Is a pizza franchise right for you?

 
Oct. 4, 2006
This is story is a one chapter of six in the PizzaMarketplace guide, Selecting a Pizza Franchise. To get your free, downloadable copy of this one-of-a-kind guide, click here.
 
While a franchise drastically simplifies the start-up and operation of a pizzeria, the overriding principle that applies to all foodservice endeavors remains: Hard work is the rule of the day.
 
Franchise lawyer Peter Singler has seen his fair share of wannabe restaurateurs who gaze at the industry through rose-colored glasses, dreaming that only time stands between them and success. But as any veteran can tell them, heartaches, headaches and long hours are just a few of the hurdles they'll have to clear in just the first week of business.
 
"If they're new to the foodservice industry, one of the first questions I ask is, 'What kind of lifestyle do you want?'" said Singler, whose Sebastopol, Calif., firm represents franchisors and franchisees of several foodservice concepts. "You figure out that they think it would be cool to run a restaurant, but they have no concept of the hours involved and the management required. I have to ask them, 'Do you understand what it means to be in foodservice?'"
 
On
 

Can you do this?

 

To see if you really are cut out for franchising, ask yourself the following questions:

1. Can you follow somebody else's road map, or do you have to be in control all the time?
2. Are you the type who will resent the franchisor two or three years from now when you don't need as much active support?
3. Do your family and friends support your becoming a franchisee?
4. How much money do you need to live on? Can you live on the anticipated money you will earn from the business?
5. Do you like to work with people?
6. Do you like to make decisions and have people report to you? Do you trust that you have what it takes to be a success?|

7. Are you healthy and able to work long hours?

 
    Source: Franchising for Dummies
occasion, Tim O'Hern meets a few of the same breed who inquire about becoming a Papa John's franchisee.
"We'll just be talking and I find myself asking, 'Have you ever even tried the product?'" said O'Hern, Papa John's senior vice president of development. "Now, that might sound like a silly question, but every now and then, somebody says, 'No, I haven't.' At that point, I want to say, 'Now come on, what are you doing here?'"
Papa John's is but one franchisor among many that has become increasingly choosier about whom it approves as franchisees. That caution reflects hard lessons learned by foodservice franchisors who allowed well-heeled, expansion-minded investors into their ranks too easily. To be sure, they had the capital to open many outlets, but they sometimes lacked the moxie to operate them.
 
Franchise shoppers should also include Coppell, Texas-based CiCi's Pizza among the ranks of the restrictive. Though it receives about 4,000 franchise inquiries a year, fewer than 40 are accepted. According to Jim Sheahan, the 553-unit chain's vice president of franchise sales, prospects are rejected more often because "they don't fit our culture" rather than for lacking cash.
 
"If a large investment group comes to us and says it wants to buy XYZ, we tell them, 'Great! We like the fact that you have money. But who's going to run those operations?" said Sheahan. "Having the right people on the ground is what's best for our brand and our business."
 
In her role in the Papa John's franchising department, Paula Greenwell, senior manager of new business development, screens prospects who want a piece of the action, but haven't considered a potential downside. "I have to ask people, 'If you're store didn't make money, what would you do?' And sometimes you realize that they hadn't thought about that happening," Greenwell said. "So we try to figure out what their expectations are to see if they truly match ours."
 
Pre-qualifying
 
Thanks to the Internet, many pizza franchisors use online pre-screening forms to weed out unsuitable prospects and reduce the legwork of actual interviewing.
 
Joni Dalton, Papa John's director of new business development, said candidates who most interest the company are those with serious restaurant experience. This group typically knows the effort and the finances required to play the game.
 
The sales process is a bit like dating, she said, in that both prospect and salesperson learn what each party can offer the other. If a prospect has operations experience, then Dalton begins an asset check to see if he's financially qualified. As is common with most franchisors, a candidate's net worth must be verified with detailed financial records that prove sufficient short- and long-term liquid is available to fund the operation.
 
"They need a great deal of working capital that goes beyond the build-out cost of a restaurant," said Dalton, adding that the screening process also includes criminal background checks. "People sometimes don't think about money for opening inventory, staffing, uniforms ... the list goes on. All of this has to be available before you even open the doors."
 
Pete Fowler, vice president of business development and supply chain management at Papa Murphy's Take 'N' Bake Pizza in Vancouver, Wash., said undercapitalization is a key reason many foodservice franchisees struggle — and sometimes close their doors — earlier than expected. If they don't have a financial fallback position, "and if the business doesn't take off like a race horse out of the chute, they're in trouble."
 
To correctly pick the best prospects, Fowler said, Papa Murphy's has individual face-to-face meetings with pre-qualified parties. Not only do company representatives discuss the UFOC and required financial commitments in detail, Fowler works to get to know the candidate as a person. He knows it's "sort of an old-fashioned way of going about it," but interacting personally with a prospect reveals a lot of information about his or her potential as a franchisee.
 
On a larger scale, Papa John's holds a periodic "discovery day," during which potential franchisees gather at the chain's head quarters to meet company officials. Just like Fowler, Greenwell learns a lot more about the candidate in person, compared to the person she knows only from phone conversations.
 
"There have been a couple of occasions when we've had a change of heart after meeting them in person," she said. During a follow-up call with one prospect, she asked jokingly, "'Did you send somebody in your place?' He was not the guy I talked to on the phone. I had to tell him that he didn't show the people-interaction skills we were looking for."
 
Dalton said discovery day also gives prospects a chance to decide whether they like the company and its leadership. The day-and-a-half long meeting includes prospects receiving an abundance of information on Papa John's, a tour of its headquarters and production commissary, as well as chances to ask questions.
 
"They're interviewing us as much as we are interviewing them," she said. "Most of the time it's a very positive experience, but they might leave here and decide not to go further for whatever reason. It doesn't happen often, but it happens."
 
Field test
 
Should the prospect interview well enough to proceed in the approval process, many franchisors insist they work two to three shifts in a store. CiCi's Sheahan said the main goal is to see how prospects handle the restaurant environment. Corporate observers in the store — some identified and some not — watch closely.
 
"Guys can fake it in an interview and tell you what you want to hear, but they can't fake it in the store," he said. "The position we put them in is the position to interact with the guest to see how they interact with team members. That's a really good position to see what kind of restaurant presence they have."
 
Fowler said Papa Murphy's three-day-long "boot camp" treats prospects to line duty on the busiest days of the week. After that period, the store's manager evaluates the candidate's performance.
 
"We want to know if they were willing to pitch in when somebody needed it, and we want to know how they related to customers," said Fowler. If the prospect appears shy and reserved around people, Fowler said he probably isn't the personable, grip-and-grin, community-minded, local-store marketer Papa Murphy's needs. "And sometimes the franchisee gets through boot camp and says, 'This is more work than I thought.'"
 
O'Hern calls such a person "a training wash out" who just wasn't a good fit. For both the franchisor and the disqualified prospect, it's typically a relief to spot problems early on rather than after a new store is up, running and struggling.
 
It's about heart
 
Both franchisors and franchisees agree that a successful pizza

Great franchisee prospects ...

 

1. ... have a servant-type mentality and get a charge out of serving others.
2. ... have to be hands-on, meaning they have to own what they do.

3. ... have to have the ability to bring on great outstanding people who have the same servant-type mentality and work ethic as you do.

franchise is as much a matter of the heart as the head. Financial gain is likely for those who work the system, but real long-term success is most probable for those who enjoy the business. Sheahan said "a servant-type mentality" is essential for fitting into the CiCi's culture, and that prospects who show up only with dollar signs in their eyes are easy to spot and probably won't cut it.
 
"The restaurant business isn't a glamorous business, so serving other people is what's going to have to drive you to do this again at the end of the day," Sheahan said.
 
O'Hern advises prospects to ask themselves: "Can I make money at it and be happy doing it? Is it going to be something I enjoy? Can I bring value to it — not just to the brand, but to the community I want to go into, and to its consumers?"
 
Good franchisees don't have to be the most charismatic leaders, he added, but they commonly are passionate people who attract good talent and keep it because they inspire others to strive for excellence. They also foster team spirit that develops dedication to the brand, to their coworkers and to customers.
 
"It's a combination of grit-your-teeth hard work and the feeling like this is what you want to do every day," O'Hern said.
 
Eagle Boys franchisee Michelle D'Andilly agreed that passion for the pizza business and your pizza brand of choice is a must. But she warned that going it alone emotionally is risky in the long run. Any human needs a support network of friends and family who can cheer them on when the going gets tough — which is almost guaranteed in a pizza franchise.
 
Scott Anthony, a single-unit Fox's Pizza Den franchisee, said the best franchisees must believe fully in their product and their system to attract not only good help, but customers. "You have to truly be sincere in your belief that it's a great product, but if you don't, customers will sense that," he said. "If you don't believe in your product, then why should any one else?"

Topics: Operations Management


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