Complementary Brands

It's not difficult to see the opportunities offered by co-branding. Teaming related concepts together in one central location can certainly offer benefits in many situations. But even if you don't co-brand in the same location, there's a related twist some franchisees have used effectively by turning to complementary brands. Portland, Oregon multi-unit operator Steve Foltz knows all about the technique.

Foltz got into the franchising business almost by accident following college in the mid-1980s. He was working as an assistant manager at a restaurant while job searching when he realized the restaurant business might offer a future of its own. A friend of his was in franchising and looking for a partner. Within a year the new partners had opened three Cinnabon's in the Portland area.

The growth has continued and today the company, called The Cinnamon Bums, Inc., operates 17 Jamba Juices, 3 Cinnabons, and 1 Seattle's Best Coffee. Additionally, the company also runs a Rainier Roaster and a Good Dog Bad Dog under operating agreements and has even created its own concept called Tenemos Tacos. Most of the locations are in the Portland area and, as Foltz sees it, they are all complementary brands - juice, coffee, and pastries.

"Franchising has been a great tool for us," says Foltz. Multi-concept franchising has been an even better tool, he says. "We've been able to take the resources of all three brands, things like conventions, training, marketing, and combine them to create a best of all worlds approach that helps us run all the concepts effectively," he says.

The company takes advantage of the built-in economies of scale. Like when they leased space at two area malls side-by-side so that two different units could share back room space - reducing the amount of costly per-square-foot leasing necessary. One location is a Cinnabon tagged with a Jamba Juice, while the other is a Cinnabon alongside the Seattle's Best Coffee.

Foltz says the company has also created its own unique financial spreadsheet that cleanly combines all stores' ordering, tracking, accounting, and payroll issues. He says two employees handle all of the company's financial business and accounting.

The franchise brands - Cinnabon, Jamba Juice, and Seattle's Best Coffee - are conveniently complementary to be sure, but there's more. "The Cinnabons work better in the mall where there's a lot of traffic, fresh faces, and it's really busy from November to December," he says. But three of the Jamba Juice stores are in strip centers and one is a standalone location. These, he says, provide a steady income during the warmer months of March through August. It's a strategy of leveraged brands, location, and income.

Foltz projects the company to generate $13.5 million in revenue during 2010. Now that's a complementary number.