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Worldwide Wrap-Up

Fatburger signs with wealthy group in China; French pools arrive


By the end of 2012, half of Fatburger’s units will be international locations, according to CEO Andrew Wiederhorn. The Santa Monica, California-based chain has 140 units open worldwide. Of the additional 225 units in its pipeline, three-quarters of them are international locations, he added. 

The reason the 60-year-old chain, owned by Fog Cutter Capital Group, of which Wiederhorn is also CEO, decided to slide into international development was practical—the U.S. was in a recession and Asia and the Middle East were not, he said. They now have units open in 10 countries, with development agreements signed in 15 additional countries. The chain started its international development with Canada in 2006, opening in China the following year, he said.

Andrew Wiederhorn

CEO Andrew Wiederhorn

The most recent deal is one that is somewhat unusual in international development, Wiederhorn said. Fatburger signed an agreement with PUJI Capital Limited, a Shanghai-based investment-and-asset management firm, to expand the brand throughout the greater China area, which includes Hong Kong, Singapore and Taiwan. What makes the deal unique is that PUJI represents some of the wealthiest families in China, many with extensive real estate holdings, where they would be able to operate the brand in their mall locations, he said.  PUJI serves as Fatburger’s master developer.

On its website, PUJI’s bio says it focuses on lifestyle, media, property and consumer industries for its “rich-list Asian families, high-net worth individuals and institutional partners.”

Fatburger, which got its name back when “Fat” was associated with “Fat City” and “Fat Cat,” not the saturated ingredient of burgers (Wiederhorn stresses they use lean beef), is an iconic Southern California brand. Rappers have included its name in songs and it’s part of Hollywood folklore. Fatburger regularly caters events at most of the studios in Hollywood, Wiederhorn said, and when “Mission Impossible 4” filmed in  Dubai, the local franchisee provided lunch for a couple of weeks to Tom Cruise and the cast, he said.

Fatburger has a prominence in the Middle East, and Wiederhorn said they’ve never experienced any anti-American sentiment, thanks in part to their Hollywood connection.

Fog Cutter purchased a second chain, Buffalo’s Cafe, last year, a casual-dining chicken-wing concept, which they hope to also expand. “There are 25 in Atlanta, half dozen in the Middle East and L.A.,” he said. The cafes, along with a smaller Buffalo’s Express, which serves just wings and fries, are additional brands for their Fatburger partners to build.

When the U.S. economy turns around, Fatburger plans to continue its domestic expansion to the East Coast.

Wiederhorn’s three key lessons learned from international expansion: Establish key flagship locations for visibility; choose the right partner, because “the wrong partner and growth gets stymied”; put your own people in those markets to start the process as you build local teams. Fatburger’s team stayed on site for a couple of years, he said. “Find the best people you can find” locally, he pointed out. “Trying to do it from L.A. is not the best recipe.”

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Denny’s Corp. has signed an exclusive agreement with the Musiet Group to develop 10 new Denny’s full-service restaurants in Chile over the next 15 years. The family-owned Musiet Group is also a franchisee of Ruby Tuesday and owns and operates PAL Airlines, which services Central and South America.

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Q Corner, Quiznos Subs’ new test concept, was opened in Paraguay by Paraguay Food Corp., a subsidiary of Premium Fast Foods Brazil. QSR International is the master franchise developer for Quiznos in Latin America. The test concept includes new drinks and dessert items not  found on the regular menu. This is the first of five units the company will open in Paraguay. The first is in the food court of the Shopping Pinedo mall in Asuncion, which is near a university with an enrollment of 41,000.

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Hilton Worldwide opened its first dual-branded property in the United Kingdom, inside St. George’s Park in Burton Upon Trent. The park is home to The Football Association’s newly constructed, world-class training and development center for English football (soccer). The more upscale Hilton Hotel & Resorts will have 142 rooms, while the Hampton by Hilton’s 86 rooms are in the mid-price range. Both hotels will incorporate sustainable elements, such as rainwater harvesting. Design and artwork at the hotels will also feature English football memorabilia and art. Hampton, which already has 11 hotels in the U.K., opened its 12th recently, an 119-room hotel in York, opposite the city’s railway station. The Hampton hotels brand has 70 hotels in the pipeline outside the U.S., the company reports.

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Not every international deal is an export; more and more foreign companies are coming to America. An unusual import is a French swimming pool franchise, Desjoyaux Pools.

Scott Thompson, a former Fitness Together multi-unit franchisee, has been charged with getting the third-generation business established in the U.S. 

The company was started by present president of international development, Nicolas Desjoyaux’s grandfather after the backyard pool he built for his family began to be coveted by friends and family. In 1978, he patented two critical design features on the in-ground pool that made it not only easier to maintain, but also created a unique product and service that could be franchised, Desjoyaux said via Skype. They began franchising in 1983.

A franchise rather than a dealership was set up, Thompson said, because they want the franchisees to not only sell the pools, but service them as well. That was a critical flaw in the first franchise program the company attempted earlier in the U.S., Desjoyaux said. A showroom is being established in Atlanta that will launch the program, Thompson said. 

One challenge is that construction rules are different all over the world, and in the U.S. they can vary by state. Lifestyle choices are also different: “In China they don’t like the sun (tanning), so they build them inside,” Desjoyaux said. There are 500 locations in 75 countries, and the U.S. will be their largest market. 

The U.S. franchise fee is $35,000, with the royalty fee built into the product, which is manufactured and shipped from France, Thompson said.

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