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Loyal people are key for WKS boss, plus no drama desired for Signal 88


David Farkas

Illustration by Jonathan Hankin

Roland Spongberg acknowledges it’s tough finding hourlies and managers in Southern California. “Today, having a sign that says ‘Now Hiring’ doesn’t get it done. You have to be more proactive than that,” he says.

The unemployment rate in Los Angeles County, for instance, was 4.1 percent at the end of 2017. In San Diego County it stood at a paltry 3.3 percent.

So Spongberg, who operates about 184 franchised restaurants in said counties, deploys a special squad to visit rivals, identify talent and “take them away.” Unless California’s thriving economy slides into a recession, his crew of poachers will remain busy for years to come.

Spongberg, after all, is a serial franchisee. His Lakewood, California-based company, WKS Restaurant Group, signed a deal last year to open at least 20 Blaze Pizzas in southern California. Last December WKS also acquired 52 Wendy’s in the region from Pennant Foods. Spongberg, a veteran real estate developer, launched the business in 1987 after franchising an El Pollo Loco. WKS is now the chain’s largest franchisee.

Over the years, WKS also added Denny’s, Krispy Kreme and Corner Bakery to its portfolio. The Spongberg family, which includes Roland’s wife and six adult children, owns the company outright.

Yet why add Blaze and Wendy’s? Spongberg likes the economics of fast-casual pizza, especially inline models. But he insisted on opening units only in SoCal and no pizza concept he interviewed had that territory available. “We struck out,” he concedes.

Until Blaze called him back offering San Diego and a part of L.A. known as the Valley. ”It’s densely populated. We have a lot of restaurants there and they are high-volume,” says Spongberg about the area that includes Encino and Ventura. WKS is obligated to open four Blazes a year for five years. He’ll finance the openings with cash flow.

As for Wendy’s: “We had looked at the burger section and had taken a run at Smashburger and Carl’s. Wendy’s is a good brand,” Spongberg says. “There was an opportunity because of the lack of capital invested over the years.”

The acquisition itself was “a complicated stock sale” and financed via Capital Spring and Wintrust Franchise Finance. Terms were not disclosed. Not all the units have undergone Wendy’s Image Activation program.

“One reason we wanted to be in Southern California is we wanted our own people in the restaurants, people who were loyal to us,” he explains.

Security concerns

A security presence at a book signing? Signal 88 Security franchisee Jeff Carlyle has handled several. He recalls an event manager who hired his franchise “to make sure there was no drama in line.” After all, he adds, “People get star-struck.”

His group has also posted security outside a fast-food restaurant. “The owner wanted us at key times because there were transient people in the parking lot. He wanted to make sure no one was blocking the drive-thru.”

Carlyle, a retired U.S. Army MP, along with partners Mike McClue and Rick Dunn, both former law enforcement officials, so far operate Signal 88 Security outlets in Charleston, Columbia and Greenville, South Carolina; Atlanta; Cincinnati; Albuquerque; and Orange County, California.

The 15-year-old Omaha, Nebraska-based franchisor charges a $45,000 franchise fee and says on its website the total franchisee investment ranges from $75,000 to $268,400 (including franchise fee). It boasts 120-plus franchisees in the U.S. and Canada.  

Of course, book signings and fast-food joints make up a small portion of the partners’ work. Mostly, Carlyle explains, their roving patrol employees drive well-marked vehicles to client sites to maintain a visible presence to ward off people with bad intentions. Doing so makes logistics one of their central concerns when opening a new outlet. “You want to make sure you find geographical location that can support your operations,” Carlyle explains.

Leasing such a spot is now a lot less expensive than Carlyle’s first franchise, Snap Fitness. He opened three gyms in Atlanta over 10 years ago, only to end up selling two of them (a third is also on the block) after hearing about Signal 88. He figured his background as an MP in Iraq would help him. The business was also less expensive to start.

“Everything I was doing in the gym business I didn’t have to do in this business. No leases or retail space,” he says. A Signal 88 office doesn’t need to be visible to customers.

The partners typically recruit clients ahead of renting an office. In Albuquerque, for example, a city on a grid system, figuring out the road network was easy, Carlyle says. Why such emphasis on road routes? “When we go out on routes, we’re delivering our service. Every month we do route efficiency,” Carlyle says.

Time is money. Carlyle would only estimate the price clients pay per patrol per 15 minutes ($9.50 to $13.50). “It’s all about patrol efficiency.

Hitting four properties per hour is our general rule of thumb,” he adds.

The partners, who’ve used franchisor-recommend banks to finance expansion, have put the brakes on growth this year. They’re focused now on increasing profits and researching markets close to their existing outposts in the Southeast and Southwest. “There’s lots of opportunity,” Carlyle maintains.

The partners, in any case, aren’t under obligation to open more Signal 88 Security offices. “There’s no expectation of that. In the FDD, there’s dollar goals you have to meet year after year, and then you’re awarded new territory.”

Has Carlyle and his partner met them? “We’re good,” he insists.

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 dfarkas99@gmail.com.

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