Give Em Something to Talk About: 10 Movers and Shakers in Franchising

With thousands of franchisors in the U.S. alone, you can expect a certain level of drama, some downturns and some breakout success stories every year. Here’s the top 10 that have caught our eye in the last year; Some have certainly been movin’ and some have been shakin’.

The golden arches took a lot of heat this past year. McDonald’s closed 2014 after reporting earnings showing the first decline (more than one percent) in domestic system wide sales in at least three decades according to analysis by Nation’s Restaurant News. On the heels of this news, McDonald’s CEO Don Thompson announced his retirement after a 25-year run with the brand. But probably most notably this year, McD’s shook the airwaves last year with the designation by the National Labor Relations Board as a “joint-employer” with its more than 14,000 franchisees. There’s a silver lining in everything though, in 2015 we’ll likely see McDonald’s giving away more apples!

Meanwhile, Better Burger chains are sizzlin’! MOOYAH Burgers, Fries & Shakes, a fast-casual, “better burger” chain, closed out 2014 reaching a milestone 75 locations and riding a wave of “MOO-mentum” into 2015 when the brand plans to cross the 100-unit mark and continue their proactive growth. MOOYAH enters 2015 with signings to open their very first locations in Florida and Wisconsin, and is focused on bringing the brand to booming markets in Atlanta, Phoenix, Minneapolis, Tampa-St. Petersburg, and Cincinnati.

“2014 was a landmark year for the MOOYAH brand but we expect even more success and growth in the New Year,” said Michael Mabry, Chief Operating Officer for MOOYAH. “We have taken strides to strengthen our relationship with our valued franchise partners and look to continue to improve as we take aim at hitting 100 units in 2015 and continue to prove that the simple approach of providing a better quality product and experience is the key to successful partnerships in local communities.”

Speaking of headlines, Shake Shack, kept on keepin’ on. The brand announced its IPO late in 2014 and raised $105 million from its initial public offering on the New York Stock Exchange. The brand (NYSE: SHAK) now not only has a fanatical following, but is worth a whopping $1.63 billion…not too shabby. With this kind of significant backing, the company that started out as a hot dog stand, is now poised for exponential international growth to add to its already existing 63 locations in nine countries.

Aziz Hashim, founder and Managing Partner of NRD Capital and 2016 chairman of the International Franchise Association

Knowing franchise brands will need to reposition their business to attract Multi-Unit franchisees, Aziz Hashim, one of the most influential Multi-Unit franchisees (Popeyes, Checkers*/Rally's, Subway), founded Atlanta-based NRD Capital in 2014, the first-ever Multi-Unit franchisee-sponsored and managed business fund within the $2.1 trillion franchise industry.

Created due to rapid changes in the industry and because franchising needed more private equity beyond Roark Capital, Serent Capital and Sentinel Capital, the fund's primary focus is acquiring equity within emerging concepts and established franchise brands, both within foodservice and others, who want to accelerate their development.

Which Wich; the Better Sandwich Leader is also a Good Samaritan

Everybody is looking for a way to stand out and make a difference, but you don’t necessarily have to find a unicorn. Sometimes it can be as simple as a peanut butter and jelly sandwich. Which Wich, a customizable sandwich chain based in Dallas launched Project PB&J in 2014 on the premise that a simple PB&J sandwich can change the world. For every PB&J sandwich purchased in a Which Wich location, the company donates a PB&J to a local cause and banks one for their global initiative trust aiming to be there for those in need of a meal when a natural disaster strikes. At its annual franchise conference on January 15, Which Wich hosted a ‘Spreading Party’ where more than 500 franchisees, corporate staff and volunteers made and donated 26,710 PB&J sandwiches to Dallas-based non-profits, breaking a world record and creating some great buzz all the while providing a meal for thousands in need.

Businesses Built For Moving

With the start of a rebound for the housing market, the business of moving heated up in the last year. Professional moving franchise TWO MEN AND A TRUCK*® based in Lansing, MI entered 2015 with confidence after wrapping up strong fourth quarter results in 2014, most notably posting 61 straight months of growth and 45 consecutive months of record growth, positioning the nationally-recognized brand for continued upward momentum in 2015. The brand disclosed Q4 2014 revenues totaling more than $350,000,000, a 13.68 percent growth over the previous year. December proved to be a highly successful month for the brand, netting more than $25,000,000 in revenue, a 17.47 percent growth from 2013.

The National Association of REALTORS® annual profile of home staging for 2015 revealed a whopping eighty-one percent of REALTORS® representing buyers confirm their buyers can better visualize themselves in a home that is staged. Showhomes, the nation’s leader in home staging and design closed 2014 with a five percent total revenue increase and reported a 35 percent increase in system wide same location sales and 24 percent more homes under contract than at the end of 2013. The brand also added yet another highly profitable revenue stream for franchisees to its roster of service offerings this past year: Showhomes Home Updating. The new service positions the brand as the premier full-service home staging choice for homeowners who would like to revitalize their property before putting it on the market with minor updates including paint and flooring.

A leader in the $133-billion local advertising industry, Welcomemat Services is a marketing strategies and technology company that provides loyalty solutions designed to target families who have recently changed their address. The company set new records for development growth with 21 new franchisee signings and increasing their presence by over 40-percent year-over-year. The brand’s successful 2014 landed them on Entrepreneur’s Franchise 500 for the first time in company history. They show no signs of slowing down, however. In just the first month of 2015, the brand has already signed on four new franchise units taking them over the milestone 50-location mark.

Everything Healthy

Who is the king? Smoothie King. CEO Wan Kim led the 700+ “Smoothies With a Purpose” brand to an 8.7 percent increase in same store sales in 2014 over the previous year, and earned confidence from established owners, with 65% percent of agreements signed in 2014 by existing franchise owners. The 2015 focus? To further educate the consumer about what a nutritional smoothie is, why Smoothie King delivers its product with a purpose, and how Smoothie King is the true originator and innovator of the segment. Smoothie King plans to open two locations every week in 2015 and to grow the $567,578 average gross sales (of the top 25 percent of traditional franchised units in 2013) within the $2 billion industry. “When people believe in the brand, there’s always going to be a fire that drives growth,” Wan Kim said. “Even during tough times, that passion never dies and continues to fuel the business. With Smoothie King, franchisees can build their business and at the same time, be proud of the work they are doing, which is a win-win for all.”

Another player in the health craze, throughout its nearly 20-year history, Pita Pit has maintained its category lead as a healthy alternative to fast food by encouraging consumers to feel good about what they eat and offering better-for-you options. Now boasting 500 locations across 11 countries, Pita Pit is recognized as No. 1 in its category in Entrepreneur Magazine’s Franchise 500. The chain has focused in recent years on educating customers about the latest and greatest options; the brand launched its Resolution Solution campaign for the second year in a row this year promoting six pitas all under 500 calories; and when we say under, we mean well under, with one option as low as 285.

FranConnect and its Acquisition

FranConnect, widely recognized as the industry-leading provider of franchising solutions acquired Process Peak, which offers innovative franchisor and franchisee software solutions. With their combined technology and software solutions for franchise development, performance and royalty management, collaboration and training, operations and marketing – the now joint force represents nearly 800 franchise brands. “The acquisition of Process Peak was a work in progress for a long time. We felt that the expertise of Tim Johnson and John Carlson would greatly help us expand the reach of our team and provide more services to an even greater number of entrepreneurs and business owners,” said FranConnect founder & CEO Amit Pamecha.

Chicken Wings & Sports

While the popular wings, beer and sports chain caters to the dudes of the world; make no mistake about key players. Buffalo Wild Wings president and CEO Sally Smith not only led the chain to the No. 22 spot in total US system wide foodservice sales according to NRN, but she’s successfully moved Buffalo Wild Wings’ holdings in the fast-casual segment with the addition of a majority investment in the nine-unit Dallas-based Rusty Taco chain. Wings and tacos? If anyone can make that a ‘thing’ Buffalo Wild Wings can.

Meanwhile, another key player in the space has found a way to differentiate by saying, “hey, wings & sports aren’t just for the dudes” and has created both a product and atmosphere perfect for families and wing connoisseurs everywhere. Buffalo Wings & Rings celebrated its highest system wide sales in its 30-year history in 2014. The brand closed the year with quadruple growth in new franchise units, signed agreements for 17 new locations; saw a system-wide sales increase of 10 percent with the same unit count; and strengthened its leadership with CEO Nader Masadeh who has been with the brand for over a decade. The brand also re-launched in Cincinnati, its home market, to incorporate the new menu, décor and service elements that have driven results so far in newer markets like Lincoln, Neb. and Port Charlotte, Fla. A refinement of Buffalo Wings & Rings’ corporate culture and improved communication between franchisor and franchisees will continue to evolve in 2015. The chain’s culinary team also worked hard this past year to achieve to a 3-to-1 ratio of food-to-alcohol sales, which has helped food costs and profitability, according to Masadeh, which undoubtedly played a role in the brand a achieving its sixteenth consecutive quarter of same store sales growth.

Mosquito Joe* and the Opportunity in Outdoor Pest Control

There are 34 U.S. franchises in the outdoor pest control space. The space was recognized by Kiplinger’s this past year as one of the franchising sectors with the greatest growth potential. Growth has been potentially attributed to the Centers for Disease Control urging Americans to be more vigilant about controlling and treating insect-related diseases, such as West Nile virus. Also, franchise opportunities in this space also typically offer a low startup investment and ample franchisor support including training and equipment. In addition the Franchise Business Economic Outlook for 2015 by HIS Economics expects to see a 1.6 percent growth rate in the commercial and residential services sector this year which include pest control.

Talk about buzz. Arguably one of the (if not THE) fastest growing franchise over the past year, Mosquito Joe closed out 2014 with the addition of 43 new franchisees, 96 new territories and a system-wide sales increase of 311 percent. “We experienced tremendous growth in 2014,” says Mosquito Joe CEO Kevin Wilson. “Not only did we expand our services to new areas, but retained 80 percent of our customer base, and established new partnerships with broker networks FranNet and FranChoice.” One thing’s for sure – with this kind of growth, we can all expect the next year to be a little less pesky. Thanks, Joe!

Palm Beach Vapors and the First Marijuana Franchise

In 2014, we saw states passing never-before-seen legislation including legalization of marijuana. In anticipation of additional states continuing to jump on the proverbial bandwagon, Chip Paul and his team have developed a cannabis vapor product known as the “M-Juice” system, which will lead franchising’s first e-cigarette and vapor retailer into becoming the nation’s first marijuana franchise. According to the “2014 Marijuana Business Factbook,” the combined sales of legal and recreational cannabis could exceed $8 billion by 2018, based on sales from markets where marijuana is legal in some form and projections from a handful of states expected to legalize recreational or medicinal cannabis over the next four years. Paul has projected that “M-Juice” could account for between 30 and 40 percent of Palm Beach Vapors’ annual revenue by 2018 if the move toward wider legalization maintains its expected momentum.

Capitalizing on Unconventional Real Estate

RadioShack filed for Chapter 11 bankruptcy in February, 2015. Prime real estate is about to open up through the 2,400 stores nationwide RadioShack plans to sell, offering a roughly 2,500 square foot footprint and high traffic retail locations for other concepts to inhabit, and some more than others will be a perfect fit.

Among the brands chomping at the bit for a piece of that real estate pie: Wireless Zone, Hand & Stone Massage & Facial Spa, PRO Martial Arts and WORKOUT ANYTIME* – all brands whose existing locations occupy a similar footprint and would be able to easily convert the retail locations. Let the bidding wars begin.