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October 2016

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In this issue

Check out our tearable franchise puns

I used to be a franchise lender, but I lost interest.

Delivery work’s not for faint of legs

Tristan Jimerson and Daniel Laeger-Hagemeister delivered sandwiches freakishly fast for Jimmy John’s. No one, Jimerson says, has delivery as dialed in as Jimmy John’s. Since the delivery zone for each store is small, the sandwiches sometimes rode in cars, sometimes in messenger bags via bicycles.

CenterOak bests 97 others to buy Wetzel’s Pretzels

“Wetzel’s is a great business for private equity investors because it has everything they look for,” declares Bill Phelps, who as co-founder and CEO of Wetzel’s Pretzels could be considered biased. “It has high cash flow. It has good growth.

Malawi’s Pizza finds early adopters for purposeful plan

Americans sending food abroad has historical roots. During WWI, U.S. citizens curtailed their consumption of wheat and sugar, eating instead fresh produce, in order to send shippable food to Europe for both the allies and our own soldiers. The slogan was “Food will win the war.” There was a similar campaign during the second World War.

Romp ‘n Roll founders don’t regret spurning Shark Tank

Michael and Babz Barnett had their 15 minutes of fame six years ago on the hit TV show “Shark Tank.” Like other contestants, they pitched their concept—a modernized kids’ gym called Romp ‘n Roll—to high-powered celebrity judges, and got the coveted offer.

HB Boys boss never likes to say ‘I told you so’

‘There has to be an allowance for people to make mistakes,’ declares Gary Moore, operator of 58 Burger Kings plus three other brands. Judging from the operation’s success, many more hits than misses are likely.

From five cents to 500 million for Nathan’s Famous

How to last for 100 years? For Nathan’s Famous, it’s the hot dog, stupid. And if you’re Nathan’s boss, Wayne Norbitz, the only way to eat it is plain. ‘That’s the way God intended it to be,’ he says.

Tilted Kilt CEO had us at ‘bacon bar’

Tilted Kilt’s CEO Ron Lynch is rolling out a new prototype for the Celtic-themed sports bar and grill, where the servers are known for their skimpy kilts. It will be lighter and brighter, with less kitschy Old World stuff hanging around. It will re-introduce games, the old-fashioned kind like pool tables, shuffleboards and dartboards. It will have a new lunch menu, with healthier options and smaller portions.

Young talent revs up Safeway Driving

Ann Littmann, a freshly minted VP at Safeway Driving School, is right on message as she describes the mission of the Houston-based franchise. “Safeway is a 43-year-old company, and we were invented to prevent the phone call no one wants to get,” she said, about a tragic car accident involving a young driver.

Pieology fires first in pizza battles

It was the great, unavoidable war. With so much money and interest flowing into the marinara-red-hot pizza category, many industry watchers see Pieology’s recent acquisition of Project Pie as the first move in an eventual wave of consolidation that will trim the number of players in this rocket-fueled restaurant segment.

Can UFC Gym go mainstream yet keep its mojo?

Ultimate fighting started on the streets, featuring brawls so bloody that lawmakers tried to get it banned. Today, UFC just sold for a staggering $4 billion to a new group of owners, and events like UFC 200 in July draw sell-out crowds. Enter UFC Gym, a young franchise owned 50-50 by UFC and a group of private investors, trying to translate the sport’s worldwide popularity into unit sales.

What to do when your brand needs a facelift

Rebranding efforts range from a logo change to exterior updates to vehicle wraps, but they all share something in common—everything goes better when franchisees buy in. Three franchises describe their decisions to have a little work done.

Retain talent with health insurance options

Recruiting and retaining top talent are critical to a franchisee’s success. By offering competitive healthcare employee benefits, franchisees can utilize a proven retention strategy to hold on to quality store managers and ultimately help increase profitability.

Getting a foot in the door with developers

As competition for top real estate locations continues to heat up, franchise groups are finding that forging relationships with developers can pay big dividends when it comes to securing space in new retail projects.

Parsing the high cost of free parking

Think about your average trip to a shopping mall—the height of car-based convenience. You jockey for an open spot, park, then walk the gauntlet through a chaotic lot filled with other distracted drivers. Judging by the crowds at most malls, walking the equivalent of a few blocks to the entrance doesn’t appear to scare off any shoppers.

Jamba Juice feels investors’ heavy hand

A trio of healthy lifestyle young men started Jamba Juice by opening a single smoothie shop in California in 1991 that they called Juice Club. They began franchising, and in 1997 changed their company’s name to Jamba Juice. In 2000 Jamba Juice acquired rival Zuka Juice and in 2003 was acquired itself. The new owners took the company public in 2006 as JMBA, at a price of about $50 a share.

Scoreboard

Marcato Capital had some choice words for the Buffalo Wild Wings board after a tepid quarter and lackluster analyst day. The hedge fund’s founder and CEO Mick McGuire sent a scathing public letter and detailed presentation that questioned the company’s direction.

‘Softer’ issues loom large in overtime planning

Franchisees and other small-business owners have a number of ways to comply with new overtime guidelines established by the U.S. Department of Labor and the Obama Administration, but attorneys and lawyers working with such clients suggest getting started sooner rather than later.

Except for the top 10, a roaring year

The 10 largest franchised brands collectively lost systemwide sales for the first time in the history of the Franchise Times Top 200+, our exclusive annual research project. But 190 other big franchisors turned in their strongest sales increase in at least five years. Learn who’s up, who’s down and what’s behind the numbers.

Mixed numbers amid auto mergers

Change is a constant in auto-mobiles, but with the rise of shared-car services and fast-tracked driverless vehicle technology, the pace of upheaval in this massive industry is going faster than ever.

Service brands go wide for sales

Here’s a statistic that jumps right out: AtWORK Group’s systemwide sales zoomed up 56 percent last year from the prior year. The temporary staffing company’s gain was by far the biggest increase in a diverse category that also boasts a few other standouts.

Flat revenue challenges cleaners

Cleaning houses and businesses isn’t sexy, but with nearly $10 billion in sales across the top 16 franchised brands in the space, it’s still lucrative. The nearly flat sales growth, however, shows there is some stiff competition.

Healthcare booms, by a country mile

It’s the year’s most booming sector. As home healthcare franchises seek to serve an ever-aging population, every brand in this year’s health and medical group recorded growth to the tune of 14 percent overall, with all but two companies hitting double-digit increases on their own. That’s on the heels of 11.7 percent sales growth in 2014, with 281 total units coming online in 2015, a 6.1 percent increase.

Hotel brands extend long vacation

Fortunes are still rising in hospitality, with sustained increases in business and leisure travel fueling a multi-year growth streak that has fattened profits and spawned new flags from many established hoteliers.

Planet Fitness leads thriving market

The fitness industry is pumping up the personal services sector, which saw sales climb 7.6 percent from 2014 to $14.2 billion thanks in large part to the massive growth of brands such as Planet Fitness, Anytime Fitness and Snap Fitness. Together these concepts added more than 500 units in 2015 and each saw double-digit sales growth.

Five beat average but a handful sink

Printing, shipping and signage franchises posted a 3.6 percent increase in systemwide sales last year, one of the more modest gains by an industry sector.

Casual dining’s demise exaggerated

A lot of people think casual dining will soon disappear, that it’s a hot potato being tossed from one private equity group to the next before time runs out. Despite the segment’s issues, there is plenty of innovation among the best brands.

Sector still golden despite slowdown

What hasn’t already been said about the wonder that is the fast-casual restaurant: It’s what millennials want, it’s what busy families want, it’s true menu innovation, it’s making gobs of money.

Retail brands fight ‘Amazon effect’

When your industry sports a behemoth like 7-Eleven, it’s hard to escape from the shadows of the big dog’s results. While sales for the retail category as a whole decreased 1.5 percent, sales for the rest of the Top 200+ category sans 7-Eleven actually increased by 3.6 percent. Overall unit growth held strong at 4.1 percent from the prior year.

Innovation fuels risers like Popeyes

While it remains in the No. 1 spot overall, McDonald’s shows its behemoth status—though not how it would like as the company’s $5 billion-plus sales drop means the sector as a whole saw less than 1 percent growth.

Brands seeking ways to be different

The sandwich segment is touching on some familiar notes, but change is afoot at some of the strongest growth brands.

Carl’s Jr. beefs up its Indian menu for Sri Lanka

Sri Lanka doesn’t offer the population numbers its neighbor India does, but its inclusion in the December trade mission points to the fact that it’s ripe for expansion. Nothing is ever a given in international expansion, which is why a boots-on-the-ground approach is so valuable.

Country Profile: Sri Lanka at a glance

The lion represents Sinhalese ethnicity, the strength of the nation and bravery; the sword demonstrates the sovereignty of the nation; the four bo leaves—symbolizing Buddhism and its influence on the country—stand for the four virtues of kindness, friendliness, happiness and equanimity.

How three brands craft and control the message

What to do after a negative review. How to turn non-techie owners into social media mavens. These are two topics tackled this month by the participants in our year-long Living Large column. Read on to learn their tactics.

Executive Ladder

Becoming Mom Spa+ Ultrasound hired Susan King Glosby as its new vice president. Villa Restaurant Group added Enrico Cundari as the new controller of its corporate finance team.

Fame cuts both ways at Wahlburgers

Fame in franchising is a double-edged sword, as actor and former Funky Bunch member Mark Wahlberg and brothers Paul and Donnie just learned.

Only in America? Mais non!

The famous 1976 Saul Steinberg cartoon in The New Yorker depicts a map of the world from the perspective of a resident of that city: beyond Manhattan, a few cities and states, small and faint; the U.S. ending at the Pacific, with Japan barely visible; and the country turning its back on the Atlantic, with Europe nowhere to be found. That sardonic depiction has come to be a shorthand way of thinking about the U.S.: myopic, with tunnel vision, imagining itself as the center of everything.

Print media’s changing role in marketing

While touring London in 1897, American author and humorist Mark Twain caught wind of rumors that he had died. Upon hearing this news, journalist Frank Marshall White sent a fellow reporter to check on Twain’s well-being. “The report of my death has been grossly exaggerated,” was his response.

CMIT owner likes working remotely

By now, anyone not residing under a rock understands the importance of computer security. Just ask the folks at the Democratic National Committee if you harbor doubts.
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From the Magazine

Publisher's Column

Success at FT begins with you, dear reader, in mind

The older I get, the more I try to learn. In my 20s, I knew everything. In my 30s, I figured I could learn a thing or two, and in my 40s, well, I actually figured out there was still a lot I didn’t know. And, instead of finding that terrifying, it was actually liberating. More comfortable in my own skin the older I got, I felt free to ask questions. If I could get a memorable “take away” from a conversation, I considered that a bonus.

Loose Ends

Why great franchising is akin to forward-thinking grandparenting

I never realized how closely aligned franchising is with grandparenting until I volunteered to watch my daughter’s two boys, Perry, 5, and Fisher, 7, so she and her husband could go to work. The boys’ other grandmother watched them full time prior to this school year, so she gets the benefits of a new study finding that baby-sitting your grandchildren may reduce your risk for developing Alzheimer’s disease. Sadly, one day a year doesn’t give you much of a long-term health benefit.
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