The Winner's Column - September 2011
As savvy franchise companies continue to flourish in a volatile 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.
New Units & Deals
Jersey Mike's Signs 2 Multi-Unit Agreements
Jersey Mike's has signed two multi-unit development agreements: one for the Phoenix area, and one for West Houston. Restaurant industry veterans Steve Rosenfield and Linda Nash Rosenfield (who own and operate 99 Carl's Jr. and Hardee's Restaurants) plan to open 10 Jersey Mike's units in the Phoenix area in the next 5 years as part of their Rosenfield Restaurants group, with the first expected to open by year-end. In West Houston, Terry Nordenstrom plans to open and operate 10 restaurants in the area. Nordenstrom, a former 30-year Domino's Pizza franchisee, built and operated 28 Domino's stores in six Midwestern states and opened the brand's first locations in both North and South Dakota. So far this year, Jersey Mike's has awarded 15 existing franchisees an additional 50 locations in 10 markets. The sub sandwich franchise, with more than 500 stores open and under development in the U.S., started at the Jersey Shore in 1956.
Motel 6 Network Opens 22 Hotels
Motel 6 opened 22 franchise locations in the first half of 2011. The latest openings include 20 Motel 6 properties and two Studio 6 properties, with a total room count of 1,656. The first half additions cover 13 U.S. states and one Canadian province. The Motel 6 network celebrated its 1,100th property opening in January 2011. Both brands are part of Accor, which has 4,200 hotels and more than 500,000 rooms across 90 countries.
Panera MUOs Add Houston Drive-Thrus
Andria Cain and her husband Chuck own nine Panera Bread franchises in the Houston area, including their two newest locations, which feature the brand's new drive-thru concept. The new Louetta location was scheduled to open Aug. 17, and the new College Park unit by year-end. The Cains had owned other franchises, including Applebee's, Sonic, and Pizza Hut before opening their first Panera in 2001. Founded in 1981 and based in St. Louis, Panera operates more than 1,400 coorporate and franchised bakery-cafÃ©s in 40 states.
Wine and Design Opens Third Franchise
Wine and Design is opening its fifth location, its third franchised unit. The new store will be operated by mother and daughter co-owners Kathy Hutcheson and Witten Duffy. The wine and painting party concept first opened in Raleigh, N.C., in April 2010 as the dream of longtime friends and business partners Emmy Preiss and Harriet Mills. Wine and Design provides the canvas, cover-up, paints, paintbrushes, and corkscrew and attendees provide a beverage of their choosing.
Aaron's Acquires 30 Stores
Aaron's Inc. has acquired all 30 of the stores owned and operated by Crusader Rent to Own. The stores are in Virginia, North Carolina, South Carolina, Tennessee, and Georgia. Plans call for 29 of the locations to be converted to HomeSmart stores, which offer weekly payment lease agreements for products similar to those sold in Aaron's (monthly) sales and lease ownership stores. A current Aaron's franchisee will assume certain of the assets of the remaining store, which will be merged into an existing Aaron's store. Aaron's, Inc., based in Atlanta, has more than 1,860 company-operated and franchised stores in 48 states and Canada.
Planet Fitness Expands into Pensacola
Existing franchisees Eric Dore and Shane McGuiness are opening a new Planet Fitness in Pensacola, Fla. Dore and McGuiness became the first Planet Fitness franchisees in September 2003 when they opened a location in Altamonte Springs, Fla. Their Central Florida locations currently serve an estimated 80,000 members and have 165 employees. "We plan to open additional Planet Fitness locations in the area, then expand into Fort Walton Beach and Panama City," said McGuiness. New Hampshire-based Planet Fitness, founded in 1992, has grown from four gyms in 2003 to more than 430 locations in 40 states.
Quaker Steak & Lube Closes and Opens in Ohio
Quaker Steak & Lube replaced an existing restaurant with a new, full-sized one in Boardman, Ohio, early last month. The new unit is 6,450 square feet with seating for more than 250, including the enclosed patio and bars. Founded in 1974 in Sharon, Pa., the original Quaker Steak & Lube began as a cook-your-own steak restaurant and has expanded to more than 40 locations in the U.S. and Canada.
U.S. Lawns Adds 6 New Franchisees
U.S. Lawns has added six new franchisees to its more than 240 landscape-management franchises nationwide. The company has brought on nearly two dozen franchisees in the past 12 months and currently operates in all 48 contiguous states. The new franchisees are: Elizabeth and Freddy Villegas, Lubbock, Tex.; Patrick Murphy, Farmington Hills, Mich.; Terry Engler and Justin Nelson, Wichita, Kan.; Kent Smith, Brooklyn Park, Minn.; George and Stacy Guthrie, Montclair, Va.; and Kyle and Kelly Sims, Basehor, Kan. Based in Orlando, U.S. Lawns turned 25 this year.
Wingstop To Open 101 New Stores
Wingstop has signed 36 development agreements since January that will result in 101 new store openings over the next several years. Recent franchise and development agreements include 30 restaurants in Southern California, 15 in Atlanta, 15 in Seattle, 6 in Northern California, 4 in South Florida, 4 in Milwaukee, 4 in Louisville, and 3 in South Carolina. "Wingstop is opening its 500th location this year, and we're on track to double that number within five years," said Dave Vernon, vice president of franchise development for the brand. The company's next phase of development will target growth in Cleveland, Chicago, Detroit, and the Northeast. Founded in 1994 and based in Richardson, Tex., Wingstop has 485 locations open and 175 restaurants in various stages of development across the U.S. and Mexico.
Mountain Mudd Expands in Cincinnati
Mountain Mudd Espresso drive-thru specialty coffee, a brand of CHS, is expanding into Cincinnati through a strategic partnership with MM Coffee Company. The plan calls for opening five stores initially, followed by more than 35 other franchise locations in the Cincinnati area. Under the agreement, MM Coffee will open and operate a number of Mountain Mudd drive-thru kiosks and cafes in the area, and will also actively recruit other entrepreneurs and assist them with opening their own Mountain Mudd locations. "Ninety percent of Americans drink several cups of coffee daily, and over half of them drink it on the go," said Mike McMillan, president of MM Coffee. CHS is a diversified energy, grains, and foods company owned by farmers, ranchers, and cooperatives, and preferred stockholders.
Honest-1 Auto Care Shifts into High Gear
Five new franchise agreements will significantly increase Honest-1 Auto Care's presence in both new and existing markets. The deals will result in three new locations in the Minneapolis/St. Paul market, one in Greensboro, N.C., and another in Princeton, N.J., and will join the 22 Honest-1 shops already operating in 11 states. Honest-1's growth plan includes single-unit and multi-unit agreements - as well as a redesigned regional developer program that does not place any requirement on individual entrepreneurs to open shops themselves; rather their focus is strictly on franchise sales and development in their protected territories. Honest-1 also offers specialized, eco-auto care programs such as the Eco TuneUp and, through a partnership with Green Earth Technologies, sells G-Oil Ultimate Biodegradable motor oil, made completely of renewable animal fats. Honest-1 plans to open 10 more locations in the next year.
Volvo Rents Opens East Region Office, Buys OKC Firm
Volvo Rents has opened an East Region Office and appointed a new management team. Russ Parisi, an 18-year veteran of the rental industry who joined Volvo Rents in 2003, will serve as Eastern Region VP and oversee the eastern U.S. and eastern provinces of Canada. Volvo also announced that it has expanded in Oklahoma City through the acquisition of AWED, LLC, a single-location construction equipment rental company. WED was previously co-owned by Volvo Rents franchisees David Evans, Max Weldon, and David Darby. A wholly owned subsidiary of the Volvo Group, Volvo Rents operates a network of about 70 corporate and franchised rental stores in North America.
Beef 'O' Brady's Goes West
Beef 'O' Brady's has signed its first California franchise agreement. The new agreement, for Hesperia, was signed by the Alvarez Group. The new restaurant, projected to open by 2012, will be based on the brand's new prototype. While the brand's western-most restaurant now is in Colorado, the Tampa, Fla.-based restaurant chain signed franchise agreements for Arizona and Idaho this year. The brand - with system-wide sales up 2.2 percent for the first half of 2011 - expects to open between 15 and 20 new locations this year, all of which will include elements of the new prototype. The chain has more than 213 locations in 21 states and projects more than 300 units by 2016.
Mooyah Signs Two Development Agents for Florida
Mooyah Burgers, Fries, and Shakes has signed development agreements with two experienced restaurateurs to expand the brand across Florida. David Tennyson, a native of St. Augustine, has been in the franchise business since 1989 and a franchisee in Florida since 2003. He will concentrate on Mooyah's growth in the northeastern Florida counties of Alachua, Baker, Bradford, Clay, Columbia, Dixie, Duval, Gilchrist, Hamilton, Lafayette, Levy, Madison, Nassau, Putnam, St. John's, Suwannee, Taylor, Union, Flagler, Volusia, and Brevard. Justin Church will focus on building the brand in key cities including Tampa, St. Petersburg, Sarasota, Lake Placid, Fort Myers, and Naples. "We've done plenty of research around franchised brands and the better burger segment is booming," said Church. Mooyah, based in Frisco, Tex., began franchising in 2007 and has more than 20 units open.
Capriotti's To Add 47 Units with 6 AD Deals
Capriotti's Sandwich Company is continuing its 30 percent growth from last year with new area developments deals in Pennsylvania, Las Vegas, Texas, Orange County, and, most recently, the Boston area. Sean and Nels Olson will develop 18 restaurants in Middlesex, Norfolk, and Suffolk counties in Massachusetts over 8 years, with the first set to open by year-end. In Nevada, Corey Melendrez and Thomas Gourley signed a 3-unit AD agreement, the first of which just opened in Pahrump. Kevin Looby has also signed a 3-unit agreement, for Chester and Montgomery counties in Pennsylvania; the new units are in addition to his locations in West Chester and Exton, Pa. Warren Ruttenberg and Rhonda Gilburne have signed on to expand the brand in Arizona with an agreement to develop 3 units in Scottsdale in the next 18 months; the first is already under construction. KCI Investments has secured its first Dallas location and has plans for 20 units in Orange County within the next 8 years. Founded in 1976, Capriotti's has more than 70 company-owned and franchised locations in 11 states.
TCBY Expands in Greater Memphis
TCBY recently opened a new store in Bartlett, Tenn., marking the brand's 22nd store in the state. Ron Rye, operator of the new location, is a franchisee with three other stores in the area and serves as the president of the TCBY Franchisee Association Board. Founded more than 30 years ago, TCBY currently has more than 380 franchise locations in 47 states. TCBY is part of Mrs. Fields Famous Brands.
Subway Passes the 35,000 Mark
In case you're keeping score, as the ubiquitous sandwich shop approaches its 46th anniversary, Subway has passed another milestone with more than 35,000 units worldwide. Go Fred.
Firehouse Subs Enters Puerto Rico
Firehouse Subs is expanding into Puerto Rico, its first move outside the continental U.S. The chain plans to open 26 restaurants on the island in the next few years, with a goal of 50 to 60 locations there. Local partner Caribbean Restaurants LLC, a multi-million dollar international company, currently operates 178 Burger King restaurants in Puerto Rico. "We are excited to bring the concept to its first market outside the continental United States," said Aniceto Solares, president and CEO of Caribbean Restaurants. Firehouse Subs, founded in Jacksonville, Fla. by former firefighting brothers Chris Sorensen and Robin Sorensen, has 441 units.
Shane's Rib Shack Adds Franchisee Financing Program
Shane's Rib Shack, a Petrus Brand company, has announced plans to add a minimum of 100 stores in the Southeast as part of its regional growth strategy before moving west. To support this growth initiative, the company announced a new comprehensive financing program to fund franchisees, with The Brand Banking Company as its preferred lender. The full-service community bank is based in Georgia and has a dedicated franchise practice. "Since The Brand Banking Company understands Shane's Rib Shack's business model and concept, their knowledgeable experts are able to guide our franchisees through the process typically within 30 to 45 days," said Petrus CFO Carl Jakatis. The original shack was founded in 2002 in rural McDonough, Ga., by Shane Thompson, began franchising in 2004, and today operates more than 65 locations.
Franchise America Finance Adds Products, Expands Programs
Franchise America Finance (FAF) has expanded its product offerings to include vehicle leasing, equipment leasing, and conventional lending. (The conventional lending product is currently reserved for the member brands in FAF's current portfolio.) The leasing division will focus on QSR and other franchise-specific leasing needs. The leasing brand portfolio will be open to brands outside of the members of the current portfolio; remodel and equipment acquisition will be the core focus of this offering. The vehicle leasing product, with a focus on mobile brands, will offer national buying power combined with bank-level cost of funds, and includes specialty vehicles and equipment, all packaged into the lease on the vehicle. The vehicle leasing is being placed through Jefferson Leasing, a division of The Bancorp Bank that operates in 38 states. Franchisors interested in participating in either of the leasing products should contact Robert Blumenthal, Special Operations Coordinator at FAF, at email@example.com or 610-668-9782.
Marco's Pizza Boosts Franchise Lending Efforts with PGI
To get more potential operators up and running, Marco's Pizza has added personal-guarantee insurance (PGI) to its existing financial assistance programs for franchisees. The latest effort aims to get more bank loans and speed the process for franchisee candidates by covering up to 70 percent of the borrower's liability. Marco's CFO Ken Switzer said PGI is an alternative to a standard SBA 7(a) loan that safeguards a franchisee's assets in the event of a default on a bank loan. If an operator defaults, the PGI policy can repay the bank as much as 70 percent of the balance. Marco's is supplementing the guarantee with its own pledge to cover another 5 percent of the liability, meaning the defaulting franchisee covers just 25 percent of the balance, possibly working out a payment plan and avoiding bankruptcy. "It's similar to a private SBA program, but it provides the bank with a higher level of underwriting confidence that they'll get paid, because the insurance company's on the hook," Switzer said. "We think this can be an absolute game-changer in finance, helping all kinds of small businesses, especially restaurants."
Switzer said PGI - which Marco's offers through AmTrust Financial with underwriting from Asterisk Financial - lets the pizza chain grow with partners who are not high-net-worth individuals or who don't have cash flow from other restaurant concepts. "In the foodservice industry, there are a lot of highly experienced people that have been managers and unit-level operators that don't have the net worth that they need to have," Switzer said. "For us to get the best people, we're willing to turn over every stone." PGI also lets current Marco's franchisees fund more store openings if their personal net worth only covers the cost of opening just one store, he added.
Switzer said the insurance company would charge about 1.5 percent to 3 percent of the loan amount per year as the premium for PGI. For the past few years, Marco's had done its own loan-guarantee program called Marco's Assurance, in which the franchisor guaranteed $50,000 of any franchisee's liability on a defaulted loan after liquidation.
Marco's operates 247 restaurants, with between 61 and 65 units scheduled to open this year. The chain has more has added than 1,200 stores sold to about 40 area representatives in 18 states. The development schedule ramps up from one unit in a representative's first year to three or four locations in subsequent years.
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