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.
“Most people think of their computers like they do toasters,” says CMIT Solutions franchisee Greg Miller. “They buy them at Best Buy and figure IT is something they can do themselves. In a professional environment, they don’t have the skills, especially when it comes to security.”
Miller, a former corporate IT executive with an MBA, has been addressing the needs of such businesses in Orange County, New York, since 2009. That’s the year he signed an agreement to operate a CMIT franchise in half of the county (pop. 377,647). In March, he became a multi-territory franchisee by acquiring the other half.
The acquisition was strategic. “When people here say they need a window cleaner or some other service,” he explains, “they search the whole county, not a town.”
After Sony Corp. laid off Miller, he hired a franchise broker who showed him a large-format printing business in addition to CMIT’s managed services model. Miller liked printing because he’s also a professional photographer who makes prints for himself and others. “It’s an area I know and enjoy,” he says.
But he realized that a growing printing business would eventually need more equipment and space, at significant capital expense. A managed services model like CMIT made more sense; he already possessed the skill set and it didn’t require a storefront. Better yet, the Austin, Texas-based franchisor provided services to clients that Miller couldn’t offer on his own—namely, the aforementioned 24/7 centralized server monitoring.
He and three employees now ply the entire 812-square-mile county, a largely rural area in which Miller estimates he’s adding 3,000 potential clients. Many of them are CPA and law firms in addition to small manufacturing and service companies.
Not that his team must visit them necessarily if they become clients. “We tend to do all our work remotely,” Miller explains, a boon to quality of life.
Tree. Apple. Fall.
Like his father, Glenn, Brett Gustafsson is an area developer. Glenn sold Quiznos franchises from 1999 to 2006 in the mid-Atlantic region (and is still AD’ing other restaurant brands). Brett meanwhile is slinging franchises for Cookie Cutter Haircuts for Kids in mostly the same area. The 33-unit chain is based in Salt Lake City.
As of late August, the 28-year-old Kent State University graduate had sold two “three-packs” and was hoping to ink another three-pack deal after the potential buyer returned from discovery day at franchisor headquarters. Those shops would open in Greater Baltimore.
Not incidentally, Gustafsson himself signed a franchise agreement for three units about a year ago. They will also be in Greater Baltimore. The first was scheduled to open August 29 in Lutherville-Timonium, an affluent suburb (median income: $74,464) on the Chesapeake Bay. The others are planned for the tony ‘burbs of Bel Air and White Marsh.
“I wanted to live it if I am selling them,” declares Gustafsson, who is partnering with brother Eric. He adds an SBA loan will finance their first shop.
The cost of launching a single Cookie Cutter unit runs from $90,500 to $261,000. The royalty is 5 percent of sales. The FDD also says 18 of the 22 Cookie Cutters franchised locations in the United States grossed between $90,281 and $338,385 in 2015.
Gustafsson insists he isn’t worried his shops will compete with the franchisee he was expecting to sign up. Baltimore suburbs are densely populated, after all. “Within an eight-mile area of our Lutherville store, we have 8,000 kids under the age of 12,” he claims. “If I even get half of them, I’d be a happy camper.”
When it’s time to update
Few legacy brands have much choice when it comes to remaining competitive than to give their restaurants a facelift. Consider Old Chicago (no pun intended.) Franchisees of the 40-year-old chain, part of the Chattanooga, Tennessee-based CraftWorks Restaurants and Breweries, are updating units at an average cost of $150,000 each. That buys them new fixtures, paint and furniture.
John Johnson, a veteran restaurateur who operates five franchised Old Chicago units in Wyoming and Montana, likes the decor changes. His Billings and Bozeman restaurants have seen comparable sales climbs by 16 percent and 34.7 percent, respectively. “We put the brand refresh on them and they turned out to be banner stores,” he boasts. He purchased both in 2014 from an existing franchisee.
The 12-year veteran of the brand has the right to own and operate Old Chicagos throughout Wyoming and Montana and in Rapid City, South Dakota. Because Johnson likes to own land, he and partners buy it with a holding company that leases it to his restaurant company, JRG Restaurants. The partners are finding Missoula real estate challenging, however, because developers “want to do a build to suit and leaseback,” he gripes.
Business in his Wyoming Old Chicago restaurants is also a challenge as energy prices collapse. Unemployment in Casper, for example, is now above 7 percent. In August the remodeled Gillette unit posted negative sales of 5.3 percent; in Casper (also remodeled) they were slightly above 3 percent.
Not that hiring has gotten any easier. “You would think so,” Johnson declares. “Younger people in the oil fields were making $24 and $25 an hour. They can do better on unemployment benefits than what we can do for them.”
Johnson is nonetheless expanding his franchise empire early next year when he will open an Old Chicago in a Holiday Inn in Rock Springs, Wyoming. He’s also considering franchising a fast-casual concept. “We’ve been looking at Fuzzy Tacos,” he notes.
David Farkas has covered the restaurant business for 25 years as a reporter and food writer, and writes about development deals in The Pipeline in each issue. Send your franchise’s development agreements to him at firstname.lastname@example.org.