Category: Entrepreneurs

PRESS RELEASE – Franchise Growth Solutions Exhibits Innovative Franchise Brands.

Posted on by Franchise Strategist

COME OUT TO THE INTERNATIONAL FRANCHISE SHOW…Franchise Growth Solutions Expands Internationally as Exhibitor and Speaker at The International Franchise Expo May 30 to June 01, 2019 at New York’s Javits Center

“We’ll be showcasing some of the most innovative and exciting franchise brands of the year.” Gary Occhiogrosso – Founder, Franchise Growth Solutions, LLC.
NEW YORK MAY 27, 2019

Franchise Growth Solutions LLC, the New York-based strategic planning, franchise development and sales organization, headed by franchise industry expert, Gary Occhiogrosso, will exhibit at the International Franchise Expo, May 30 – June 01, 2019, at the Jacob K. Javits Convention Center in New York City.

Mr. Occhiogrosso, a 30-year veteran of single and multi-unit franchise development and sales, was instrumental in the launch and growth of nationally recognized franchises including Ranch *1, Desert Moon Fresh Mexican Grille, and brands found under the 100+ unit multi-brand franchisor, TRUFOODS, LLC.

From booth #646, Franchise Growth Solutions will showcase some of 2019’s hottest franchise opportunities: Acai Express®, Riko’s® Thin Crust Pizza, Balloon Kings®, and MATTO Espresso® to an estimated 20,000 entrepreneurs and future business owners. Occhiogrosso revealed, “We’ll be showcasing some of the most innovative and exciting franchise brands of the year.”
With additional credentials as an in demand public speaker on franchise success, and as an adjunct instructor at NYU, and Contributor to Forbes.

Occhiogrosso will also moderate two panel discussions entitled. At the first discussion “ Private Equity and Franchising” scheduled for Thursday May 30th at 10am, Occhiogrosso will host a discussion between franchisors and private equity investment professionals on how to find capital, the best ways to position franchises for growth/investment, and a checklist of what is required for strategic partnership in the eyes of the investment community. “This is my favorite venue to present this panel, we bring together Emerging Brands and Private Equity Investors to discuss ways to capitalize on the fired-up equity markets in Franchising,” added Occhiogrosso. The second event titled “Using Your Digital to Sell Franchises” is scheduled for Thursday May 30th at 4pm and will cover how Franchisors can maximize their franchise solicitation by tapping into the vast array of tools now available in the digital world. Occhiogrosso said “This panel will feature experts in the Internet marketing industry who will share tips and best practices designed to create accelerated lead generation for their franchise sales effort.” The events are free as part of the attendance fee for the Franchise Expo.

The International Franchise Expo in New York City is the largest franchise show of its kind in the country. The three-day show traditionally attracts over 20,000 attendees and over 400 national and international franchise opportunities.
ABOUT FRANCHISE GROWTH SOLUTIONS, LLC

Franchise Growth Solutions, LLC is a strategic planning, franchise development and sales organization offering franchise sales, digital advertising, brand development, strategic planning, real estate selection, architectural development, vendor management, lead generation, and PR including social media. Franchise Growth Solutions’ proven “Coach, Mentor & Grow®” system puts both franchisors and potential franchisees on the fast track to growth. Membership in Franchise Growth Solutions’ client portfolio is by recommendation only.

For information on Franchise Growth Solutions or any of its franchise opportunities, please contact Gary Occhiogrosso at (917) 991-2465 OR email at [email protected]

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Creating Sensible Employee Policies When Building Your Company

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WHEN BUILDING A COMPANY, YOUR CORPORATE POLICIES… will mold and shape the culture and mission of your brand. In addition, your team members performance and the aspect of becoming an “employer of choice” to attract the “best and the brightest” are directly connected to the polices you create for your organization. Warren Cook,President & CEO of SymbianceHR offers his thoughts on best practices when developing policies for your company.

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Development of Policies that Make Sense
– By Warren Cook, President & CEO

In my experience, small businesses owners care tremendously about their staff, so much so, that at times they develop practices that can later place them at risk and expose them to liability for discrimination. For example, paying an employee for a “few weeks” when they are out sick or taking care of a family member but then when a new employee wants time off since they are not friends, they are told use their paid time off or the absence is unpaid.

Maternity leave is another great example, as I have observed everything from 100% pay the entire absence without a policy written to working from home during the maternity leave, all while trying to provide FMLA coverage (job protection) when the company only had 8 employees. At the same time, when a male employee decided they wanted time off to be with their spouse and newborn, they were denied the request.

In another situation, an employee was in an auto accident, and the owner felt bad, so they continued their compensation at 100% for several months. Yet another employee, later in the year, requested time off because they heard about the other employee getting paid, and wham, problem for the employer because they didn’t want to pay this employee.

Inconsistency in practices is the road to discrimination, even if unintended. These employers and many other examples I could share, also neglected other means to provide the support to their employee they desired, without breaking the bank and destroying company cash flow. For example, implementing a Short Term Disability program, employer or employee paid, could allow for an offset of the cost in your current practice. Why? You pay an insurance premium instead of the full cost of the employee compensation. Let us not forget benefit premiums during an employee absence, that also can become a double hit on the employer with poor leave policies in place.

I encourage you to strategically plan for the various situations that can occur with your workforce, and then determine what is the most cost effective and beneficial method to provide the desired support to your workforce. It may be insurance, it may be time off, it may be alternative work schedules, it may be remote work, or it may be another solution all together. Remember, setting precedence using a discriminatory approach can expose your business to tremendous risk and liability even though your have great intentions. Seek the right advisor to help guide you through the development of legally compliant and non-discriminatory solutions to take care of your workforce with policies and programs that make sense. Visit: https://www.symbiancehr.net/

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About the Author: Warren Cook
Warren is a conscientious human capital management leader dedicated to providing coaching and guidance to business owners and leaders in support of their continued success. With over two decades of practical industry experience across the public and private sector, and various industries from pharmaceutical to financial to telecommunications, Warren enjoys applying his depth and breadth of industry and academic (BS/MBA/MS) experience to solving the workforce management challenges of today. With a proven track record of implementing successful solutions to business challenges by effectively orchestrating change initiatives, strategic planning & execution, system and process engineering, people development, and modeling leadership behaviors to motivate the workforce, Warren is uniquely competent and capable of driving continued business success for your organization.

Warren enjoys giving back to the community, and accomplishes this passion through his workshops and training to non-profit organizations and industry associations across the region and across the country. To further this ambition Warren served the Delaware HR & Business Community by presenting at the DE SHRM 2017 & 2018 Annual Conferences and was the lead presenter at the July 2018 DE SHRM Diversity & Inclusion conference.

Warren authored the book “Applicant Interview Preparation – Practical Coaching for Today” and provides training and coaching on this topic in the local community at schools and non-profit organizations to support the development of the next generation of professionals.

If you want to benefit from the experience and capabilities Warren has to offer, you can reach him by email at [email protected] or by phone at 302-276-3302. Visit: https://www.symbiancehr.net/

How Do I Get The Money to Start My Own Business and How Much Money Do I Need.

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HOW TO FINANCE YOUR BUSINESS IDEA…Our friends at Benetrends have covered this topic perfectly. When you have a great idea for a business but not the cash to get it going. This article will offer helpful tools to get that business started and growing.
Photo by Mick Haupt on Unsplash

Entrepreneurial Dilemma: Do I Have Enough Money to Start My Own Business?
Author Benetrends

You have come up with a great idea for your own business, one that you are confident will be financially, personally, and professionally fulfilling. You are ready to start developing your business plan, doing market research, and testing marketing ideas.
How much money will you need to bring this idea to fruition? What kind of finances will you need to get things started and how much will you need on a monthly basis going forward?

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These financial questions are often ones that keep entrepreneurs up at night, worrying about how much money they will need to be viable and successful.

It is a classic entrepreneurial dilemma: do I have enough money to start my own business?

Fortunately, most up-front and ongoing costs can be identified at the start of your ideation. Doing the work to build out your budget will bring you peace of mind and a foundation to use when pursuing small business funding. Here is a closer look at the framework you should use to determine your business costs.

What will it cost to open your business? Find out with our business planning calculator.Twitter Tweet This
Why Knowing Startup Costs Is Important

Startup costs give you and others a clear idea of what it will take to operate your business. Too many small-business owners underestimate their costs and end up playing catch up, undermining their growth or forcing them out of business. There are several benefits to projecting these costs:

Profit Analysis. Knowing what your costs are, along with your revenue projections, helps you estimate your profitability, including when you are likely to break even and how long you may be operating at a deficit.
Investor Expectations. If you are seeking investments to help finance your business, investors will want to see your startup cost analysis.
Loan Approvals. Lending officers, like investors, will want to know what it takes to open the doors and keep them open when considering your loan application.
Tax Planning. Anticipating your business costs helps you and your accountant plan your tax strategy by understanding what will be deductible when it comes time to file your taxes.
Peace of Mind. There is stress in starting a business. A clear-eyed understanding of your costs eliminates one uncertainty in the process.

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Questions to Answer Before Building Your Cost Estimate…Read the entire article here:
https://content.benetrends.com/blog/entrepreneurial-dilemma-do-i-have-enough-money-to-start-my-own-business

Ten Tips For Evaluating A Franchise Opportunity

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WITH THE UPCOMING FRANCHISE SHOW IN NYC, IT’S CRITICAL TO KNOW… how to evaluate the validity of the opportunity. My colleague, Ed Teixeira wrote this excellent article on properly evaluating a franchise system. You’ll find these 10 tips insightful.

How To Do A Preliminary Evaluation Of A Franchise Opportunity
Ed Teixeira – Contributor

You don’t have to be an expert in franchising to perform an initial evaluation of a franchise opportunity. I use my experience as a franchisor executive to know what to look for in a Franchise Disclosure Document (“FDD”) but it’s not necessary to have a strong knowledge base of franchising to make an informed decision. In addition, having seen the results of numerous franchise FDD analysis and comparisons, while at FranchiseGrade, I’ve become more aware of what separates the good franchise systems from the rest of the pack.

franchise-growth-solutions-for-emerging-brands
Click Here to Learn about Franchising Your Business

A prospective franchisee should have a process that’s easy to follow, this process is to focus on key items in the FDD, and although each item in the FDD is important, some are more important than others. This evaluation is not intended to replace comprehensive franchise due diligence, including obtaining franchisee feedback, but rather it’s a way to filter out the good performers from the rest. Before investing valuable time and money, you can find those franchise opportunities that meet key performance standards. I’ve presented this information ranked by what I consider to be most important so it may not follow the order in how they appear in the FDD.

My Ten Key Items:

1. Internet Search
The first thing I do is search the Internet using the name of the franchise with terms like “lawsuit”, “franchise complaints”, “franchisees sue”, etc. This only takes a few minutes and can lead you in a certain direction if you find some results. Unless there is a large number of negative results you’ll know that the franchise isn’t tainted. Keep in mind that large franchise systems based upon their size, are more susceptible to franchisee complaints and lawsuits than smaller franchise systems.

2. Franchise System Growth-Item 20

I look at franchise outlet growth over time. Steady growth over a three -year period is an indicator of a healthy franchise system. Negative trends, or up and down growth over several years can be indicative of an unhealthy franchise system. Be aware that poor franchise growth may not always reflect existing ownership since the franchise might have been re-acquired by new owners.

3. Franchisee Turnover-Item 20
Franchisee turnover is a key statistic to focus on. You can learn how many franchisees left the system for the most recent 3 -year period and the reasons why. Ceased Operations can be the result of a bad franchise investment opportunity or franchisee failure due to undercapitalization or poor site selection. On the other hand, a large amount of Franchisee Transfers can be a sign of a good franchise system with a strong market for resales.

4. Litigation-Item 3
Franchise litigation is an indicator of how positive, franchise relations are between the franchisor and its franchisees. Although disputes between the parties is a normal occurrence within franchise systems the absence of significant litigation in the FDD of a mature franchise system is an indicator of satisfied franchisees. When reviewing the FDD of a large franchise system, expect to find some amount of litigation. A good sign is litigation cases that represent a small percent of the number of the franchise outlets.

5. Financial Performance Representation -Item 19
The FDD should provide enough franchisee financial information to enable a prospective franchisee to create a pro-forma income statement and cash flow projection. The more financial information the better. With few exceptions, such as a franchise start-up, a lack of any financial disclosure is a red-flag.

6. Royalty and other fees- Item 6

I use franchise fees to include royalties, national and local advertising fund contributions, plus other fees to identify the total ongoing fees a franchisee is obligated to pay. More franchisors are using creative ways to charge fees, including a fixed royalty dollar amount plus a declining royal rate based upon franchisee sales.

7. Franchisee Investment-Item 7
The initial investment presented in the FDD is designed to provide prospective franchisees the estimated minimum and maximum amount of capital needed to establish and open the franchise. An important requirement of the items in the Initial Investment table is that each is item be as accurate and complete as possible.

8. Franchisee Territory-Item 12
The territory represents a key area when evaluating a franchise opportunity. The critical components of a franchise territory; is the quality of the franchise territory and whether it provides the franchisee the potential for continued growth and whether the territory is protected and exclusive and how it’s defined. Does the franchisor have the right to sell products or services to customers in the territory through various distribution channels?

9. Franchisor Financials-Item 21
Although a CPA is best qualified to review the franchisor financial statements, look for the primary sources of franchisor revenue. If a medium to large franchisor is generating more revenue from Initial Franchise Fees compared to royalties, it could represent a red-flag. Does the franchisor receive a large proportion of its revenues from vendor rebates? How much does the franchisor spend on G&A, especially franchisee support and infrastructure? For a more in-depth review, utilize a CPA to conduct the review.

10. Franchisor Rights and Franchisee Restrictions-Item 16
This section indicates what rights the franchisor retains over the franchise operation. Although all franchise agreement tilts in favor of the franchisor, too many restrictions on the part of the franchise and too few franchisor obligations in terms of assisting and supporting the franchise, require more review including questioning the franchisor representative.
Based upon the above, one can determine how a franchise opportunity has performed and whether it represents a reasonable franchise investment. Whether or not you’re an individual searching for one franchise, a potential multi-unit franchisee or a PE firm, this ten-step process can provide a straightforward method for vetting a franchise opportunity.
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About the Author:
Ed Teixeira is Chief Operating Officer of Franchise Grade and was the founder and President of FranchiseKnowHow, L.L.C. a franchise consulting firm. Ed has over 35 years’ experience as a Senior Executive for franchisors in the retail, healthcare, manufacturing and software industries and was also a franchisee. Ed has consulted clients to franchise their existing business and those seeking strategic solutions to operational, marketing and franchise relations issues. He has transacted international licensing in Europe, Asia, and South America. Ed is the author of Franchising from the Inside Out and The Franchise Buyers Manual and has spoken at a number of venues including the International Franchise Expo and the Chinese Franchise Association in Shanghai, China. He has conducted seminars, written numerous articles on the subject of franchising and has been interviewed on TV and radio and has testified as an expert witness on franchising. He is a franchise valuation expert by the Business Brokerage Press. Ed can be contacted at [email protected]

Franchising Your Business? – NOW WHAT?

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FRANCHISING YOUR BUSINESS? – NOW WHAT?… A well thought out plan that is forward-looking for the first 1- 3- 5 years. Have you also given thought to the logistics, how do you intend to respond to all the incoming and make outgoing calls quickly?

Franchising Your Business? – NOW WHAT?
By Gary Occhiogrosso – Managing Partner – Franchise Growth Solutions

So you’re ready to launch your newly franchised brand. You’ve set up your store; proved it out over time, have the UFDD and the Operations Manuals in order, so now what? What do you have to show for all the time and money spent up to this point? Where’s the ROI?

How to be a Growth Story
Well, for a franchise system to truly grow, you must sell/award franchises to qualified individuals. You’re not a “growth story” if you’re not selling new franchise units. Hell, you may not even be a franchise story if you’re not selling franchises!
New franchisors are usually so caught up in the idea of “process” or in other words the work of the business so to say that in fact, they overlook the time, cost and needed strategy to sell franchises. I’ll bet many are so sure their franchise will be a hit that they think you can sell it on your own or use “success fee” broker network as the entire development plan. There are no zero cost decisions, one way or the other. How to grow and at what cost is always the question.

Harsh Reality
It doesn’t take long for the smart franchisors to recognize reality and ask themselves a tough question; what do you I know about selling a franchise? Most don’t even have a written Strategic Development Plan? Yes, a development plan, a plan that outlines the markets, the trade areas, the type of ideal franchisees, where to find them, the cost per inquiry, and the conversion percentage, the budget, and the goals. A well thought out plan that is forward-looking for the first 1- 3- 5 years.
Have you also given thought to the logistics, how do you intend to respond to all the incoming and make outgoing calls quickly? Make the follow-up calls; conduct the discovery days, and all the prospects questions, his wife’s questions, his attorney’s questions. Consistent, timely sales efforts rule the day. If you’re lucky, you quickly realize you don’t have the time or the expertise to launch an effective selling system for your franchise.

Ignorance is NOT Bliss
The danger and destruction of ignoring that realization can be seen at all levels in the franchise industry from dead brands to bankrupt franchisees. When franchisors fail to recognize that they are now in a completely different business than the concept they started, several mistakes can happen whether it is selecting the wrong franchise candidate. Or thinking they can service an international franchisee. Alternatively, opening in a market where they have distribution challenges. Or opening in a market with zero name recognition, franchisors can sometimes be their own worst enemy to growing their brand in an aggressive but responsible way. The successful Franchisors all come to the realization that just because they know their business doesn’t mean the franchisor knows the franchise business. Certainly not anymore than a franchise strategist might know the trade secrets of operating your business successfully.

Answering the NOW WHAT Question
The road is littered with new franchisors that tried the “Do It Yourself” approach. Alternatively, perhaps paid a company that is really in the business of selling paperwork like the FDDs, Manuals, & Brochures, but not selling the franchises. Or thinking a broker network, which is designed to supplement your selling strategy, should be your sole selling strategy. So we get back to the question; now what? We can help you answer that question. Please feel free to contact us at [email protected]
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About the Author
Gary Occhiogrosso Managing Partner – Franchise Growth Solutions
Currently, is the Managing Partner of Franchise Growth Solutions, which is a national franchise development and sales firm. Their “Coach, Mentor & Grow Program” focuses on helping Franchisors with their franchise development, strategic planning, selling franchises and guiding franchisors in raising growth capital. Gary started his career in franchising as a franchisee of Dunkin Donuts before launching the Ranch *1 Franchise program. He is the former President of TRUFOODS, LLC a 100 unit, multi-brand franchisor and former COO of Desert Moon Fresh Mexican Grille. Gary was selected as “Top 25 Fast Casual Restaurant Executive in the USA” by Fast Casual Magazine. In addition, is an adjunct instructor at NYU on the topics of Concept & Business Development as well as Franchising & Entrepreneurship. He is also the host of the “Small Business & Franchise Show” broadcast in New York City and is a contributing writer for www.Forbes.com on the topic of Franchising.

Lead Generation – Lifeblood of Franchise Sales

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LEAD GENERATION – LIFEBLOOD OF FRANCHISE SALES…You’re damn right no one told you, or you may not have purchased the Op’s Manuals or had an FDD written. What you must consider is the total cost to launch a franchise company. Moreover, the most significant piece to that puzzle is the “Cost Per Acquisition” or Lead Generation.

By Gary Occhiogrosso – Founder Franchise Growth Solutions, LLC.
Photo by David Marcu on Unsplash

Despite what you’ve heard, start-up and emerging brand franchises do not sell themselves. Oh sure, we all want to believe that the brands we’ve created are so unique and special (like our children) that everyone will beat a path to our door just for the opportunity to invest a few hundreds thousand dollars in opening one of our franchises. Although I’m one of the most positive people you’ll ever meet when it comes to franchising, I’ve also been around long enough to know that a franchisor’s short view, lack of research and sometimes ego are responsible for one of the most the critical mistakes startup franchisors make. That is to underestimate the Cost Per Acquisition regarding Lead Generation.

Let’s go back to the beginning.
You have this idea to expand your business. You do a little research that leads you in the direction of franchising. So how does one do that? Well for many, after a quick google search, they come across listings for franchise attorneys that will write a Franchise Disclosure Document and a “Franchise Development” company that will take on the responsibly of writing a set of Franchise Operations Manuals. Many startup franchisors and emerging brands are led to believe that these two components on their own will make you a franchisor. While these items are necessary, this by itself happens not to be the whole truth.

My firm Franchise Growth Solutions specializes in start-up, emerging and turnaround franchise brands, I have witnessed the challenges facing these brands at their outset. As a result, I’m about to tell you the first thing you won’t want to hear – You need approximately $120,000 to $200,000 over the first 12-15 months of your startup to properly launch a franchise brand.

WOW – No One Told Me.
You’re damn right no one told you, or you may not have purchased the Op’s Manuals or had an FDD written. What you must consider is the total cost to launch a franchise company. Moreover, the most significant piece to that puzzle is the “Cost Per Acquisition” or Lead Generation. Here’s the second thing I’ll tell you that you won’t want to hear – Simply put, no leads, no franchise sales. Also, to be clear, we’re not talking about the enthusiastic customers that tell you they would love to open a franchise. Trust me, most of these evaporate as soon as they realize what it costs to open a business and that you don’t have a siphon hose that goes from your cash register directly into your pocket.

The data today regarding how much it costs to sell a franchise is overwhelming. It’s true every once in a while (like a total solar eclipse) we hear about the franchise brand that almost from its outset grabs the imagination of the general public and eventually investors, and before you know it, there are 150 operating units. There are three things to embrace with this scenario, one; it’s great to expect and even initially forecast that you fall into the solar eclipse category but bad if you build a long term financial business plan on it. Two, as I mentioned earlier, it is very very rare and three; many times (usually most, but I can’t quantify that) these rapid rising stars collapse under their weight due to lack of infrastructure, franchisor experience and lack of growth capital. Many of these franchisors believe they can support their growth by “selling franchises.” However, just like a hungry shark, the bigger it gets, the more bodies it needs to eat to stay alive – Ouch if you’re a franchisee that just got swallowed up so the franchisor could pay the electric bill at the office.

There is a “Light At The End Of The Tunnel.”
Some of the things we instill in our franchisor clients is the understanding that it takes time, patience and money. What’s daunting is; there are “unknowns” regarding how much time and money. We can point to statistics and make some forecasts, but forecast change and franchisors need to be able to move with those changing dynamics. If the Franchisor is unwilling or unable to modify and pivot their franchise sales program, they will eventually give up, fail or be sidetracked by some other interest, just like the dog that chases the ball no matter where you throw it, even in traffic.

The “light at the end of the tunnel” is the way the Cost per Acquisition will be reduced as you open units, garner more brand recognition, create successful franchisees and start to build up a digital footprint that will drive interested people to your franchise website. That said, it’s important to embrace three ideas; be properly capitalized as mentioned above, also slow and steady (within plan) wins the race. And lastly, solely chasing ROI is pointless. If you dismiss these three ideas, you run the risk of exhausting yourself and depleting your assets simply because you “need” to grow quickly. Notice I said “need” not “want.” We wouldn’t be prudent entrepreneurs if we didn’t want to grow our companies as quickly as possible. However, the frenetic, lizard-brained approach often misjudges,ignores the universe or doesn’t know that mistakes abound, egos mislead and eventually you have that sandwich chain that everyone was so high on in the early 2000s that has now all but vanished, seeing multiple bankruptcies and too many lawsuits to count.

The Full Picture
Getting all the facts on how to franchise your business is the most critical exercise you can perform. Launching your brand the right way may take a little more time and money, but a strong foundation, a good plan and great people will pay off in the long run.

For more information on this topic contact us at [email protected]

Fast casual falafel specialist, Taboonette launches franchise prototype, building momentum for nationwide expansion

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TABOONETTE: THE FALAFEL GROWS UP
Franchising Case Studies

Fast casual falafel specialist, Taboonette launches franchise prototype, building momentum for nationwide expansion

Taboonette is a fast casual, Middleterranean™ restaurant that is revolutionizing the falafel shop. Inspired by a trip which co-owner, Danny Hodak, took to Israel, the elevated shop brings the healthy diets of the Middle East and Mediterranean and fuses them with chef-driven food and American style.

With recipes curated by classically trained, renowned Israeli chef, Efi Naon, the eatery takes a modern approach to food created in the age-old, wood-fired taboon ovens for which Taboonette is named. Opening eyes to gourmet Mediterranean food, the shop offers locally sourced and sustainable meals in a rustic chic atmosphere that fosters social consciousness and brings people together.

Now a standout amongst New York’s popular upscale fast casual restaurants, Taboonette will build on its seasoned approach to success as it begins nationwide franchise expansion.

Taboonette currently has one corporately-owned location in New York, with a track record for success which will lead the brand to impressive growth. The popular Union Square hot spot will open its second corporate location in Q1 of 2019 with two additional restaurants slated to open by year-end.

Read the entire story here:
https://www.globalfranchisemagazine.com/case-study/taboonette-the-falafel-grows-up?fbclid=IwAR28S3I7xrJrUne_np2mTgZ2SDakVoVSCV4YpLJcX9ecxH3JTR1LjpDz0Ok

At a Glance:

Name of franchise: Taboonette Middleterranean Kitchen™
Established: 2012
Investment range: $350,500-$637,400
Minimum required capital: $200,000
URL: http://taboonettefranchise.com/
Contact [email protected]
(917) 991 2465

How Successful Restaurant Franchisees Are Growing Their Brands

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WHEN GROWTH IS THE GOAL, MULTI-UNIT, MULTI-BRAND IS HOW FRANCHISEES ARE FUELING THEIR GROWTH…

How Successful Restaurant Franchisees are Growing their Brands
By Gary Occhiogrosso

Restaurant franchising has undergone an evolution in the last 20 years. Today’s franchised restaurant business now attracts a variety of investors for a variety of different reasons. Beginning in the 1960s owning a single unit franchised restaurant was an entry point for everyday individuals to get into the restaurant business. This “First Wave” in restaurant franchising was the growth tool of choice for many entrepreneurs and first-time business owners.

With Success Comes Change
Successful individual franchisees seeking growth went on to open numerous locations under the same franchised brand name. Using their experience in real estate, restaurant operations and developing staff as well as their ability to leverage cash flow from their profitable businesses, many went on to open additional units in the ’80s and ’90s. Whether it’s a single individual owning three to five franchised restaurants or larger investors that opened scores of locations, multi-unit ownership proved to be a method for financial growth by giving franchisees and investors an established model with a predictable result. Using this Multi-Unit development method as a means to increase enterprise value for the business owner became what I call the “Second Wave” in franchising. Many of these now professionally managed “corporate” franchisees have taken numerous franchise systems to new heights by developing hundreds of units in their designated territories.

All Dressed Up And Nowhere To Grow
When growth is the goal multi unit multi brand is how franchisees are fueling their organizations.
So what happens when a growth-driven franchisee reaches a level of saturation for their brand in their market? How can they continue to expand? How do they optimize the business infrastructure they’ve already created in their organizations?
Today’s “Third Wave” of franchise development lies in the concept of not only owning multiple restaurants of the same brand but also owning multiple units of various brands. Multi-Brand restaurant franchising has exploded in recent years. Countless franchisees now operate two, three or more non-competing restaurant brands. These large franchisees can sometimes develop additional brands in their original territory while many others choose to run restaurants in several regions. These franchisees are driven by revenue growth, brand diversification, open territory, capitalizing on existing human resources, local real estate, consumer trends and demographics in a market. The concept of owning multiple units of one brand has been eclipsed by what is now known as Multi Brand ownership. That’s where a franchisee develops the business enterprise as a franchisee of various non competing restaurant brands.

Private Equity Investors Dig Deeper for Gold
Today, not only are the franchisor/parent companies the target of private equity investment and acquisition but so are large franchisee organizations. As franchisees, private equity firms are creating millions of dollars in profit by scaling the number of restaurants in their portfolios utilizing a proven system with a predictable result.

Phil Druce, Partner with Atlantic Street Capital says “We feel strongly about the sustainability of the franchising category as multi-unit franchisee investors into the future. While some equity investors might shy away from broadly defined retail thinking that the category over the medium to long-term will be compromised with the proliferation of technology or delivery-based solution, we continue to feel positive about the sector.

Druce continued; “Amazon risk” will continue to be a popular phrase used across the industry as an undefinable risk. We feel as though the best operators and investors will find ways to drive door swings, engage with the customer in a meaningful way, and deliver a customer experience that keeps people coming back. The most sustainable businesses will complement their core retail business with technology solutions of their own that enhance, without cannibalizing, their value proposition.”

The number of Multi Unit-Multi Brand franchisees has grown to the point that some franchisees operate more units in their collective Multi-Brands portfolios than some of the individual franchisors they represent. This month is the Multi Unit Franchise Conference in Las Vegas. I’ll be attending and I’ll have more to say on this topic in my next article. Whatever the ultimate future direction of this type of franchise growth happens to be, Multi Brand franchising is here to stay and will continue to create larger and larger franchisees.

A Roger Lipton Update – Chicken Salad Chix

Posted on by Franchise Strategist

A Roger Lipton Update – Roger is an investment professional with decades of experience specializing in chain restaurants and retailers, as well as macro-economic monetary developments. He turns his background, as restaurant operator and board member of growing brands, into strategic counsel for operators and perspective for investors.

By Roger Lipton -with Permission
An archive of his past articles can be found at RogerLipton.com.

Chicken Salad Chick, based in Auburn, Alabama, was formed in 2008, by Stacy Brown. Stacy was a stay-at-home mom and self-proclaimed connoisseur of chicken salad who began the business by selling chicken salad made from her home kitchen. She was eventually shuttered by the local health department for selling food from an un-approved facility. She then joined her future husband, Kevin, who left a career in software sales, to help build the foundation for multiple corporate locations and future franchise growth.

In terms of equity ownership, in early 2015, Eagle Merchant Partners (“EMP”), an Atlanta, GA based private equity firm, purchased the majority ownership of the company. Kevin Brown, tragically, succumbed to colon cancer in 2015 at the age of 40. Before his death however, Kevin was instrumental in negotiation of the PE transaction, and he also helped establish the Chicken Salad Chick Foundation, which raises funds for cancer research and feeding the hungry.

In conjunction with that transaction, Russ Umphenour and Scott Deviney become chairman and President/CEO, respectively. Both are highly respected industry veterans. Mr. Umphenour was the CEO of Focus Brands (parent of Moe’s, Auntie Anne’s Pretzels, and others), and before that ran RTM Restaurant Group, the Arby’s franchisee that he founded.

Mr. Deviney was CEO of SDZ (a multi-unit Wendy’s franchisee) and SVP with SunTrust Bank, specializing in the restaurant industry. Over the last several years, the management team has obviously been broadened further to support the ongoing rapid growth. Stacy Brown, the cultural creator of Chicken Salad Chick remains a prominent spokesperson and brand voice, as well as a shareholder.

Originally a drive-thru and takeout only operation, the menu was expanded and sit-down facilities were added as additional stores opened. With franchise operations beginning in 2012, 29 units were open by the end of 2014, with contracts for an additional 114 locations.

The comfortable family oriented decor is combined with a creative and modestly priced menu, featuring over a dozen varieties of made from scratch chicken salad plus pimento cheese and egg salad, as well as fresh sides, salads, soups and sandwiches.

The primary meal special called The Chick includes a scoop of sandwich of chicken salad with a choice of a fresh side, salad, soup or another scoop of chicken salad, egg salad or pimento cheese. All meals are accompanied by a pickle spear, wheat crackers, a selection of breads for sandwiches and a small cookie. The menu also offers chicken salad BLT and turkey club sandwiches, though over 85% of sales come from chicken salad, which is also sold in large and small grab’n go containers called Quick Chick. Upwards of 70 percent of guests are women and the chain prides itself on being “chick friendly.”

Chicken Salad Chick ended calendar 2018 with 104 locations operating—74 franchised and 30 company operated. There were 21 franchised locations and five company stores opened in 2018. When EMP purchased the business in May 201, there were 32 stores in the system, so growth has been dramatic over the last four years.

The 104 locations are now located within twelve states—ALA, GA, FLA, NC, SC, TN, MS, LA, TX, KY, AK, OK. It is expected that 45 locations will have opened in 2019, 13 of them being company operated. It has so far not been necessary to advertise for franchisees, as the curb appeal of the physical unit combined with the menu and employee culture, as well as attractive unit level economics have generated more than adequate franchise interest.

According to the most recen Franchise Disclosure Document: The stores are about 2750 square feet in size, generally located in strip malls, costing an average of about $450,000 in total to establish, including up front franchise fees.

Much of the franchise appeal is the operational simplicity, which in turn generates attractive unit level economics. The equipment package is basic, with a steamer to cook the chicken (everything is prepared daily in the restaurant), food processors, refrigerated sandwich tables, a walk-in cooler, reach-in freezer, water filtration system, toaster and Quick Chick refrigerated case.

The absence of fryers (which must be vented) reduces construction costs, creates site flexibility as well as relative desirability as a tenant. The entire package of furniture and fixtures cost around $120,000. The up front franchise fee is $50,000 per unit, the ongoing royalty is 5% of sales with an additional national advertising contribution of 1.5%.

Last twelve months’ AUV was $1.2M in 2018, growing by about 9% in 2016, 13% in 2017 and 11.2% in 2018. Same store sales were up 15% in 2016, 8% in 2017 and 4% in 2018. Traffic has also been up consistently, most recently up 2.9% in 2018. The sales improvement is especially impressive within a restaurant industry that has been challenged in this regard.

Cost of Goods Sold has averaged about 30.5% with fully loaded labor at roughly 25.0%. Stores are open from 10am to 6-8pm (depending on the market) and closed on Sundays, taking a page out of Chick fil-A’s playbook, and allowing operating management to “have a day for family life.”

It is noteworthy that only about 45% of sales are dine-in, the balance being takeout (25%) and catering. Dine-in and takeout sales combine to provide a ticket average of $14.82. Also important: Drive through locations generate 27% more sales than without. 31% of the current system has drive through windows, and 40% of the planned locations will have them.

While the company makes no unit level profitability claims, our analysis indicates that franchises are likely earning at least 15% EBITDA (after royalties) at the store level. With sales now running at about $1.2M per unit, that would generate a “cash on cash” return of $180,000, or 40% on the $450,000 investment including franchisee fee, among the best returns in the franchised food industry. We emphasize: this is our analysis, not their claim.

Chicken Salad Chick continues its smart and rapid growth with no obvious impediments. While still relatively small, with only 104 units system-wide, franchisees are “voting with their pocketbooks,” and opening stores at a rapid rate. The concept seems “defensible” in terms of product line differentiation, combined with an employee “culture” reflecting the “chick” founder, but an operational simplicity that allows for fairly rapid growth. We look forward to following this company’s future development.

Why “Franchisee Validation” Is So Necessary When Buying a Franchise

Posted on by Franchise Strategist

WHY “FRANCHISEE VALIDATION” IS SO NECESSARY WHEN BUYING A FRANCHISE
By Gary Occhiogrosso – Founder of Franchise Growth Solutions, LLC

The process of buying a franchise can be confusing, complicated and often stressful. Once you’ve decided to purchase a franchise, the search begins for the right type of business, the correct investment level and the desire to find a brand that you can stand behind and work to a successful operation.

The process usually starts with an email or a phone call to a representative of the Franchisor followed by an application. These initial steps are usually completed before the franchisor meets with you. Next, there is the franchisor’s interview process, your discovery day at the franchisor’s headquarters and reading and seeking legal counsel on the Franchise Disclosure Document (FDD). These are all necessary and customary steps when exploring and buying a franchise.

Not Done Yet
Once you completed the above process, there is one more step to be taken. In my opinion, it is the most critical step, “Validation.” Franchisee Validation is the act of the prospective franchisee (you) calling and or visiting as many existing franchisees as possible. This is not only insightful but in my opinion a necessary step. Speaking with the brand’s franchisees can give you inside information regarding the operational issues that face a franchisee daily. For example, the support the franchise gives its franchise community and the acceptance of the product or service to general public.
Most importantly you’ll want to find out about financial performance.

Franchisors Cannot Answer All Your Questions
The franchisor cannot answer many of the financial performance questions you have because of Federal Trade Commission and State Franchise Regulations. Unless the FDD includes full financial information, franchisors are prohibited from making any earnings claims that would be considered an “inducement to buy” their franchise. Many Franchisors do not publish the performance results of their franchised units because the information is not verified or audited and therefore may be incomplete or inaccurate. You will be frustrated if you attempt to get information about profitability, cost of goods or labor from the Franchisor. That’s why you must speak with operating franchisees. They can, and many will be willing to have a conversation about their operating performance.

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Their Results May Not Be Your Results
Of course, it’s no guarantee you’ll do the same amount of business, or be as profitable as some franchisees. However, speaking with operating franchisees can give you a “Thin Slice Evaluation” and perhaps create some comfort level in with your decision to purchase the franchise. Remember, you’re not buying an existing business with a track record of the operation results, so you can not quantify how well you will do in the business. You need to conduct your due diligence on the concept, the management team and the support given by the franchisor. It would be best if you felt confident with the concept, the product and your ability to perform like a successful franchise. The information you gather from the franchisor, the existing base of franchisees and a good dose of faith and passion will help you achieve success.
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