If there is such a thing as perfect training to become a franchisor, Great Wraps Chairman Mark Kaplan got it. And he's applying that training to a franchise he and his partners are building from the ground up.
Kaplan went the classic marketing route through the corporate world, building on his MBA from New York University. His resume reads like a classic journey through the great brands: Colgate Palmolive, Nabisco, Coca-Cola.
"You're sort of an entrepreneur when you are running brands within a company," Kaplan says, "but you have to get approval for everything." It was the one thing that nagged at him while he was managing Baby Ruth, and then Wheat Thins.
Then Atlanta-based Coca-Cola turned to the Atlanta-born Kaplan to manage Sprite. "They asked me if I was ready for the big league," Kaplan laughs. But it was no joke.
"The soda business is mammoth," he says. "The budgets I got to play with dwarfed anything I had done before. So the question was right."
But Kaplan couldn't turn it down; "It was thrilling to come back to my hometown and keep my career."
The experience he added to his knowledge of brand management included dealing with franchisees for the first time. Granted, bottlers are not the same as business format franchisees, but they are running their own large companies. Since they are franchisees, they can't be ordered around easily. Kaplan found the way to work with them.
"Essentially, we came out with programs and got them to come along," he says. It turns out that it was natural for him to work with the bottlers that way. "You had to turn on a dime to match the competition, and the bottlers were very sophisticated. It was my first experience with franchisees." Granted, he says, it was a lot more elaborate than franchising as he knows it now, but it laid the foundation for what he wanted to do.
While Kaplan was at Coke, the opportunity came up to buy a little-known restaurant chain called Gyro Wrap. The idea immediately appealed to Kaplan, but he was concerned that it might not catch the interest of his partner, Bob Solomon.
"Bob is far more conservative than I am," says Kaplan. "His whole family was in Coke. I never thought he would break away, but the first day he looked at it he became interested. For me it was less hard; I had all these dreams of building my own company culture, establishing corporate value systems, leading a group of professionals."
That was in 1989. Despite all his experience in managing brands, Kaplan found himself in deeper waters.
"The food industry is rough," he says. "You're so busy doing, it's hard to think and plan, and that's all I knew how to do."
The opportunity was there--Kaplan's dream was to become a corporate quarterback, leading a team that found its own path. But, "In the early '90s I certainly wasn't ready for the food industry. We had to get lost in all that."
While they were getting lost, they also found the time to do some thinking. The wrap category was, he says, "a category that didn't really exist. No one knew what they were. It was an obscure sandwich niche that we had to do a lot of explaining about. It was well ahead of its time."
The chain featured a limited line of pita-wrapped sandwiches like the Gyro Wrap, the Teriyaki Chicken Wrap, and Steak & Cheese Wrap. Convinced that the market had already begun shifting away from traditional fast food, Kaplan and Solomon set out to reposition their concept to offer the mainstream a better quick-serve food alternative.
"We saw a tremendous concept in a category that didn't really exist," Kaplan says. "It was behind the ethnic wraps like gyros." But the partners did not want to stay in an ethnic "corner." "We knew the future was in the middle of the room and not in the corner. We wanted to develop the mainstream wrap concept."
Franchisees were happy; they were making money even though the concept was not particularly well understood. Kaplan started to find out about the customer with focus groups, store intercepts, and solo interviews.
"In the early days it was so clear," says Kaplan. "Customers thought we were different, and they wanted something different. They were psychographically mavericks, adventurous in their vacations, adventurous in their activities. Our research told us the concept would eventually be mainstream as long as it was not too elaborate or crazy or ethnic. We set out to mold Gyro Wrap into a mainstream broad-based wrapped sandwich concept."
The result of this redevelopment was a much broader food concept that centered on hot wrapped sandwiches. And in 1992 they renamed the chain Great Wraps.
Now the concept seems to be taking off, with mainstream quick service restaurants offering some version. As they did so, there were lessons, Kaplan says. "Burritos started calling themselves wraps. The Mexican aura does not reach wraps. They don't cross over; they aren't able to clearly define for the customer what they are trying to do. People looking for Mexican aren't looking for that new age thing; people looking for wraps aren't looking for rice and beans." The lesson for Kaplan was to be focused on hot wrap sandwiches.
Through it all, the partners rely on their background in corporate brand management, especially with Coke.
"We serve our franchisees like we used to serve Coke bottlers--they hardly need Coca-Cola except for the product," Kaplan says. "We approached this company in that brand management fashion. We didn't want to put stores out there until we had the formula right."
For about 10 years, Great Wraps fine-tuned, waited for wraps to catch on, and serving their existing franchisees. It was a strange time for franchising, of course, with an extremely strong economy.
"People were making more money in their sleep than when they were awake," Kaplan says. "When people were coming to me, $200,000 in a 401K plan, drawing 25% interest and asking, 'Why should I come into your business?' I said, 'You shouldn't if your money is working that hard.' In the late '90s it changed, and people had to go back to work. People's investments were 20-30% less and falling. They had to put money to work in a business."
The partners decided that this was their time.
"So about 12 months ago, we hired a great franchise manager, and went on the web."
With more than a hundred leads a week, Great Wraps has been able to open 25 stores this year, and plans more next year. The investment is in the $200,000 range for stores averaging about 1,500 square feet.
The exciting development for Kaplan has been area development.
Los Angeles and Dade County in Florida are sold, and the company is on the verge of selling Chicago, Detroit, and Orlando.
"We just put our first ad in Nation's Restaurant News for area development a month ago, and it's amazing the response we're getting," Kaplan says. "These are very sophisticated franchisees who won't settle for one store. They want to be like me; they want to develop a network and oversee stores. These are ex-corporate people who were outplaced, downsized, or replaced. They're sophisticated operators who have handled staffs, big budgets, and who can sell and communicate on many levels. It's thrilling."
What's particularly thrilling is that many of these sophisticated operators could have gone with other concepts.
"Small business is hard," says Kaplan. "You have to have a certain critical mass or you can't get something done. The magic number in franchising is 100 stores. Until then you don't have the critical mass. That's exactly the point we're ató65 stores open, 10 more opening between now and end of the year, and 75 more contracted. We have the infrastructure in place. Our corporate debt is paid off, and from here on out we can put all of our money into growth."
The eventual target is 500 stores, which Kaplan considers a great size, leaving stores occupying whole areas where they are special. So the company is building in a little scarcity.
Kaplan has not forgotten his goal of creating a unique company culture. It's based on an open exchange of information and empowering each manager.
"We tell every manager here when they are interviewing that we will expose them to every issue in the company, and we expect them to offer feedback freely. We also expect them to accept feedback freely from anyone in the company."
Kaplan insists that he and Solomon do not tolerate politics or misuse of rank that prevents that exchange.
"The goal is to foster an environment where we're constantly sharpening the knife because issues are constantly confronted (with decorum, of course). And since we are in the middle of a huge growth spurt, we need all the internal input we can get."
His take is that the people who work at Great Wraps are empowered. The downside is that managers can think too big, and not follow through on their own projects. The company has instituted checks and balances that commit people to specific output.
"I always wanted this type of freedom when I was in the corporate world," says Kaplan. "I guess it's working because our turnover is almost non-existent."