Smoothie King Expands Its Franchisee Search
Smoothie King wants bigger franchisees. For years, the Covington, Louisiana-based chain of smoothie shops focused on small operators, taking the McDonald's approach to franchising by forcing operators to run one unit well before moving onto the second. The idea is to ensure that operators can do the job before entrusting them with more than one unit.
But in recent years, the company has discovered that such a plan limits its ability to attract the big players in the franchisee world—experienced operators who want to control an entire market. So the company is shifting its franchise sales strategy, introducing a multi-unit development agreement aimed at experienced franchisees. New operators without that experience will still be required to prove themselves with that one unit, but the multi-unit agreement would give the company something to offer an experienced franchisee who is looking to start selling smoothies. "We're starting to attract experienced operators to our system," said Richard Leveille, executive vice president of franchise development and real estate for Smoothie King.
Experienced operators want to control entire markets, which they can run more efficiently, without interference from other operators that may not run their restaurants as well. They can also control marketing and other issues. "They want territory protection," Leveille said. "So we're going to introduce that."
Smoothie King's move is part of a broader trend toward larger franchisees that's been evident in the aftermath of the recession. First, credit concerns funneled franchisee expansion toward existing operators that had access to credit and plenty of cash. More recently, concerns about cost issues, like labor and food costs, have furthered a trend toward bigger franchisees. While Smoothie King is maintaining its single-unit operating model, many others are abandoning it altogether in favor of multi-unit deals in an effort to direct units toward a more sophisticated base of franchisees. Some systems, like Burger King and others, are even directing sales of existing units toward large franchisees.
Leveille, for his part, believes his company's system would work well for multi-unit franchisees. "Our largest operator has 25 units," he said. "It's a proven multi-store concept that can be very successful."