When franchise row needs a refresh
Photo by Beth Ewen
As I get older, I find myself morphing into a prototypical old man—standing on my front stoop with minimal clothing, squinting my eyes and wondering if the world is going to hell.
On my daily commute, I roll past a line of businesses we call “franchise row” in our household—a nearly endless strip of franchised retailers and restaurants that tends to define my city in the eyes of locals in the metro. This section of our main street, Central Avenue, is home to a shiny new White Castle and Chipotle, but the older Wendy’s, Sonic, Taco Bell, Papa John’s, recently shuttered Tires Plus and A&W-KFC combo could all use a refresh.
None of their visual offenses are major: things like pot-holed parking lots, faded paint, outdated signage and a taken-down logo that left behind a dirty shadow draw my scorn and furrow my brows like Red Forman. I’m not yet shaking my fists or calling anyone a dumbo, but rather wondering how franchisors and multi-unit franchisees handle the problem of the most aged locations in their vast systems, and how cities can spur the process.
In many ways, keeping a franchise system with thousands of units spick and span is like repainting the Golden Gate Bridge—once you get to the end, it’s time to turn around and start all over again. Here’s how some are managing the never-ending job. Deferred no more
Down at city hall in Columbia Heights, I sat down with Joe Hogeboom and Keith Dahl from the community development department for their take on our aging franchise establishments. They were beaming in the wake of positive local press covering the city’s new Facade Improvement Grant Program. Eligible business along Central Avenue can receive cost-matching grants on exterior improvements up to $5,000, not including security cameras thrown in for free.
“It really takes a lot to violate our property maintenance code,” Hogeboom said of the city’s past relations with business owners. “They’re recommendations at this point, so business may or may not follow them, but going forward we’re hoping to redo them so they have more teeth and businesses have to follow them.”
This new facade improvement program gives the city a $50,000 pile of carrots to hand out, rather than swinging sticks, so staff has gone door-to-door describing the program and offering a helping hand with the application process.
“How much regulation do you really want from your government?” Dahl asked, noting that all but one business has been receptive to the program. “We can’t force anybody to do anything, but at least we can give them the incentive to do something.”
It’s an enterprising pro-business initiative for a city with just 20,000 residents, and something that’s available to both franchised and independent businesses—and allegedly much more welcome than city inspectors showing up on a code-enforcement basis.
Like every other industry, urban planners tend to move in a pack—and façade improvement programs are available in countless cities. Whether it’s a small downtown looking to clean up the main drag or big cities with similarly large budgets, investing in downtowns and helping small businesses has gone mainstream. Call your local city hall to see if matching funds are available in your territory.
Managing the mega-system
Tom Schmitz is the director of operations for Haza Foods, owner of my town’s Wendy’s, one of 239 in the company’s portfolio in the central United States. He’s been with Haza for seven months since it purchased the local market, but indirectly with Wendy’s since 1982. Of its 55 Wendy’s in the metro, 15 have been recently remodeled and 40 are part of its aggressive store refresh program. It plans to renovate each one of its area Wendy’s locations over the next four years.
“If you take a traditional Wendy’s and do the dining room and exterior, you could be up to $250,000 to $300,000,” he said. “When you get to the extent of an older building and you have to do things in the kitchen and roof units, obviously that will add on to the cost.”
Wendy’s corporate sends a rep out once a year to evaluate every store, Schmitz said, but the multi-unit franchisee has district and local managers who are always monitoring stores, along with the local building, health and fire inspectors who come calling.
After a recent job change, Schmitz is now overseeing all of Haza’s local remodels, along with his other operations work, which he said adds a fun new dimension to his Wendy’s career that spans longer than my lifetime.
“To juggle that you have to be very well organized and have a calm, steady demeanor,” he said. “It’s hard to explain, but it’s fun. People often ask me how do you do it? I take it one day at a time.”
Wendy’s Chief Development Officer Abigail Pringle manages the mega-system’s thousands of units from the headquarters, while constantly implementing and updating its image optimization plan that includes store builds and remodels. As a brand that’s nearly 50 years old, she said managing franchisee renovations and new builds often means figuring out where franchisees are in their own life cycle.
“We’ve had franchisees in our system for a long time and all have been great, but now they’re at a point in their life when they’re thinking about retirement and looking at succession planning,” she said. “When you’re thinking about reinvesting in your restaurants, your time horizon has a lot to do with that.”
If sinking hundreds of thousands of dollars into a store isn’t in the cards, for retirement or other reasons, the corporation steps in to help its franchisees sell to franchisees who are better capitalized or have a longer time horizon to capture the benefits of such a major investment.
Depending on EBITDA or gross earnings and traffic volume, among other metrics, the company recommends one of four remodeling options—a $150,000 “refresh light,” $300,000 standard refresh, comprehensive $500,000 remodel and a totally new store that can exceed $1.5 million.
For large owners like Haza, Pringle said the company has joint capital planning meetings where they examine the entire portfolio, go over franchise agreements and help them choose the ideal pacing of remodels and major investments. It also offers construction management services if the franchisee elects.
Wearing the pants
One door up from Wendy’s, the A&W/KFC in my town is a co-located unit from the days when Yum Brands still owned both brands. A&W CEO Kevin Bazner previously told me about his “blocking and tackling” that means encouraging franchisees to make smaller, more impactful renovations that boost the customer experience, rather than sinking major dollars in upgrades that don’t face the customer.
A&W Chief Operating Officer Paul Martino said such co-branded locations are the most challenging in the company’s stable given that the franchisees share resources and must coordinate upgrades with another brand.
“We have not taken a heavy-handed approach when it comes to co-branded remodels, knowing that many of these co-branded restaurants are coming up on remodel cycle with their parent brand,” he said. The A&W/KFC by my house is scheduled for a much needed complete overhaul, although the company wasn’t able to share a specific timeline for the project. A&W franchisees pay for and manage all construction work, but corporate helps with design services and has a “high-touch” approach to all remodels that Martino said often result in 10 to 20 percent sales boosts for standalone locations.
“Every restaurant has different needs,” he added. “If a franchisee comes to us with $5,000, it might be best used toward new paint. $10,000 could also include interior paint and $20,000 might allow for some seating updates or new pavement."
From my own experience as a geezer in training, I’ve also learned what a big difference can be made with just a rake, broom or paintbrush. Sometimes it’s like these young kids have never heard of such things.
If you’re a franchisee with units that need attention, this is the time to invest in your future—and your city’s future, too—or sell to an operator who will. If a given market is worth staying in, get painting or building. If some municipal assistance would help, there’s no harm in asking for it. And while you’re at it, please make sure that your exterior is welcoming to all. Believe me, we’re paying attention—even if we’re not wearing pants.
Tom Kaiser, pictured on opposite page trying out an electric scooter in downtown Minneapolis, is senior editor of Franchise Times and writes about urban tales in franchising in each issue. Send story ideas to firstname.lastname@example.org