Friends Make Fine Franchisees

March 24, 2002

Allan Huston used to lead the biggest pizza chain in the business. Now he and two former Pizza Hut colleagues are franchising a pizza concept they believe is one of the industry's best.

Earlier this year, Huston, Pat Williamson and Larry Zwain formed Pizza PALS, a company that plans to franchise 100 Cici's Pizza stores over the next 10 years.

Though Cici's is based in Coppel, Texas, Pizza PALS (which stands for passion, attitude, leadership and success) will be headquartered in Denver, where Zwain will oversee operations as COO. Along with Zwain, Huston and Williamson will serve as co-chairmen of the board.

For Huston, 56, the move is a chance to reenter the pizza business as an entrepreneur rather than a corporate executive. He retired from that role when he left Pizza Hut as president and CEO in 1996. He also served as chief development officer and COO for the company.

Zwain, oversaw Pizza Hut's Western operations throughout the late '80s, and switched to KFC International in the early '90s. He ultimately became president and CEO of Boston Market in 1994. After the company was purchased by McDonald's in 1997, Zwain became the burger giant's marketing director until last year.

Williamson worked 15 years at Pizza Hut, and was its COO when he left in 1997 to form Tri-J Capital Partners with Huston. The company owns and operates 29 Applebee's Restaurants in the Carolinas.

"When we acquired those Applebee's, our vision was to have three to five business that we were involved in and running. Now Cici's is the second one," said Williamson, 51. "Over the last three or four years we've looked at 20 to 25 different businesses other than this, and we came real close on getting into a couple of them."

Huston called the opportunity to become Cici's franchisees a mix of the right opportunity and the right time. Despite the competition in pizza, he said, operators can always get in because the pizza industry isn't dominated by one or two entities.

"This is a people business, and if we satisfy the people behind the counter, they'll satisfy the people who walk through the door."

Larry Zwain
COO, Pizza PALS, a Cici's Pizza franchisee

"In burgers, chains dominate," Huston said. "But pizza's different because no one has a monopoly."

Cici's also is different from most pizzerias. Unlike many companies that grow by adding small delivery/carryout units, Cici's builds 4,000 square-foot stores that seat 80 to 100 and serve a $3.99 all-you-can-eat buffet. The buffet features 16 pizzas, pasta and salad, and kids under 3 eat free. Annual store sales average about $850,000.

Over the last year, the 17-year-old company also began its re-imaging campaign. Stores are getting new décor, and the food quality has been upgraded, said Joe Flannigan, director of marketing for Cici's.

But most importantly to groups like Pizza PALS, Cici's is courting area developers.

"We love our current franchisees, but we believe multi-unit partners are the key to our growth process right now," Flannigan said. "To get guys of (the Pizza PALS) caliber is a home run for us. That's sort of a dream team."

Now They See Cici's

Long-time Texas residents, Williams and Huston knew of Cici's Pizza, but what brought the concept to their attention was a Sept. 28 article in the Plano Morning News. The piece, which discussed the chain's systemwide upgrades, as well as its charismatic founder, Joe Croce, piqued Williamson's curiosity. During a business trip, he showed it to Huston.

"We thought this was a business we ought to look at," Williamson recalled. "It told about a company that was on the way up ... and it only had 400 locations, so we knew there was room to grow."

Last November when the men met Croce, Williamson was impressed. "He clearly had tremendous enthusiasm for what he's doing ... they guy has no 'off' switch. The more we talked with Joe and learned about what his team has done, we got excited."

The Cost of Doing Business

Paying for 100 franchise stores will be expensive. Huston said each will cost "in the neighborhood of $400,000," and that 30 percent equity in each store is required to start every new one. The remaining 70 percent of the cost, he added, will be financed.

Pizza PALS will begin opening stores in Colorado by September, but whether the company will be able to squeeze into the state all 100 it's signed on for remains to be seen. According to the 2000 U.S. Census, Colorado's population is only 4.3 million, and many of those residents are scattered throughout the state in communities that may be too small to support a Cici's.

Should Colorado be maxed out before all its alotted stores are opened, Pizza PALS does have the first right of refusal on Cici's Utah territory.

"We've not decided what the degree of penetration is, but Cici's is going to do some research on that," Huston said. "It's kind of open-ended right now."

The company plans to open two restaurants in the first year of the agreement, four in the second, eight in the third and 12 in the fourth. It plans to maintain that one-per-month pace until 100 units are operating.

Despite the tight foodservice labor market, Zwain is confident he'll find the necessary staff for all the company's stores.

"This is America, there are lots of great people here, and there are lots of ways of finding them," said Zwain, 48. "This is a people business, and if we satisfy the people behind the counter, they'll satisfy the people who walk through the door."

Old Friends Make Good Partners

What's clear is that the three former colleagues are more than satisfied to be working with each other again. Zwain said the trio's time together at both Pizza Hut and KFC showed them that their skills are perfectly matched for their current business: Huston has financial expertise; Williamson is operationally strong; and Zwain is a proven marketer.

But what about their former colleagues still at Pizza Hut? Have any of them called to voice any dissatisfaction with their switch to another brand?

Huston said no, and added that he doesn't expect them to since "we're just franchisees, we're not involved in the Cici's strategy or what it's going to be doing."

Will any of the three step out to claim he's found a better pizza, as did Pizza Hut co-founder Frank Carney, when he became a Papa John's franchisee in 1996?

"No, I don't think you're going to see us making any commercials either," said Huston, chuckling a bit. "No, we just know how to be good franchisees, and that's what we're going to do to."

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