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October 2015

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In this issue

In memory of Subway’s Fred DeLuca

Fred DeLuca, co-founder of the largest restaurant chain by units in the world, Subway, died September 14 at the age of 67, just weeks after celebrating his company’s 50th anniversary. DeLuca founded Subway when he was 17 with funds from a family friend, Dr. Peter Buck, a nuclear engineer. DeLuca was originally looking for money for college, but Buck challenged him to start a sub shop. DeLuca grew the single store named Pete’s Super Submarines to worldwide sales of $18.2 billion and 43,154 units as Subway.

These execs have cure for sitting disease

Catherine Monson is a stand-up franchise executive. Fastsigns’ CEO has taken the standing desk one step further and included a treadmill. The only downside, Monson says she’s found so far to never sitting at her desk is the change in her footwear—flats. “I know this disappoints friends who like amazing high heels,” she says, sighing as she adds that she’s had all her pantsuits hemmed for flat shoes. (She does have heels at the ready.)

Turning Father’s Day Eve into a holiday

'Dads need more' is one of the taglines of the newly created holiday, Father's Day Eve. But can you really franchise a celebration of fatherhood?

‘Get your numbers on’ is advice from Rita’s operator

Sure, it’s fun to be in business for yourself, but Misty Young has advice for prospective franchisees—the point is making money. She and partners are executing the largest development deal in Rita’s Italian Ice history.

Why restaurant owners fear the beard

‘Beards are hip,’ says one restaurant owner, stating the obvious. Facial hair used to be verboten in foodservice, but no longer, and many are scrambling to rewrite policies. At least one holdout, though, forbids the beard.

‘Franchising Gives Back’ recognizes do-gooders

Two nights prior to IFA members visiting their representatives on the Hill in September, they honored 15 companies’ charitable giving. Here’s why those two things are philanthropically linked.

Arby’s do-or-die moment

Paul Brown had never led a fast-food franchise in his life when new investor Roark Capital picked him to run Arby’s—a concept so out-of-touch with today’s tastes it was the butt of comedians’ jokes. But Brown and his team punched back, proudly embracing its meats, and today can boast a fast-food revival against the odds.

Franchise Times Top 200+ ranks 500 brands

Sales grew a measly 2.1 percent, the slimmest increase in years, at the 200 largest U.S.-based franchises. A rare decline at two top 10 brands, McDonald's and Subway, took its toll

Christian Bros. sets sales pace for auto sector

New car sales are at their highest level since 2005—on pace to hit more than 17.5 million in the United States this year—and national brands are seeing gains bringing mom and pop-type shops under their umbrellas.

Investments in Weed Man, @Work bear fruit

There are single-unit franchisees, and then there are the big, multi-unit kind. Weed Man USA’s three-year-old effort to develop the latter type is paying off big in this year’s results.

Unkind Mother Nature boosts Paul Davis

Cleaning franchises cleaned up in 2014, literally and figuratively. This category encompasses a number of differing segments, including commercial, residential and disaster clean-up, as well as targeted services, such as carpet and air-duct cleaning.

Right at Home, BrightStar post healthy stats

“In the last three years, we’ve opened 165 franchises; our competitors have averaged 67 in that same time period,” boasts Eric Little, chief development officer for Right At Home, and he should be allowed to brag.

Hotels lead franchise world with 7 percent pop

As the recession fades further from memory, companies, couples and families have reopened their pocketbooks to fuel massive year-over-year growth in the hotel category. Gains are widespread, but high-end legacy chains like Marriott, Hilton, Hyatt and InterContinental are leading the pack with double-digit growth at many of their most prominent flags.

Anytime Fitness climbs top 200, up 52 percent

In case it’s not obvious as you peruse the column of companies to the right, personal services is a diverse and eclectic category. Not to be confused with business services, personal services are franchised services that individuals use for their, well, their personal needs, like tax preparation, exercise, haircuts and education.

New tactics boost Unishippers, FASTSIGNS

Unishippers’ focus on the small- to medium-sized business customer led to strong growth last year, 12 percent up in sales and 5 percent up in units. “We really focus on the SMB customer, trying to differentiate ourselves from our competitor space,” says Kevin Lathrop, president.

After flat years, Johnny Rockets gets growing

It may seem strange to lump taxes and children’s services together in the personal services category, but on the surface, a category like family dining doesn’t seem like it should produce any head-scratching when it comes to listing the top members. Until you get to the 10th franchise: Hooters. We’re not saying Hooters isn’t family-friendly, only that the so-called veto-vote may have a different meaning here. (Perhaps, the same could be said for Ruth’s Chris Steak House, where price could deter a young family from dining there.)

Tech, data drive smokin’ sales at Dickey’s BBQ

Fast-casual shows no signs of slowing down. This year’s Top 200 is peppered with better burger chains like Five Guys at No. 75 and Smashburger at No. 210; wing concepts like Zaxby’s at No. 77 and Wingstop at No. 111; and of course Panera, the dominant concept in the category which again ranked No. 27 this year.

Plucky Chick-fil-A wows with marketing

Quick service restaurants are still some of the biggest players in the restaurant industry, fetching more than $235 billion in 2014 across various food segments from pizza to donuts and, of course, burgers.

Former upstarts chomping away at Subway

Once upstart competitors are no longer nipping at Subway—they’re chomping away at the largest franchise in the sandwich category. Subway pulled in an impressive $18.8 billion in sales in 2013. But even with an additional 858 units, the brand’s sales dropped 3.19 percent in 2014 to $18.2 billion—a $600 million drop.

Matco boasts 25% jump; Ace moves up top 10

Sporting double-digit sales increases, Matco Tools, Pet Supplies Plus and Once Upon A Child led the franchise retail category in 2014 with the largest gains in a category seeing modest, 1.5 percent growth overall.

Stadium blitz for hungry franchise brands

Setting up shop in the path of thousands of hungry fans can be fruitful. But stadium locations are challenging for their rapid-fire pace and tight quarters—not to mention if the home team starts losing.

Subway hopes for short attention spans on Jared

Public figures can have a huge impact on the fortunes of companies, for good and ill. No one knows that better than Subway, which cannot yet say the ultimate effect of the fall of spokesman Jared Fogle.

Inspiration from Everest highlights RFDC

The annual Restaurant Finance & Development Conference is right around the corner. The event runs from November 9-11 at the Wynn Hotel in Las Vegas and offers operational insight, financing opportunities and a chance to network with other industry leaders.

Tax tips can save headaches and money

Peter Lancellotti is a franchisee of Seniors Helping Seniors in West Los Angeles. With 42 employees and a fast-growing business, he doesn’t have much time to look at arcane tax exemptions.

Four pillars support lasting growth in restaurants

The restaurant space is hot right now, but our guest columnists share advice on how to avoid flaming out quickly. Consistency and replicability are two foundational concepts.

Extra drama at Planet Fitness debut

There’s drama every time a company goes public, but PLNT’s $216-million IPO really caused execs to sweat. Just days after the low-cost fitness chain began offering shares August 6, the company frantically sought a temporary restraining order against a fired employee, whom it accused of stealing “highly sensitive personal and financial information” that it feared he would use to torpedo the offering, said a lawsuit filed in U.S. District Court in Maine. A federal judge granted the order by 7 p.m. August 11, and it was to remain in effect for 14 days.

Living Large brands describe marketing tactics

When customers can say anything about your business at any time, the old rules of controlling your message no longer apply. The three brands we're following all year explain how they're tackling the new reality.

Smoothie King makes moves in United Arab Emirates

The Middle East is a hotbed for franchising right now. Those who want to ease into the territory may want to enter through the UAE. But be aware: It's easy to get seduced by money flowing in the region.

Country profile: doing business in UAE

The colors of the UAE flag symbolize Arabian unity. Above is the national flag; however, each of the seven emirates has its own flag, except for Fujairah, which uses the national flag.

Executive Ladder

The gym center franchise Workout Anytime announced the addition of two new team members: Mark de Gorter as chief operating officer, and Greg Maurer as vice president of fitness, who will help design the brand’s personal-training program.

Lawsuit: Regis clips franchisees by ditching ProCuts

The hair-cutting franchisor was once gung-ho about its concept aimed at men, ProCuts. But the thrill seems to be gone, and a handful of founding franchisees are crying foul. Is this any way to launch a brand?

World Bank takes fresh look at franchising

A few blocks from the White House and about the same distance from the State Department is a building which, with its sleek modernity, blends into downtown Washington. It doesn’t broadcast its presence loudly, but it doesn’t need to: It is the World Bank, potentially one of the most important sources of funding on the planet.

Many motivators drive franchisees, like staying sharp

Ask a person why he or she is franchising in the first place, and the same answers pop up again and again: It’s a way to make money, expand an existing portfolio or satisfy a passion. To remain active mentally and physically isn’t usually in the mix.
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From the Magazine

Publisher's Column

Weighing in on a meaty issue

I’m a Minnesota Twins baseball fan. Besides watching them on TV, I’m guessing I probably attend 20 games or more a year at Target Field, their home ballpark. It’s still a pretty new venue with slick restaurants featuring avant-garde food (for a ballpark), craft beers and wine, climate-controlled areas with padded seats and more. This isn’t grandpa’s ballpark, folks. (That's yours truly with mascot T.C. to the left.)

Loose Ends

This time it really is all about Nancy

In all the years I’ve worked for Franchise Times, I’ve never been asked to write commentary for the Top 200+ research—until now. I am not known for my keen mathematical mind. In college I avoided upper-level math and science classes, preferring instead to take literature and sociology and cultural anthropology. At the time, I could see the value of reading good literature—and the occasional murder mystery. I didn’t have the foresight to see that one day I would be working in the Bobby Sox snack shack and need to make change. Nor that a balanced life starts with a balanced checkbook.
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