It's not easy following a dog act. Franchise veteran Lee Sanders, taking the stage after Amy Nichol's talk on Dogtopia, quipped, "I like the Dog of the Week program. I've had some previous restaurants that would fit that role."
But not, of course, in his current role as CEO of Johnny Rockets, a retro diner chain known for its feel-good Americana image and dancing and singing servers.
The Lake Forest, California-based company has 260 of the casual-dining restaurants open, with 140 in the pipeline. The challenge for Sanders who joined the chain after serving as senior vice president of development and franchising for Buffalo Wild Wings is how to revitalize an older brand.
Johnny Rockets is wholly owned by RedZone Capital GP, LLC, a private equity firm whose owners also own the Washington Redskins football team.
To grow a brand – old or new – Sanders had the following advice:
- Treat franchising as a relationship, rather than a contract.
- Know your customer. In Johnny Rockets' case, the franchisee is the customer; the person buying the burger is the consumer.
- If you want to grow, be willing to change the status quo. You need to get people out of their comfort zone; and to be willing to change the company culture.
- Provide the necessary infrastructure. Franchisees pay for it, they should get it.
- Understand what new growth at a mature system will look like. Existing staff may not have the skills necessary to take a mature concept that has been stagnant for a while on a fast-growth path.
- Heritage franchisees also may resist change. They can believe they've lost relevance and become disenfranchised. And, the worst-case scenario: Heritage franchisees can ban together and slow down the momentum.
- On the other side of the coin, new franchisees won't always care about what went on before they joined the system.
- Be willing to refranchise. If no one will buy it for what you think it's worth, that might tell you something: The valuation may not be what you thought.
Real estate is always a challenge, so don't make it harder for franchisees to find good sites, Sanders says. In some systems, franchisors block out all the good markets for company stores. "That's not the business model you should think about," he says. Nor should a franchisor take away a great site a franchisee has found, for a company store. "It's legal, but it may not be ethical or good form," he says.
For new franchisors, understand you have to spend money to be in franchising. "It's important to have a solid agreement, as soon as you can afford it, spend money to get a good one," he told the crowd.
And successful executives, he warns, must be willing to pay to get an
experienced team. And be prepared: That team's going to want to share in the economics – i.e. the equity.
After all, you want to avoid breeding a lot of dogs.