The Winner's Circle, August 2011
As savvy franchise companies continue to flourish in a changing economy, FUSR continues to bring you good news each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, innovating, and continuing to grow, whether domestically or overseas. To be considered for next month's Winner's Column, please send your good news to firstname.lastname@example.org.
Zoup! Adds Second Denver Location
Following on the heels of its first Denver opening, Zoup! Fresh Soup Company opened a second restaurant in the city last month. After spending more than 15 years in the construction industry, new franchisee Tim McKennie switched career directions and signed on with Zoup!, a fast-casual soup concept founded in 1998. Since then, Zoup! has grown its network of franchises to more than 30 restaurants in the District of Columbia, Colorado, Michigan, Indiana, Ohio, Pennsylvania, New Jersey, Connecticut, Massachusetts, Illinois, and Canada.
Beef 'O' Brady's To Open in South Texas
Beef 'O' Brady's has signed a franchise agreement for its first Harlingen-McAllen-Brownsville location in McAllen, Texas. Local franchisee Christian Hasbun Villarreal will build the McAllen restaurant using the brand's new prototype. In addition to the McAllen signing, the company is targeting several domestic and international markets for future development and expects to open between 15 and 20 new locations this year, all of which will include elements of the new prototype. Beef 'O' Brady's, a family sports pub concept headquartered in Tampa, Fla., has more than 220 locations in 20 states.
Chester's Adds 5 More Stores
Chester's has announced the opening of five new locations in Texas and the Midwest. The new locations are in Wallis, Tex., Oberlin, Kan., North English, Iowa, Manitowoc, Wisc., and Burwell, Neb. Chester's, which was scheduled to open 30 stores in July alone, has already opened more than 100 franchise locations this year. Chester's has more than 1,800 Chester Fried licensed and Chester's franchised locations.
ZIPS Signs 20-Unit Mid-Atlantic Development Agreement
ZIPS, approaching 30 locations along the East Coast, recently announced the signing of a 20-unit development deal. "This is the largest signed agreement our company has had to date," said Andy Cucchiara, vice president of franchise operations. The multi-unit deal was signed with Pilgrimage Development, a Maryland-based investment and retail development group anchored by lead investor Harvey Rothstein, CEO of DavCo Restaurants. The partners at DavCo have more than 100 years of business and real estate development experience with such brands as Wendy's, KFC, and other QSR and fast casual brands. The first location under the new agreement is slated to open this month in Pasadena, Md., with additional units planned for Greater Baltimore and Glen Burnie, Md., in the second quarter of 2012. Pilgrimage plans to target markets throughout the mid-Atlantic region for the remainder of the agreement. ZIPS, founded in 1996, began franchising in 2006.
Dickey's Barbecue Pit To Add 23 in California; Opens in San Antonio
Dickey's Barbecue Pit plans to open 23 new locations in California market over the next nine months. Dickey's currently has eight locations operating in California. The new units will be in San Jose, San Luis Obispo, Paso Robles, and Arroyo Grande. In San Antonio, Texas, franchisees Sandor Gonzalez and his father, Antonio, plan to expand their franchise portfolio with their second and third Dickey's locations. Nationwide, Dickey's is targeting 200 new openings this year. The Texas-based brand, which opened in 1941 and began franchising in 1994, currently has 156 locations in 35 states.
EmbroidMe Signs Master for Canada
EmbroidMe has signed a master franchise deal with Stuart Erskine for development in Canada. The initial focus will be in Alberta and Ontario. Erskine recently signed a master franchise agreement for Billboard Connection (EmbroidMe and Billboard Connection are both United Franchise Group brands)
- Erskine also owns and operates Magnetsigns, a sign promotional and advertising franchise with more than 140 locations in Canada. EmbroidMe, which began franchising in 2000, has nearly 400 locations in the U.S., Canada, and Australia.
Cafe2U Signs Master Franchise Deal for the U.S.
Following a year-long proof-of-concept study, Australian mobile coffee concept Cafe2U has signed a master franchise deal for the U.S. "The recent study within the San Diego area proved to be a successful one as we managed to iron out all the operational issues prior to expansion and to conduct extensive market research into all aspects of our business model," said Managing Director Derek Black. "The most interesting part of the study was to understand that Americans readily accept the concept of having espresso coffee made fresh for them outside their workplace." Cafe2U has 110 mobile coffee vans in Australia and 50 in the U.K. and Ireland.
12 New Units Dunkin' Donuts for Florida
Dunkin' Donuts has signed agreements with three franchisees to develop 12 new restaurants in Tampa. Five units will be developed in Sarasota and Charlotte County by existing Dunkin' Donuts franchisee David McNulty; the first is slated to open in 2012 with the remaining four to open by 2016. Velocity Brands plan to open four restaurants in Manatee; the first is scheduled to open in 2012 and the remainder by 2015. Herb Serpa plans to open three restaurants in the South Pinellas region by 2014; the first will open next year. "The Sunshine State is a priority growth market for Dunkin' Donuts in 2011," said Grant Benson, vice president of franchising and market planning at Dunkin' Brands. Founded in 1950 and based in Canton, Mass., Dunkin' has more than 9,700 restaurants in 31 countries worldwide and reported global system-wide sales of $6 billion in 2010.
Is the Money Flowing Again?
Three GE Capital Deals Top $50 Million
- $28.9 Million to Subway Operator
GE Capital, Franchise Finance has provided a $28.9 million credit facility to Rottinghaus Company, which operates 359 Subway units in the Midwest from its base in La Crosse, Wisc. The facility, which includes a $24.5 million term loan and a $4.4 million revolving line of credit, will be used to consolidate and refinance existing debt. "GE Capital was quick and flexible in adapting to our deal structure, which strengthened our trust in their ability to fund this transaction and thereby our growth plans," said CFO Don Rottinghaus.
- $13.9 Million to Buffalo Wild Wings Operator
Wings Across America, a Buffalo Wild Wings franchisee, has completed a $13.9 million transaction. The funding includes a $9.4 million refinance term loan and a $4.5 million new unit development line of credit. Funding was provided through GE Capital's bank affiliate, GE Capital Financial. Based in Barrington, Ill., Wings Across America and its affiliates have been franchising with Buffalo Wild Wings for 10 years and currently own and operate 18 Buffalo Wild Wing units in Maryland and in areas northwest of Chicago. "We chose to go with GE Capital based on certainty of execution, the structure they offered, and our existing relationship," said John Weiler, president of Wings Across America.
- $11.8M for SpringHill Suites by Marriott Operator
Hotel operator Advance Management & Investment has secured an $11.8 million term loan to refinance a SpringHill Suites by Marriott property in Temecula, Calif. Funding was provided through GE Capital's bank affiliate, GE Capital Financial. "It was our first time financing with them," said Nilay Patel, managing partner of Kingman, Ariz.-based Advance Management & Investment, which operates and manages 15 hotels in California and Arizona under various flags associated with Marriott and other high-profile brands.
Cybeck Capital Buys 50% Stake in Fetch! Pet Care
Cybeck Capital Partners has acquired a 50 percent equity stake in Fetch! Pet Care. Reaching 200 franchises at its peak, Fetch! ran into growing pains as it managed its rapid growth. Cybeck Capital Partners, led by Managing Director Harry Loyle (current IFA Treasurer), will guide the strategic direction for Fetch! going forward. "Cybeck Capital Partners has experience building successful franchise systems and working through challenges that have resulted in healthier franchise organizations," said Paul Mann, founder and CEO of Fetch!, a pet sitting and dog walking services concept, which now has about 150 franchisees. Cybeck Capital Partners, a boutique private equity firm based in Dayton, Ohio, provides management support and equity funding for mezzanine-stage companies.
Roark Capital Completes Arby's Acquisition
Wendy's/Arby's Group has completed the sale of Arby's Restaurant Group to a buyer formed by Roark Capital Group, effective as of July 4, 2011. The seller will change its corporate name to The Wendy's Company. Roland Smith, president and CEO of The Wendy's Company, said "We congratulate Roark on the Arby's acquisition and are we are pleased to retain an 18.5 percent common stock interest in the Arby's business." The Wendy's Company includes more than 6,500 restaurants in the U.S. and 25 other countries and U.S. territories worldwide. Roark Capital Group's portfolio includes Focus Brands (Auntie Anne's, Carvel, Cinnabon, Moe's Southwest Grill, and Seattle's Best Coffee at selected locations), McAlister's Deli, Money Mailer, Batteries Plus, Wing Stop, Schlotzsky's, and several other franchise brands.
Phil Friedman Buys Salsarita's Fresh Cantina
Phil Friedman - who as CEO of McAlister's Deli, led the brand's expansion from 27 to 300 units - has acquired Salsarita's Fresh Cantina, a Mexican restaurant concept based in Charlotte, N.C. Terms of the deal were not disclosed. Friedman will serve as CEO of Salsarita's Holdings LLC, a company he formed to acquire the brand. "I'm back in it and I love it," Friedman said in an interview with Nation's Restaurant News. Larry Reinstein, who will join as president and COO, was president and CEO of Fresh Concepts, a multi-unit, multi-concept restaurant operating company. The seller was Salsarita's Inc. and Bruce Willette, who founded the brand in 2000. Salsarita's has 82 locations (80 franchised) in 19 states and Puerto Rico. Seven new Salsarita's units are scheduled to open by year-end.
Sombrero Mexican Food Begins Franchising
After more than 25 years of operating in the San Diego area, Sombrero Mexican Food has begun franchising. With 19 locations open in Southern California and Arizona, the family-owned and operated Mexican QSR concept will now offer franchise opportunities to qualified candidates. "San Diego is the epicenter for good, quick-service Mexican food; that proves true from how well it is received here," said Javier Correa, Jr., Sombrero's vice president. Ozzie Garcia, who has spent more than 30 years in the Mexican food industry, will manage the company's new franchise program.
Seacrets Unveils Franchise Program
Seacrets Franchising LLC, franchisor of a restaurant, bar, hotel, and night club concept, has announced a new program to sell franchises. Seacrets opened in Ocean City, Md., in June 1988 as a small Jamaican-themed bar and restaurant with an occupancy of under 200. The concept has grown steadily into a vacation entertainment destination and today stretches over six acres of land with an occupancy of 4,600. The flagship Seacrets location has 18 bars, 6 entertainment stages, a hotel, its own radio station, a night club, and indoor and outdoor dining areas. "We expect we will have at least three franchises operating within the next five years, with more to come in following years," said Leighton W. Moore, Jr., founder of Seacrets. Not all new locations are expected to be the size of the Seacrets flagship location, but franchisees will be encouraged to acquire enough land to add a hotel to their complex as they grow. The franchise program, developed with the help of the Chicago-based iFranchise Group and franchise attorneys Plave Koch, will be rolled out in mid-Atlantic states, with national expansion and locations outside the U.S. to follow.
Culver's Co-Founder George Culver Dies at 88
George M. Culver, who co-founded Culver's Frozen Custard and Butterburgers in 1984 in Sauk City, Wisc., passed away recently at the age of 88. Along with his wife Ruth, son Craig and his wife Lea, Culver saw the concept expand to 435 restaurants in 19 states. His son Craig, continues as CEO.
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