October 2006

By Misti Hewatt

THE FRANCHISE DREAM

“‘Build it and they will come’ was a con­cept in the movie Field of Dreams, but it ain’t the fact in the franchise business,” says Jim Squire, Certified Franchise Executive and the Franchise Development Manager for HoneyBaked Ham Co. and Café. With a long history in the franchise business, Squire knows that success in franchising, whether as a franchisor or franchisee, is more than hoping and praying.

A growing number of Americans are hoping to uncover the true keys to success­ful franchising. According to Entrepreneur magazine’s Franchise 500 survey, the total number of franchise units for companies grew 11 percent from 2004 to 2005 compared to a 4 percent increase from 2003 to 2004. And, restaurant franchises are top contenders, holding 13 spots in the top 30 Franchise 500 rankings. Subway claims No. 1 and is also the fastest growing franchise followed by Pizza Hut, Inc. and Quiznos Sub.

With this promising momentum and the growing trend in eating out – the National Restaurant Association estimates that Americans will spend more than half their food dollars at eating-and-drinking places by 2010 – restaurant franchisors and franchisees stand to profit. As with any business, however, profits depend on smarts, not trends.

Squire puts it simply, “There is no automatic pilot for any franchise company.”

SUCCESSFUL FRANCHISORS

Become Partners

Several metaphors describe the relation­ship between franchisors and franchisees, parent-child and husband-wife among them. “Unfortunately, some franchisors look at fran­chisees more as employees than as the business partners that they are. Some franchisors con­sider franchisees as customers,” says Squire. He thinks that franchisors should think of the relationship as a mutually beneficial business partnership. After all, franchisors are only as successful as their franchisees.

Franchisors can practice the “partner­ship” philosophy by involving franchisees heavily in the decision-making process. At HoneyBaked Ham Co., a franchise advisory council comprised of five franchisees, elected by their constituency, provides feedback and ideas to headquarters. Only at HoneyBaked it is no longer “headquarters,” but rather “cus­tomer support center.” The name change is a little thing, but according to Squire it helps foster the partnership mindset because “it is not setting us up as ‘the company’ or ‘Big Brother.’”

Legally, Charles Hoff with the law firm Taylor-Busch, general counsel to the GRA and co-chair of Franchise Round Table, thinks that the foundation for a good partner­ship starts with an “even-handed” Uniform Franchise Offering Circular (UFOC) that “takes into account the sensitivities of a fran­chisee.” In his experience, one of the biggest mistakes franchisors make is leveraging fran­chisees too much.

Find Good People

Selecting the right franchisee is crucial, but according to Hoff, franchisors often do not spend enough time on the qualification process.

Wing Zone’s Stan Friedman agrees, “The best system in the world is moving with deliberation and not rushing, having several meetings and several conversations with all of the decision makers.”

Decision makers extend beyond the po­tential franchisee: Investors, spouses and even children are impacted by the decision to open a franchise. Discovery Days provide one opportunity for franchisors to meet with potential partners and introduce them to the concept, but it is also an opportunity to meet all relevant parties.

Get Professional Help

Although Stan Friedman shares a last name with Wing Zone co-founder Matt Friedman, they are not related. Stan describes their meet­ing and eventual partnership as serendipitous. They met at a franchising conference where Stan was speaking. His speech influenced Matt’s business prospective, and as a result, Matt began requesting frequent lunches with Stan. During these lunches, he would pick the seasoned professional’s brain.

“It took me several months before I real­ized I was being worked over for some cheap consultancy,” Stan quips.

Eventually, Stan entered into an equity partnership with Wing Zone, and he now serves as the Executive Vice President. He explains that successful franchisors do just what Matt did: They get professional help.

“When you have an organization like [Wing Zone] where everybody is from the inside, you start having to go outside to find more wisdom than you have collectively.”

Make It Easy

At Wing Zone, simple things – such as their signature 25 flavors, clean shirts and a standard friendly greeting – work together to deliver consistency. Friedman makes clear that these might be “little things in the minds of some, but they are not little things at all. The value proposition of franchising is built on consistency of customer experience.” Wing Zone’s “very, very specific operating system” helps the franchise “over deliver on low expectations.”

In addition to easy-to-follow operations, the most successful franchisors provide appro­priate education and support. HoneyBaked assigns each franchisee a project manager who works to establish a specific timeline during the development process. The proj­ect manager also assists with any roadblocks the franchisee might encounter, from site selection to construction and a myriad of other potential issues. In addition, there is an extensive two-week training program, and during the opening process, training and field operation representatives spend time with franchisees in their local market.

Appropriate and high-quality products, from ingredients to equipment, also simplify franchising. Squire touts the importance of HoneyBaked’s strong supply chain. “We ensure that our suppliers manufacture every­thing to absolute spec.”

Rob Caswick, co-founder of the fast-casual Italian franchise Artuzzi’s, dedicated a lot of time on equipment specifications. He and partner Jeff Newsham originally wanted to use a wood-fire oven for pizzas, but they soon realized it required greater skill to operate than most ovens and opted for an impinger oven instead. “It isn’t sexy, but it’s dead-on every time,” says Caswick.

Do It Themselves

“As a franchisor, you really have to be in there rolling up your sleeves to get customer feedback,” says Caswick. He aims for 5 to 10 percent of Artuzzi’s to remain company owned. “Without a company store, it is a lot more difficult.”

Company stores help franchisors address franchisees questions, test new products and collect customer feedback.

SUCCESSFUL FRANCHISEES

Follow Rules

“If you want to be the true entrepreneur who wants to invent everything, don’t buy a franchise.” This is the advice that Wing Zone’s Friedman has for potential franchisees.

Multiunit Bojangles’ owner Matthew Kirby has a background in operations, having worked with the Navy for five years. He describes himself as good at fol­lowing directions but not very creative. “Bojangles’ has a 30-year history and lots of experience in marketing, operations and food preparation,” Kirby says. “The wise thing for franchisees to do is to buy into the whole concept and fol­low the system.”

Do Homework

Understanding the concept and the system from the beginning helps. Finding a good attorney and accountant to assist is smart. To identify potential points of contention, an attorney can help navigate the UFOC. One potential source of contention is exclusive territory. “Defined and protected territory is vital to a franchisee’s success. Contractual exclusivity prevents possible encroachment and allows for franchise growth,” says Nancy Oswald, multiunit Ruth’s Chris franchisee and Chair of the GRA.

Another great re­source is current and past franchisees. The UFOC contains a list of franchisees that have left the system. Finding out why they left could provide valuable insight, as could talking with current franchisees that are successful. “Other franchisees can help you save money and make fewer mistakes,” Bojangles’ franchisee Kirby says. “Potential franchisees also need to make sure that franchisors are restaurateurs committed to long-term growth, not just finance jockeys.”

Fall In Love

Working with a brand and with people that they like and respect is invaluable. “The two main things that guided my decision were the strength of the Bojangles’ brand and the integrity of the people,” says Kirby.

Nancy Oswald agrees, “I could not only re­late to the Ruth’s Chris brand, but I embraced Ruth Fertel’s philosophies.”

A former franchisee himself, Artuzzi’s Caswick shares that the No. 1 thing is having passion – because franchisees spend a lot of time living and breathing the brand.

Hire Good People

“As an owner, there is nothing more im­portant than picking people,” said Bojangles’ Kirby. Managers are especially crucial to a well-run operation.

Once the team is hired, franchisees need to clearly set objectives and expectations, and hold everyone accountable for results.

THE FRANCHISE REALITY

Indeed, franchising is no field of dreams, and there is no autopilot. As Stan Friedman says, franchise success is about “doing the right things with the right people at the right times for the right reasons.”

An Essential Ingredient for Future Success

October 2006

By Debby Cannon, Ph.D., CHE

Finding great employees has been a chal­lenge the restaurant industry has faced for some time. You typically do not hear owners or managers proclaim that they are overwhelmed by the vast number of superbly qualified job candidates. Our industry competes with an increasing number of businesses that include foodservice operations from hospitals to grocery stores. Growing competition is not the only concern as we plan for the future, however.

According to many sources, the challenge of finding employees is only going to get more serious. Demographic studies state that by 2010, there could be as many as 10 million more jobs available than there are employees in the United States. This number, of course, includes all types of industries, but the hospi­tality and foodservice industry will definitely feel the impact.

According to the National Restaurant Association, foodservice-related employment is expected to continue to increase this decade reaching 13.8 million jobs in 2014. That is an increase of 1.3 million jobs compared to 2006. The number of foodservice management po­sitions is projected to increase by 11 percent between 2004 and 2014.

Why is this employment crisis targeted for 2010? Because around 2010 the wave of baby boomer retirement will begin. The oldest boomers turned 60 this year. As 2010 approaches, a wave of this generation will be approaching retirement age. Some projections expect that a sizable portion of the baby boom generation will not retire completely due to financial limits. After all, this is the generation that, for the most part, threw caution to the wind when it came to saving and preparing for the future. It is expected that a sizable number will opt for part-time work or even career changes to accommodate a more flexible lifestyle in later years. The other complica­tion to the demographic picture is that there are fewer workers following the baby boom generation. This fact is particularly concerning for our industry since we have predominately attracted “younger” workers – especially for entry-level, front-line positions.

Some sources, such as Ken Dychtwald in Workforce Crisis (Harvard Business School Press, 2006), stress that the shortage of employees in skilled positions will be felt even before 2010. That is no surprise to most restaurant and foodservice operators who already compete in a difficult market for culinary and other skilled talent.

So, what can an owner or operator do to prepare for this oncoming crisis? As with most complex problems, the possible solutions will have to be multipronged and target several different areas.

• A long-term topic of conversation in our industry has to move from a back-burner is­sue to a priority: We have to reach out to the workforce of the future (now in elementary grades, as well as in middle schools, high schools and colleges) to market the great op­portunities that can be found in restaurants and other foodservice segments. Programs like ProStart have certainly helped, but we have to start earlier and focus on front-of-the-house positions as well as opportunities in culinary careers.
• The model of this being an industry predomi­nately for “the young” needs to be questioned. In the future, baby boomers will continue to be a sizable part of the workforce but these may be the employees who want the less physical, more flexible part-time positions. With their wealth of business experience and knowledge, how can older workers be best utilized in your organization? This is a great topic to ponder because the companies that assertively offer attractive packages to the baby boomer generation will have valuable labor force resources.
• Employee retention is going to take on an en­tirely new meaning and will be synonymous with business survival. To be most effective, a “retention” culture must exist within the foodservice operation and must be consis­tently applied – not just when there is a diminishing labor pool.

What are some of the essential components of a successful retention culture?

1. Effective recruitment and employee selection:

The highest turnover rates in most indus­tries, including foodservice, occur in the first six months of employment. This is because of “bad hiring” decisions. This does not mean that you hired a “bad” person. Most often the case is that you hired a “bad” fit – a mis­match between your company’s culture and the individual’s personality, work values and preferences. Another predominate reason for turnover in the first 180 days is a disconnect between what the job really entails and the person’s skills, knowledge and aptitudes. The company’s training program cannot or will not address the inadequacies or build sufficiently on the employee’s strengths resulting in em­ployee failure.

In a recent study on employee turnover involving 20,000 interviews in a variety of industries, the top three reasons for turnover (from the perspective of the exiting employee) were:

• Job or workplace was not as expected
• Mismatch between job and person
• Too little coaching and feedback

The third reason for turnover brings us to an­other key component of employee retention.

2. A working environment in which employees can build their knowledge and skills:

Most members of today’s younger work­force do not plan on retiring with their current employer. In fact, there will be multiple em­ployers throughout the span of their careers. What, then, is the “hook” to commitment, loyalty and a maximum length of service – al­beit perhaps three to five years? The answer for many of the generation X, Y and millennial employees is the opportunity to consistently build competencies and professionally grow.

3. An overall positive work place that is sincerely committed to friendly employee relations:

One of the most important aspects of this type of work place is making employees feel valued and respected. The belief in positive employee relations has to start with the ac­tions at the very top of the organization’s leadership with carry-through to every level of the company. The front-line supervisor’s actions, in many foodservice operations, are going to have more impact on the entry-level hourly employee than upper management. Ironically, the supervisory level is often the most overlooked when it comes to training and coaching.

The above suggestions are just a start. The topic of workforce challenges is so important that more dialogue has to continue as we stra­tegically prepare for the future. To initiate this dialogue, feel free to e-mail your thoughts to me at hrtdfc@langate.gsu.edu. The School of Hospitality in the Robinson College of Business at Georgia State University will act as an incubator in collecting thoughts on this topic and sharing them in a future article. I welcome your creative ideas on dealing with current and future workforce challenges.

Debby Cannon, Ph.D., CHE, is Director of the Cecil B. Day School of Hospitality, Robinson College of Business, Georgia State University

Sweet Grass Dairy Makes Chefs and Customers Smile

October 2006

By Karen S. Adle

Sweet Grass Dairy is one of those success stories that makes people feel good – especially when tasting their award-winning cheeses. This family operation began with the vision of Al and Desiree Wehner, dairy farmers who left conventional farming in 1993 to create a natural and sustainable system at Green Hill Dairy, a 350-acre New Zealand-style rotational grazing dairy farm in Quitman, GA. They later opened their sister operation, Sweet Grass Dairy, which became the headquarters for a world-class cheese making facility that is operated by Jessica and Jeremy Littles, the Wehners’ daughter and son-in-law.

Situated on 140 acres in Thomasville, GA, Sweet Grass is about 30 miles from Green Hill Dairy and is home to the multibreed goats that provide the milk for their fresh chevre; Georgia pecan chevre; Lumiere, a soft-ripened cheese coated and layered with grapevine ash for balancing; and Holly Springs, an aged semi-soft raw cheese. Green Hill Dairy is home to the cows, who produce the milk for five cheeses: Green Hill, a rich, buttery double cream; Thomasville Tomme, a mellow aged raw milk cheese; Georgia gouda; Clayburne, made in the style of a bandaged English Cheddar; and Myrtlewood, a unique aged cheese with a hard, dry texture.

Sweet Grass is the only dairy in Georgia, and is one of only a few in the Southeast that sells beyond an immediate area. Desiree Wehner’s original idea was to sell direct from the farm, serving local residents of the area with an array of dairy products, includ­ing milk, butter, ice cream and cheese. When the Littles moved back to south Georgia in 2002, there wasn’t enough business in the immediate area in Thomas County to support the entire family. They explored ways to increase the production and distribution of their cheeses and decided that marketing to restaurants that could appreciate the high-quality local flavor would be the key to their plan. Their first customer in Atlanta was Star Provisions, owned by Anne Quatrano and Clifford Harrison, chef/owners of Bacchanalia and Floataway Café. Quatrano and Harrison are avid supporters of local food and farmers, and continue to buy large amounts of cheese from Sweet Grass.

Jessica Littles acknowledges that there are advantages to being the only cheese maker in Georgia, but she says that they would welcome other dairies. Having recently attended the conference of the American Cheese Society, she has seen cheese makers in other states, such as Vermont and California, join forces to maximize resources by buying supplies in bulk and creating better shipping solutions.

In addition to the excellence of the product, much of the credit for the success of Sweet Grass goes to the chefs who try Sweet Grass products and become enthusiastic, says Littles. She points out that there does seem to be a threshold people must cross to realize that cheese doesn’t have to come from Wisconsin or Vermont to be good. Without an advertising budget, word of mouth has been the dairy’s only real form of promotion, and the chefs who have discovered Sweet Grass are its biggest promoters. In the beginning, Littles would approach the chefs in Atlanta that she and her husband thought would be interested in having a local, high-quality product. Seeger’s was one of their first influential accounts; many other chefs around the Southeast would try a Sweet Grass cheese there, then call to place an order.

Now you can expect to find Sweet Grass products on the menus of many restaurants throughout Atlanta, including Dish, Restaurant Eugene, South City Kitchen, Woodfire, Mid City Cuisine, 5 Seasons Brewing and Restaurant, and Table 1280. And others around the state are catching on. If you make the drive to Tybee Island from Savannah to George’s, you’ll find that Sweet Grass cheeses have made their way to the coast.

Chef Sheri Davis, chef-owner of Dish, presents a cheese platter that features four Sweet Grass products, and she lets her guests know that these are Georgia local-grown products. The cheeses are accom­panied by Dish’s own olive crisps, bread and a variety of treats such as currants, figs, cherries and spiced pecans. Jessica Littles remembers the first time she visited Chef Davis. When she walked in, Davis said, “I’ve been waiting for you. I knew that somebody was going to do this soon – I just didn’t know when.” Chef Davis’ enthusiasm has held steady; she has been placing orders every two weeks for four years. “Sweet Grass cheeses are impeccable. They are so flavorful, and the variety is great,” she says. More than just the product, Davis says she loves the way that Littles and the fam­ily have a passion for the animals, the restaurants and the chefs.

Another chef who waxes elo­quent about Sweet Grass products is Linton Hopkins. Hopkins owns and operates Restaurant Eugene with his wife, Gina Hopkins, who runs the front of the house and is the restaurant’s sommelier. The Hopkins team is also a strong supporter of local and sustainable farming, and recently took the opportunity to take their staff down to the dairy to spend the day making cheese and visiting the farms. Hopkins also feels a kinship with Jessica and Jeremy Littles – he and his wife share the same kind of passion for what they are doing that they experience with Sweet Grass. He appreciates their products and he also likes their philosophies about sustainability and their belief in proper animal husbandry.

One of Chef Hopkins’ favorites in the line is the Green Hill, which he describes as one of the freshest he has ever tasted, made from the most pure milk. “”It evokes the fresh food the cows are eating. It is all about the milk,” he says. The Chevre, which Hopkins finds to be quite versatile, is also a Restaurant Eugene favorite. One way he is currently serving it is mixed with grits to create stuffed squash blossoms.

Jessica Littles points out that they are fortunate in south Georgia to have a climate that supports year-round grazing. This is only one of many points in favor of this vibrant young company that has made such an impact on the food and farm scene in Georgia in a short time. Going on the adage, “What goes around comes around,” the Sweet Grass family commitments to healthy, natural, humane farming, caring for their customers and producing superb products will reap continued success for Sweet Grass Dairy.

To learn more about Sweet Grass Dairy, call (229) 227-0752 or visit www.sweetgrassdairy.com.

Georgia Organics, a nonprofit organization that supports organic and sustainable farming and living in our state, provided this article. Georgia Organics is working for a future when every resident has access to fresh, healthy foods grown by local farmers. To learn more, visit www.georgiaorganics.org, or call (678) 702-0400.

Karen S. Adler is a writer, editor and project consultant who works with Georgia Organics as an editor and mentoring program coordinator.