Challenge the Pros

"Explain your development strategy as it relates to recruiting single-unit versus multi-unit franchisees. Do you look for both? Why or why not?"

Greg Vojnovic, Popeyes Louisiana Kitchen, Vice President Development

During the past five years, most franchisors have changed their concept of the ideal franchise candidate. Today larger franchisors are focused more exclusively on recruiting multi-unit/multi-brand players, rather than the single-unit operators most systems were built on. As an established, nearly 40-year-old brand, Popeyes Louisiana Kitchen markets franchising opportunities toward the top-tier multi-unit/multi-brand category franchisees, while simultaneously considering single-unit candidates. We currently have more than 1,900 locations in 44 states, the District of Columbia, Puerto Rico, Guam, and 27 foreign countries.

Top-tier franchise candidates have enough experience and resources to fight for territory in the best "top-tier" DMAs, while putting less attention on "secondary" DMAs. This presents a challenge for franchisors because, of the 200 DMAs in the U.S., the top 75 represent 80 percent of the population; the remaining 125 smaller DMAs are considered "secondary." Each of these smaller markets is unique, and we look at the individual market criteria when deciding how to make our franchise opportunity available. Before reaching a decision, we approach each market and each candidate on a case-by-case basis.

For example, in a small town that could support one Popeyes location, a single-unit franchisee may be more tightly connected to the community than a multi-unit player and may be a better fit. While the strength of our brand brings a lot to an operator, having close ties in a smaller community can be critical to success. In a large, complex market, these advantages may not help as much and may not be a good opportunity for a single-unit developer when the market needs significant, rapid development. In these cases you need an experienced multi-unit operator with a growth strategy capable of building out valuable complex markets.

When deciding whether to recruit single-unit candidates, multi-unit candidates, or both, the key is to be open and flexible in your process while never compromising on your standards. Don't automatically discount the single-unit operator. In some situations, a candidate who appears to be "only" a single-unit candidate may eventually turn out to be a larger player than the multi-unit franchisees you're recruiting. Match your process to your candidate and your opportunity.

Art Coley, CFE, AlphaGraphics, Vice President, Global Development

Whether it's single or multi-unit, franchise development and recruitment will never be the same again. If a brand is having trouble with development today, chances are they have not evolved with the times. My guess would be that their management is "old school" and wants to jump in and "show how it's done"--only to find that their efforts are just digging the hole deeper. The days of easy lead generation and financing are gone.

Development teams that are winning today are operating a multi-channel lead generation program with a detailed and disciplined process that allows the candidate flexibility in the discovery of a brand. And we cannot forget that, more than ever, unit economics matter. If virtually all new franchisees are not making some money and enjoying the business within a maximum of 24 to 36 months, the brand is in trouble and had better make immediate needed changes.

Regarding the single-unit versus multi-unit question, AlphaGraphics' focus has been primarily on single-unit operators. Often, candidates who have come to AlphaGraphics have been looking at a retail or food franchise and realized that multiple units are required to earn the targeted income. They quickly learn that many AlphaGraphics locations produce annual sales of two to three times our single-unit average of $1.1 million. They realize that the B2B focus of our business removes the ceiling that exists with most location-driven retail and food franchises. However, technology has changed things for candidates by putting the potential multi-unit, hub-and-spoke, "super-sized" opportunity on the table with AlphaGraphics. That's why we are finalizing our hub-and-spoke model for candidates who are the right fit to develop a market with a $10 million-plus presence.

Whether the focus is on single or multiple units, we are committed to clearly understanding the goals of the candidate first. If our opportunity fits with their skills and objectives we continue. The future for development is very bright for brands with a good model, solid support, clear vision, and leadership that truly understands the migrating development landscape.