The Big Switch: Successful Franchisee Leaves Corporate Life Behind

In 2005, Mike Scruggs, Sr., was senior vice president of global operations at Little Caesar Enterprises, Inc. in Detroit. A year later, he was a Little Caesars franchisee operating two stores with his wife, Deb, and his son, Mike II, in Colorado Springs. By April 2007, he'd opened his fifth restaurant. Today he has plans for more, lots more!

With more than 25 years under his corporate belt, Scruggs was ready to go out on his own. He cites two main reasons. First, "You want to build something for yourself and your family." Second, "You want to work for yourself, make decisions that don't involve a lot of red tape."

Plus there's the passion factor: he really likes working in a pizza store. "I've always been in operations, behind the counter, working in the stores with the managers and the people," he says.

Scruggs started in the pizza business when he was 15 or 16, working at Amato Brothers in Livonia, Mich., west of Detroit. He says that's where he learned his work ethic-and some valuable lessons about working with others. For instance: "You retain people by how you train them, how you respect them, and how you support them. It's not always pay."

For Scruggs, it was a combination of factors that drew him to Colorado and franchising. A few years back, his son, Mike II, now 25, who had never previously shown an interest in the business, said he'd like to get into Little Caesars as a franchisee. Scruggs put him to the test in a Detroit store for six months. "He did well," says Scruggs, which got him to thinking…

Scruggs and his wife were raised in Detroit, and after a lifetime in the city they were ready for a change. Colorado Springs had been without a Little Caesars store for six years, and was clearly a growing area. It looked good to him. And, he adds, with the successful overhaul and rejuvenation of the brand (in which he played a key role), "It's a great time to be a Little Caesars franchisee."

It's working for him: Scruggs opened his first 5 restaurants in 31 months-a pace he calls "pretty aggressive." He's looking to build out the market to 12 to 14 stores, at a rate of two or three per year. He has already identified six to eight new locations in Colorado Springs where he'd like to build.

"We know what corner we want to be on. It's now finding the right piece of real estate. Sometimes you have to wait a year. That's better than putting one in across the street that's not as convenient," he says. "You have to be very disciplined."

Scruggs credits Little Caesars founder and owner Mike Ilitch with a great deal of his own success. "He's been like a father to me. I've been with them since I was 19," says Scruggs, who turns 50 this year (2007). "Some of the things they've done for me and my family over the years have been unbelievable. He's a great person, and has been a mentor to me."

Ilitch, one of the wealthiest men in the U.S., ranked 242nd among the Forbes 400 Richest Americans in 2006. In addition to founding the Little Caesars brand in 1959 with his wife Marian, he owns the Detroit Tigers and Detroit Red Wings. Yet, says Scruggs, "I always felt comfortable talking openly and honestly about anything without worrying about the consequences. He's been a rock all the time-for advice, or to bounce an idea off of."

Making the transition to franchisee was a gradual process for Scruggs. In June 2004, he sent his son, Mike II, to Colorado Springs to open and operate their first store. They found a site, hired management, did the build-out, and opened for business in October. "I'd go back and forth from Detroit," he says.

In August 2005, with a second store open, Scruggs and his wife relocated to Colorado Springs. He was retained for another year by Little Caesar Enterprises as a senior advisor, and officially left corporate life in August 2006. "Mr. Ilitch was kind enough to let me get the business going before I made the jump," he says.

Scruggs, who knows the system inside and out, says he loves operations. He also has his family involved, doing everything not handled directly by their managers and staff. Mike II is operations manager and involved in HR and day-to-day store responsibilities, as is Scruggs. Wife Deb does all the books and accounting from a home office.

"There may be a day when we have another person or two, but even at 12 to 14 stores, I don't want to create a lot of overhead," he says. "I want to keep my hands around the business."

His biggest challenge today is finding good management people with a good, solid work ethic, he says. "One of the things I tell managers who come to work for me who tell me 'I'm great at this or that,' is that we're not running a sprint here, we're running a marathon. You don't have to Wow me. Just show up every day and do your job. Unfortunately," he adds, these days, "Wowing is showing up every day."

His motivation these days is building a business for himself and his family. Bank payments also motivate him, he says, laughing. And being the competitive guy Scruggs says he is, there's also his desire to run great stores, have high sales, and be successful. "I have a very high passion for what I do. It sometimes gets the best of me." (He notes "the nice Harley sitting in the garage I'd like to get out on.")

Any succession plan Scruggs has "is more in my head at this point," he says. He's looking to Mike II to take over someday. A younger son, Adam, 21, still in school, also has shown an interest in the business. And his daughter, Katelyn, a high school senior next year, works a couple of days here and there-"if I can get her," he says. There's time.