The Winner's Column
As savvy franchise companies continue to flourish in this challenging economy, FUSR will bring you Good News each month, highlighting brands that are adding units, increasing comp store sales, striking deals with investors, and continuing to grow despite the economy - maybe even because of it. And as the U.S. economy struggles through its "jobless recovery," growth-oriented franchisors continue to look overseas for expansion opportunities - and this month, we report on an overseas franchisor set to open its first U.S. location, as well as several new entrants to franchising.
They "Had a Good Year" Department
Subway Tops 32,000 Units in '09
In 2009, Subway racked up some pretty impressive numbers in pursuit of the crown for most franchised units worldwide. The sandwich chain opened 2,164 new locations in 49 U.S. states and the District of Columbia, 7 Canadian provinces, and 67 countries (filling about 2.6 million s.f. of commercial retail space). Subway now expanded its reach into more than 7,200 "nontraditional" locations such as airports, department stores, hospitals, and park and recreational facilities. In sum, the brand now has more than 32,000 locations in 90 countries, with its total international store count topping 9,200.
Edible Arrangements Continues Expansion
Edible Arrangements reported strong growth in 2009 with the opening of 74 new stores and franchise agreements for more than 85 locations in the U.S., Rome, Hong Kong, and Turkey. The company is seeking to add several new development agreements in the Pacific Northwest, Midwest, and other areas of the U.S., and to expand its presence to India, Brazil, Mexico, Spain, and Canada. Edible Arrangements also announced a new enterprise development program and the company's evolution into multi-unit franchising. Founded in 2009, the brand has more than 940 locations and is targeting 1,000 by year-end.
70 New Motel 6 and Studio 6 Units Open
Accor North America reported the opening of 63 Motel 6 and 7 Studio 6 locations last year, totaling 5,109 rooms. "For the second consecutive year, we have achieved record growth of the Motel 6 network, while improving the brand's quality and consistency," said Olivier Poirot, CEO for Accor North America, operator of the two economy hotel brands. The 2009 additions include 82 new franchises (15 were corporate-owned Motel 6 units), 2 corporate acquisitions, and 1 corporate new build, covering 25 states and two Canadian provinces. Accor North America has more than 1,000 lodging locations in the U.S. and Canada, about 35 percent franchised.
Wingstop Reports 2009 Growth
Wingstop ended 2009 on a positive note, reporting its 25th consecutive quarter of positive comp store sales. And in its home town of Dallas, Wingstop became the Official Wings of the Dallas Cowboys. Founded in 1994 and franchising since 1997, Wingstop has 433 restaurants open in 34 states, and opened its first international restaurant in Mexico City.
Refranchising Drives 2nd Year of Record Sales
Sylvan Learning, Inc. reported record franchise sales growth over the past two years. Since Jan. 1, 2008, Sylvan has sold 145 domestic franchise territories, including the conversions of more than 100 corporate units to franchisees. The conversions in 2009 met the company's goal of refranchising 40 centers. The brand also reported its best international franchise sales numbers in at least a decade in 2009, with centers outside the U.S. and Canada growing 50 percent in the past two years, and further overseas growth expected in 2010. Sylvan has centers either operating or opening soon in the Bahamas, Bahrain, Cayman Islands, Egypt, Hong Kong, Kuwait, Oman, Qatar, Saudi Arabia, and United Arab Emirates. The 30-year-old brand has about 1,000 centers worldwide.
New Units: U.S.
PJ's Coffee Opens in the French Quarter
PJ's Coffee has set up shop at 300 Bourbon Street in the 500-room Royal Sonesta Hotel New Orleans. The new PJ's Coffee Café, the brand's first café concept, will serve coffee, a light breakfast and lunch menu, and freshly baked goods created daily by the hotel's executive pastry chef. Established in 1978 and franchising since 1989, the brand is based in New Orleans and has 63 locations in 7 states.
Burger House Expands in Texas
Burger House, founded in Dallas in 1951, has opened its seventh location in the state, in Rockwall. The brand also sold its eighth franchise in Plano, set to open later this year. The Rockwall location, owned by Richard Wells, president of ECLAT Private Equity Company, is the brand's the sixth store in the Dallas area and the second to open in less than a year, following a store opening in Tyler last summer. Two of the stores are owned by franchisees.
ColorTyme Spreads in Home State
ColorTyme recently opened the doors of a new unit in Austin. The new 3,800 s.f. facility offers rent-to-own merchandise including electronics, appliances, furniture, and computers. The brand's franchisees operate 195 rent-to-own stores in 33 states. Its custom wheels and tires franchise brand, RimTyme, operates 24 stores in 12 states. Based in Plano, Texas, ColorTyme is an independent, wholly owned subsidiary of Rent-A-Center.
The Greene Turtle Grows in Virginia
The Greene Turtle opened its second Virginia restaurant last month, a 6,000-s.f. unit in Leesburg that will be open from 11 a.m. to 2 a.m. daily. (The other opened in Fredericksburg in late 2009.) This is the first of three franchised locations slated for Northern Virginia by partners Sattar Shaik and Praveen Kondoka. The franchisor, which plans to open up to 25 restaurants in Virginia, also has a signed agreement with a different franchisee group for at least two sites in the Hampton Roads area, with the first scheduled to open in Chesapeake later this year. The Greene Turtle opened in Ocean City, Md., in 1976 and has 24 locations in 3 states and Washington, D.C.
Sonesta International Announces 1st U.S. Franchise
Sonesta International Hotels announced the first property in its new U.S. franchise program. The 341-room Sonesta Hotel Orlando Downtown is the result of a franchise agreement between Sonesta Franchise Corp. and owner RSLLC Orlando Downtown Hotel, LLC, a joint venture of affiliates of Glenmont Capital Management, LLC and Resolution Services, LLC. Glenmont Capital Management is an institutional private equity firm. Resolution Services was launched by Ewoldt International, LLC and its principals Eric M. Ewoldt and Jay Litt, along with Edward J. Miller of California Coast Companies. The hotel recently underwent a $10 million renovation, and the owners plan to spend $4 million more to rebrand it to Sonesta standards.
New Units: International
Right at Home Enters Brazil
Right at Home is expanding into Brazil under a master franchise agreement with Eduardo Chvaicer, who will open the initial location in Sao Paulo. About 10 percent of Brazil's 192 million people are 60 or older today, a number projected to reach 30 percent by 2050. This expansion follows the brand's launch into the United Kingdom in October. Founded in 1995, Right at Home has more than 175 franchisee in 41 U.S. states, the U.K., and Brazil, and reported a 25 percent growth domestically in 2009.
Carlson's Regent Brand To Open in India
Carlson Hotels Worldwide is expanding its luxury Regent brand into India with the opening of the 160-room Regent Gurgaon in late 2013. Gurgaon is one of New Delhi's four major satellite cities. This marks the latest global expansion of the Regent brand, which has several other properties under development: The Regent Bangkok, The Regent Doha, The Regent Dubrovnik, The Regent Emirates Pearl, Abu Dhabi, The Regent Kuala Lumpur, The Regent Maldives, The Regent Manila Bay, The Regent Palmas Del Mar Puerto Rico, and The Regent Phuket Cape Panwa, all scheduled to open within the next three years. Carlson has more than 1,060 locations in 77 countries.
Area Development News
NakedPizza Inks 50-Unit South Florida Deal
NakedPizza, which last year rode the Twitter phenomenon to recognition far beyond its one small take-out and delivery location in New Orleans, announced a 50-unit area development deal for South Florida, including Miami. The agreement is with Florida NKP, LLC, a group led by "an international team of multi-unit veterans who have operated more than 77 fast food, casual and fine dining concepts throughout Latin America and Florida," according to the announcement. The first location is scheduled to open early this summer in Miami Beach. NakedPizza--whose social mission to bring its philosophy of health-promoting ingredients to the $30 billion pizza segment--has received financial backing from billionaires Mark Cuban and Robert Kraft of The Kraft Group. The brand, which launched its franchising effort last September is looking to enter into area development contracts for most major U.S. markets in the coming months. For a look at how NakedPizza used Twitter to spread its brand, see www.franchise-update.com/article/887/.
Big Plans & New Starts
Paciugo Gelato & Caffè Seeks To Add 100 in '010
Family-owned franchisor Paciugo Gelato & Caffè, with 41 locations open in U.S. and Mexico, has announced plans to add 100 or more new franchise locations by year-end.
The growth will focus on areas throughout the East Coast, California, and company core markets in Texas. The brand, founded by by Ugo, Cristiana, and Vincenzo Ginatta 10 years ago in Dallas, offers authentic Italian gelato in more than 30 flavors from a selection of more than 300 recipes, including flavors ranging from Mediterranean Sea Salt Caramel, Blackberry Cabernet, Tiramisù, and Fondente Extra Dark Chocolate to more unusual flavors like Banana Beet and Black Pepper Olive Oil.
Cell Again Begins Franchising
New and used cell phone reseller, Cell Again, has begun franchising across North America. The brand focuses on low-risk, kiosk locations where customers not only purchase phones and accessories, but can also sell their old cell phones. Cell Again has five current locations, four in Utah and one in Las Vegas. To spread its brand, Cell Again has partnered with Franchise Foundry. Cell Again claims its stores make between $10,000 and $18,000 gross profit a month.
We Do Lines Wants To Stripe Your Lot!
Outside of parking your vehicle, who thinks about the painted lines in parking lots? Chris Couri, Tom Darrow, Dan Rella, and Craig Lenahan, that's who! Couri, Darrow, and Rella co-founded We Do Lines, a parking lot striping franchise, in February 2008; Lenahan joined in April 2009. After testing the concept up and down the East Coast, they're ready to pursue the approximately $1 billion striping niche of the $29 billion U.S. parking lot market. "There's not one national parking lot striping company out there. The market is completely untapped," says Couri, president of the Ridgefield, Conn.-based concept. The four have teamed with Skip Barrett, who co-founded GarageTek in 2000. "I have seen a lot of franchise concepts, but none with the potential of this one, especially given the landscape of this industry," says Barrett. Start-up costs range from $77,000 to $134,000, with the leasing of a truck and equipment making up the bulk of costs. The company also places a high priority on being eco-friendly and socially responsible.
LED Source Lights Up for Franchising
In another "first in class" new concept, LED Source has begun franchising its LED lighting business. The company has been profitably distributing LED lighting and doing retrofits for warehouses, parking structures, and offices since opening in 2005, and says it has a proven system to offer franchisees. "Our concept is the fusion of the world's most time-tested and effective way to grow any business coupled with a product that, according to the Department of Energy, has the potential to reduce U.S. energy consumption by more than a third," says Marcel Fairbairn, president and founder of LED Source. The company reports it has already made some franchise sales, though they are not open yet.
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