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Athens Banner-Herald, By Don Nelson - Franchising represents the "wave of the future" for small establishments like the Blind Pig Tavern that are looking to grow, said Rob White, who owns the Athens bar and grill with his partner, James Pagonis.
"I think it's much easier for us to (franchise) rather than open another store," White said. "You don't have the outlay of capital, you can expand the business quicker and some of that responsibility is shared with someone else."
White, Pagonis and Tim Gardiner, the current Blind Pig general manager, have teamed up to start Blind Pig Tavern Franchising, Inc., and they are working with Lavonia, Georgia based National Franchise Associates, Inc. to create a franchising information package that should be ready for marketing in the fall, White said.
30+ Years of Franchising Experience
National Franchise Associates, Inc. is an international franchise consulting and development firm with over 30 years of experience in all facets of franchising. "We were referred to NFA by one of their Athens- based clients and was highly recommended. Their track record of success is very impressive," stated White. "Zaxby's was the first franchise company that they started, and we all know how successful Zaxby's has become."
In addition to Zaxby's, NFA has helped create successful franchising programs with Locos Deli and Pub, Barberitos, Jittery Joe's and Five Star Day Café. "We have been very impressed with Steve and Judy Raines and their professional approach in helping us grow our restaurant program," White continued.
Ferrando's Italian Pizzeria's Franchise
Meanwhile, in Oconee County, the owner of Ferrando's Italian Pizzeria is turning to the franchise option and is also working with National Franchise Associates, Inc. to pursue the option. "We should be ready in the next 30 to 60 days," said Lou Ferrando, who owns the Oconee Ferrando's with his wife, Stephanie, and brother, Chris. Ferrando will own the franchise company with his father and stepmother.
Lou Ferrando had been in business only for a year when he decided to franchise his restaurant, but his experience and model came from his father, who has run a pizza business for over 20 years. Lou Ferrando Sr. operates two restaurants in Aiken, South Carolina.
"I felt like the system me and my dad have was easy to duplicate without much effort," Ferrando said.
The first major phase of setting up a franchise division requires developing a uniform franchise offering circular, a prospectus that contains the franchise agreement, financial information and other materials pertinent to starting up a franchised location.
The Blind Pig Tavern and Ferrando's are in the middle of the process, and they are the latest Athens-area food-related business to enlist the help of National Franchise Associates, Inc., operated by franchise consultant and attorney Steve Raines and his wife, Judy, a marketing expert in small business.
Ferrando said it doesn't take a "multi-million-dollar type of person" to get into a relatively low-cost business like his pizza restaurant, but it could be as much as $300,000 including a $25,000 franchise fee, build out costs, all equipment and furniture and other expenses. Franchisees will also pay a 5 percent royalty on sales.
A good location is a key factor to any franchise, said Ferrando. "I can't let people come to me and talk me into the wrong location," Ferrando said. "That translates into people saying the concept didn't work; the location is one of the most important things next to the food."
Ferrando is considering opening another store in the Athens area before he takes the franchising effort full throttle. He said getting a second store going would help in the marketing and financial areas, and he would probably sell the Oconee site as a franchise later.
Franchising Frenzy has hit Athens
Zaxby's, Locos Grill & Pub, Barberitos, Jittery Joes, Five Star Day Café and Uncle Otto's European Eatery (formerly Achim's K-Bob) all found franchising direction from NFA. Blind Pig Tavern and Ferrando's Italian Pizzeria are the latest Athens area restaurants to join the world of franchising.
"I have heard from my clients that being in Athens is a great place to launch a franchise program," Raines said. "They will probably tell you that having their headquarters in Athens has helped with exposure for franchising outside the Athens area."
The University of Georgia wields an influence on the franchising cycle, Raines said.
"There's an exposure a restaurant gets to not only students and faculty at UGA but also to parents when they come several weekends a year to visit sons and daughters. Most of the time they go out to eat," Raines said. "They become exposed to a Zaxby's or Locos or Barberitos."
"Often an interest in franchising comes from a UGA student's family member or alumnus who talks about how nice it would be to have a place like a Jittery Joes's Coffee House in Peachtree City," Raines explained. "Sometimes it comes from a regular customer who lives in town."
That's how Five Start Day got its first franchise, said Diana Fairbairn, who owns the gourmet soul food restaurant with partner Mary Long.
"People often would come back and ask us about expanding our concept to other sites, but (franchising) started for us with Bill Hamby, a loyal customer (and Athens resident) who approached us and asked about having a restaurant on the east side," Fairbairn said.
Five Star worked up a franchise package about a year and a half ago with National Franchise Associates, Inc. and sold its first store to Hamby, who opened his Five Star Day in May 2006 on Barnett Shoals Road.
Athens also is a proving ground for restaurants, because with so much competition, if a restaurant doesn't run a good operation, it's not going to last very long, Raines said. Paraphrasing from the lyrics of the song "New York, New York," Raines added, "If you can make it (in Athens), you can make it anywhere."
"The Barberitos story serves as a prime example," Raines said. "The original Barberitos restaurant in downtown Athens opened in a location where several other restaurants failed-some more well funded. Through Barberitos' owner Downing Barber's hard work and effort, he made it where others were unsuccessful," Raines said.
Why is a company franchiseable?
In reviewing, whether a company is ready to begin franchising, Raines said his company considers several factors.
First, a business must be operational, not just a concept in someone's head. "We get two calls a day from people with a 'great idea,'" Raines said.
The enterprise also must show signs of success. Before franchising, the company should have a successful operation and an understandable operating system through which a franchisee can expect a reasonable likelihood of making money, Raines said. In addition, the founders or initial management team that launches the franchise company needs to have years of operating experience before selling the concept to others, Raines said.
"They need to be able to explain how to overcome problems and down times." Raines said.
Franchisors need more than a track record, though. It also is essential that the franchising management team work well with others, because franchisees will represent a diverse group of people, Raines said. Often, determining the personality of the franchisor represents a judgment call by NFA, but Raines said it's important for the franchisor to be compassionate without compromising the operating system and to have discipline and organizational skills.
The measuring stick for financial performance of a franchise usually is based on the positive cash flow of a business, and NFA focuses on the first four years as a key to anyone considering buying a franchise. "The new franchisee needs to be able to make a living and pay his personal and business expenses," stated Raines. "If the franchisee is successful, then the franchisor will very likely be able to sell more franchises in a short period of time. The success or failure of the first few franchisees will have a definite effect upon the franchisor's growth."
Jittery Joe's Coffee Houses
Getting those extra franchises is crucial to the growth and survival of a franchise company, said Bob Googe, owner of the Jittery Joe's coffee house concept.
Jittery Joe's started the franchising process about two years ago and has sold eight franchises, besides the four Googe owns with his wife in Athens. Five of the eight franchises are now open in Buford, Cartersville, Clemson, Peachtree City and Watkinsville. "We expect to have over 20 franchises by the end of the year," stated Googe.
"Franchising our business was the right decision for our company. Our experience with NFA has been very positive—their track record of successfully helping businesses expand through franchising is awesome," continued Googe.
The Locos Story
Locos owners, Jamey Loftin and Hughes Lowrance, had been in business for eight years, relocating their original restaurant and expanding before starting up their franchise division in 1996, Loftin said. "We contacted NFA because the owners of Zaxby's worked with them and were very pleased with the work generated by Steve and Judy Raines and their staff," stated Loftin.
Zaxby's, the elder statesman of the Athens food franchisors, started franchising in 1994 and hit its stride several years ago. The company now boasts nearly 400 locations throughout the Southeast.
Loftin credits Lowrance with pushing the idea and the success of the franchising concept, which afforded them the ability to grow when their financial position was limited, Loftin said.
They sold their first franchise in 1997 and now have 26 franchise locations in Georgia and Alabama. They also are talking with someone about a restaurant in St. Louis. Within three years, Loftin hopes Locos will have 50 franchises. "When you get to 50, you kind of hit your stride," Loftin said. "We are trying to position ourselves to get to that 50 mark."
Locos, whose early franchises opened in strip centers or existing buildings, now has moved to free-standing structures, "the latest, greatest prototype," with stacked stone, wooden beams and leather booths, Loftin said.
When Locos first started franchising, a franchisee could build a restaurant for less than $200,000, and now the free-standing model costs about $2 million, including the property, building, outfitting and franchise fee of $35,000, Loftin said.
The major cost for a franchisee or anyone starting up a business involves the expense of a building, construction and equipment, White said. "The actual franchise rights or fees are a minor cost," White said.
Blind Pig Tavern plans to charge about $20,000 for its franchise fee. That purchases the rights to the name and an operations manual that covers everything from training to recipes to distributors for supplies. "The advantage is they are using our learning curve," White said.
A franchisee still will have to pay for the building, space, a lease, restaurant equipment and furniture, and, of course, operating costs including payroll, supplies and utilities.
Selling its first franchise in Athens was a logical first step for Five Star to build on its franchise plan, Fairbairn said. "It gave us a chance to expand in our back door," Fairbairn said. "We can make mistakes and adjustments, but the end goal is to take it outside the community."
Fairbairn and Long would like to expand to Watkinsville and west Athens before targeting other college towns.
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