Saxton CEO filters 99 sites to get one; Tutor Doctor ‘zee wants significance
Illustration by Jonathan Hankin
I enjoy talking to veteran franchisees who continue to grow their franchises, either organically or through acquisitions. It’s edifying, after all, to tap into the brain power of multi-unit operators who are still open to new ideas that could help anyone reading this column.
Take Saxton Group CEO Adam Saxton, for example. He oversees 81 McAlister’s Deli restaurants spread throughout six breadbasket states. The family-run business, founded by his father, Executive Chairman Kelly Saxton, is McAlister’s largest franchisee and ranks No. 82 on Franchise Times’ Restaurant 200 list of U.S. franchisees.
Last year, according to Adam Saxton, the company piloted an app in several units that allowed hourlies to get paid (using a pay card) at shift’s end. “After they clock out, they get a notification on their phone and are able to get paid next day for the shift they just completed instead of waiting for two weeks,” he explained, adding with no extra administrative cost.
Saxton claimed employee feedback has been positive, and said 856 workers (out of 3,188) are using pay cards. He reckoned the company has “paid out” $5,000 per day via the app, or year-to-date $508,000.
“What you find is, you have a few early adopters. Then other people see them doing it and it grows organically,” he said.
The quick-pay initiative is a small part of the company’s larger effort to trim turnover and enhance recruitment. Other parts include paying competitive wages and offering flexible hours to high school and college workers. “You have to add as much as you can to the employee experience,” he maintained.
Those efforts should serve the company well in Omaha, Nebraska, its newest market, where it now operates two restaurants. The unemployment rate stood at or below 3.1 percent this summer.
The Dallas-based group, which opens eight to 10 new restaurants annually, is also counting on its real estate prowess. “When we started developing in the Dallas-Fort Worth area, the third or fourth largest metro area in the country, there were zero McAlister’s Delis,” Saxton recalled. “Today, there are 35. So we know how to enter a market and build brand presence.”
So how’s it done? “I start with a macro view of a market and identify trade areas based on our experience of where we would do well,” Saxton told me. Using brokers, he identifies the trade areas first. “In a market like Dallas, you might start with 75 trade areas, in Des Moines, 10. Then you have focus on finding the best sites in each,” he advised.
That’s how people should do it. Instead, he added, franchisees are often enamored with specific sites, such as the intersection, the corner, the endcap or the shopping center. He encourages franchisees to “zoom out and identify trade areas.”
Only afterward does Saxton ask brokers to send him details of suitable sites. “You filter out 99 to find that one,” he said.
Well-educated at Tutor Doctor
Jon-Anthony Lui has been around franchising since his late teens. Now in his mid-30s, he operates a Tutor Doctor franchise throughout 11 territories in the Greater Toronto area. Some 350 tutors serve 1,000 families annually, he says. Tutors provide in-home academics on a one-to-one basis chiefly to elementary and high school students.
“I’ve been in and around franchising for a long time because my dad was in franchise sales,” he explained, adding his late father worked for a digital marketing concern called WSI. “It was through that interaction that I understood the value of franchising,” he said. His mother and father, who immigrated to Canada from Hong Kong, encouraged their son to be entrepreneurial.
Eventually, Lui began selling franchises for Tutor Doctor Canada, a franchisor. Although he enjoyed interacting with potential clients, he said he didn’t like cold-calling people. “I was good at it, but it was difficult for me,” he recalled.
Six months later, a company executive offered Lui a territory to build from scratch but not own. He jumped at the chance. “I would run it as a general manager,” he said.
A few months later, having met financial goals, Lui was ready to buy the territory. He borrowed money from a local bank for the purchase. (Roughly 100,000 people live in a territory, Lui said.)
Today, the total investment necessary to begin operation of these types of franchises runs from $68,500 to $96,700 for a Local Territory Franchise and from $73,500 to $101,700 for a Regional Territory Franchise. The Empire Builder Franchise is $118,200 to $146,400, according to the franchisor’s Financial Disclosure Document.
Lui operates his business from a single office, sourcing tutors from online job boards, community career centers and teachers colleges. The pay is $18 an hour, a rate that attracts students who might otherwise have taken a minimum wage job.
The FDD also shows that tutoring costs (exclusive of operational costs) “are approximately 39.2 percent of U.S. systemwide tutoring generated by our franchisees.” The employment website Indeed.com notes Tutor Doctor hourly wage is $20.64 an hour in the U.S.
“Tutoring builds résumés by showing professional development,” Lui contended, adding good tutors “are passionate about helping people.” On a given evening, he adds, his tutors are running 60 to 80 sessions in students’ homes.
Tutors are tested for subject-matter expertise despite what they claim they can teach. “What’s more important is, do they have the same values as we do?” Lui added.
As for growth, Lui is more or less land-locked due to other Tutor Doctor franchises in the Toronto metroplex. Instead, he said, he is focusing on a larger footprint with deeper penetration. “I want to create, with the franchisor’s help, the McDonald’s of tutoring. I want to be significant.”
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.