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How Do you Grow Your Franchise Brand? Joe Caruso explains how to beat the crowd. "According to the 2016 Franchisor Database Breakdown by Rob Bond, 34.2% (1378) of franchisors in North America have 5 or fewer units, and 51.6% (2081) of franchisors have 20 or fewer units. This data highlights the significant number of franchisors operating on a smaller scale, underscoring the importance of effective growth strategies to navigate expansion challenges successfully." Premise: 10 Franchise Units & 1 Corporate Unit 1. Franchise Structure: Imagine a 10-unit fast casual franchise restaurant concept. This brand operates 10 franchise locations and 1 company-run restaurant. The company-run restaurant serves multiple roles: it’s a training ground for new franchise owners to develop management, technical, and in-store proficiency skills. It also functions as a hub for R&D, equipment testing, marketing initiatives, and corporate services. 2. Franchisee Composition: The franchisees are a mix of first-time owners and experienced small multi-unit operators. These operators have signed development agreements to own and operate an additional 40 locations. 3. Franchisor Management Team: The franchisor’s core management team consists of 3-5 people. Main Problem: 1. Operational Strain: Initially, the operations of the 10 franchise locations and the company-run restaurant were managed effectively by the franchisor’s small but dedicated management team. They invested more than full-time effort to ensure quality, cleanliness, and adherence to operating standards. 2. Expansion Challenges: With commitments for over 40 new units from franchisees with Multi-Unit Development Agreements (MUDAs), the franchisor faces a significant challenge. The timing of these new openings is uncertain, creating strain on the franchisor’s headquarters team. Franchise fee revenue and royalties are currently insufficient to cover the costs of experienced talent necessary for managing this expansion, leading to a classic “chicken and egg problem” where investment is needed to grow, but growth is needed to justify investment. 3. Resource Constraints: Faced with cash flow and capital constraints, the franchisor might be tempted to hire less experienced leaders to fill crucial gaps in operations, support, marketing, real estate, construction, and supply chain management. While this might seem like a cost-saving measure in the short term, it is ultimately shortsighted and could undermine the brand’s standards... Click to get the solution: https://lnkd.in/e9m76qBv #QSR #Entrepreneur #Restaurants #Franchise #NRA2024 #Franchising #FranchiseChat Chainformation Altir Industries, Inc. Franchise Pipeline Franchise Development Outsource Ned Lyerly Joe Caruso Michael (Mike) Webster PhD Anders Hall Jonathan MartinMichael Scherr Dr. John P. Hayes, CFE Robert Branca

Joe Caruso gives you his take on this franchising question - "Dealing with resistant franchisees who defy new branding guidelines, how can you maintain brand consistency?" Here is what Joe contributed to this LinkedIn Collaborative article. "This is a deceptively and seemingly easy question to answer and it is not. Who does not agree that maintaining a unified brand is critical for success and you should combine clear communication, support, and enforcement? Smart franchisors bring their Franchise Advisory Council and key franchise owners in on new branding and rebranding programs at the front end to develop the elements, determine the reason why a change in branding is needed by the system, investment and get franchise owner buy-in early on before the program launches. You may still have defiant franchisees who will have to be managed and you will likely have more consensus with the franchise owners who participated in the process." https://lnkd.in/eDTUedk2

Joe Caruso answers and contributes to LinkedIn Franchising Collaborative article asking this question "You're running a franchise organization. How does remote work influence your decision-making process?" Here is what Joe said on this. "Remote teams have been a key part of franchising for a long time. It is not new that franchisors deploy field marketing and franchise business coaches strategically situated geographically to support franchise locations. To do this modern franchisors are utilizing cloud-based uniform communications and operations manual platforms to ensure that franchise locations, field deployed support people and HQ staff are all working together with the same KPI and compliance information." https://lnkd.in/e9zTuaJB

Matthew Liedke Franchise Times - IFA Offers Clarity on New FTC Rules With Attorney Input "The recent Federal Trade Commission action is not a cause to panic, according to a panel of legal experts hosted by the International Franchise Association on Thursday. The video conference was held nearly two weeks after the FTC issued a policy statement warning that a franchisor using contract provisions, including non-disparagement clauses that prohibit an owner’s communication with government agencies, violates the law. The FTC’s action was in response to public comments received when the commission held a request for information. Over the course of the comment period last year, 5,291 comments were submitted. According to the FTC, franchisees reported ever-increasing payment processing and technology fees that put a hardship on the owners. In response, the FTC issued the policy statement as a way to address “unfair” and “deceptive” practices by franchisors. The statement emphasizes that franchisee reports and voluntary interviews are a critical part of FTC investigations, and reluctance by franchisees or an inability to file reports and discuss their experiences may hamper the agency’s work to protect owners. The FTC made clear that it is illegal for franchisors to impose undisclosed junk fees or fees that raise costs and may make the difference between profitable and unsustainable franchises. In addressing the FTC’s statement on reporting to regulators, attorney J. Mark Dady of Dady & Gardner, P.A. said, “I don’t think the sky is falling, to be real clear.” In regards to the confidentiality portion of the FTC’s statement, Dady said that’s on par with existing policy. “I don’t think that franchisors have the ability to prevent franchisees to speak with regulators, and I don’t think that’s what most franchisors are attempting to do,” Dady said. “I think most of these provisions are standard confidentiality and non-disclosure types.” He continued, “Since the FTC is trying to get info from franchisees to understand the current state of franchising, I think it’s just a reminder to franchisees that if you want to talk, we’re here.” Also joining the conversation was David Koch, an attorney at Plave Koch PLC, who said the franchise community shouldn’t overreact to the FTC’s statement. “The policy statement is basically just a warning,” Koch said...clickthru to read more." https://lnkd.in/egUkkdpU

Joanna Fantozzi Nation's Restaurant News tells us what is happening with One Table Restaurant Brands and Tender Greens. "The string of bankruptcies continues for the restaurant industry in 2024, as the Southern California-based salad and bowls concept, Tender Greens, and its parent company, One Table Restaurant Brands (also parent company to fast-casual Mexican chain, Tocaya), filed for Chapter 11 bankruptcy protection on July 17 and July 18, respectively. Together, Tender Greens and Tocaya Modern Mexican operate around 40 locations, mostly in California. According to bankruptcy documents, the Los Angeles-based One Table Restaurant Brands has an estimated $10 million to $50 million of liabilities, with under $50,000 of assets, and is considering a sale in the form of an auction or stalking horse bidder. In a separate bankruptcy document filed by the same ownership, BLT Steak LA LLC — the West Hollywood location of New York City-based BLT Steak, which closed in 2013 and was replaced by a Tocaya location — also filed for Chapter 11 protection. Each of these bankruptcy documents were filed on July 17 and July 18 by Harald Herrman, the former Darden Restaurants Inc. executive and Mendocino Farms CEO, who formed One Table Restaurant Brands in August 2021, following the merger of the two Los Angeles-based fast-casual brands. The newly formed company was backed by both Alliance Consumer Growth (ACG) and Union Square Hospitality Group, the latter of which had taken a significant minority stake in Tender Greens in 2015. One Table Restaurant Brands is owned TYP Restaurant Group (47.5%), New Tocaya Holdings, LLC (47.5%) and Big Table Brands Management, LLC (the remaining 5%). The debtors are aiming to consolidate each of these bankruptcy filings under one Chapter 11 case, and are asking for emergency funding to be able to run their businesses during the bankruptcy process. One Table Restaurant Brands follows many other restaurant companies that have declared bankruptcy in 2024, most notably, Red Lobster, which filed for Chapter 11 bankruptcy protection in May, Rubio's Restaurants, Inc., and Tijuana Flats Tex-Mex. Other smaller concepts and franchisees that filed for bankruptcy in the first half of 2024 include Party Fowl, Boxer Ramen, Sticky Fingers, Oberweis Dairy, Foxtrot/Dom’s Kitchen, Melt Bar and Grilled, Kuma’s Corner, Subway’s River Sub LLC and Arby’s Miracle Restaurant Group. https://lnkd.in/eq5vKuti

PMQ Pizza updates us on Old Chicago Restaurants "SPB Hospitality, parent company to Old Chicago, has hired Andy Somers as its vice president of operations. Somers will head up Old Chicago and the brewery divisions, according to a press release. Somers has more than two decades of experience in the restaurant industry, and he most recently served as senior director of operations at P.F. Chang's China Bistro. "We could not be more excited to welcome Andy to SPB," Josh Kern, CEO of SPB Hospitality, said in the press release. "Andy's impressive track record and people-centric leadership style align seamlessly with our commitment to Serve People Better. His proven ability to drive operational excellence and his passion for developing strong, motivated teams will be instrumental in elevating the Old Chicago and Brewery brands. We are confident that Andy's strategic vision will lead to continued growth and success." SPB Hospitality manages various iconic restaurants and breweries, including Old Chicago Pizza & Taproom, Krystal, J. Alexander's Restaurants, Stoney River Steakhouse and Grill, Logan's Roadhouse and more. https://lnkd.in/egVGrXNU

Bret Thorn Nation's Restaurant News updates on Red Lobster Red Lobster will almost certainly be bought out of bankruptcy by its creditors, led by Fortress Credit Corp., according to a document filed with a bankruptcy court on Monday. That was the casual-dining chain’s intention when it filed for Chapter 11 bankruptcy protection in May, after years of troubled sales and a reportedly botched all-you-can-eat shrimp promotion that cost it millions of dollars. The purchaser’s official name is RL Purchaser LLC and it is controlled by Fortress, which refinanced Red Lobster’s debt in January, making it its largest creditor. It will gain control of the company in exchange for the debt it’s owed in a deal reportedly valued at around $375 million. Fortress Investment Group, parent of Fortress Credit Corp., is also the owner of SPB Hospitality, which owns Krystal Restaurants LLC, Logan's Roadhouse, J. Alexander's Restaurants, Gordon Biersch Brewery Restaurant, and several other restaurant brands. In the document filled with the Orlando division of the bankruptcy court of the Middle District of Florida, Red Lobster and affiliated entities that filed for bankruptcy protection did not receive any purchase bids by the July 18 deadline except for RL Purchaser, so it canceled a proposed auction. A hearing to approve the sale is scheduled for July 29 at 1:30 p.m. at the George C. Young Federal Courthouse in Orlando. The sale would end a saga of multiple leadership changes and poor performance since Golden Gate Capital sold Red Lobster to a consortium led by seafood supplier Thai Union Group PCL. as well as the chain’s management at the time. Then-CEO Kim Axel Lopdrup retired less than a year later and was followed in quick succession by Kelli Valade, Paul Kenny previous legal counsel Horace Dawson, and finally restructuring expert Jonathan Tibus, who prepared the chain for bankruptcy. In statements that were part of the bankruptcy filing, Tibus pointed to irregularities in the way that Thai Union and people associated with it, including Kenny, handled the “Ultimate Endless Shrimp” promotion as well as Red Lobster’s overall shrimp supply chain. In the aftermath of the bankruptcy, Red Lobster has closed more than 100 restaurants https://lnkd.in/gWuDcvNu

World Coffee Portal reports - "The JAB HOLDING COMPANY LLC backed fast-casual group has enlisted Bank of America to facilitate a sale of its 815-store Caribou Coffee and 656-site Einstein Bros Bagels chains, sources told Reuters News Agency. JAB Holding Company’s coffee and food-to-go group Panera Brands is exploring a sale of Caribou Coffee and Einstein Bros. Bagels, as well as its other bagel brands, according to a Reuters report. Citing sources familiar with the matter, the news agency said Panera Brands has enlisted Bank of America to facilitate a sales process, which could value the café chains at more than $1.5bn. A Panera Brands spokesperson declined to comment on the report and World Coffee Portal has reached out to JAB Holding Company for comment. Minneapolis-based coffee chain Caribou Coffee currently operates 498 stores in the US and a further 317 across 10 international markets, with a strong presence in Kuwait, the UAE and Turkey. Colorado-based bagel chain Einstein Bros. Bagels operates 656 outlets across the US, and also owns Bruegger's Bagels, Noah's New York Bagels and Manhattan Bagel, which have a combined footprint of over 300 US sites.    Luxembourg-headquartered investment giant JAB Holding created the Panera Brands fast-casual business unit in August 2021, uniting the Panera Bread, Caribou Coffee and Einstein Bros. Bagels brands in one group. Missouri-based Panera Bread is the largest chain in the group with 2,182 stores across the US and Canada and generates the majority of Panera Brand’s circa $4.8bn annual revenues. If the sale of Caribou Coffee and Einstein Bros. Bagels goes ahead, US coffee and food-to-go chain Panera Bread will reportedly return to an independent business within JAB Holding’s portfolio of beverage brands. The investment firm also has interests in coffee and tea group JDE Peet’s, UK-based Pret A Manger, Swedish coffee chain Espresso House Group, US donut and coffee business Krispy Kreme and soft beverages group Keurig Dr Pepper Inc.. The report comes as Panera Brands continues to build towards a long-awaited IPO launch. The group has been exploring a public offering since November 2021 and said the key strategic senior appointments of Patrick Grismer and Mike Tattersfield in September 2023 were about ‘positioning the company to go public’. Panera Brands will still pursue a listing of its remaining Panera Bread business if it divests its other businesses, according to Reuters.  It also follows JAB Holding’s May 2024 announcement that it was seeking to become less reliant on its consumer goods portfolio and would establish a global insurance platform and asset management company to maximise its investment opportunities. https://lnkd.in/g2Cd7KSs