my iPhone is everything. What are you reading? The 5 Languages of Appreciation in the Workplace: Empowering Organizations by Encouraging People by Gary Chapman and Paul White, and Good Leaders Ask Great Questions by John Maxwell. Do you have a favorite quote? Bo Schembechler’s quote, “Every day

MULTI-UNIT FRANCHISEE IS S UE I, 2015

you either get better or you get worse. You never stay the same.” I also love Calvin Coolidge’s quote that begins with “Nothing in the world can take the place of persistence...” It is fantastic. We have a Calvin Coolidge award we give based on that quote. Best advice you ever got: My dad’s advice to be responsible and take ownership. Our theme for this year is, “Because that is the way I want it to be, I own it.” Anything that is in your control, act now. It gives you some sort of empowerment. We have our strong core values that also came from my dad: Respect, Responsibility, Trust, Fairness, and Contribution. He was a swim coach and a teacher. What gets you out of bed in the morning? I always get up with ambitious visions about how the day could be. I like to get things done. I like to keep moving. I like projects and I love people. What’s your passion in business? The people. The network. The satisfaction. There is pressure and stress in taking responsibility, but there is also great joy in getting things right. I spend a tremendous amount of my time trying to figure out how we can shape the business model so my folks are making more money—so as we improve they are sharing in the win. We are in the execution business, and it takes a lot of moving parts to get the product to someone and make it a great experience. There is not a computer that can deliver a pizza to the door and smile. In this business, if you don’t love people you are probably doing the wrong thing. How do you balance life and work? My life and work have become one and the same. My work is my life. I balance, but the list is never going to be done. Once you learn that, you can have your desk stacked full as long as you are moving forward. Then everything you look at in the stack is opportunity. Last vacation: Palm Beach with the kids. Person I’d most like to have lunch with: Today, probably Nick Saban, Alabama’s head coach. He reminds me of my dad. He is tough, sharp, and consistent.

MANAGEMENT Business philosophy: We use the Pike Place Fish Market philosophy for our customers: play, make their day, be there, and choose your attitude. The Cowabunga Team mantra is, “To be the best, you’ve gotta beat the best!” We are always looking to be our best and beat our best. Management method or style: I am results-oriented. I allow for freedom of decisions and process. And I spend a lot of time strategically for my business. How do others describe you? Competitive, confident, passionate, and I would hope someone would say that I was generous. One thing I’m looking to do better: I’m always looking to be a better boss. That is my job and role—to be a leader. How I give my team room to innovate and experiment: I cut them wide-open loose. I give them an outline or a budget and a process. I don’t give them a lot of instruction to start, but I spend time on what the outcome should be. How close are you to operations? I’m not as close in the store-tocustomer connection as I used to be, just because of the growth in number of stores and people. But I am as close to the business as I can be without making every pizza. I keep my schedule clear so I can maintain a bigger picture. What are the two most important things you rely on from your franchisor? I expect sound decisions. When a franchisor doesn’t make sound

decisions you are left holding the bag. I expect good, solid decisions and a commitment to the brand. I expect them to help me be profitable so I can grow their brand. What I need from vendors: To be contemporary and innovative so we can constantly improve and speed up our operations. And I need them to be absolutely price-competitive. If I bring them sales advantages or assets that help them, I expect them to help me. How is social media affecting your business? Social media has become such a broad term. We have grown from zero pizzas ordered online to more than half our orders online. From a banner advertising and social media standpoint, it is a faster way to network and seems to have cut out a lot of our print business, which is helpful economically. The jury is still out where social media is from an advertising standpoint. Our Domino’s leadership is committed to doing the best job, so it is off my plate to worry about. How do you hire and fire? I look at the people funnel like a timeline: advertising to recruit, onboarding, initial training, and a focus on a career path. That is a process we are working on right now. What is extraordinary retention? What is desired? What is expected? Those are things we are focusing on right now. I don’t have a plan to fire, but if you bugger things up consistently you are probably going to be gone.

BOTTOM LINE Annual revenue: N/A. 2015 goals: My focus is always on profits and sales, happy customers, our operational scores, and what we call the “Miracle of Team.” If we have a fantastic team, we will have great operations, which will generate happy customers. Happy customers generate sales increases, which generates profitability. We are in the middle of reimaging all of our stores. We hope to have 90 percent of that done by the end of 2015. Growth meter: How do you measure your growth? By sales, profitability, number of units, and people. If I get more people, I will get more sales. We went from 91 stores to 101 in 2014, with two or three more lined up in January. Vision meter: Where do you want to be in 5 years? 10 years? My vision is to have consistent growth of 10 to 20 stores a year from our base of 101 stores now and continue to build brand equity. To really be seen as great operators, I would like to see us at a 9 or 10 in our brand equity scores. How is the economy in your region affecting you, your employees, your customers? We have seen tremendous sales growth, but because of food and insurance costs our profitability is about the same. We haven’t raised prices for 3 years, so I maintain that we may not discount as much. Have you used private equity, local banks, national banks, other? Why/why not? I work with BB&T Bank. I have a personal relationship with my lending person. I don’t have a lot of debt for the number of assets we have. What I do is lay out a plan with them way ahead of time of what I’m do-

MULTI-UNIT FRANCHISEE IS S UE I, 2015

ing, where I’m going, and where I’m spending money. My rule of thumb is that if you borrow, it has to be for something that is new to the system. If I were starting today, that would be a rule I would have started with. Now the process for growth is more important to me than the number of stores. What are you doing to take care of your employees? The nonprofit Domino’s Pizza Partners Foundation was established to assist team members in time of special need or tragedy. Since its inception, the foundation has helped thousands of Domino’s Pizza team members and their families with financial, emotional, intermediary, and advisory assistance. How do you reward/recognize top-performing employees? Our management team earns bonuses based on our five goals. In December, we were looking for a record week in sales. I put a $100,000 bounty out for the management team to split if we hit the record week, so they could think about and understand how important it is to me that we constantly get better. I try to keep it fun and treat my employees like customers. We also have awards banquets every year and give out literally hundreds of plaques and trophies to recognize people. We really believe in recognition. Every week I write cards for anybody who is up in sales by 5 percent or more. That is a big stack every week now. I could raise the sales increase amount to limit that work, but they all mean something to me, so that is a really important piece. What kind of exit strategy do you have in place? None. I am sticking with this. I really love the brand. I really love the leadership team we have in there now, and I love their decision-making process. I used to help run the whole thing, so I know this is the best we have ever had. I’m really proud to be part of the brand.

COME GROW WITH A WINNER! ■

■

Franchise opportunities available nationwide!

Established in 1973…42 years of proven success Famous for our best-in-class food offering and value pricing #1 Consumer’s Choice in Cafeteria/ Buffet Chains by Restaurants & Institutions #1 in the Buffet Restaurant category 2011–2015 by Entrepreneur #1 in grill-buffet segment for 14 years by Nation’s Restaurant News 503 restaurants in 42 states (395 franchised, 108 companyoperated) as of 1/1/15 Financing available from more than 40 leading lenders

goldencorralfranchise.com/muf Contact Annette Bagwell: abagwell@goldencorral.net | 800-284-5673 ext. 4479 Franchises available nationally with 3rd-party verification of $2.5 million net worth with $500,000 cash or cash equivalents

+ CHICKEN & WAFFLES

SERIOUS SOUL FOOD

A CULT FOLLOWING

Multi-Unit FRANCHISE GOLD This deliciously lucrative combination is set to take America by storm. Corporate partnerships are available – get to know the first-to-market soul food franchise that everyone’s already talking about.

480-444-8285

lolosfranchise.com

BY HELEN BOND

Clearly Transparent

Communicating and sharing success

hen it comes to creating a successful corporate culture, veteran Jiffy Lube franchisee Richard Paek has found that seeing does lead to believing. Paek, who opened his first Jiffy Lube in 1992,

has built a multi-unit system that emphasizes transparency inside and out. If there is a sales, customer service, or employee performance stat to be had, Paek will use it to rank, reward, and motivate his team.

“‘No sugarcoating’ is one of our favorite quotes,” says Paek, CEO of Newport, Calif.-based Allied Lube Inc., which operates 75 Jiffy Lube service centers in California and Texas. This focus on sharing the facts with his 800 employees is paying off. With estimated annual revenue of more than $60 million, Allied Lube’s growth outpaced the 2,000-unit Jiffy Lube chain by 9 percent in 2012, 7 percent in 2013, and is on track to three-peat growth in 2014. While Paek contends there is no silver bullet to operating multi-unit locations, it starts with creating an infrastructure that promotes communication from the top down. “If you look at what we have been able to do, it is pretty amazing,” he says. “We worked on structure and morale. Our morale and teamwork are very high and we make sure we communicate efficiently and effectively throughout the entire company.” Paek has spent millions on store upgrades, signage, and advertising, but he contends it is the internal restructuring of his culture, communications, and daily operations that has fueled Allied Lube’s growth. The company uses sales and labor data, car counts, mystery shopping, customer satisfaction survey results, and other objective data to award NAME: Richard Paek TITLE: CEO COMPANY: Allied Lube, Inc. NO. OF UNITS: 75 Jiffy Lubes

FACEFIRSTPHOTOS.COM

AGE: 50

FAMILY: 4 kids YEARS IN FRANCHISING: 22 YEARS IN CURRENT POSITION: 22

MULTI-UNIT FRANCHISEE IS S UE I, 2015

First job: “In the 7th grade I was in charge of the popcorn stand at the junior high school concession stand.” or deduct bonuses and rank stores. Employee favoritism by district managers is frowned upon and challenges among stores makes winning sweeter, he says. This way of thinking is particularly important to the younger generation, who want to have fun doing their job, be recognized for what they do, and love being ranked. Often, this spirit of competition is more about productivity and the pride of doing well than it is about money, he says. Along the way, Paek discovered that high morale leads to high productivity. “Passion is something that is caught,” he says. “We hire positive people who deal with employees in positive ways and recognize and reward positive statistics and productivity. When we focus on positive influences and positive reinforcement, we find the negativity falls off. I feel like we have done that well.”

Paek learned the value of a strong work ethic early. Born in South Korea, he was a fifth grader when his family moved to California, and he watched his “highly educated” father toil seven days a week as a janitor, welder, taxi driver, and owner of a small mom-and-pop grocery store. Still, he was intrigued by the idea of being in charge of his own destiny. After studying business administration at USC, Paek bought a printing company he sold three years later to fund his first Jiffy Lube franchise. He chose the brand after a year of researching brands and industries he believed were ripe for multiple units. His portfolio had blossomed to 113 stores, all financed internally, when he decided to sell stores in Colorado and California markets where he viewed growth as “tapped out.” He turned his focus on Texas, where he continued to expand.

As his experience grew, Paek says he learned to work smarter and became a quick study of how understanding human behavior can benefit the bottom line. “When I started in this business I had a ton of energy, a ton of drive, and not a lot of experience and mentoring. I feel like I did everything on my own,” he says. “The biggest thing I learned was working with people and through people and not stepping in their way so they can be productive—especially if you want to be larger.” Growth is definitely part of a 2015 business plan that includes the addition of 5 to 10 stores and the evolution of their leader as a coach as many longterm employees move up the ranks. Paek is embracing this supporting role as the mentor he never had, and you can bet he will continue to focus on the positive.

PERSONAL First job: In the 7th grade I was in charge of the popcorn stand at the junior high school concession stand. Formative influences/events: My dad was a small-business owner and taught me that true freedom comes when you take charge of your own destiny. I learned that I was willing to take risks in order to be in charge of my destiny. Key accomplishments: After years of hard work, I feel like I have just hit my stride. I’m in the best place of my life, having recovered from some setbacks, to have a company that has grown significantly over the last few years. I have built an incredibly effective, productive, and efficient team, whom I believe—and it pleases me so much—are happy and loyal. I have four amazing children, all with different styles and ambitions, of whom I couldn’t be more proud. I’m at my best both spiritually and physically. Biggest mistake: Failure to anticipate the economic crash of 2008. Smartest mistake: When I had my first store I did everything. I did too much. While I learned our business from the inside out, I risked burning myself out and didn’t focus on the higher priorities of the business. Decision I wish I could do over: Not pulling the plug on a key staff member, who was not performing, early enough. Work week: On call 24/7 and loving it! How do you spend a typical day? I really spend all my days working on the vision of the company and working directly with upper management to implement and help them succeed. Communicating well and functioning as a

team are critically important to the success of my business. Favorite fun activities: Watching my 13-year-old play baseball and traveling to new locations. Exercise/workout: 45 minutes of strength, flexibility, and cardio three to five times a week. Regular infrared sauna. Favorite tech toys: iPhone 6. What are you reading? Delivering Happiness by Zappos CEO Tony Hsieh. Do you have a favorite quote? “The quality I most admire in others is the persistence and tenacity to find a solution when there doesn’t seem to be one.” Best advice you ever got: The book The Making of a Blockbuster: How Wayne Huizenga Built a Sports and Entertainment Empire from Trash, Grit, and Videotape taught me to focus on growing at all costs. What gets you out of bed in the morning? Interacting with my team. What’s your passion in business? Watching a team member grow and prosper both professionally and personally. How do you balance life and work? I have a detailed 5-year plan that I update yearly for both personal and work—writing things down helps me stay focused. Last vacation: Japan (Tokyo, Osaka, Kyoto). Person I’d most like to have lunch with: Ron Paul.

MULTI-UNIT FRANCHISEE IS S U E I, 2015

MANAGEMENT Business philosophy: If you have passion, everything else will fall into place. Management method or style: Closely working with them from the perspective of coaching and teamwork, but otherwise I’ve learned that micromanaging is overwhelming. At the end of the day, you have to trust the people you hire. However, a key motto of mine is still, “Trust, but verify.” Greatest challenge: Knowing priorities and always tackling the most important first. Getting the team to focus on the most important things first. How do others describe you? Crazy, enthusiastic, optimistic, easygoing, motivating. One thing I’m looking to do better: To be in the best physical shape in my life in 2015. How I give my team room to innovate and experiment: You have to give enough room for them to try. If they fail, but learn, they grow and become even more competent. Watch for the decisions that have financial implications, but don’t over-manage the small pieces, as that erodes their confidence and your teamwork. How close are you to operations? Very close. We take one or two teambuilding trips/events per year, have weekly (and daily if needed!) calls. My team knows that I’m available 24/7 if they need me. What are the most important things you rely on from your franchisor? Fairness, objectivity, vision. What I need from vendors: Responsiveness and transparency. How have you changed your marketing strategy in response to the economy? How? I hired a marketing specialist with extensive knowledge in our category. How is social media affecting your business? Not really. Each of our locations has a Yelp page that occasionally gets a comment. But as we are a national brand, most of the social media affects the brand at the national level. We actually dismantled our “Allied Lube” Facebook and Twitter pages, as we got so little traffic to the sites because people go to the national pages instead. How do you hire and fire? Hire slow, fire quickly. For our hiring and teamwork, I use a detailed personality/behavior test called the Birkman Method. This test shows usual and stress/need behavior in people and has been a key tool in both hiring and effective teamwork. I have been using this for the last 10 years. How do you train and retain? A big chunk of management is focused on training. We don’t have a trainer at our stores—each member of management is a trainer. In regards to retention, recognition is key. I believe in sharing a piece of the profitability with performing employees, from senior team members and down through the store levels. How do you deal with problem employees? I believe that we have built an incredible system—it works like a well-oiled machine at this point. If we have a problem employee, then they probably aren’t fitting within the system and need to be removed. While it may sound cold, we focus so much on our culture of hard work, respect for others, and effectiveness that if you are a “problem” then it is because you do not embody those traits. Fastest way into my doghouse: Distorting the truth/facts.

MULTI-UNIT FRANCHISEE IS S UE I, 2015

BOTTOM LINE Annual revenue: More than $60 million. 2015 goals: GROW!! At least 5 to 10 new stores and sales growth of 7 percent. Growth meter: How do you measure your growth? Sales, profit, productivity/efficiency, EBITDA. Vision meter: Where do you want to be in 5 years? 10 years? Continue to be in business and have grown the business smartly. I’d love to have 1,000 stores if it made sense and we could do it smartly. How is the economy affecting you, your employees, your customers? 95 percent of our stores are located in Texas, which has recovered well. The population of our primary cities has grown (new customers), housing is affordable, and cost of living is reasonable. Our business is thriving right now. If anything, we are struggling to hire, because the job market is so strong. Are you experiencing economic growth in your market? Absolutely (see above). How do changes in the economy affect the way you do business? Even though Texas is doing well economically, customers are still highly price-sensitive and couponing continues to be a major influencer of how they spend their dollars—especially considering that oil changes are a relatively low-engagement purchasing decision and not considered an “indulgence” that they want to spend money on. How do you forecast for your business? Jiffy Lube is the leader in the preventive maintenance service business, and we feel the good direction that the brand is headed will help us continue to grow. At the franchisee level, we evaluate a number of key performance metrics across our network on an hourly basis to make sure we can pivot when needed to win the day. Labor control is key to keeping costs under control to help us hit our daily comp growth goals. Marketing and ops work together closely to ensure that their efforts support the business goal. What are the best sources for capital expansion? Depends. When I grew from one to 40 stores, I used SBA loans, owner financing, and banks that specialized in established franchise businesses. Have you used private equity, local banks, national banks, other institutions? Why/why not? I have not dealt with private equity so far. I have dealt with banks that deal with franchises. What are you doing to take care of your employees? We provide and constantly monitor and adjust to provide an environment where wellperforming employees, stores, and districts are rewarded. We do it by keeping detailed statistics on all areas of operations and financials and giving feedback on a regular basis (daily to yearly). We have one analyst who keeps track of all the vital statistics, trends, and rankings and communicates to the entire company on a daily basis. We strive to keep morale high by rewarding positive stats and behavior. We hire and promote people who are positive and understand that productivity is directly related to high morale. Our pay and bonus structure is closely aligned with the company’s financial goals. How do you reward/recognize top-performing employees? See above. What kind of exit strategy do you have in place? I know that it’s smart to have an exit strategy when you start a business. Right now we are in a growth mode and that’s our focus.

WEâ&#x20AC;&#x2122;RE FIRED UP FOR 2015! 2015 is going to be an exciting year as we bring our signature wood fired pizzas built with scratch made dough to Indianapolis, Champaign, Washington, D.C., Birmingham, Denver and more. If you're fired up and ready to hit the Brixx, call us at (888) 724-7188.

2014 Brixx Franchise Systems, LLC. This advertisement does not constitute an offer of a Brixx Wood Fired Pizza 7.375x4.875-RRAd(HR).pdf 8/25/14 8:25 of AMa Franchise Disclosure Document only. restaurant franchise. An offer can be1made after receipt

CMY

Saddle Up With A Recognized Brand In Quick Service Restaurants For Almost 50 Years

BY HELEN BOND

Idea Man

Steve Sager continues his innovative ways

teve Sager knows a good idea when he sees one. The franchise veteran championed Subway’s innovative $5 footlong sandwich as a nationwide promotion and pioneered the brand’s use of speedy ovens to offer customers toasted subs in a flash. So when Sager says he sees financial promise in a new fast casual pizza franchise, you might want to listen. Sager, who owns 16 Subways in South Florida and 7 Auntie Anne’s in Florida, Alabama, and Mississippi, is in on the ground floor of a development plan for Persona Neapolitan Pizzeria, a createyour-own, handcrafted pizza concept

out of Santa Barbara, Calif. At Subway, Sager opened 265 stores over the years as a development agent and has grown accustomed to fielding queries from franchising candidates seeking his funding and expertise. Still, Sager wasn’t shopping for a new brand when he traveled to California to check out Persona, co-founded by classically trained chef Joe Baumel, the son of a family friend. The 30-year franchisee was intrigued by the idea of serving up a custom wood-fired pizza in 90 seconds. He inked Persona’s first franchise development agreement—for 20 restaurants in South Florida that he plans to

roll out over the next 3 to 5 years. The game changer, he says, was how good the pizza tasted. “It wasn’t in my mindset to grow another food company, but I found something that was unique enough that got me excited,” says Sager, president of Boca Raton, Fla.-based Sager Management Group. “The reality is, to make money in the food business is not easy. You really have to have a brand that is going to cut through the clutter, and that is not always easy to do.” Sager knows what it takes to succeed in franchising. Thanks to “luck” and the financial backing of his father, who felt his son was suited to be his own boss, Sager was 25 when he opened his first Subway in 1985. In just four years, the pair would open 12 South Florida locations. “Back then, it was unheard of to be a multi-unit franchisee that quickly,” Sager says. “It just wasn’t the kind of business people did. We just started NAME: Steven Sager TITLE: President COMPANY: Sager Management

Group

NO. OF UNITS: 16 Subways, 7 Auntie Anne’s; Persona Neapolitan Pizzeria (agreement to develop 20 units in 3 to 5 years) AGE: 53 FAMILY: Wife Rebecca, daughter

Remy

YEARS IN FRANCHISING: 30 YEARS IN CURRENT POSITION:

I have been a franchisee and development agent of Subway for 30 years.

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Quality Cuisine Unique tastes and bold flavors from across Asia. Combining healthy, fresh ingredients made-to-order straight from the wok.

The FASTEST GROWING

ASIAN

Flexible Options

CONCEPT in the

Two prototypes allow franchisees to select a service model that fits the market. Kitchen size remains constant to allow continued focus on takeout, delivery and catering.

FAST-CASUAL

Dedicated Support

SPACE

Our experienced team has walked both sides of the franchisor-franchisee partnership so we take support seriously. Culinary innovation, revenue building programs and technical savvy keep Mama Fu’s fresh and relevant.

LEARN MORE ABOUT MULTI-UNIT FRANCHISING OPPORTUNITIES:

512-949-3211

FRANCHISE@MAMAFUS.COM

MAMAFUSFRANCHISE.COM

MAMAFUS

Diversify Your Franchise Portfolio Strong demand for our products and services is driving store revenues! • $1.36M average sales for top 25% of our stores • Over 25 consecutive years of system and same-store sales growth • Ranked #1 franchise in category by Entrepreneur® magazine (2010-2015) • Multiple revenue streams - retail, B2B, and smartphone and tablet repairs • Leading national brand / 650+ stores nationwide • Proven system, outstanding training, and minimal staff requirements

Franchise Opportunities Available! Contact us today at 1-866-217-7451 or www.batteriesplus.com/franchising Net sales average of $1,357,758 is based on the net sales average for the 136 stores that represent the top 25% of all 545 stores open during the entire 2013 calendar year. Of those 136 stores, 48 stores (or 35% of the 136 stores in the top quartile) met or exceeded the net sales average (or 8.8% of the 545 stores open during the entire 2013 calendar year). See Item 19 of our FDD for further details.

expanding, and I really loved the business right away.” The folks at Subway noticed. Subway founder Fred DeLuca tapped the young entrepreneur to become a development agent to own and build the brand in a struggling territory in Northern New Jersey. He sold his rights in 1997 and moved back to Florida to launch an aggressive development plan for Subway at home. From 1999 to 2011, the University of Florida graduate opened 135 stores, almost doubled average unit sales, and seized on a pricing idea backed by a catchy jingle that became a marketing darling. When a Subway with weak sales was returned to Sager’s portfolio, he adopted and expanded on a $5 footlong idea that a Miami franchisee had used to boost sagging weekend sales. Sager still has the banner in his garage that touts $5 footlongs, all day, every day. Sales doubled the first day and then doubled again the first week of the promotion.

Sager implemented the idea throughout his 220 stores, boosting sales as much as 35 percent, compared with flat growth chain-wide. Within three months, the sandwich bargain was winning customers nationwide. “When something works like that and happens by synergy, it doesn’t take much to make it go forward,” Sager says. In 2003, he had another idea to add to Subway’s winning sales strategy when he spotted a giant oven promising hot pizza cooked in 1 minute being installed in a restaurant next to a Subway in a mall location. A year later, the TurboChef technology was adapted to deliver oven-toasted sandwiches in seconds in Sager’s restaurants, and eventually throughout the Subway system. “People literally have been in the room and said, ‘Steve, our sales are flat. What is our next idea?’” he says laughing. “I would like to think that I am good at what I do because I enjoy it—and I understand operations and marketing.

But if you have something that is so good, a lot of that is timing and luck.” Sager now hopes to turn his luck and knack for development and innovation to personalized pizza. In addition to opening stores in Florida, he plans to add Persona locations in the Chicago area. He is also working closely with founders Baumel and fellow master pizza chef Glenn Cybulski to develop and enhance operational systems for franchisees. The company hopes to open 250 restaurants nationwide in the next 5 years. “My goal would be to never change the integrity of that product, never shortcut it,” says Sager. No matter where Sager’s journey takes him, you can bet he will always be looking to change things up for the better. “We do things every day in our own stores that move the needle to create a better experience for our customers,” Sager says. “In this business, it is never done. To be relevant you always have to be willing to adapt.”

PERSONAL First job: Stringing tennis rackets. Formative influences/events: My mom for unconditional love. My dad for teaching me the importance of loyalty and “your word is your bond.” Key accomplishments: My daughter, considering I had her at 50! Biggest mistake: Too many to mention—no one bats 1,000. The key is that the good decisions outweigh the bad ones. Smartest mistake: Missing an important meeting I should have attended—it led me to meeting my wife. Decision I wish I could do over: Being a better student. I should have taken college more seriously. Work week: It varies. Good or bad, I am always in touch and available 24 hours a day to my staff and franchisees. With that said, I always make time to unwind and spend quality time with my family and friends. How do you spend a typical day? It is never the same. I visit stores, meet with landlords, work on R&D. Put out fires. Check lots of emails! Favorite fun activities: Traveling, golf, flag football, skiing. Watching Sunday football. I am a long-suffering Miami Dolphins fan. Exercise/workout: I run 4 to 5 miles four days a week and lift weights twice a week. Just starting to do yoga. Favorite tech toys: I really like technology, but mostly it is just getting the newest iPhone when it comes out. What are you reading? I like current events, so I read three morning pa-

MULTI-UNIT FRANCHISEE IS S UE I, 2015

pers and assorted magazines. Do you have a favorite quote? “The devil is in the details.” In the restaurant business the small stuff can make the biggest difference. Best advice you ever got: “You can will it to happen.” My father said that to me many years ago. The way I take that advice is, you better work hard and believe in yourself, because if you don’t no one else will. What gets you out of bed in the morning? My daughter. She comes in the room and pulls on my arm and says, “Get out, Daddy.” What’s your passion in business? To stay relevant. It is exciting to work hard and adapt to changing business environments. It keeps you on your toes. How do you balance life and work? It is always a struggle, because of the unknown, but you do the best you can. Always make time for your family. Otherwise, all the success in the world is meaningless. Last vacation: Does Disney World count? My wife and I went to London in the fall. Person I’d most like to have lunch with: My grandmother. She died when I was young, and I did not get to appreciate the amazing woman she was. I would love to hear her story about life in the 1930s. She moved from New York to Miami as a widow, with two young boys and no resources, but somehow bought real estate, became a singer, and provided for my dad and uncle.

Multi-Unit Franchisees Dream. Build. Grow. Succeed. To provide a deeper sense of their journeys, insights, and personalities, weâ&#x20AC;&#x2122;ve selected from our most inspiring print interviews to create a new series of videos of these franchisee leaders.

We call them Empire Builders.

For more information call: (408) 997- 7795 ext. 202

“The field is where the best ideas will always come, and it is always about the team.” MANAGEMENT Business philosophy: To strive for excellence. Management method or style: I usually have a softer approach. I always felt that I spend as much time with my staff as I do with my family, and I so want the office atmosphere to be enjoyable and productive. How do others describe you? Honest, loyal, caring, a little eccentric, and sometimes late—not my best quality. One thing I’m looking to do better: I can always be more patient. How I give my team room to innovate and experiment: Always, in any business, if you think it begins and ends with you, that is a recipe for failure. The field is where the best ideas will always come, and it is always about the team. How close are you to operations? Very. I believe it is what I do best. The quality of a product and customer service is where it starts and ends. What are the two most important things you rely on from your franchisor? A proven way to do things and procedures that provide a basis for success. It gives you the feeling that you are not in this alone. What I need from vendors: Fair prices and consistent quality. Have you changed your marketing strategy in response to the economy? How? It is a balance. When I was the development agent for Subway in South Florida, we developed the $5 footlong. This strategy went on to be the biggest event in franchising. The key is knowing when to stop one marketing strategy and go on to the next. It can be difficult. In a slow econo-

my, discounting is always the first idea, but it must be a balanced approach. I always like to focus on great products as the main focal point in our marketing. How is social media affecting your business? Social media is a twoedged sword. With the new technologies, we now have mobile ordering apps and customers can comment on their experience on many different platforms, which is great. The negative is when a comment is inaccurate. Once a person reads it, they tend to believe it, and it can be difficult to change their perception. How do you hire and fire? I have hired through most routes. My favorite is by a referral, someone I know and whose opinion I trust. I am sure, like most, that I don’t like to fire people. I have had to do it many times over the years. It’s necessary, but not the best part of my position. How do you train and retain? Our training is very comprehensive and always starts and ends with customer service. Training is teaching someone something new. It has to be done in a manner that is detailed and in-depth. Sometimes current staff forgets how difficult it can be to learn something new, no matter how basic it may be. So patience is the key. How do you deal with problem employees? Quickly! If the problem is more detailed training, we will work on that issue. If it is an attitude, or how the employee is treating customers, they will be let go. Fastest way into my doghouse: Lie to me. Or cause drama in the office or store.

BOTTOM LINE 2015 goals: To open our first Persona in the South Florida area. Growth meter: How do you measure your growth? By the success of the franchise. If we open and customers love our product, which I believe they will, we will have 20 stores open in the next 3 years. Vision meter: Where do you want to be in 5 years? 10 years? Happy and healthy and growing a great new chain that can revolutionize the pizza industry. How is the economy in your regions affecting you, your employees, and your customers? The economy is always a factor. It is a constant that is always dealt with—how you market and advertise, employee wages, value to your customers. Value is never just about the cost of a product, it is how much your customer enjoys their purchase in relation to what they paid. Are you experiencing economic growth in your market? South Florida is currently going through a growth cycle. The real estate and tourism industries have experienced huge growth in the past few years, and all of South Florida, especially Miami and Miami Beach, have become international cities with tremendous foreign investment dollars coming in. How do you forecast for your business? It can be difficult because

MULTI-UNIT FRANCHISEE IS S UE I, 2015

we rely on past customer counts to predict the future. We all do it, but it is not an exact science. Have you used private equity, local banks, national banks, other? Why/why not? I have had great experiences with my local banks. We usually borrow varying amounts for each franchise we open. Banks like franchises because of the track record for success and knowing they will be paid back on their loan. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Ultimately, those costs are going to be passed on to the consumer. Everyone wants a living wage and healthcare, but if the franchisees aren’t profitable it can’t happen. How do you reward/recognize top-performing employees? We have goals that are tangible so everyone knows what they are striving for. We have monthly meetings where we recognize our top-performing employees with bonuses and awards. What kind of exit strategy do you have in place? Right now, none. I enjoy what I am doing way too much to concentrate on anything but growing Persona.

IT’S NEVER BEEN A BETTER TIME TO OWN A HUNGRY HOWIE’S PIZZA FRANCHISE 19 CONSECUTIVE QUARTERS OF SALES GROWTH* HOT CONCEPT TO OWN 2013 & 2014 Entrepreneur

NATIONWIDE OPPORTUNITIES FOCUS MARKETS Denver, CO • Salt Lake City, UT Houston, TX • Atlanta, GA

FRANCHISE 500 - 4 YEARS RUNNING Entrepreneur TOP 50 MULTI-UNIT FRANCHISE Business Review TOP 200 FRANCHISE CHAINS 2013 & 2014 Franchise Times

Exclusive territories are available. Call (248) 414-3300 or log on to franchising.hungryhowies.com. Take a self-guided tour of our digital brochure and complete a simple form to request more info. *Results measure company-wide same store sales figures for each fiscal quarter over the previous year’s fiscal quarter. The measuring period is March 22, 2010 through December 28, 2014. Excludes store sales from the State of Florida. Not all individual stores experienced the same results. New franchisees may have results that differ. This advertisement is not an offer of a franchise. Franchises are offered and sold only through a Franchise Disclosure Document. 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. STATE OF NEW YORK: THIS ADVERTISEMENT IS NOT AN OFFERING. AN OFFERING CAN ONLY BE MADE BY A FRANCHISE DISCLOSURE DOCUMENT FILED WITH THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. SUCH FILING DOES NOT CONSTITUTE APPROVAL BY THE DEPARTMENT OF LAW OF THE STATE OF NEW YORK. MINNESOTA STATE REGISTRATION NUMBER F–2873. Hungry Howie’s Pizza & Subs Inc., 30300 Stephenson Highway, Suite 200, Madison Heights, MI 48071, 248-414-3300.

RECONNECT BY KERRY PIPES

Resetting Priorities Anand Gala resizes, refocuses, and restrategizes

implification and a renewed focus on business and life have taken center stage for Anand Gala since we profiled him in 2010. “It’s really a simple story of taking a step back and reassessing where I am,” he says. At the beginning of 2010, Gala and his company were coming out of the recession and picking up steam. He had 19 Applebee’s, 5 Famous Dave’s, and 3 Del Taco locations. But he says with units spread across several western states he was looking to bring his operation back home when an unexpected offer came his way. “We had been going through the massive reimaging program rolled out by Applebee’s with all of our locations,” he says. “Then about two years ago we were approached by the largest Applebee’s franchisee in the system who wanted to buy our locations.” It was a big deal for Gala because almost half of his sales were generated in his Applebee’s units. But it seemed like the right time and place, and he closed the deal in the summer of 2014. He’s still sitting on the proceeds from the sale and evaluating his next move. He also sold his Del Taco locations NAME: Anand Gala TITLE: President & CEO COMPANY: Gala Corp. NO. OF UNITS: 10 Famous Dave’s

of America AGE: 41 FAMILY: Married, 2 children YEARS IN FRANCHISING: 31 YEARS IN CURRENT POSITION: 16

MULTI-UNIT FRANCHISEE IS S UE I, 2015

RECONNECT PERSONAL First job: Jack in the Box, working as a production employee cleaning floors, restrooms, etc. Formative influences/events: Biggest influences have been my family. I have received a great deal of support and tough love from my parents and brother. I have been inspired and motivated to succeed by them and many other family members who have gone into the franchised restaurant business and achieved the American Dream. Key accomplishments: Learning work ethic and the value of money at an early age. It continues to serve me well and keep me grounded. Failing early and not getting mentally and emotionally paralyzed because of it. We learn the most from our failures. Biggest mistake: No mistakes, just decisions, of which some have consequences. Each has been a great learning experience and has made me a better person and leader. Smartest mistake: Going to work for my family. No better education, and I have the opportunity to spend time with my family. Decision I wish I could do over: None. Each decision has led me to where I am, and I feel blessed and lucky to have such a life. Work week: Five days in the office, stores, or traveling. Work from home a half-day on weekends. Typical 60-hour work week. How do you spend a typical day? No day is typical. Varies every day. Favorite fun activity: Sports, reading.

Exercise: Been on my to-do list for 10 years. Hope to start soon. Favorite tech toy: Smartphone. It has so many things built in so I do not have to carry too many things with me any more (camera, phone, music player, etc.). What are you reading? Be Our Guest: Perfecting the Art of Customer Service by the Disney Institute. Do you have a favorite quote? “Be the change that you wish to see in the world” by Mahatma Gandhi. Best advice you ever got: Life is too short to work with a@#holes. What gets you out of bed in the morning? The prospect of having an impact on people’s lives and making something better than it was the day before. What’s your passion in business? To improve as many lives as possible through the creation of opportunity and delivery of great service. There is a lack of this in the world today. How do you balance life and work? There is no such thing as balance for an entrepreneur. There is only engagement. I try to be present and engaged in whatever I am doing and whoever I am with, whether that is work or family. Last vacation: London—an interesting view into what urban U.S. will eventually turn into. Person I’d most like to have lunch with: Milton Hershey. He failed four times (bankruptcy) before starting The Hershey Company. He had focus and perseverance.

MANAGEMENT Business philosophy: Make things better, every day. Management method or style: Build strong teams of people smarter than I am in their specific area. Develop an aligned strategy. Let them do their jobs. They tend to hold each other accountable. Greatest challenge: Time management. How do others describe you? Patient, calm, focused, driven. One thing I’m looking to do better: Time management. How I give my team room to innovate and experiment: Set the goals, encourage them to find the way, do the research, etc. I encourage them to continue their education, whether it is formal, conferences, webinars, certification, etc. How close are you to operations? I was not as involved as I wanted to be until I sold the Applebee’s business last year. I now have time to get much more involved, but I am careful not to undermine the efforts and accountability of our operations teams. What are the two most important things you reply on from your franchisor? Leadership/brand strategy and innovation (how to innovate the business to make the franchisees as profitable as possible). What I need from vendors: Honesty, integrity, and a focus on my profitability.

Have you changed your marketing strategy in response to the economy? No, but we continue to test and evaluate different marketing strategies for effectiveness and adjust accordingly to get the best results. How is social media affecting your business? It has an effect on every business. You need to monitor it so that you have a sense of consumer perception (perception is their reality). You cannot authentically “manage” social media. You just have to do the best you can with QSCF&V and social media will take care of itself. How do you hire and fire? No change. I still hire slow (lots of diligence and interviews/testing to make sure the candidate fits the culture and position). I still fire fast to remove any negative impact to our company and our culture. How do you train and retain? We continue to focus on a disciplined training culture of one-on-one as well as documented practices, processes, procedures, and systems that can be tested against. We also have a very heavy dose of training in our company culture. If we do all that correctly, retention is taken care of. How do you deal with problem employees? Most take care of themselves and leave as they realize that they do not fit our culture and do not want to be held accountable to our higher standards. Fastest way into my doghouse: Poor communication and not living up to your commitments.

MULTI-UNIT FRANCHISEE IS S U E I, 2015

to an entrepreneur in Phoenix where the stores were located. All of this gave Gala a renewed sense of focus and a chance to spend more time strategizing for his business, whose units are now all located in California. “When you have a large business you are deeply involved in running that busi-

ness daily,” he says. “By selling off and now focusing exclusively on only Famous Dave’s, I have more time to think and plan strategically.” In the past five years he has doubled his Famous Dave’s locations from 5 to 10 in Northern and Southern California. He expects to add two more Famous

Dave’s in 2015, perhaps more. “I’m always looking at opportunities to create value in my organization,” he says. “I’m constantly looking at potential acquisitions within my brand and, possibly, elsewhere.” Gala says he loves the Famous Dave’s brand because it is “a clearly differentiated concept and the brand is a master at barbecue.” Business played a major role, but his downsizing strategy wasn’t just a dollarsand-cents decision for the married father of two. “This has all given me more time to spend with my family, and that’s the most important part of life.” Moving forward, he says, “I have the luxury of being more strategic with my business right now since I have downsized, but that doesn’t mean I won’t grow again.”

BOTTOM LINE Annual revenues: Private.

such as crowdsourcing debt and equity financing.

2015 goals: Continued focus on improvement and efficiency.

Have you used private equity, local banks, national banks, other? Why/why not? We have historically had experiences with local and national banks as well as franchise finance companies. I prefer the local banks and those options with a special focus on franchise finance as they understand the business better, as well as the needs of the shareholders. I do not use private equity.

Growth meter: How do you measure your growth? If we are achieving or beating our traffic targets while achieving or beating our guest satisfaction goals. If we take care of the guests, they come back more often. Sales and profits are a by-product of doing the basics correctly. Vision meter: Where do you want to be in 5 years? 10 years? Our vision is not measured in store count, sales, or employee count, but rather by a very well-run business and guests who are evangelists for our business. We do aspire to win the Baldrige Award in 10 years or sooner. How is the economy in your regions affecting you, your employees, your customers? As the economy improves, we see the opportunity for increased frequency because of an increased customer confidence. We also see continued challenges that cannot be timed with the economy or market, and so there are many cost pressures that make business challenging. Are you experiencing economic growth in your markets? Yes, things are getting better, slowly but surely. How do changes in the economy affect the way you do business? They recently have been motivating to accelerate the way we innovate in our business. There are always various pressures or changes that require any business to be in constant change and engaged in innovation. How do your forecast your business? We are very focused on how we continue to improve against ourselves. We consider the competitive set, but they are not our benchmark, only a point of reference. What are the best sources for capital expansion? We have expanded with our own capital and traditional bank financing. It is a slower method of growth. There are some very innovative platforms for financing coming soon,

MULTI-UNIT FRANCHISEE IS S UE I, 2015

What are you doing to take care of employees? We offer many benefits, incentives, and options for top performers as well as career options for so many who are interested, and we provide a great deal of training and education. How are you handling rising employee costs? This is why we need to continue to educate ourselves and innovate. The economy, labor costs, and regulations are not the same as they were 10 years ago. Therefore, neither should the way that we run our businesses. Technology has and will continue to play a role in innovation, but we are also required to reimagine what we do to run a restaurant and how we do it. It is uncomfortable at times as change is hard for all of us. How do you reward/recognize top-performing employees? Through strong financial incentives. Most recently, we have a program that provides a leased BMW for our top-performing general managers. What kind of exit strategy do you have in place? I do not think of the business in terms of exit strategy, as this tells our company and its employees that I am not committed to them. Instead, I focus on succession planning. This focuses on developing strong leaders in the company to continue to outperform and provides opportunity and incentive to them for their commitment and performance. Great businesses are built over time with a strong, long-term focus. Short-term strategies never create value or sustainable businesses that last.

RedBrick Pizza Recipe for Success ®

LIMITED TIME OFFER!* Zero Royalty for Six Months! SiteFinder℠ Guarantee!

Our real estate team will help you find your location within 12 months or we may refund your entire franchise fee. Combining premium cheeses, gourmet toppings, organic sauce, and freshly made artisan dough. RedBrick Pizza and its signature 1000⁰ open flame brick oven are a leader in fast casual gourmet pizza.

For information call 1.877.457.8145 Visit: redbrickpizzafranchise.info

*This offer is subject to the qualifications, restrictions, and conditions described in our RedBrick Pizza Franchise Incentive Offers brochure. To obtain a copy of this publication, go to redbrickpizzafranchise.info. Not all offers are available in all markets. This information is for informational purposes only and is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. An offer can only be made with the delivery of a Franchise Disclosure Document (FDD). Certain states require registration of the FDD and we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law. RedBrick Pizza FC LLC is the franchisor and is currently headquartered at 2811 McKinney Avenue, Suite 354, Dallas, Texas 75204. RedBrick Pizza FC LLC FL Advertising ID: BF40112, MN State Registration No.: F-7326. RedBrick Pizza © 2014 RedBrick Pizza, LLC. All rights reserved.

Franchise Opportunity SEARS OUTLET STORES HAS EXISTING, CORPORATE-OWNED LOCATIONS AVAILABLE FOR QUALIFIED, PROSPECTIVE FRANCHISEES.

Franchise owner benefits include: • Turnkey business opportunity with no upfront inventory costs • Sears Hometown and Outlet Stores, Inc. offers 80% financing for the purchase of an existing corporate location • Sears Hometown and Outlet Stores, Inc. handles merchandising, transportation logistics, delivery & installation • Access to premier brands exclusive to Sears and its respective affiliates • Leverage existing customer relationships and warranty protection nationwide • Ongoing support and training

Download Our Free eBook, to Discover The Secrets to Becoming a Successful Franchise Empire Builder at:

www.searsempirebuilders.com

Investment Level: $100K

- $2 Million

For more information on the franchise opportunity contact:

Scott Nichols Director, Franchise Business Development 847.286.3074 scott.nichols13@shos.com

RECONNECT BY KERRY PIPES

Staying the Course

The future looks bright for Ken Leese

he past five years have been tough for those in the tax business, but things are looking up and Ken Leese’s positive attitude has never waned. “With the state of the economy, you look at how fewer people working translates into fewer tax returns that need preparing,” says the 47-year-old Jackson Hewitt franchisee. “Our business has struggled somewhat to remain status quo, and one of the realities we discovered is that the tax business is not so recession-proof.” Regardless, Leese has remained steadfast and has made calculated and strategic moves since we profiled him in 2010. He’s divested all of his Delaware territories and replaced them with Jackson Hewitt units in Southern New Jersey, his home base. He still has a few locations in Pennsylvania but the core of his operation is now in New Jersey. Proof that the market is picking up? He’s

grown from 40 locations at the end of 2013 to 45 today. When we last spoke with him, Leese had grown his Play N Trade stores from one to three, but has cut back to a single location. “That business model is struggling and there has been a lot of change in computer gaming,” he says, adding that there’s a new management team at the brand and he’s eager to see what they have in store. Leese is “cautiously optimistic” about the Jackson Hewitt brand. He points to the brand’s recent change of ownership and leadership changes at the top. “I plan to stick it out. I like to say I’m cautiously growing,” he says. And he certainly knows how to do that. Early in his Jackson Hewitt career, Leese was overseeing more than 100 locations up and down the East Coast. It was tough but lucrative work that involved a lot of travel. But when kids came along, a twin boy and girl,

PERSONAL First job: Accounting firm. Formative influences/events: Working in franchised businesses during high school and college. Key accomplishments: Jackson Hewitt Hall of Fame 2003, Jackson Hewitt National Advisory Council President 2003–2006. Biggest mistake: Overexpansion without enough capital. Smartest mistake: Overexpansion without enough capital. Decision I wish I could do over: Not diversifying early enough. Work week: I work around my time with my kids. Currently Mondays, Wednesdays, and Fridays are short days (8 a.m. to 3 p.m.) and Tuesdays and Thursdays are longer days (8 a.m. to 8 p.m.). I am generally always available to my team 24/7. How do you spend a typical day? During tax season, I read reports in the morning, and then visit offices to encourage the team and give out impromptu awards. Favorite fun activities: Concerts and sporting events, tennis, fishing, and being with my kids.

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Exercise/workout: Not enough, but starting to walk, bike, and play tennis more often. Favorite tech toys: iPhone. What are you reading? I like reading about history. Currently, I am reading a book about George Washington and his spy ring during the Revolutionary War. Do you have a favorite quote? I came, I saw, I conquered. Best advice you ever got: Make sure you are working at something you enjoy! What gets you out of bed in the morning? Teaching each of my children to become a better person each and every day. What’s your passion in business? To allow my management team to retire when I do. How do you balance life and work? Through technology, I make myself available 24/7 to my team whether I’m in the office or not. Last vacation: Palm Beach. Person I’d most like to have lunch with: Julius Caesar.

Smoothie Factory Super Boost BuyBack ®

LIMITED TIME OFFER!* $200,000 Super BuyBack Offer!

We’ll buy your store for up to $200,000 and may assume your lease if you are not completely satisfied within the first 6 months of opening!

Zero Royalty for Six Months! SiteFinder℠ Guarantee!

Our real estate team will help you find your location within 12 months or we may refund your entire franchise fee.

Smoothie Factory Juice Bar stands alone in the industry for superior products in four categories: Healthful smoothies, Fresh cold-squeezed all natural juices, Health supplements, and Co-branding with Red Mango® award winning frozen yogurt. Smoothies are a proven global industry, matching consumer demand and healthful treat. And the opportunity to grow continues.

Call: 1.877.457.8145 | Visit: smoothiefactoryfranchise.info *This offer is subject to the qualifications, restrictions, and conditions described in our Smoothie Factory Franchise Incentive Offers brochure. To obtain a copy of this publication, go to smoothiefactoryfranchise.info. Not all offers are available in all markets. This information is for informational purposes only and is not intended as an offer to sell, or the solicitation of an offer to buy, a franchise. An offer can only be made with the delivery of a Franchise Disclosure Document (FDD). Certain states require registration of the FDD and we will not offer or sell franchises in those states until we have registered the franchise (or obtained an applicable exemption from registration) and delivered the FDD to the prospective franchisee in compliance with applicable law. Smoothie Holdings FC, LLC is the franchisor and is currently headquartered at 2811 McKinney Avenue, Suite 354, Dallas, Texas 75204. Smoothie Holdings FC, LLC FL Advertising ID: BF40077, MN State Registration No.: F-7328. © 2014 Smoothie Holdings, LLC. All rights reserved.

things changed. “I wanted to be home and see my kids grow up,” he says, and began to consolidate his operations closer to home. These days he’s comfortable with the number and more centralized location of his stores. However, the New Jersey native, who loves living in his home state, says he’s worried about the fallout from the closing of casinos in Atlantic City. “This could be devastating for people here,” he says. “The layoffs could be 50,000 to 60,000 people. I’m already thinking about what we can do to help. Maybe offer free tax returns. I don’t know, but we want to do something if we can.” Leese says he never could have made

it as far as he has in business without his dedicated and talented management team. Together, he says, they have faced NAME: Ken Leese TITLE: CEO/President COMPANY: The Tax Authority Inc.;

Video Game Authority LLC

NO. OF UNITS: 45 Jackson Hewitt,

1 Play N Trade AGE: 47

FAMILY: Single dad with boy/girl

twins, 12

YEARS IN FRANCHISING: 20 YEARS IN CURRENT POSITION: 20

increased governmental regulations, the emergence of online tax filing, and growth in tax preparation competition. “I promised my team several years ago that I would keep them and that we would all get through this,” he says. “I think that time has come. We made it and things are looking promising for the future.” Leese always has his eyes and ears open for business opportunities. One avenue he is actively investigating is large retail stores, such as Walmart or Sears, that allocate space to Jackson Hewitt to prepare customer taxes instore. “It’s a managed risk that offers a less expensive option for me,” he says. “That makes sense.”

MANAGEMENT Management method or style: Centralized administration and decentralized management. Greatest challenge: Hiring, training, and motivating a seasonal workforce. How do others describe you? Laid back on the outside, but a fierce competitor on the inside. One thing I’m looking to do better: Hiring and motivating. How I give my team room to innovate and experiment: I often solicit suggestions from my team, from the managers to the tax preparers. I will reward an idea that we implement. How close are you to operations? I am involved. But I allow my team to run the business, and to use me and my experience as a resource. What are the two most important things you rely on from your franchisor? Software and products. What I need from vendors: Seasonal programs.

Have you changed your marketing strategy in response to the economy? How? Definitely. We are using online advertising more frequently. We use more email and text campaigns, as opposed to direct mail. We also have switched from television to radio to save money. How is social media affecting your business? More and more of our customers are online and using social media, so we have to have a strategy that keeps them informed. How do you hire and fire? Hiring is difficult in a seasonal business and something my team needs to get better at. We try not to fire team members unless we are left with no other choice. How do you train and retain? Every year we train and retrain our team, mostly online. How do you deal with problem employees? Discuss issues with them. We train and retrain. We let them go when necessary. Fastest way into my doghouse: Don’t do what you say you will do.

BOTTOM LINE Annual revenue: $4 million. 2015 goal: $5 million. Growth meter: How do you measure your growth? Office count and revenues. Vision meter: Where do you want to be in 5 years? 10 years? In 5 years, 75 offices; in 10 years, retired. How is the economy in your region affecting you, your employees, your customers? Currently, we are having a big problem in Atlantic City with regard to all the casino closings. Are you experiencing economic growth in your market? No, see above. This affects the whole area. How do changes in the economy affect the way you do business? The economy affects how many offices I open/close. How do you forecast for your business? From experience and type

MULTI-UNIT FRANCHISEE IS S UE I, 2015

of office. What are the best sources for capital expansion? Internal cash flow. Have you used private equity, local banks, national banks, other institutions? Why/why not? It’s difficult in our industry to get funding owing to the lack of hard assets. What are you doing to take care of your employees? Low-cost incentives and win-win bonus programs. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? Trying to become more efficient as a company. How do you reward/recognize top-performing employees? Additional time off and bonuses. What kind of exit strategy do you have in place? Work in progress.

ANY GARMENT DRY CLEANED

1.99

Pricing Model makes us a Market

Disruptor

Major

Markets Available for Development

Visit www.321zips.com/franchise.php or call 877-321-9477. ZIPS Franchising LLC, 7474 Greenway Center Drive, Suite 1200, Greenbelt, MD 20770

2015 Mega 99 Rankings Each year we work with FRANdata to compile a list of the country’s largest multi-unit franchisee organizations. Based on total unit count, the rankings show not only the number of units these “mega” franchisees operate, but also the brands they favor. The list is dominated by food brands, but also includes non-food concepts such as business services (tax preparation), consumer services (automotive), and lodging. Building a multi-unit empire is a matter of taste, opportunity, passion, and comfort level. If you’re looking to expand and diversify your own growing franchise empire, seeing what the “big guys” are buying may help guide you in your choices this year. NAME

UNITS

BRANDS

1 NPC INTERNATIONAL

1,390

PIZZA HUT, WENDY’S

2 TARGET CORP

1,183

COLD STONE CREAMERY, PIZZA HUT, JAMBA JUICE

3 CARROLS RESTAURANT GROUP

650

BURGER KING

4 FLYNN RESTAURANT GROUP

640

APPLEBEE’S, TACO BELL

5 HEARTLAND AUTOMOTIVE SERVICES

575

JIFFY LUBE

6 DHANANI GROUP/HOUSTON FOODS

540

BURGER KING, POPEYES LOUSIANA KITCHEN

7 ARAMARK

532

BEN & JERRY’S SCOOP SHOP, CHICK-FIL-A, CHILI’S, COSI, DENNY’S, DUNKIN’ DONUTS, EINSTEIN BROS. BAGELS, ERBERT & GERBERT’S, THE EXTREME PITA, IHOP, JACK IN THE BOX, KFC, MCALISTER’S DELI, MOE’S SOUTHWEST GRILL, NOBLE ROMAN’S, PAPA JOHN’S PIZZA, PINKBERRY, PIZZA HUT, QDOBA MEXICAN GRILL, QUIZNOS, RAISING CANE’S CHICKEN FINGERS, SBARRO, SEATTLE’S BEST COFFEE, SUBWAY, TACO BELL, TIM HORTONS, TOGO’S, VILLA PIZZA, WENDY’S, JAMBA JUICE, WHICH WICH, QUAKER STEAK & LUBE, FRESHII, MOOYAH BURGERS & FRIES, PANDA EXPRESS, SALAD CREATIONS

8 ARMY & AIR FORCE EXCHANGE SERVICES

473

ARBY’S, BLIMPIE, BURGER KING, CHURCH’S CHICKEN, CINNABON, DOMINO’S PIZZA, EINSTEIN BROS. BAGELS, GODFATHER’S PIZZA, PIZZA HUT, POPEYES LOUISIANA KITCHEN, SUBWAY, TACO BELL, TACO JOHN’S, WING ZONE, CHARLEY’S GRILLED SUBS

9 SUN HOLDINGS

453

BURGER KING, POPEYES LOUISIANA KITCHEN, KRISPY KREME, CICI’S, ARBY’S, T-MOBILE, GOLDEN CORRAL

10 HMSHOST CORP

393

BAJA FRESH, BLIMPIE, BURGER KING, CHICK-FIL-A, CHILI’S, CINNABON, COLD STONE CREAMERY, DUNKIN’ DONUTS, EINSTEIN BROS. BAGELS, GODFATHER’S PIZZA, THE GREAT AMERICAN BAGEL, GREAT STEAK & POTATO COMPANY, JOHNNY ROCKETS, KELLY’S CAJUN GRILL, KFC, LA SALSA, MOE’S SOUTHWEST GRILL, NATHAN’S FAMOUS, PINKBERRY, PIZZA HUT, POPEYES LOUISIANA KITCHEN, QUIZNOS, RANCH ONE, ROMANO’S MACARONI GRILL, ROY ROGERS, RUBY’S DINER, SALSARITA’S, SBARRO, STEAK ‘N SHAKE, SUBWAY, VILLA PIZZA, YEUNG’S LOTUS EXPRESS, JAMBA JUICE, SMASHBURGER, FAMOUS FAMIGLIA, SONNY BRYAN’S SMOKEHOUSE, SALAD CREATIONS, MAX & ERMA’S

11 TACALA

384

PIZZA HUT, SONIC DRIVE-IN, TACO BELL

12 ROTTINGHAUS COMPANY

382

SUBWAY

13 SODEXO

378

BAJA FRESH, BLIMPIE, BURGER KING, CARL’S JR., CHESTER’S, CHICK-FIL-A, EINSTEIN BROS. BAGELS, GODFATHER’S PIZZA, KFC, MCALISTER’S DELI, MOE’S SOUTHWEST GRILL, PAPA JOHN’S PIZZA, PIZZA HUT, QUIZNOS, SEATTLE’S BEST COFFEE, SUBWAY, TACO BELL, TIM HORTONS, WOW CAFE & WINGERY, JAMBA JUICE, PJ’S COFFEE OF NEW ORLEANS, NRGIZE LIFESTYLE CAFE, QUAKER STEAK & LUBE, ERBERT & GERBERT’S, PLANET SUB

14 PILOT TRAVEL CENTERS

369

ARBY’S, CARVEL, CINNABON, HUDDLE HOUSE, KFC, MOE’S SOUTHWEST GRILL, PIZZA HUT, SUBWAY, TACO BELL, WENDY’S, DAIRY QUEEN

15 MUY BRANDS

365

PIZZA HUT, TACO BELL, WENDY’S

16 MANNA INC.

361

WENDY’S, CHILI’S, FAZOLI’S, PERKINS RESTAURANT & BAKERY, MARK’S FEED STORE

17 BODDIE-NOELL ENTERPRISES

330

HARDEE’S

18 UNITED STATES BEEF CORP

327

ARBY’S, TACO BUENO

MULTI-UNIT FRANCHISEE IS S UE I, 2015

ISSUE 2 OF 2015 ADVERTISING

DEADLINE

FEBRUARY 27TH, 2015 Call (800) 289-4232 ext. 202 - or email sales@franchiseupdatemedia.com to reserve your ad space!

2015 Mega Rankings, continued NAME

UNITS

BRANDS

HARMAN MANAGEMENT CORP

307

A&W, KFC, LONG JOHN SILVER’S, TACO BELL, PIZZA HUT

ADF COMPANIES

303

PIZZA HUT

APEX RESTAURANT MANAGEMENT

300

KFC, LONG JOHN SILVER’S, TACO BELL

LOVE’S TRAVEL STOPS & COUNTRY STORES

300

ARBY’S, GODFATHER’S PIZZA, SUBWAY

STRATEGIC RESTAURANTS ACQUISITION COMPANY

291

BURGER KING

WILCOHESS

280

ARBY’S, DUNKIN’ DONUTS, GODFATHER’S PIZZA, SUBWAY, WENDY’S

KBP FOODS

276

KFC, TACO BELL, LONG JOHN SILVER’S

K-MAC ENTERPRISES

276

KFC, TACO BELL

MASON-HARRISON-RATLIFF ENTERPRISES

267

SONIC DRIVE-IN

RICHARD LAWLOR

263

DUNKIN’ DONUTS

SOUTHERN CALIFORNIA PIZZA

262

PIZZA HUT

THE COVELLI FAMILY LIMITED PARTNERSHIP

260

PANERA BREAD

JIB MANAGEMENT

255

JACK IN THE BOX

HESS CORP

251

BURGER KING, GODFATHER’S PIZZA, QUIZNOS

FUGATE ENTERPRISES

245

PIZZA HUT, TACO BELL

QUALITY DINING

214

BURGER KING, CHILI’S

D L ROGERS CORP

210

SONIC DRIVE-IN

THE PANTRY

210

CHESTER’S, CHURCH’S CHICKEN, LITTLE CAESARS PIZZA, QUIZNOS, SUBWAY, DAIRY QUEEN

HENLEY ENTERPRISES

206

VALVOLINE INSTANT OIL CHANGE

MARLU INVESTMENT GROUP

205

ARBY’S, CHURCH’S CHICKEN, TGI FRIDAYS, JACK IN THE BOX, LITTLE CAESARS PIZZA, SIZZLER, CAPTAIN D’S, SEARS OUTLETS & APPLIANCE STORES

AIMBRIDGE HOSPITALITY

201

COMFORT INN/COMFORT INN & SUITES/ COMFORT SUITES, DAYS INN, ECONO LODGE, EMBASSY SUITES HOTELS, FAIRFIELD INN/INN & SUITES, FOUR POINTS HOTELS, HILTON GARDEN INN, HILTON/ HILTON SUITES, HOLIDAY INN, HOWARD JOHNSON, HYATT HOUSE, MARRIOTT HOTEL, QUALITY INN/ QUALITY SUITES, HOTEL OR RESORT, RADISSON HOTELS, SHERATON HOTEL/RESORT, SUPER 8, WINGATE INNS/WINGATE INNS & SUITES, WYNDHAM HOTELS & RESORTS, ALOFT HOTEL, HYATT REGENCY/HYATT, CAMBRIA SUITES, CROWNE PLAZA, BAYMONT INN & SUITES

TA OPERATING

201

BURGER KING, KNIGHTS INN, PIZZA HUT, POPEYES LOUISIANA KITCHEN, SUBWAY, TACO BELL, TIM HORTONS

SERVUS!

183

DENNY’S, LONG JOHN SILVER’S, WENDY’S, GRANDY’S, PAPA JOHN’S PIZZA

CHARTER FOODS

177

A&W, LONG JOHN SILVER’S, TACO BELL

JRN

177

KFC, PIZZA HUT

SIZZLING PLATTER

176

LITTLE CAESARS PIZZA, SIZZLER

MULTI-UNIT FRANCHISEE IS S UE I, 2015

franchise opportunities "Providing employment, customer satisfaction and growth is very enjoyable. I'm not going to retire... this is too much fun." With 26 restaurants and more than 600 employees, Paul Hitzelberger is one of Del Taco's largest franchisees.

Golden Fried

OPPORTUNITY. This is an exciting time to own a Church’s Chicken®. With 60 solid years behind us, we’re moving forward with a brand new building design and new products that will keep us on the path to success. But even more impressive is our passion for the food we make and the service we provide. From our hand-battered chicken made in small batches all day long to our

famous scratch-made honey-butter biscuits, we continue to bring our guests the kind of food they love. We have almost 1,700 locations in 29 states and 27 countries, making us one of the largest chicken restaurant chains in the world. Our growth represents unprecedented stability and commitment franchises can build on.

THE REASONS LOVE CHURCH’S ARE SIMPLE: • Exciting new image and building design generating million dollar sales • Simple operating system for reduced labor costs • Quality franchisee support • Flexible real estate and construction programs • Exceptional development opportunities in markets across the country ®

JOIN THE CHURCH’S FAMILY. AND HAVE THE LOVE . FRANCHISE WITH US! 800 639 3495 CHURCHS.COM ®

It’s the perfect time for your next bold business move. As one of the country’s leading Mexican Quick Serve Restaurant brands with 50 years of proven operational success, we’re aggressively expanding across the U.S. and offer exclusive, multi-unit development opportunities.

™

This advertisement is not an offering or sale of a franchise. Any offer and sale would be made only by means of a franchise disclosure document, if required by applicable law, the tender of a definitive franchise agreement, or both. ©2015 Cajun Operating Company, under license by Cajun Funding Corp.

CAll now and Ask us about our Growth Incentive Program for New Market Development laura tanaka Director of Franchise Development

949-462-7379

ltanaka@deltaco.com

Del Taco LLC, 25521 Commercentre Drive Suite 200, Lake Forest, CA 92630

DELTAC OFRANCHISE.C OM

This advertisement is not an offering. An offering can only be made by a prospectus ﬁled with the Department of Law of the State of New York. This information is in no way intended to encourage the breach of any contractual obligations you may have. MN REP. NO. F-5365.

ChurchsFranchiseVertical.indd 1

1/12/15 11:30 AM

2015 Mega Rankings, continued

NAME

UNITS

KMART

175

LITTLE CAESARS PIZZA

CEDAR ENTERPRISES

170

BURGER KING, WENDY’S

WING FINANCIAL SERVICES

165

JACKSON HEWITT TAX SERVICE

COMPASS GROUP USA

156

BOJANGLES’, BURGER KING, EINSTEIN BROS. BAGELS, JERRY’S SUBS & PIZZA, JOHNNY ROCKETS, MOE’S SOUTHWEST GRILL, PAPA JOHN’S PIZZA, PINKBERRY, PIZZA HUT, QUIZNOS, ROLLERZ, SUBWAY, TACO BELL, WENDY’S, JAMBA JUICE, UNO DUE GO

PACPIZZA

156

PIZZA HUT

DESERT DE ORO FOODS

155

PIZZA HUT, TACO BELL, KFC, LONG JOHN SILVER’S

RESTAURANT MANAGEMENT COMPANY OF WICHITA

155

LONG JOHN SILVER’S, PIZZA HUT

B & B CONSULTANTS

153

SONIC DRIVE-IN

FOURTEEN FOODS

153

DQ GRILL & CHILL, DAIRY QUEEN BRAZIERS

DAVCO RESTAURANTS

153

WENDY’S

PJ UNITED

152

PAPA JOHN’S PIZZA

RLJ LODGING TRUST

150

COURTYARD BY MARRIOTT, DOUBLETREE HOTELS/DOUBLETREE GUEST SUITES, EMBASSY SUITES HOTELS, FAIRFIELD INN/INN & SUITES, HAMPTON INNS, HILTON GARDEN INN, HILTON/ HILTON SUITES, HOLIDAY INN, HOMEWOOD SUITES BY HILTON, HYATT HOUSE, MARRIOTT HOTEL, RENAISSANCE HOTELS & RESORTS, RESIDENCE INN BY MARRIOTT, SPRINGHILL SUITES

INTERFOODS OF AMERICA

140

POPEYES LOUISIANA KITCHEN

CHALAK MITRA GROUP

140

KFC

CELEBRATION RESTAURANT GROUP

139

PIZZA HUT, TACO BELL

VALENTI MANAGEMENT

139

CHILI’S, WENDY’S

RMH FRANCHISE CORP

137

APPLEBEE’S

RPM PIZZA

135

DOMINO’S PIZZA

DOHERTY ENTERPRISES

134

APPLEBEE’S, PANERA BREAD

APPLE GOLD

132

APPLEBEE’S

SUMMIT RESTAURANT GROUP

131

A&W, WINGSTREET, PIZZA HUT, LONG JOHN SILVER’S

TRI STAR ENERGY

129

PACIFIC PRIDE SERVICES

AMERICA’S PIZZA CO

128

PIZZA HUT

CAFUA MANAGEMENT COMPANY

128

DUNKIN’ DONUTS, DUNKIN’ DONUTS/BASKIN-ROBBINS

LAS VEGAS PIZZA

127

PIZZA HUT

PALO ALTO

124

KFC, PIZZA HUT, TACO BELL

RAGE

123

PIZZA HUT

MARCHELLE STEWART

123

KFC

WISCONSIN HOSPITALITY GROUP

121

APPLEBEE’S, PIZZA HUT

BAJCO

121

PAPA JOHN’S PIZZA

JEM RESTAURANT GROUP

119

PIZZA HUT, TACO BELL

MULTI-UNIT FRANCHISEE IS S UE I, 2015

BRANDS

Experience the WORLD’S GREATEST HAMBURGERS • NEW SMALLER FOOTPRINTS • IMPROVED ECONOMIC MODEL • DOMESTIC & INTERNATIONAL MULTI-UNIT DEVELOPMENT OPPORTUNITIES • LOWER POINT OF ENTRY & REDUCED INVESTMENT COSTS

visit fuddruckers.com/franchising or call 866-939-6273 for more information

2015 Mega Rankings, continued NAME

UNITS

BRANDS

THE SCRIVANOS GROUP

118

DUNKIN’ DONUTS, DUNKIN’ DONUTS/BASKIN-ROBBINS

SOUTH AMERICAN RESTAURANTS CORP

117

CHURCH’S CHICKEN

NEIGHBORHOOD RESTAURANT PARTNERS

115

APPLEBEE’S

BRIAD RESTAURANT GROUP

114

TGI FRIDAYS, WENDY’S

DIPASQUA ENTERPRISES

114

SUBWAY

WESTERN RESERVE RESTAURANT MANAGEMENT

113

WENDY’S

RANDOLPH S KATZ

111

MIDAS

DALAND CORP

110

PIZZA HUT

GOLDCO

109

BURGER KING

SEI/AARON’S

109

AARON’S SALES & LEASE OWNERSHIP/AARON RENTAL

W2007 EQUITY INNS REALTY

104

COURTYARD BY MARRIOTT, EMBASSY SUITES HOTELS, FAIRFIELD INN/INN & SUITES, HAMPTON INNS, HOLIDAY INN, HOMEWOOD SUITES BY HILTON, RESIDENCE INN BY MARRIOTT, SPRINGHILL SUITES, TOWNEPLACE SUITES BY MARRIOTT, HYATT PLACE

PEPPER DINING

104

CHILI’S

CK VENTURES

103

JACKSON HEWITT TAX SERVICE

GALENA ASSOCIATES

103

VALVOLINE INSTANT OIL CHANGE

MAGIC BURGERS

103

BURGER KING

BRIJ AGRAWAL

102

SUBWAY

NORTHEAST FOODS

101

BURGER KING

W2005/FARGO HOTELS REALTY LP

COMFORT/COMFORT INN & SUITES/COMFORT SUITES, FAIRFIELD INN/INN & SUITES, HAMPTON INNS, HOMEWOOD SUITES BY HILTON, RESIDENCE INN BY MARRIOTT, SLEEP INN/SLEEP INN & SUITES, TOWNEPLACE SUITES BY MARRIOTT

PARADIGM INVESTMENT GROUP

HARDEE’S

LUIHN FOOD SYSTEM

KFC, TACO BELL, LONG JOHN SILVER’S, HURRICANE GRILL & WINGS

TANWEER AHMED

KFC, TACO BELL

BOOM

SONIC DRIVE-IN

A3H FOODS LP

JACK IN THE BOX

HOUSTON FOODS

BURGER KING

WILLIAM B GRAVES

DOMINO’S PIZZA

BURGERBUSTERS

PIZZA HUT, TACO BELL

JOHN BOIKE

SUBWAY

MC LLC

JIFFY LUBE

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Source: FRANdata, Franchise Update Media

BREAKFAST • LUNCH

DINNER • CATERING

YOUR HOME BUILDING FRANCHISE OPPORTUNITY

VOTED #1 FOR CRAVEABILITY* • Made-to-order scramblers, handcrafted sandwiches, homemade soups, hand-tossed salads, signature panini and bakery fresh sweets • 180+ locations and growing • Best-in-Class Catering

• $2.3M average annual unit sales volume** • Fastest growing industry segment • Flexible footprint • Ideal for existing real estate conversion

*2014 CONSUMER PICKS SURVEY, BAKERY CAFE SEGMENT

FOR MORE INFORMATION ON FRANCHISE OPPORTUNITIES: 888-732-2495 • Franchising@CornerBakeryCafe.com CornerBakeryCafe.com/Franchise-Information © 2015 Corner Bakery Cafe. This advertisement is not an offering to sell a franchise. An offering can be made only by Franchise Disclosure Document (FDD) that has been registered with, and approved by, the appropriate agency in your state; if your state requires such registration. **$2.3M AAV represents the average for the 79 company-operated and 16 franchise-operated locations that have been in operation for at least 36 months (excluding limited-hour cafes) as disclosed in Item 19 of the 2014 FDD. Individual financial performance will vary. A copy of the FDD is available by contacting Franchising@CornerBakeryCafe.com. Corner Bakery Cafe · 12700 Park Central Dr · Suite 1300 · Dallas, TX 75251.

We are looking for entrepreneurs and home builders for both master and individual territory franchise opportunities. Here’s why:

• Grow your business and increase your profits • Gain exposure by joining forces with a well branded company • Access to building management systems capable of allowing you to grow with less employees • Build an asset to sell when you retire

find out more

gjgardner.com (417) 449-4159

So many reasons to love this business

Ease of Operations

21 Irresistible Burger Creations

• No cooking, dining or delivery • Limited hours of operation • Lower QSR initial investment

A Successful System

• Over 1,350 stores in 38 states • Strong unit economics • #1 Pizza Chain in Zagat Food Survey

Franchises Available 1-800-257-7272

#5 Fast Casual’s “Movers & Shakers” #1 Top Overall for Fast Food Pizza National Restaurant Chains Survey

For more franchise information, contact us at: 813.425.6252 • www.burger21franchise.com

www.papamurphysfranchise.com 12318-PRNT-FZSLS

BY EDDY GOLDBERG

FUND-AMENTAL CHANGE? Is Aziz Hashim’s new fund for franchisees a game-changer?

ired of paying royalties? How would you like to get in on collecting them? That’s one of the reasons—among many—behind an innovative fund created to allow multi-unit franchisees to own or invest in franchise brands. “If you’re in franchising as a multi-unit franchisee and have built your enterprise by paying royalties, it’s a very natural hedge to have an investment in an entity that’s in the business of collecting royalties,” says Aziz Hashim, founder and general partner of the new fund, called NRD Partners. Hashim, who has made a career operating restaurant franchises, says he has been preparing for this new role all his franchising life. “I’ve entered and exited 14 brands in my career. So in a way I’ve been practicing as a little mini-private equity fund anyway. Because that’s what funds do: they buy an investment, improve upon it, hold it for a period of time, exit it for a return, and move on to the next one. I’ve been doing it as a franchisee for the past 20 years, and now I’m about to do it as a franchisor.” This experience, says Hashim, has given him a level of comfort in managing deals, underwriting transactions, and the confidence to take this step. “I think that’s one of the reasons many of the investors were comfortable investing with me. They have seen that kind of operation for many, many years.” We asked Hashim about the fund—what

MULTI-UNIT FRANCHISEE IS S UE I, 2015

“The idea for the fund is to provide superior return rates for the investors, as well as for potential franchisees of the brands we acquire. We’re doing it for both.”

Aziz Hashim

it is, where it’s going, and how it might change the face of franchising. Tell us about the fund, and why you started it. What I did as a multiunit franchisee was to respond to the current trends in franchising. Some of that revolves around the fact that it’s very difficult for potential franchisees to decipher what represents a good deal for them. There are too many brands proliferating—it’s become too easy to create a franchise brand—and people have no idea on how to truly evaluate and how to invest in a brand that has the highest degree of success for them. So part of the response to that is this fund I’ve created, with the sole purpose of identifying franchise companies to take an interest in or to buy outright that will offer compelling unit economics and a good partnership culture between franchisor and franchisees, such that we do franchising in what we consider to be the best way possible—an ethical approach to franchising, if you will. That’s the essential premise of the fund. The context of the fund is that most of the investors are also multi-unit franchisees like me who, for a long time, have really not had an avenue to invest or to diversify their capital into the franchisor side of the business. Most of us have spent our entire career paying royalties and being a franchisee, but we have not

FUND-AMENTAL CHANGE? really participated on the franchisor side because there really haven’t been many avenues to do that. The only ones available were: 1) if your franchisor was one of the few that was public, you could go out and buy shares, and 2) a few franchisees have actually purchased a franchisor. But no one had really found a vehicle where multiple multi-unit franchisees could have an investment strategy. We’ve also identified that as a gap, and this fund is evidence that, because of its popularity and its support for multi-unit franchisees, there was pent-up demand there. So we solved that problem as well. The third thing is that there are challenges in franchise development, and a lot of brands are struggling to identify qualified franchisees. How is this fund different? The idea for the fund is to provide superior return rates for the investors, as well as for potential franchisees of the brands we acquire. We’re doing it for both. That’s what makes us different. Most funds normally are looking out primarily for their investors. As I’ve said many times before, if you look at franchising objectively, there are diametrically opposed goals: the franchisor makes money off the top line and the franchisee makes money off the bottom line, and those are not always in sync. We’re looking out for our investors and we’re going to give them a superior return, but not at the expense of our franchisees. That’s not going to happen, and that’s not what our franchisee investors expect. Whether some of them happen to be limited partners in the fund, and others happen to be franchisees of a brand the fund buys, at the end of the day we’re all franchisees. Who are the investors? There are almost 40 investors who operate a total of at least 1,500 units. Most are multi-unit franchisees, but some are individuals with high net worth who may not be franchisees but may have other holdings in franchising. Therefore our fund has the breadth of the contact network of all our limited partners, which extends to thousands of franchisees. So when we invest in a brand, our marketing is essentially internal. We

can just go to our investor base, and if they want to develop (or if they don’t, for whatever reason), they have access to many franchisees in their network who would be supportive of a brand that their friend was a part owner in. For a lot of multi-unit franchisees, the best source of advice on franchise development is from referrals from existing franchisees. Why invest in the fund? First is diversification. If you’re in franchising as a multi-unit franchisee and have built your enterprise by paying royalties, it’s a very

natural hedge to have an investment in an entity that’s in the business of collecting royalties. That’s just kind of Business 101—hedging your investments. Second is that the fund’s profile is to invest in emerging brands—not necessarily startup brands, but brands that are, ideally, between 50 and 150 units. Those brands typically represent the best opportunity for developers because chances are you can get an entire territory to develop. Being a part of the limited partner base of the fund gives you certain privileged access to the brands the fund acquires—before we go to the

INVESTORS SHARE THEIR THOUGHTS: ROB BRANCA

ob Branca is a Dunkin’ Donuts franchisee based in Central Massachusetts who operates more than 70 units. • Why we invested. First, the investment idea is a sound one, and it’s in a space we understand well—franchising. We understand the risks, the pitfalls, the relationship issues, the unit economics issues, the competitive environment, and the dynamics between franchisors and the franchisees. We feel that we could perform as well as, or perhaps better than, some franchisors or the management teams of the systems we will be acquiring. We think the sky’s the limit, depending on how we perform and what we can do with these existing businesses. Something that would become very obvious to a multi-unit franchisee may not be a nut the existing management can crack. It may be that the founder is satisfied where the system is and doesn’t intend to invest the resources and time to grow it—and there’s nothing wrong with that. Even though there’s more potential for that system, they aren’t willing to negotiate the obstacles in the way of growing that system at that point in their lives. Whereas we’re eager to do that. The other major reason is the integrity of the fund manager. Aziz Hashim is well-known and well-respected for a good reason in our industry. He has a sterling Rob Branca reputation, and that’s just as important to us as the underlying business economics. We also enjoy working with him. • Change. There’s a sea change going on the franchising world now, and this fund is a natural result of that. The rise of the multi-unit franchisee is clearly a hallmark of that change. As multi-unit franchisees have succeeded, we’ve been able to attract the capital required to diversify in ways like this. In many ways we already are in private equity. When we make an investment it’s the most private of equity— it’s our own money. So the fund is just an extension of that, where we’re able to pool our resources and make larger acquisitions and further diversify our holdings. • Franchisors want to have investors like us. With this fund, they’re essentially outsourcing everything they need to expand to an existing multi-unit franchisee organization. So it’s no surprise that franchisors are looking favorably on something like this. It’s good for the franchisor, it’s good for the franchisee, and it’s good for the public because you’ll get someone who’s going to be delivering quality goods and services at competitive costs.

MULTI-UNIT FRANCHISEE IS S U E I, 2015

FUND-AMENTAL CHANGE? broader franchise community. And third is because our goal is to provide some outstanding returns for investors. Is there a monetary goal for the fund? The fund was initially marketed as a $50 million fund. However, due to demand, we have increased the size of the fund to $100 million. What types of brands are you targeting? We are open to any sensible investment in franchising. However, there are 5 verticals we have a particular interest in: food, because it represents the largest segment in franchising; wellness and beauty; education; healthcare; and senior care. Do you think this will change the fundamental structure of franchising? Fundamental is a strong word. Franchising is a $2.1 trillion industry, and I feel a $50 million or $100 million fund within that doesn’t change it overnight. But I certainly feel I’ve started something

“The fund was initially marketed as a $50 million fund. However, due to demand, we have increased the size of the fund to $100 million.” that is going to lead to fundamental change down the road. There’s a huge imbalance between the risk-adjusted economic returns of the franchisor and the economic returns of the franchisee as franchising in the U.S. matures. This fund is a response to that reality and others will, in due course, find ways of replicating it. So it’s an evolution, like what Uber did to taxis. If you take any public franchisor com-

INVESTORS SHARE THEIR THOUGHTS: ALI LAKHANY

li Lakhany is the CEO of CSM Group, which operates more than 70 Popeyes Louisiana Kitchen and T-Mobile USA units in Texas, Tennessee, and Alabama. • Why we invested. The reasons our group, which has been in franchising for decades, feels it’s good to put a substantial amount of money into this fund are: 1) The person driving it knows franchising as well as we do, is very knowledgeable, has a good background, and is an overall A-class individual. 2) The business model of the fund, the way Aziz is looking to acquire brands, is a no-brainer. The numbers make sense, and I think it will make some great money. 3) To diversify our assets from just operating businesses and paying royalties—we want to be able to collect royalties too. • Franchisees who attend the Multi-Unit Franchising Conference should be on the lookout and be very excited, because a lot of the brands they haven’t Ali Lakhany been able to franchise with, brands that haven’t had the strength to go from a regional to a national player, will come soon to their markets. • Franchisors. I think franchisors would actually be optimistic about this fund, particularly the smaller and medium-sized brands that can partner with the fund and accelerate their growth. I agree with Aziz that it opens up a great amount of networking opportunities for the franchise community overall. If a franchise brand is really a quality brand, they would want that to be known. Partnering with Aziz would certainly accomplish that.

MULTI-UNIT FRANCHISEE IS S UE I, 2015

pany and look at what has happened to their stock in the past 5 years, it is remarkable. While franchisees have done well in this period as well, in general it cannot be compared with returns garnered by the franchisors. The natural question is, Why were the franchisors able to outperform the franchisees in such a profound way? The reason is that franchisees work really hard: we build stores using our own capital, we pay the royalties, and there’s very little incremental expense to the franchisor. That is the essence of the franchise business model: a license of intellectual property to others for a fee. And it works very well, so well in fact that it has led to a proliferation of franchising. But when the underlying business model for the franchisee is not based on a solid unit-economics footing, it can create an imbalance. In other words, a franchisor can continue to make outstanding returns while the franchisee does not. This fund’s goal is to identify those brands that represent a great investment for a franchisee, and use the power of the fund’s network to help the good ones grow. The fact that franchisees can band together, that they can unite, that they can create a capital base, that they can go out and buy great franchisors, and that they can choose to develop those franchisors in which they have an investment—that’s a fundamental change, no matter how you slice it. What kind of feedback are you getting, now that more people know about the fund? I’ve received only positive feedback from every quarter. I have not received any negative feedback from anyone—including my franchisors, the people who should be most worried. They know that I’ve scaled down, but they have been as encouraging as anyone. It’s been really heartwarming. Are you getting calls from emerging franchisors looking to be purchased? I don’t think a day goes by where I don’t get a new phone call. This has been going on for several weeks. I can’t even return the phone calls. We’re getting franchisors in the 50- to 100-unit range who are saying, “Hey, this is what we need to

Drive Your Franchise Profitability

n Improving franchise Profitability enables faster growth n Consolidated results facilitates benchmarking n Benchmarking KPIs vs budget helps focus on profits n Standardized integrated systems improve productivity n Branded and tailored as part of total franchise offering

Anytime-anywhere Cloud Accounting for Franchises Learn more: www.franchiseIQ.com/update USsales@accountsIQ.com 877-580-5769 (Toll Free)

Enabling Smarter Business

FUND-AMENTAL CHANGE? break out of the doldrums here.” Because at that range, franchisors can become stuck. There are hundreds and hundreds of franchisors in that range, all vying for the next franchisee. So we’re getting a lot of calls. There also have been discussions with very large franchisors with upward of 1,000 units that have also reached out and said they’ve reached a certain size, but they want to accelerate their future growth and don’t mind partnering with the fund if that means access to our franchisee base. I wasn’t expecting that. When you say “partnering,” what might that look like? If there’s a franchisor with 1,000 or more units, the

fund, today, may not be capable of buying it. It may not even be for sale. The idea would be for us to take a minority stake in that brand so that we would become owners of that brand but may not control the brand. In exchange for that ownership stake, that partnership would include access to the fund’s franchisee base, as well as counsel, support, and guidance from us on how to improve their franchise offering to make it even more palatable to multi-unit franchisees. Why have you reduced the number of units you operate? As the fund manager, my duty is to manage the investments that others have entrusted me

INVESTORS SHARE THEIR THOUGHTS: SPENCER SMITH

pencer Smith, president and CEO of the Smith Group in Cortez, Colo., operates 44 Aaron’s and 2 Big O Tires. • Why we invested. Most entrepreneurs are always looking for a way to diversify without losing focus. That is what I believed I saw in the opportunity of investing with Aziz and his fund: a way to diversify my investment but to not distract me and lose focus on what I’m doing day to day. My expectation is to create some additional value for the capital I’m putting in. But I also anticipate there will opportunities and networking that will come from being associated with this fund that I would not otherwise be exposed to. Aziz’s strategic approach and his business logic is very focused and exceptionally clear and seems to be spot on. I’ve looked at other venture capital and private equity funds, and the thing I believe is unique is the reputation Aziz has in the franchising world—a level of respect Spencer Smith from both the franchisor and franchisee communities. I think he’ll have opportunities that other private equity funds would not, both in identifying and in structuring deals. When he does decide to acquire a franchise system, there will be a following who will want to be a franchisee of that system. There’s going to be an inherent trust because Aziz been in the trenches like we have, or a founder has been. If I had created a successful chain of 20 restaurants, if somebody came to me like Aziz, who has experience in the industry and a track record as a multi-unit operator—versus a private equity fund where the individual hasn’t been there and done that—I think he’ll be able to outcompete for some potential deals. I think there can be a level of relatability that will exist where he will connect and speak a founder’s language with a depth and sincerity that won’t exist at a traditional private equity fund. • Franchisees. Those who have interest in further growth, or getting in for the first time should watch what is acquired through the fund and seriously consider that there’s a different perspective being applied, just because of Aziz’s background—so there may be some additional added value and upside beyond the typical private equity acquisition.

MULTI-UNIT FRANCHISEE IS S UE I, 2015

with. Therefore it’s incumbent on me not to divide my time between personal endeavors and the fund’s endeavors. So over the past year or two I have significantly scaled down my personal holdings. The idea is to scale it down to a very minimal level, but I will always be a franchisee. I believe it’s very important for me in some capacity, even though I may not be a dayto-day manager of a franchise business, to stay connected at that level. But by far the substantial portion of my time will be spent managing the fund. What else should multi-unit franchisees know about the fund? I think they should take pride that fellow franchisees are now able to embark on such ventures that until a very short time ago may have been out of the realm of possibility, or even out of the realm of talk. How is this possible that we could actually control brands ourselves? Because individually, very few franchisees have enough financial horsepower to take on a brand. Some larger franchisees have bought small brands, but they bought only one. We’re a fund, we’re going to buy many. Franchisees should take heart that they have now reached a level where we are in the same investment category as those who own brands, not only figuratively, but literally, because we’re going to become franchisors. Also, they should look at their own portfolio and think strongly about diversification. Franchisees are sometimes concentrated in the brand they operate, and there could be risk there. That risk can be mitigated in a number of ways. One is to do multi-branding as I’ve done previously in my career, to have different types of brands so that if one is not doing so well, another might be doing better. But another way could be investments such as the one we have here, where they have some money allocated toward the franchisor side of the business. So on the one hand their “day job” involves paying royalties, but they also have an investment in a structure that collects royalties, so you have a little bit of what I call a financial hedge. They should look at that and see if it’s something that works for them.

FUND-AMENTAL CHANGE? Franchisees also should take note of the power of collaboration. This endeavor is essentially an exercise in demonstrating the power of collaboration. When franchisees get together and pool our resources, it allows us to do far more than any one of us could have done individually—because we have a resource which, in franchising, is more powerful than funding: we are operators. There are just so many tracks this endeavor tries to address: the sophistication of franchisees, the recognition of their financial power, how franchisees can rise to the next level, the inequities in franchising between risk-adjusted franchisor and franchisee returns, the growing inequities in franchising in terms of the relationship, the franchise agreement, it goes on and on. It sounds like we’re trying to take a stab at all of these issues through just one structure. We’ll see how far we get, but I’m very optimistic, and most of the people I talk with feel this is a really important first

“This fund is owned by franchisees, and we’re buying brands we believe in.” step and will lead to, hopefully, many other steps by many other people that will continue this work. How do you think this will affect the future of franchising? People who are familiar with what I’m doing say this represents a significant innovation in franchising and a turning point in the growth of franchisees. When people come up to me and say, “This is going to change the face of franchising,” I don’t take that stuff lightly. This is going to change the future of franchising because it’s going to be the equalizer, rebalancing the scales

between franchisors and franchisees. It’s going to make franchisees stakeholders in the franchisor in real terms, not in lip service. This represents major innovation in that it allows sophisticated franchisees access to “the other side of the trade,” that is, being able to participate in franchisor ownership, in the royalty collection part of the business. Number two, we have a fund now that, potentially, will provide that Good Housekeeping Seal of Approval. It will not guarantee anything, but will say that, for at least the brands we buy, they have been vetted by other franchisees. We didn’t buy a brand because it was a way to make money at the expense of the franchisees. This fund is owned by franchisees, and we’re buying brands we believe in. And as I mentioned, a lot of our limited partners will be developers of many of the brands we buy. So that’s a huge innovation as well. This is really a big game-changer—and should have been done a long time ago.

WE DID

fresh & tasty LONG BEFORE IT WAS TRENDY.

Franchises Available in Key Markets.

Contact Perkins® today: franchise@prkmc.com 1-800-877-7375 www.perkinsrestaurants.com/ franchise-opportunity

This advertisement is not an offer to sell a franchise.

MULTI-UNIT FRANCHISEE IS S U E I, 2015

2015 KEYNOTE

SPEAKERS The acclaimed subject of the book, movie

Frank Abagnale

and Broadway play Catch Me If You Can,

Frank Abagnale, and New York Times Best-Selling Author, Futurist & Founder of the XPrize Foundation, Peter Diamandis. Peter Diamandis

PLATINUM SPONSORS

GOLD SPONSORS

FRANCHISEE ONLY LUNCHEON SPONSORS Captain D’s Checkers & Rally’s Restaurants Costa Vida Fresh Mexican Grill Krispy Kreme Modern Business Associates

FRANCHISEE ONLY OPENING SOCIAL SPONSORS Camp Bow Wow Johnny Rockets McAlister’s Deli

Exhibitor Franchisors 1-800-Radiator.com Aaron’s, Inc. A&W Restaurants, Inc. Arooga’s Grille House & Sports Bar Batteries Plus Bulbs Boston’s Restaurant & Sports Bar Buffalo Wings & Rings Burger 21 Camp Bow Wow Captain D’s Charter Fitness Checkers & Rally’s Restaurants Church’s Chicken, Inc. CKE Restaurants Colors on Parade Corner Bakery Café Costa Vida Fresh Mexican Grill Dairy Queen Corporation Del Taco Denny’s Dessange International Inc. Dunkin’ Brands East Coast Wings & Grill Einstein Bros. Bagels Erbert & Gerbert’s Sandwich Shop FATBURGER FAZOLI’S RESTAURANT GROUP, INC. Firehouse Subs First Watch - The Daytime Café Fuddruckers Giordano’s Godfather’s Pizza, Inc. Golden Corral Buffet & Grill Hooters of America, LLC Huddle House, Inc. Hungry Howie’s Pizza Hurricane Grill & Wings Interstate All Battery Centers Jersey Mike’s Subs Krispy Kreme la Madeleine LED Source Lift Brands Mama Fu’s Asian House Massage Envy Spa Massage Heights Corporate, LLC McAlister’s Deli Modern Business Associates Moe’s Southwest Grill MOOYAH Burgers, Fries & Shakes Newk’s Eatery Oxi Fresh Franchising Pancheros Mexican Grill Papa Murphy’s Take ‘N’ Bake Pizza PET SUPPLIES PLUS Pie Five Pizza Co. Pita Pit USA Popeyes Louisiana Kitchen

Quaker Steak & Lube® Raceway Rent-A-Center Retro Fitness Rita’s Italian Ice Rosati’s Pizza Russo’s New York Pizzeria Salsarita’s Franchising, LLC Sbarro, Inc. Sears Hometown and Outlet Stores Smashburger Smoothie King SONIC Drive-In Sport Clips Steak ‘n Shake sweetFrog Premium Frozen Yogurt Sub Zero Ice Cream & Yogurt Taco John’s TAZIKI’S MEDITERRANEAN CAFÉ The Greene Turtle Sports Bar & Grill The Human Bean Tide Dry Cleaners Tim Hortons USA Togo’s Toppers Pizza, Inc. Tropical Smoothie Café Walk-On’s Bistreaux & Bar Watermill Express Wayback Burgers Which Wich® Superior Sandwiches Wingstop Restaurants Wok Box Yogurt Zone Zaxby’s Franchising, Inc ZIPS Exhibitor Suppliers Balboa Capital Bill.com BullsEye Telecom Comcast Business Direct Capital Franchise Group EnTouch Controls Entrepreneur Media, Inc. Every Door Direct Media powered by Taradel Granite Telecommunications Harland Clarke - TranSource Indevia Accounting INFINITI HR International Franchise Association Intacct JobApp Plus Joyal Capital Manalto Inc. Modern Business Associates NEST International OnsiteRIS, Inc. Retail Data Systems The DiJulius Group

The Rawls Group - Business Succession Planning Vendor Safe Technologies VF Image Wear WEX rapid! PayCard Yooz Cloud AP Automation York Alternative Risk Solutions ZippyApp Keynote Speaker Sponsor Popeyes Louisiana Kitchen Advisory Board Meeting Sponsor Comcast Business franchiseIQ Modern Business Associates Lanyard Sponsor FranchiseGrade.com Franchisee Conference Tote Bag Sponsor Jersey Mike’s Subs Franchisor Conference Tote Bag Sponsor Fish Consulting Chairman’s Dinner Sponsor Lift Brands Escalator Metal Strips Sponsor FranchiseGrade.com Agenda At a Glance Sponsor Modern Business Associates Bronze Sponsor MOD Super Fast Pizza *As of Press Time

Hello Fellow Franchisees, Franchisors and Vendors, I would like to invite you to join me and many of the nation’s top leading franchisees, to the 15th Annual Multi-Unit Franchising Conference scheduled on April 8th-10th in bustling Las Vegas. This is a must-attend event for anyone serious about franchising, interested in doing business with, or learning from the most successful franchisees, franchisors and their supplier partners or investing in their success. This is a “who’s who” of franchising. It is where franchisees looking to grow by adding brands, units or territories go to network and look for the chance to finance their latest enterprises.

Robert Branca Chairman MUFC 2015; President, Branded Management Group / President, Branded Realty Group

The Multi-Unit Franchising Conference is designed to be an excellent educational and inspirational resource, providing panels of experts discussing current topics directly geared towards those invested in franchising. Whether you have a conversation with a mega-franchisee doing business in multiple states, or are inspired by the experienced roster of speakers, you will come away armed to better your own businesses. The people who attend The Multi-Unit Franchising Conference tend to do so regularly. These are the thought and action leaders in franchising who return time and time again, year after year for a reason: they know that this conference is the ideal platform for attendees to network, share and learn; it’s where franchisees continue their education and equip themselves for the next step in their franchising journey. Need another reason to attend? How about this: deals get done here. Franchisors and the most credit worthy, successful franchisees know the Multi-Unit Franchising Conference is where they’ll find capital, recruit talent and discover new products and technology. Given recent highly publicized events, perhaps the most discussed aspect of the 2015 Conference involves planning to navigate the coming headwinds facing our businesses. Whether in the labor, regulatory or operational spheres, becoming informed and developing a strategy are more critical than ever. These are unprecedented times, and the best place to prepare yourself is by being among the best in franchising. Best Regards,

Why you should Attend

The Multi-Unit Franchising Conference brings successful Multi-Unit Franchisees together for a two and a half day event that combines exciting content & curriculum, an exhibit hall full of new opportunities, and plenty of networking. This conference provides an experience you can’t find anywhere else!

1 2 3 4 5

Dynamic Agenda We provide content-rich learning geared to help multi-unit franchisees grow and be inspired. Our curriculum extends beyond what franchisees learn at their individual brand conferences. Don’t miss our inspiring keynote speakers. This is the only event of its kind that focuses on the critical concerns of today’s franchisees.

Developed by and for Multi-Unit Franchisees This is a unique event because it is highly influenced by its advisory board consisting of the very best multi-unit franchisees. The board works diligently to ensure that the conference delivers on its promise of being the best platform for franchisees to learn how to improve unit performance and grow their businesses.

Franchisee-Only Events Franchisees appreciate the opportunity to network with their peers and have asked for even more networking sessions. The 2015 conference introduces a new networking session — Meet the Speakers Roundtables, where you can talk with fellow franchisees. Our franchisee speakers will lead the roundtable discussions that cover a variety of topics important to multi-unit franchisees today.

Exhibit Hall More than 70% of franchisees previously attending tell us they are looking for new opportunities. Visit with more than 230 sponsors and exhibitors representing franchise brands and product and service providers. If you are looking for a new franchise opportunity or vendor partner, this is the place to be. Three sessions are held in the exhibit hall, providing plenty of time to visit every booth.

Speaker Roster Our franchisee speaker roster includes some of the best, brightest and most experienced franchisees in the industry. These talented individuals representing all aspects of the franchise industry share their experiences to help you learn and grow your business.

KEYNOTE SPEAKERS Peter Diamandis is the world’s foremost expert and futuristic leader in incentivized innovation: the art of incentivizing smart and talented people within your company or those experts around the world to focus on solving your grand challenges. He has worked with Fortune 100 companies, government leaders, and captains of industry over the past 15 years. In 2010 Diamandis was the winner of The Economist’s “No Boundaries” award for “meta-innovation — driving innovation in the way people innovate.” He is also the winner of the Arthur C. Clarke Award for Innovation, the Heinlein Award, the Lindbergh Award, the Wired RAVE Award, the Neil Armstrong Award, and the World Technology Award. Dr. Diamandis is the Founder, Chairman and CEO of the X PRIZE Foundation, a non-profit focused on designing and launching large incentive prizes to drive radical breakthroughs for the benefit of humanity. Best known for the $10 million Ansari XPRIZE for private spaceflight, the Foundation has awarded prizes in Exploration, Life Sciences, Energy & Environment, Ocean Health, and Education/Global Development. Dr. Diamandis attended the Massachusetts Institute of Technology (MIT) where he received his undergraduate degree in molecular genetics and graduate degree in aerospace engineering.

Dr. Peter Diamandis

New York Times Best-Selling Author, Innovator and Founder of the XPRIZE

After MIT he attended Harvard Medical School where he received his M.D. In 2005 he was also awarded an honorary Doctorate from the International Space University. Diamandis has founded over 15 companies since his first year at MIT. Many of these are non-profits dedicated to creating change in the world. Peter’s mission is to guide and inspire the transformation of humanity both on and off the Earth. His personal motto is: “The best way to predict the future is to create it yourself.” In 8th grade, while living in New York, Dr. Diamandis won first place in the Estes rocket design contest. In 2012, Diamandis released the best-seller Abundance: The Future Is Better Than You Think, debuting at number one on the Amazon and Barnes and Noble best-sellers lists. The book focuses on how exponential technologies, coupled with the DIY movement and the on-line connectivity of the “rising billion,” will enable an age of global abundance providing water, energy, food, shelter, education and healthcare in unprecedented availability for humanity.

Frank W. Abagnale is one of the world’s most respected authorities on forgery, embezzlement, and secure documents. For over 36 years he has worked with, advised, and consulted with hundreds of financial institutions, corporations, and government agencies around the world. Mr. Abagnale’s rare blend of knowledge and expertise began more than 40 years ago, when he was known as one of the world’s most famous con men. This was depicted most graphically in his best-selling book, Catch Me If You Can, a film of which was also made, directed by Steven Spielberg with Leonardo DiCaprio and Tom Hanks. The Tony-Award winning musical Catch Me if You Can, directed by multiple award winner Jack O’ Brien, opened on Broadway at the Neil Simon Theatre in April 2011. Between the ages of 16 and 21, he successfully posed as an airline pilot, an attorney, a college professor, and a pediatrician, in addition to cashing $2.5 million in fraudulent checks in every state and 26 foreign countries. Apprehended by the French police when he was 21 years old, he served time in the French, Swedish, and US prison systems. After five years he was released on the condition that he would help the federal government, without remuneration, by teaching and assisting federal law enforcement agencies.

Frank Abagnale

Acclaimed Subject of the Book, Movie and Broadway Play Catch Me If You Can

Mr. Abagnale has now been associated with the FBI for over 36 years. More than 14,000 financial institutions, corporations, and law enforcement agencies use his fraud prevention programs. In 1998 he was selected as a distinguished member of the “Pinnacle 400” by CNN Financial News – a select group of 400 people chosen on the basis of great accomplishment and success in their fields. In 2004 Mr. Abagnale was selected as the spokesperson for the National Association of Insurance Commissioners (NAIC) and the National Cyber Security Alliance (NCSA). He has also written numerous articles and books including The Art of the Steal, The Real U Guide to Identity Theft, and Stealing Your Life. “Abagnale’s lecture may be the best one-man show you will ever see.” —Tom Hanks

WHO SHOULD ATTEND Franchisees The Multi-Unit Franchising Conference provides contentrich learning opportunities geared towards franchisees. Our curriculum brings something different to the table and extends beyond what franchisees learn at their individual brand conferences. Our sessions and panels are comprised of franchisees positioned within different segments of the franchise industry. We also strive to provide plenty of opportunities for our franchisee participants to network amongst their peers.

Franchisors

20%

own between 20-50 units

Additionally, franchisee attendees admit they find brands with leadership presence at the conference more attractive than those without C-suite representation.

own 50+ units

2014

19%

Franchisee Attendee Profile:

own between 5-10 units

555 Total

19%

own between 2-5 units

Franchisees attended

The 2014 Multi-Unit Franchising Conference was attended by more than 550 multi-unit franchisees, representing every segment of the franchise industry â&#x20AC;&#x201C; food, retail and service. More than 70% of our participants said they were seeking new franchise opportunities. This conference is the perfect venue to effectively display your franchise opportunity to prospective multi-unit franchisees. The conference programming is developed with the guidance of our Multi-Unit Franchisee Advisory Board. They share their expertise, challenges and experiences with participants. This provides a great opportunity for franchisors to learn (including CEOs, Presidents, Vice Presidents and Directors) in all disciplines in the organization â&#x20AC;&#x201C; Sales, Operations, Marketing, Finance and Technology.

10%

15%

own between 10-20 units

210

FRANCHISOR

BRANDS

ATTENDED IN 2014

Suppliers Service providers interested in reaching multi-unit franchisees and franchisors should attend the Multi-Unit Franchising Conference. With more than 550 multi-unit franchisees and 520 franchisor attendees, the conference provides a great opportunity to showcase your services and expertise.

18% 30% 100%

Attending brands with COO or VP of Operations representation

Attending brands with CEO representation

Attending brands with CDO or Senior VPs of Business Expansion

AGENDA AT A GLANCE TUESDAY, April 7 | Pre-Conference 11:00AM TO 6:00PM

Golf Tournament – Arroyo Golf Club

6:00PM TO 7:30PM

MULTI-UNIT FRANCHISEE Opening Social (Franchisees Only) – Carmine’s Restaurant Sponsored by Camp Bow Wow, Johnny Rockets & McAlister’s Deli

WEDNESDAY, April 8 | Main Conference 7:30AM TO 7:30PM

Registration Desk Open

7:30AM TO 8:15AM

Continental Breakfast

9:00AM TO 10:30AM

Opening General Session Welcome: Therese Thilgen, CEO, Franchise Update Media, with Robert Branca, President, Branded Management Group / Branded Realty Group & 2015 Conference Chairman KEYNOTE

Peter Diamandis, Futurist & Author, Abundance: The Future Is Better Than You Think

10:30AM TO 11:00AM

Coffee Break

11:00AM TO 12:00PM

General Session: Financing 2015 – Securing Capital

12:00PM TO 1:30PM

Franchisee Only Luncheon: Seating available with franchisees by industry or size of organization Sponsored by Captain D’s, Checkers & Rally’s Restaurants, Costa Vida Fresh Mexican Grill, Krispy Kreme Doughnuts, Modern Business Associates

12:00PM TO 1:30PM

Franchisor & Supplier Luncheon – Build and Evaluate Your Franchisee Recruitment Plan & Budget Growing to 20 Units

Growing from 20 to 50 Units

Growing Beyond 50 Units

1:45PM TO 3:00PM

Adequate Financing to Grow

Building Bench Strength to Support Infrastructure

Capital Solutions for $15+ Million Acquisitions and/or Growth

3:15PM TO 4:30PM

The Right Time to Grow Your Infrastructure

Financing Acquisitions & New Growth

Planning Infrastructure to Support Your Next Brand or Acquisition

4:30PM TO 7:00PM

Opening Social in Expo Hall – Exhibits Open

AGENDA AT A GLANCE THURSDAY, April 9 | Main Conference 7:30AM TO 7:30PM

Registration Desk Open

7:30AM TO 8:15AM

Continental Breakfast

8:30AM TO 11:00AM

General Session Opening Remarks – Robert Branca, President, Branded Management Group / Branded Realty Group & 2015 Conference Chairman Industry Trends – Darrell Johnson, CEO, FranData

11:00AM TO 11:15AM

KEYNOTE

11:15AM TO 12:15PM

Break

Frank Abagnale, Author, Catch Me If You Can

Concurrent Breakout Sessions Marketing Track Customer Engagement The Best Marketing Tool

Operations Track Evaluating Distressed Units

Relationships Track Labor Laws – Impact on Hiring and Retaining Good Talent

Growth Track Lease Negotiations & Re-Negotiations

12:15PM TO 1:45PM

Lunch in Expo Hall – Exhibits Open

2:00PM TO 3:00PM

General Session – Franchisees & Franchisors Working Together to Build Stronger Brands

3:15PM TO 4:15PM

Concurrent Business Sessions Marketing Track Local Store Marketing for Optimum Brand Awareness

Operations Track Take Your Customer Service to the Next Level

Relationships Track Franchising Under Attack: How Recent & Proposed Legislation Affects Your Bottom Line

4:30PM TO 5:30PM

Meet the Speakers Roundtables - Franchisee Only Session

5:30PM TO 7:00PM

Cocktail Reception in Expo Hall - Exhibits Open

FRIDAY, April 10 | Main Conference 9:00AM TO 10:30AM

Closing Session Develop Your Plan for Growth Workshop for Franchisees and Franchisors Infrastructure, Financing Needs Assessment & Plan Development

Growth Track How to Evaluate a Franchise Brand

Multi-Unit Franchisee Magazine is proud to once again honor franchisee excellence with our annual Most Valuable Performer (MVP) Awards. We are looking for the best and the brightest franchisees â&#x20AC;&#x201D; the power operators, the innovators, the creative thinkers who have demonstrated outstanding performance in growing both their organization and their brands. MVP Award winners will receive VIP passes to the 15th Annual Multi-Unit Franchising Conference in Las Vegas, April 8-10, 2015, where they will be treated like franchisee royalty and recognized on stage during the general session. In addition, they will also receive an exclusive profile in Multi-Unit Franchisee Magazine, a feature on mufranchisee.com, and an impressive award to display back in their office. Nominations are due January 5th, 2015 To qualify, multi-unit franchisees must have at least five operating units, and have been in a franchise system for a minimum of two years. Multi-unit franchisees can nominate themselves or fellow multi-unit franchisees. Franchisors can nominate outstanding multi-unit franchisee performers in their systems.

Nominations Influencer Award for Former Pro-Athlete For achieving excellence in franchising, as a former pro-athlete. Influencer Award for Husband & Wife Team For demonstrating excellence in the franchising industry as a husband & wife team. Innovation Award For bringing a new and unique contribution to their brand. Veteran Entrepreneurship Award For outstanding performance, leadership and innovation by a veteran. Community Involvement Leadership Award For providing an example for others to follow in franchise success.

Spirit of Franchising Award For achieving brand leadership with a single brand. Single Brands Leadership Award For achieving brand leadership with a single brand. Multi-Brand Growth Leadership Award For achieving brand leadership in multibrand expansion. Noble Cause Award For passionate, unwavering support for those in need. American Dream Award For achieving remarkable success in his new country.

All nominations are strictly confidential. Questions? Contact Christa Pulling christap@franchiseupdatemedia.com

FRANCHISEE ONLY EVENTS

We’ve heard your requests and based on your feedback, we are offering one more franchisee only event this year – Meet the Speakers Roundtables. These events are designed to encourage networking amongst your peers in a relaxed environment.

Multi-Unit Franchisee Opening Social Tuesday, April 7th Grab a cocktail and mingle with your multi-unit franchising peers. This year's chair Robert Branca, Multi-Unit Franchisee of Dunkin’ Donuts, along with our advisory board of multi-unit franchisees invite attending franchisees to join them for an evening of peer-to-peer networking and cocktails. This exclusive franchisee social event is the perfect way to jumpstart your conference experience at the lovely Carmine's Restaurant, located in the Caesars Palace Forum shops.

Networking Luncheon Wednesday, April 8th Network and share ideas with other multi-unit franchisees during our franchisee only luncheon. Where else can you engage with franchisees from a variety of industries? Discover new ideas and best practices and develop relationships with business owners facing the same challenges. Seating will be open or available by industry. Details available when you register.

Meet the Speakers Roundtables Thursday, April 9th The 2015 Multi-Unit Franchising Conference introduces this new networking session – Meet the Speakers Roundtables where you can talk with fellow franchisees. Our franchisee speakers will lead the roundtable discussions that cover a variety of topics important to multiunit franchisees today.

Join your franchise colleagues at the 2015 Multi-Unit Franchising Conference Golf Tournament. The tournament is a premier networking event and a casual forum to strengthen existing relationships and build new ones with industry decision makers. All players must be registered for the Multi-Unit Franchising Conference in order to participate in the golf event. Each player receives: cart, box lunch, two drink tickets, postgame awards reception, and transportation to and from Caesars Palace. All Golf fees are additional fees beyond the conference registration rates. Registration: Please contact Gary Gardner garyg@franchiseupdatemedia.com or 800-289-4232 ext. 201. Tuesday April 7th, 2015 Shotgun Start at Golf Fee: $195.00 Club Rental Fee: $50.00 Reservation Deadline: April 1st, 2015 Questions? Please email us for more information Interested in sponsoring? Please email sales at sales@franchiseupdatemedia.com or call Sharon Wilkinson at (800) 289.4232 ext. 202 for more information.

2250 C Red Springs Drive Las Vegas, NV 89135 www.thearroyogolfclub.com

The Multi-Unit Franchising Conference returns to the beautiful Caesars Palace hotel. We hope you enjoy your stay. The grandest of Las Vegas hotels, Caesars Palace is famous worldwide for its magnificent beauty and impeccable service. This majestic Las Vegas hotel offers a 129,000 square foot casino, 26 restaurants and cafes, sprawling gardens and pools, a world-class spa, and the renowned Coliseum spotlighting world-class stars. Room Block Expires March 16, 2015 Roman Tower Guest Rooms $189 single/double These guest rooms are located in the heart of the property and just a walk through the casino to the Multi-Unit Franchising Conference space. The Roman Tower guest rooms are standard in size, with classic room dĂŠcor. Palace Tower Guest Rooms $189 single/double These guest rooms are situated directly above the conference space with direct access via elevator to the Multi-Unit Franchising Conference space. The Palace Tower guest rooms are more spacious in size, with modern dĂŠcor and recently renovated. These rooms are going fast. Don't miss the opportunity to book now!! For Reservations call 866-227-5944 and book under MultiUnit Franchising Conference. Callers can also use our group code to identify the group, SCMUL5

BY KERRY PIPES

Just

Be-Cause

Cause marketing is making a difference

oing good is a longtime pursuit in cal profile. And while it can lead to an im- provide greater awareness of the problem America. You might even say it’s proved bottom line, say the four franchises and support for those who suffer from a part of the culture. Americans we spoke with, “done right” means doing domestic violence. Since its inception in love a good cause and like to help when good with no bottom-line expectations. 1996, the foundation has raised more than they can. Whenever needs arise, there al$1.9 million for local domestic violence ways seem to be businesses, organizations, Molly Maid: Give to give shelters and agencies across the country. and private citizens ready to come forward “The cause must predominate, not the Roberts says the only way to get into lend a hand. And in the past couple of mutually beneficial profit. Creating aware- volved with cause marketing is if you decades, businesses, especially franchises, ness of the brand is a by-product,” says sincerely care about the cause. “If you’re have been getting more and more involved Molly Maid President Meg Roberts, who thinking that Millennials or Baby Boomers in supporting charitable causes. has been actively involved in the brand’s are more likely to purchase your service because you participate in philanthropy, It makes sense, both personally and for cause marketing initiatives. business. Franchises are local operations, The brand’s Ms. Molly Foundation then don’t even do it,” she says. Molly Maid looks for franchisees who most run by people who are part of the was formed to help communities stop community. As a result, many franchise the cycle of domestic violence and give are motivated by service, says Roberts. “If brands and tens of thousands of fran- victims a second chance in life. October they also have a sense of service for their chisees have become involved with good is National Domestic Violence Aware- community, then our Ms. Molly Foundacauses. Sometimes those causes are global, ness month, and Molly Maid employees, tion may have something others don’t ofnational, or regional, but more often they franchisees, and customers join forces to fer,” she says. “We encourage our owners to participate and have are local and franchisees and franchisors alike are created a turnkey way to there to step in. contribute both finan“Cause marketing” cially and emotionally is a popular term used by hosting fundraising events their teams and to describe these efforts. Boiled down to customers can join as its essence, it’s simply well.” doing something good Michael Silva-Nash for those in need. Howis a 22-year-old Molever, say those who are ly Maid franchisee in active in cause marketNorth Little Rock, Ark., ing, it should never be known in his community done with anything othfor making regular TV er than altruistic moappearances to provide tives in mind. Done cleaning tips for viewers, well, cause marketing and for regularly raising unites franchisees and funds for local women’s their employees with shelters through the Ms. their communities and Molly Foundation. He conveys a positive brand has raised thousands of image, boosting their lo- (L-R) Meg Roberts, Michael Silva-Nash, Dorcas Van Gilst. dollars for Women &

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Just Be-Cause Children First and the Dorcas House, a Jersey Mike’s: Making a domestic violence shelter in Little Rock. difference He also accepts non-financial donations “Giving… make a difference in someone’s from customers, such as clothing and life.” That’s a philosophy Jersey Mike’s other items that can be used at the Dor- Subs founder and CEO Peter Cancro cas House. has emphasized from the beginning with “Domestic violence occurs more than every franchisee: support the community people realize, and we all know someone that supports you. And it’s working: since who has been abused, either emotion- 2010, Jersey Mike’s locations across the ally or physically,” he says. “A majority country have raised nearly $10 million of our customer base and employees for local charities and have distributed are women, and we feel that we owe so more than 750,000 free sub sandwiches much to the people who hire us and the to help numerous causes, says Rich Hope, people we hire,” he says about how he the brand’s chief marketing officer. chose this cause. “This fervor for helping others has Since 2005, he has raised nearly $30,000 become a ‘must have’ personality trait for through organizing two 5K runs, host- prospective franchisees. Our franchisees ing events, asking for customer contri- share the belief that the more you give, butions, and donating a portion of every the more you get,” he says. “They are home cleaning. In February 2014 he was genuinely engaged in caring about their asked to join the board of the Ms. Molly local causes and committed to taking acFoundation and says he has enjoyed every tion and making a difference.” second of working with very talented and Hope says there are many sound busipassionate people to help others make a ness reasons for developing a cause-related difference. marketing program, and that the effects Silva-Nash credits his franchise brand of a well-run program run deeper than with providing great support for his ef- brand awareness and increased revenue. “It forts in Little Rock. “The Ms. Molly creates a company that people are proud Foundation makes it easy for anyone to to work for, it becomes a franchise that be involved,” he says. The foundation al- people want to be part of, and it creates lows franchisees to donate a portion of important intangibles that are difficult to every service fee for a month, a year, or place a value on.” any other term they choose. The foundaGreg McMenaman is Jersey Mike’s area tion also provides other opportunities and director for Southeast Florida. He teamed levels of participation. up with Quantum House, a hospital hospiThe foundation makes it easy for fran- tality house that helps lessen the burdens chisees to participate. “They create the of families whose children are receiving graphics and work out agreements with printers. As a franchisee, I order the material, implement the programs they have, and write the check. The little work we as franchisees do makes a huge difference.” The ultimate goal is simple, says Silva-Nash. “Pick a cause that you, your customers, and employees care about. You can make a positive impact. No matter how big or how small, everyone Greg McMenaman (kneeling, center) presents a can make a difference.” check to Quantum House.

treatment for serious medical conditions in Palm Beach County. “I got involved with them because my wife had volunteered a few times and took me there to see for myself what they did,” says McMenaman. “Since they are located on the campus of St. Mary’s Medical Center in West Palm Beach, it was an easy trip to make. When I walked through the door that day and met the families, staff, and volunteers, one thought came through my mind in an instant: How can I make a difference?” McMenaman set out to use his Jersey Mike’s stores to help spread the word about Quantum House, and over the past two years those stores raised nearly $120,000 for the organization. “There is a customer-driven donation number that we collect in-store at the register. We’ve use bounce-back coupons with various incentives to get customers to donate. For example, if a customer donated $1 they would receive a $1-off coupon for their next visit. On our annual Day of Giving, customers are amazed that we donate 100 percent of our sales that day to Quantum House, and they want to be part of the process.” Keeping the cause simple and focused helps both employees and customers understand what he’s doing and why the cause is important. As an area director, he got his franchisees on board by having them visit Quantum House and witness firsthand the families, the purpose of the organization, and the difference it is making. It also helped that Quantum House promoted the effort, provided in-store volunteers, and made sure the Jersey Mike’s brand and efforts were broadcast through their own social media and communications and available to all of their supporters. “This relationship is truly a partnership, and Jersey Mike’s is a part of the Quantum House family,” says McMenaman. “Yes, doing good is $50,000 also good for business,”

MULTI-UNIT FRANCHISEE IS S U E I, 2015

Just Be-Cause he says, “and that means we can raise even more money for our cause.”

give back a sizable amount,” he says. “We want to be known as a local restaurant that not only makes money, but that also supports local causes within the community where we do business.” If you are going to get involved in cause marketing, he says, “You need to have a genuine spirit of helping. It can’t be used as a gimmick, the public is way too smart for that. Associate yourself only with causes near and dear to your heart that you really want to help. Talk to your employees and make sure you get their buy-in. This will go a long way toward being successful.”

Hungry Howie’s: Love, Hope & Pizza Hungry Howie’s Pizza, which took up the cause of defeating breast cancer some years ago, encourages and supports franchisees who help raise money to combat the disease. Beginning in 2009, the brand turns its pizza boxes pink every October during Breast Cancer Awareness Month in its “Love, Hope & Pizza” campaign. To date, the brand and its franchisees have raised more than $1 million for the National Breast Cancer Foundation. “For every pizza sold, every story shared, Massage Envy: Brand alignment and every new Facebook fan added durMassage Envy Spa is another brand that ing the month of October, we make a takes charitable causes seriously. Through donation to the National Breast Canits national partnership with the Arthritis cer Foundation,” said Jeff Rinke, HunFoundation, the brand has raised more gry Howie’s vice president of marketing, than $2 million in support of the founduring a panel discussion of cause mar- Kevin Dittrich, Hungry Howie’s dation’s Walk to Cure Arthritis events keting at the 2014 Franchise Consumer franchisee, raises funds for across the country. It also hosts Healing Marketing Conference. The brand also is local causes in Michigan. Hands for Arthritis, a one-day nationwide involved in supporting the Leukemia & in-clinic event. Lymphoma Society (blood cancer) and He says it’s important to identify a Eugenia Tzoannopoulos is Massage Common Ground (affordable housing valid cause that will pull in community Envy’s regional developer for the Conand homelessness). support. From there, it’s necessary to line necticut region, which includes ConnectiKevin Dittrich, a Hungry Howie’s up proper staffing during the fundraiser cut, Rhode Island, Westchester County in franchisee in mid-Michigan, operates and engage the community, and family New York, and Bristol County in Massanine stores surrounding the Capitol area members when applicable. ”You need to chusetts. She has been involved in cause in Lansing. He’s been involved in the look at the food needed to order, staffing marketing because, she says, “It has always brand’s Love, Hope & Pizza campaigns, the store, advertising in local papers, and been in our DNA as individuals, but it’s but has an additional story to tell. His yard signs. If we help out a family and go even more important when you are a lomost recent cause marketing effort was through the work, we want to be able to cal business that is taking the time to supto benefit a local family facing an port the community, charities, and at times, tragedy.” all-too-familiar foe. She has been a part of many loTom Sims, head of maintenance n Cause sponsorship is predicted to reach $1.84 bil- cal causes and has assisted in various for the school district in Perry, Mich., had been diagnosed with an aggres- lion in 2014, a projected increase of 3.4% over 2013. ways, sponsoring many local walks and runs, and has been actively insive form of brain cancer. “We had a (IEG Sponsorship Report) n Nearly all U.S. consumers (93%) say that when volved in the brand’s partnership three-day event at our Perry store to benefit the Sims family,” says Dittrich. a company supports a cause, they have a more posi- with the Arthritis Foundation. “We gave 50 percent of the proceeds tive image of that company, up from 85% in 2010 and “On our annual one-day Healing from all of our sales for those three 84% in 1993. Hands for Arthritis event, $10 from n Americans say they are more likely to trust every massage or facial is donated days and raised over $8,000.” (90%) and would be more loyal (90%) to companies to the Arthritis Foundation,” she Dittrich says Sims had mountthat back causes. ing bills from two different hossays. “Additionally, we raise monn Whether, and to what extent, a company sup- ies through various initiatives in pitals and was facing lengthy and costly radiation and chemotherapy ports an issue influences a variety of personal deci- each clinic, such as raffles, spin the treatment. “We thought it was the sions as well, including where to shop or what to buy wheel, bake sales, and free chair least we could do for such a well- (82%) and which products and services to recommend massages.” The organization has known and well-liked local figure to others (82%). (2013 Cone Communications Social raised more than $1 million from Impact Study) and friend,” he says. its single-day events.

Cause Marketing Stats

MULTI-UNIT FRANCHISEE IS S UE I, 2015

Just Be-Cause Tzoannopoulos says she has a wonderful relationship with the local Arthritis Foundation chapter in Connecticut. “This past September, we had an employee outing for all of our team members. We raised money by securing support from businesses and sponsors we work with.” She says goals are set from a national level, then passed down to each of the regions and local levels. “As regional developers, we then work with the clinics in our region to set goals and discuss best ideas on how to be successful for each of the planned events. Every year we aim to go a bit higher than the last. Over the last few years, we have raised several million dollars for the Arthritis Foundation.” Tzoannopoulos says it’s easy to get her employees involved. “Massage therapists are naturally healers and love to be a part of cause marketing like Healing Hands for Arthritis,” she says. Their customers—and even other local businesses—have also been eager participants. She says her business benefits from the

marketing value. But more important, so does the cause. “This is a win-win, but ultimately we like to do it because it really does feel good.”

Eugenia Tzoannopoulos, Massage Envy regional developer, has helped raise millions for the Arthritis Foundation.

And you? These are just a few examples of how franchise brands are supporting great causes. So many others, too numerous to mention here, are doing it today and have been for years. But a great cause marketing effort is nothing without dedicated franchisees carrying out the mission in their local communities. When franchisees, in concert with their franchisors, dedicate themselves and their resources to a cause, embrace assistance and guidance from their brand, and work closely with local organizations, good things happen—for everyone. Along with proper planning, organized implementation, and local action, sincere motives and passionate hearts are the perfect combination to make a difference in the world.

AdIndex ADVERTISER PAGE

ADVERTISER PAGE

2015 Buyer’s Guide 79 2015 Conference Calendar IBC 27 Batteries Plus Bulbs Bricks 4 Kidz 3 Brixx Wood Fired Pizza 25 Burger 21 47 Checkers & Rally’s Restauratns 11 Church’s Chicken, Inc. 43 CKE Restaurants Back Cover Corner Bakery Cafe 47 29 Costa Vida Del Taco 43 Denny’s 5 1 Direct Capital Dunkin’ Brands 15 Empire Builders 29 Entrepreneur 75 Farmer Boys Food Inc 29 Feed America 45 Firehouse Subs 31 franchiseIQ 51 Franchising.com 77 Fuddruckers Inc. 45 G.J. Gardner Homes 47 Golden Corral Buffet & Grill 21

Hot Dish Advertising Huddle House, Inc. Hungry Howie’s Pizza International Franchise Association Jimmy John’s Gourmet Sandwich Shops Lo-Lo Chicken & Waffles Mama Fu’s Franchise Group, LLC Moe’s Southwest Grill MU II Advertising Deadline Olson & Associates PAPA MURPHY’S INTERNATIONAL Perkins Restaurant & Bakery Quaker Steak & Lube RedBrick Pizza Retro Fitness Roy Rogers Franchise Company, LLC SEARS Hometown and Outlet Stores Smoothie Factory The Coffee Beanery The Greene Turtle Sports Bar & Grille Togos Franchisor, LLC Wayback Burgers Wok Box Fresh Asian Kitchen ZIPS Dry Cleaners

73 IFC 31 71 17 21 27 7 41 43 47 53 9 35 19 25 35 37 53 41 45 37 39 39

MULTI-UNIT FRANCHISEE IS S U E I, 2015

CustomersCount BY JACK MACKEY

Make It So! Customer growth lessons from Amazon

mazon founder Jeff Bezos is a Star Trek junkie. He almost named his company MakeItSo.com, based on the adventures of the USS Enterprise, when Captain Jean-Luc Picard would confirm his commands with the words, “Make it so!” “Make it so!” may also be the ultimate personal motto for multi-unit operators trying to grow their businesses. But the practical question is, How exactly do you increase sales and business value continuously over many years? What is the secret to Amazon’s growth? Bezos answers like this: “We know customers like low prices. We know customers like big selection. We know that customers like fast delivery. And we know those things are going to be true 10 years from now. They are going to be true 20 years from now. So we can count on those things and we can put energy into them.” You can sense his passionate focus on customers is founded on the kind of cool long-term thinking that characterizes great investors. The Amazon CEO came from humble beginnings. Born to a teenaged single mom, his $30 billion fortune is self-made. He is not a warm and fuzzy guy, having graduated from Princeton University summa cum laude with degrees in computer science and electrical engineering. Bezos also had the guts to quit a great job to go into his own business. He was a rising star on Wall Street right out of college, so he is very savvy financially. When Bezos says, “We know” what customers like, he means that Amazon’s customer research shows that price, selection, and speed matter most to his customers. Data analysis confirms those are the key drivers of customer satisfaction and loyalty in the online retail business where Amazon competes. And national benchmark data from the American Customer Satisfaction Index (ACSI) show Amazon is rated highest in the online retail industry, thus supporting the connection between the customer experience, revenue growth,

MULTI-UNIT FRANCHISEE IS S UE I, 2015

and ultimately, business valuation. (Amazon actually has the highest ACSI score among all companies across all industries.) Even though Amazon is not a franchise system and your businesses may seem much different from online retailing, you should have access—through your franchisor—to similar research proving what’s most important to customers of your businesses. And you should be able to see benchmark data on your customer loyalty compared with other franchisees and with competitors.

The value of customer loyalty, plus engaged and skilled employees, and intellectual property, are worth more than the value of tangible assets, such as inventory, machinery, and equipment. For example, if you are a franchisee of a top-tier brand, you should be able to see real-time customer comments, sentiment analysis, and ratings that indicate how each of your locations is performing on your key drivers. For restaurants it might be taste of food, speed of service, and friendliness. You can count on those elements of the customer experience being important for a very long time, so you “can put energy into them.” Over the months and years, you can compare your customer experience against competitive benchmarks to see if you’re pulling ahead, slipping behind, or just treading water.

What differentiates your brand? The customer experience Amazon creates is what distinguishes the brand. It includes every customer-facing element: from unbeatable product prices to unprecedented selection; from the algorithms that recommend items you actually want to buy to how they package them to ensure accuracy and ship them to avoid damage. Bezos understood that when entrepreneurs put money toward winning customer loyalty, those dollars are investments that yield compounded returns over time. According to a 2011 webinar by the Harvard Business Review, companies that are loyalty leaders in their industries (like Amazon) grow at double the compound annual growth rate of average performers in their industries over the course of 20 years. Did you know that the value of customer loyalty, plus engaged and skilled employees, and intellectual property— the intangible assets of a business—are worth more than the value of tangible assets, such as inventory, machinery, and equipment? Customer loyalty, as evidenced by a steadily increasing revenue stream, is the number-one value-creating factor in business valuation. Optimizing customer loyalty in your business—and proving it with customer and sales data—is essential to a successful exit strategy. What the example of Amazon shows us (reminds us really, because we all know this) is that the root cause of business growth is gaining and keeping an everincreasing number of customers. That’s not just true for big, world-famous companies, either. In fact, it is even more important for emerging companies, such as multi-unit franchisee organizations, to build a future on the solid foundation of customer loyalty. Make it so! SMG Chief Evangelist Jack Mackey helps multi-unit operators improve loyalty and drive growth. For an analysis of the customer research capabilities leading franchisors provide today, request “An Executive Critique of the Customer Experience” (either the retail or restaurant report). Contact him at 816448-4556 or jmackey@smg.com.

Join the Movement Are You a FAN? Franchise businesses need to come together and speak with one, consistent, strong and collective voice on behalf of our great industry. IFA has launched the Franchise Action Network (FAN), to mobilize the franchise industry to be that voice. By joining the FAN, we will unite all of our voices within franchising with a strong message about the positive impacts of the franchise business model in every community across the country. Make your voice heard and join in this fight by signing up for the FAN today!

www.FranchiseActionNetwork.com If you have any questions about this new initiative, please do not hesitate to contact IFAâ&#x20AC;&#x2122;s Senior Director, Political Affairs & Grassroots Advocacy, Erica Farage at efarage@franchise.org or 202-662-0760.

People BY ADAM PIERNO

Now Hiring! Recruiting and retaining the best Millennials

o, you’re hiring again. You have positions open and want to make sure the employees you bring in will meet your goals—or exceed them. No matter what position you’re trying to fill, your hiring pool probably consists of those aged 18 to 34, otherwise known as Millennials. As the Millennial group matures, we have seen that they have a unique outlook on work and corporate life, but can be great employees when properly motivated and understood, based on a few key insights. 1) Transparency The job market has not exactly been great for Millennials as they graduated college and joined the workforce. This has had a few different effects on their perspective on jobs and careers. One is that they have become less trustful of corporations, meaning they’re less likely to take things at face value. They expect transparency and are likely to reject someone they feel is guarded or protective of critical information. To win over Millennial candidates, provide them with access to the information they’re seeking. Traditionally, brands looking to hire have had a simple employment page on their website with a link to an application. Instead, build out a featured employment section and give them the information they commonly ask about. If it’s more-sensitive information, ask for an email address and provide them with access through a link in a confirmation message. Millennials have grown up during a recessionary period, but they’ve also grown up in the digital age. They will research your company and employment one way

MULTI-UNIT FRANCHISEE IS S UE I, 2015

or another. Offer the information on your terms. Consider linking to employment review sites such as Glassdoor. Just as with customer communications, you’ll never control all the conversations happening about your company across the web. Don’t try to. Instead, displaying them with pride and making an ef-

fort to mediate any issues you find will demonstrate the transparency valued by this generation. 2) Entrepreneurial ways Another effect of the difficult job market Millennials faced during the Great Recession is that they have developed some of the skills of an entrepreneur. They’ve sought out ways to make income beyond the traditional job or career track. They may be more willing to take on unconventional roles or combine tasks that have been separate in the past. 3) How to communicate with Millennials • Freedom: There are two ways to speak to this insight as you recruit Mil-

lennial candidates. First, communicate how much freedom you’re willing to give them to chart their own success. They were limited during the slowest growth periods of the recession. Find examples inside the company of people who have been successful going above and beyond their core responsibilities. Consider incentives for achievements met outside base-level expectations. Do what you can to make each employee responsible for running what you position as an “independent business” within your business. • Flexibility: Second, give them the flexibility to add or subtract some responsibilities within their job description that tilt toward their individual skills and interests. To uncover these skills and interests, during the interview process ask them what other jobs they may have applied for, and why. By giving them a voice in the job description at the outset (provided it meets the needs of your company) you’re communicating to them that you value their contribution, are willing to invest in their career growth, and are not a rigid organization. Writing these things is simple. Of course, for all positions within all companies, executing them may not be. Find ways your company or your team can become more desirable for Millennials. Ask your best Millennial employees what they like and don’t like about working with you. Doing so won’t just help you recruit better employees, it also will help you retain the best ones you have. Adam Pierno, director of brand strategy and planning at Santy, unearths Millennial insights at the convergence of media, technology, and the marketplace. These insights lead to positive and revenue-enhancing change for clients. Contact him apierno@ santy.com or 480-710-4243.

ÂŠ2015 Hot Dish Adver tising, LLC

dkane@hotdishad.com

612.746.8414

HotDishAd.com

Security BY BRAND BARNEY

How Safe Is Your POS System – Really? 5 critical questions for your POS vendor

hile very skilled at installing systems, pointof-sale (POS) vendors often don’t understand security basics and likely won’t make your security their main priority. Obviously, this can lead to very poor organizational security. After all, your POS system harbors some of the most valuable information at your organization: customer credit card data. Before hiring someone to set up your POS environment, there are five key questions you should ask. These questions are designed to help you weed out ignorant vendors that don’t have your security best interests at heart. 1) Can I set my own user name and password? If a vendor provides POS credentials and won’t let you change them, that’s a serious red flag. It likely means they’re using those same credentials at every other client’s business too, also known as “universal credentials.” Setting up universal credentials simplifies a POS installer’s job: no need to rack his brain for each client’s password when performing routine system maintenance (see point #2). He only needs to memorize one password! Unfortunately, this insecure practice leaves your business in danger. An installer really concerned about your security should allow you to choose your own password, and encourage you to follow industry best practices (e.g., your password must be a minimum of 8 characters long, have at least 4 special characters, and 2 numbers). 2) How often do you conduct routine maintenance? A POS vendor’s job isn’t just to install software/hardware and disappear from your life forever. The vendor should be constantly maintaining those systems by installing updates on both applicable operating systems and POS software. One great question to ask is, “Are all critical security patches installed

MULTI-UNIT FRANCHISEE IS S UE I, 2015

within one month of release?” I understand that keeping your system patched with the latest and greatest security isn’t always fun, but it will help protect you from a data breach and is absolutely worth the time it takes to ensure your vendor is staying on top of it. 3) Do you use unique remote access credentials for each POS system? If your POS vendor uses the same credentials to access your store as they use for others, their breach might soon become your breach. An attacker who discovers a vendor’s remote access password now has ready-made

These questions are designed to help you weed out ignorant vendors that don’t have your security best interests at heart. credentials to get into any other system using the same credentials—including yours. Ensure your vendor uses unique credentials to access your environment. You should also ask how long your vendor needs the remote access connection to your systems. It is not uncommon for a vendor to gain access remotely and then never disconnect. This is a very poor security practice and should be prohibited. Keep your vendor’s access to a minimum and monitor it regularly. 4) Do you maintain our anti-virus? An anti-virus program keeps an eye on your system. It’s pretty independent, but when it finds a problem it requires human direction. It will ask if you want to delete the problem, ignore it, or quarantine it.

Until someone tells the anti-virus program what to do with that problem, it will just sit back and wait, which isn’t doing anybody any good. That’s why regular scanning maintenance is so important. Your POS vendor may or may not maintain your anti-virus scanning, but this question isn’t a make-or-break deal. It’s just important to know the responsible party. If your vendor is not handling your anti-virus, make sure you have an up-todate version, that it’s scanning regularly, and that you have someone designated to address what it finds. 5) Do you set up the POS system as an application on my back-office computer? Many POS vendors dump POS system software onto the backoffice computer. What’s the problem with that? Well, in addition to storing sensitive POS information, you use that computer to order uniforms, track payroll, browse Facebook, and email staff. As we know, the Internet is full of malicious links, software, and downloads ready to compromise your business. If you accidentally click on one of those malicious links, be prepared to kiss your customer credit cards goodbye. A good POS vendor recognizes the importance of segmenting your POS environment. That means not allowing POS software to reside on a system that can browse the Internet. The best solution is to set up two computers in your back office. On one, you conduct all your business (ordering uniforms, etc.). The other is only for your POS, properly segmented from the other back-office server by a firewall. Just remember: your security matters. Choose a POS installer with the same security-minded attitude and you’ll be light years ahead of most of your peers… not to mention keeping your data safe from hackers. Brand Barney, a security analyst at SecurityMetrics, has more than 10 years of compliance, data security, and database management experience. Learn more about SecurityMetrics by visiting www.securitymetrics.com.

WHY CHOOSE ONE WHEN YOU CAN REACH THEM ALL

Existing Business Owners Looking Aspiring for New Ventures Entrepreneurs

Franchisees Seeking Portfolio Expansion

Existing Business Owners Looking Aspiring for NewEntrepreneurs Ventures

Advertising in Entrepreneur expands your reach to potential buyers from all spectrums of business. That’s because affluent business buyers aren’t just reading franchise publications. In fact, many aren’t reading them at all. To get the complete perspective on business they need, including ideas for improving existing operations, new opportunities for growth, and emerging trends affecting the course of their companies’ success, investors across the spectrum rely on Entrepreneur. The only way to connect to all of them is to connect to us.

Call today to leave no lead behind.

1-800-864-6864 x271

36 Years Strong in the Franchise Market

Finance BY STEVE LEFEVER AND ROD BRISTOL

Boosting Unit Profitability Tips for improving your bottom line

e’re often asked, “I’ve been in this system four years. When should I start making a profit?” This is a disturbing question at best—as if profits were somehow time-sensitive: just wait long enough and, Presto!, profits. If only it were that easy. Here are some thoughts on improving your bottom line. • A disaster waiting to happen. Unit profitability and performance are, at their core, a function of three key drivers: 1) financially trained franchisees, 2) an effective performance model, and 3) accurate financials. Whether owing to cost or priorities, many franchise networks are lacking in one or more of these areas. It is critically important that franchisees have the financial skills and knowledge to drive up both profitability and cash flow in their operations. How is this accomplished? • Reach out and teach someone. Traditionally, if there are two people involved in a business, one knows how to make it and one knows how to sell it. The financial/ management side of the business is typically left to the accountant, the banker, their spouse, or to no one. People just hope it works. Sadly, most discover that hope is not a strategy. Most franchisees receive excellent training for initial startup, operations, and sales/marketing. Financial training is often overlooked completely or delivered by the corporate accountant who reinforces the expectation that finance is “dull and boring.” Franchisees need to learn to use the numbers to tell the story of the business, and know how to use their financial intelligence to develop a performance report card. It will clearly identify strengths and weaknesses—and point the way to developing a “spot on” action plan. • What gets measured, gets managed: the three-legged stool. The performance model that has proven most effective in driving up unit profitability is a three-legged stool: 1) education, to provide the foundation, 2) benchmarking, to provide the yardstick, and 3) accountability, to provide the discipline. Built around the key

MULTI-UNIT FRANCHISEE IS S UE I, 2015

term “measure,” this process consistently drives performance improvement. • Education beats shooting from the hip. At a minimum, franchisees need to understand the four linchpins of finance: 1) how a company makes a profit (i.e., break-even analysis), 2) how to develop and use a financial performance scorecard, 3) understanding the crucial role of the balance sheet in managing cash flow, and 4) managing the credit line and bankability. An effective financial curriculum, such as our Profit Mastery, provides franchisees both the framework and the tools to make insightful decisions in a recovering economy, rather than simply “shooting from the hip.” • Benchmarking: you can’t measure without a yardstick. Talk is cheap. Everyone has a story about how they’re doing. Producing a financial benchmarking study cuts through the rhetoric, provides a performance report card for the network, profiles the top performers, and provides a reliable framework to measure best practices. A well-developed financial benchmarking process is an indication of both a maturing network and a professional approach to performance. Financial benchmarking presents an unexcelled opportunity for networks to do what everyone talks about: work together. In the relatively few systems that produce timely, meaningful benchmarks, franchisees consistently experience measurable increases in performance—and regularly report these benchmarks as among the most valuable resources provided by the franchisor. • The power of peer groups. Imagine a group of 8 to 12 franchisees meeting quarterly, twice in person and twice online, to share complete financial performance results that have been packaged side-by-side in a scorecard format. The group is led by a trained facilitator. Each group member prepares a concise situation analysis to present to their surrogate board of directors, the other group members. This is the basis for a performance group. One member likened the initial meetings as “getting

naked in front of strangers,” but added that it’s “the most beneficial business-related activity I’ve ever undertaken.” The bottom line: in networks that use peer performance groups, group members consistently outperform non-group members. • Accurate financials: GIGO. For many franchisees, completing their financial statements is a major chore that leads to a sigh of relief: “My work here is done.” The fact is, nothing could be further from the truth: the owner’s job has just begun. Their job is to take these statements and, based on the story the numbers tell, evaluate their performance and chart a course for the future. Sadly, this management perspective is often sidetracked by faulty financial information. Without accurate and timely financials, you become a member of the Christopher Columbus School of Management. When Columbus left he didn’t know where he was going, when he arrived he didn’t know where he was, and when he returned he didn’t know where he’d been. The good news? It’s never too late to focus on the unit profitability and cash flow that foster performance and growth. As a franchisee, you have invested your capital, time, hopes, and dreams in your company. Every month you send a piece of your bottom line—yes, your bottom line—to your franchisor, which becomes their top line. It is in everyone’s best interest to drive your bottom line up by finding the tools and resources proven to be effective in doing so. Steve LeFever is the founder and chair of Business Resource Services (BRS), a Seattle-based consulting firm that provides financial management education, network benchmarking, performance group facilitation, and bookkeeping services for closely held businesses under its Profit Mastery brand. Rod Bristol is senior vice president at Profit Mastery. Learn more at www.profitmastery.net, 800-488-3520 x14 or write to lefever@ brs-seattle.com.

THE LARGEST FRANCHISE

Franchising.com belongs in your recruitment media plan because it gives you: •

MORE ENGAGED VISITORS – 40% of Franchising.com's Traffic is Content Driven

•

MORE NEW FRANCHISE PROSPECTS – Franchising.com's Traffic is Increasing Daily (5% increase first 6 months of the year)

•

MORE WAYS TO ATTRACT PROSPECTS – Direct Link, Lead Form, Press Release Program and New Local SEO

•

MORE EXPOSURE, MEANS MORE PROSPECTS – Unlimited Categories, Unlimited Press Releases, Unlimited Leads

INFORMATION WEBSITE IN THE WORLD

Call your sales rep to discuss Franchising.com campaign opportunities starting at $599 per month. Ask about our Franchising.com Express E-Newsletter Banners and Custom Solo Email Blasts. For information on how Franchising.com can help you meet your development goals, please call us at 800-289-4232 x202 or email us at: sales@franchiseupdatemedia.com

ExitStrategies BY DEAN ZUCCARELLO

Thinking of Selling? Deals require industry-specific expertise

fter several months of testing after an initial diagnosis by your family doctor, you now must schedule surgery for a heart condition. What do you do next? First, you get recommendations from hospitals, other doctors, and reliable friends for the best specialists. You meet with and interview several of those recommended, ultimately choosing the right person for your specific situation. After all, entrusting your family doctor with something clearly outside their realm of expertise would be ludicrous, right? You want the best specialist available. So how could you have a different mindset regarding a critically important economic decision, such as the sale of your business? We see this happen every day. And in many cases, the seller’s folly jeopardizes a successful outcome. When selecting an attorney to handle the sale of a business, many owners rely on their longstanding relationship with their existing attorney. Let’s call him Ted. He’s a comfortable choice, as familiarity and trust already exist. The seller has confidence in Ted’s competence, earned over the years. More important, the seller feels an intense loyalty to Ted, feeling he has earned the right to handle such a critical legal matter. Selecting anyone else would be disloyal. This is an interesting dynamic, since Ted does not possess the experience to best handle this situation. In the example above, the family doctor would never offer his services or even be considered for a procedure he has not been trained for and performed dozens of times. However, this distinction appears to blur when making the decision to handle a specific legal matter, especially something that might be considered more of a general business practice, such as contract drafting and negotiation. In reality, this distinction should be very clear. Over the years, Ted has successfully

MULTI-UNIT FRANCHISEE IS S UE I, 2015

handled dozens of different legal matters for the business (franchise agreements, real estate purchase agreements, bank agreements, vendor contracts, and so on), demonstrating his effectiveness in dealing with these aspects of the business. However, the process of selling a business can be very different. How hard can it be, you ask? So what if Ted hasn’t done many M&A transactions? He is smart and the seller trusts him to “get through it.” What’s critical to understand here is how the M&A process is unique and differs from other legal aspects of the business. The emotional investment associated with the possible outcome turns M&A transactions into a whole different beast. For many sellers, this is the culmination of a lifetime of effort. At the very least, it is a significant economic event. Regardless, it has a very different overall feeling than a “day-to-day” business transaction. This also is true for the buyer—which cannot be overemphasized. With nerves already running hot, this is not the time to learn along the way. It is imperative to avoid the pitfalls that come from inexperience. An experienced M&A attorney understands the issues and what is customary for that particular business, therefore effectively communicating his expertise to the client, along with setting realistic expectations. Any mistakes or complications throughout this process get magnified tenfold and jeopardize the transaction. We have seen many transactions fall apart from being overrun by insignificant issues that should have been avoided. Additionally, the M&A process is more than just a negotiation of the acquisition sale agreement. Lease assignments, asset inspection reports, franchisor transfer documents (if the business is a franchise), estoppels, guarantees, non-compete agreements, and other factors specific to the industry all require definitive knowledge. On the surface, the acquisition document might appear similar to other types of pur-

chase agreements, but like most things, the devil is in the details. Understanding the subtleties of how these contracts differ substantially affects the outcome. The addition or deletion of even one word in the agreement can considerably affect the meaning of a provision, resulting in a “non-market” position. Attorneys with industry-specific knowledge typically don’t make these mistakes. Finally, it is important to note that not all M&A experience is the same. For instance, M&A issues that are customary in one industry might be very different in another. We have seen experienced M&A attorneys with familiarity in different industries incorrectly “dig in” on issues that are not customary in franchise or restaurant industry transactions, thereby complicating matters. Additionally, there are variances among brands, especially with franchise companies. What is common practice in one concept might be very different in another. Our advice is to follow the path of selecting the best specialist for the job. In many cases, a client’s current attorney has the requisite M&A experience and is well-suited to the task. In a situation where that is not the case, consider using your existing attorney as the point person, but employ a specialist to work alongside them. We have found this to be an effective solution in many instances, with the added efficiency typically saving time and costing you less in the long run. Ultimately, all you need to remember is this: If your current counsel is not the right person for the task, don’t compromise. Find the right surgeon. Dean Zuccarello is CEO and founder of The Cypress Group, a privately owned investment bank and advisory services firm focused exclusively on the multi-unit and franchise business for 24 years. He has more than 30 years of financial and transactional experience in mergers, acquisitions, divestitures, strategic planning, and financing in the restaurant industry. Contact him at 303680-4141 or dzuccarello@cypressgroup.biz.

Franchise Update’s Annual Multi-Unit Buyer’s Guide is the only franchise industry publication providing side-by-side comparison of franchise opportunities that best support your business growth needs and continuity.

Coming soon — Watch your mailbox in April!

2015 Multi-Unit Franchisee Buyer’s Guide •

The leading industry resource targeted to the largest multi-unit, multi-brand owners and operators in the U.S.

•

Unique side-by-side comparison of franchise opportunities

•

An excellent opportunity to showcase your brand and its unique benefits

FranchiseMarketUpdate BY DARRELL JOHNSON

Year of the Franchisee Defending the franchise model in 2015

n many levels, 2014 was a tumultuous year for the franchise business model. First, a quick overview. Franchising is regulated at the federal level, and 15 states have specific registration and approval requirements—yet we entered the year with 19 ongoing or new state legislative initiatives involving franchising; several city councils also got into the act. Back in D.C., the NLRB piled on with additional efforts to alter the franchise business model, and the SBA is re-evaluating how it defines “affiliation” standards for franchise brand SBA-guaranteed lending eligibility. Some of these actions have been challenged in the courts; others will be in the near future. The motivations for all these efforts are varied and generally political in nature. However, they have one thing in common: the relationship between franchisor and franchisee. What has changed to cause so many dramatic actions on multiple fronts? Let’s separate two distinct causes of change. The first is the more recent revolutionary effort at changing the franchise business model, motivated by self-interest groups with no historical involvement in franchising. They include union organizations and governing bodies (primarily cities) intent on altering the local competitive business environment. Possible changes from these activities will likely play out as much in the courts as in governmental bodies. This cause puts the entire franchise business model at risk. Efforts to prevent these changes must be successful or there is a high likelihood the business model itself will be permanently—and negatively— altered. Franchisors and franchisees are aligned in this revolutionary war. While the IFA is leading the legal and legislative battles, everyone’s involvement is required. The second cause of change is evolutionary and market-driven. By its fundamental design, franchising is constructed around a balance between the rights of a brand owner (the franchisor) and the

MULTI-UNIT FRANCHISEE IS S UE I, 2015

rights of the operator (the franchisee). Those rights are defined in the franchise agreement. Over the past few decades, however, franchisors have added a lot of protections and other terms to franchise agreements. Some of these changes, designed to address unusual issues, could be characterized as “protect the brand at all costs.” The result has been a shift in the balance of control toward franchisors and away from franchisees, drawing the attention of legislative and regulatory bodies.

Franchising is constructed around the rights of a brand owner and the rights of the operator. Because of its management of the SBA Franchise Registry since 1998, FRANdata has seen this change firsthand. The SBA looks at the level of control a franchisor has over franchisees because federal loan guarantees through the SBA are available only to eligible small businesses, as defined by federal size standards statutes. If a franchisor has “too much control” over the franchisee, the SBA determines that the franchisee is no longer a small business and therefore ineligible for a federal loan guarantee. (The entire focus of SBA affiliation determinations is franchise and related agreements. Control issues are identified over 90 percent of the time, and usually solutions are found in the form of side agreements negotiated between the SBA and the franchisor for use by only those franchisees seeking SBA loans.) FRANdata has assisted the SBA in the determination process and has tracked, analyzed, and evaluated franchise agreements and resulting side agreements for more than 1,600 franchise brands across

15 years of change. Based on this work, we can identify the more significant issues that have arisen from this evolution, which include 1) the right of a franchisee to realize the value of their equity in the franchise unit, 2) franchisor restrictions over unit transfer rights, and 3) the level of risk a franchisee assumes beyond the operation of the business unit. Evidence of the importance of these particular topics can be found all around. More than 20 state legislative initiatives have come about in the past 3 years that addressed some of these issues specifically. The SBA just published an announcement in the Federal Register about its approach to these very issues. For the first time, the IFA issued a Statement of Guiding Principles in 2014 that addressed franchise practices and to enhance franchise relations. And in June, Aziz Hashim (a multi-unit operator, past chair of the Multi-Unit Franchising Conference, and 2016 chair of the IFA) and franchise attorney Brian Schnell (a partner with Faegre Baker Daniels) co-wrote an article titled, “A New Era in Franchising Continues To Emerge: Should a More Balanced Franchise Agreement Play a Role?” I’m sure no franchisor inserted new terms into a franchise agreement with the intention of triggering city and state franchise legislation or greater regulatory oversight. Yet some of those same terms, intended to protect the brand, have contributed to the dramatic rise in this type of governmental activity. What does this mean for the future of franchising? First, we must win the revolutionary attack on the franchise business model. Second, we must pay close attention to the evolutionary changes or we will suffer from a series of unintended consequences. One of the most potent voices in this dialogue should be that of the multi-unit operator. Will we hear it in 2015? Darrell Johnson is CEO of FRANdata, an independent research company supplying information and analysis for the franchising sector since 1989. He can be reached at 703-740-4700 or djohnson@frandata.com.

WE LOVE

PRODUCING [ THE BEST ] CONFERENCES

IN FRANCHISING SAVE THE DATE(S) for the conferences of 2015!

April 8-10, 2015 15th Annual Multi-Unit Franchising Conference, Caesars Palace, Las Vegas, NV Attendees: Franchisors, Suppliers & Multi-Unit Franchisees

multiunitfranchisingconference.com

October 14-16, 2015 17th Annual Franchise Leadership & Development Conference Intercontinental Hotel, Atlanta, GA Attendees: Franchisors; CEO’s, Presidents & Senior Development Officers and Suppliers

franchisedevelopmentconference.com

June 23-24, 2015 5th Annual Franchise Consumer Marketing Conference, Intercontinental Hotel, Atlanta, GA Attendees: Franchisors; CEO’s, Presidents, Chief Marketing Officers & Marketing Managers

franchiseconsumermarketing.com