Multi-Unit Franchise Articles

But with a father who was a barber-turned-businessman and franchise owner, and a mother who was a stylist herself, they knew something about the hair business.

Brad Bruckman owned 15 Krispy Kreme franchises in the Northern California/Sacramento area when he felt a desire to reexamine his career direction. "I didn't necessarily foresee any of the problems that were soon to begin affecting that franchise, but I did begin to wonder about other opportunities, and, ultimately, I feel like I got out at just the right time," says the 42-year-old entrepreneur.

Area Developer asked Darrell Johnson, president and CEO of FRANdata, what a multi-unit developer should look for when evaluating franchise opportunities. In a wide-ranging interview, Johnson sorts out the massive amount of available information into four basic categories and provides a tutorial-and dozens of relevant questions-on how to think things through when searching for the best brand to suit your business (and personal) needs.

I call it the 10-10-10 rule. You spend $10,000 on your building, FFE and advertising to attract a customer. In 10 seconds, you drive her away with a bad service experience. And you wait 10 years for another chance to win her back. Service success, or failure, is predictive of your future sales and profitability. A terrific Harvard Business Review article explains the business economics in detail and I'll tell how you can get that article at the end of this column.

Franchisors are always looking for ways to boost cash flow and build greater trust with franchisees. One way to help accomplish those goals is to offer an effective purchasing program.

For multi-unit owners, planning an exit strategy is something to consider long before investing in that first unit or concept. What are your long-term goals? Would you like to sell in five years? Ten? Pass the business to a family member? Make a clean break, or keep your hand in? Is trading your cash flow for a lump sum the best way to go? What about seller's remorse?

Being a big fish always helps, especially in a big pond. But big fish still have problems-or opportunities as the more optimistic prefer to call them. And it certainly helps to have a positive outlook when you become an area developer. Topping the list of problems/opportunities are the usual items: location, hiring and retention, financing, etc.-but magnified by the number of units, as well as the number of concepts operating under one umbrella. Area Developer magazine asked four successful "Big Fish" to weigh in on what's tipping their scales as 2005 approaches.

Seattle's Dennis Waldron is still in the early stages, but he's by no means an amateur. For 10 years he was president of Cinnabon, where he introduced franchises and grew the chain to 400 units. After Cinnabon was sold, "I looked at a number of opportunities and finally settled on being a franchisee," he says. More than that, Waldron set out to be a multi-unit franchisee.

The multi-unit operator point of view is more of building an organization. From real estate, capital investment and people development, it is a very different environment. And the people development is the most critical aspect for success.

Franchising's great strength has always been that it is adaptable. Combining two kinds of ownership, one general, the other close to the ground, has given these systems quick reflexes in an ever-changing economy.

John D. Prince is a franchise owner on the grow. His current flags include Applebee's, Aaron's, Famous Dave's, and Hooters. His holdings are concentrated mainly in Utah, where, owing to the state's unique liquor laws, he also owns and operates three private sports bars. He got involved in Applebee's by necessity, when his Ponderosa Steakhouses were tanking in the early 1990s, and has steadily added new sites-and new concepts-ever since.

When Rocco Fiorentino was 30 and a mechanical contractor in Philadelphia, an accident opened an opportunity that changed his career path. He was remodeling a bagel shop owned by a neighbor when his client had a heart attack. Fiorentino ended up with the shop.

Irvine, CA-based El Pollo Loco has a penchant for serving hand-marinated, flame-grilled chicken and the freshest Mexican foods, and last year the company experienced record sales of $396 million. But executives there say that although their product is important, they owe much of their success to their loyal and dedicated employees. In fact, multi-unit operator Roland Spongberg recently went six years without losing a single manager at his 21 southern California El Pollo Loco locations. So what's going on at this company that's creating this environment of motivated, hard-working employees who stay the course?

Bill Welter's name may not be familiar, but one small phrase he created decades ago will place him for you immediately: "Where's the beef?" Yes, Welter was executive vice president of marketing for Wendy's when that famous campaign made a star out of a little old lady named Clara Peller, and gave Wendy's a real boost in the marketplace.