When Isaac Singer created a business model to speed up the production and distribution of his patented, widely-used sewing machines in the early 1850s, the world was first introduced to the newfound concept of franchising. By the late 1930s, with the advent of fast food restaurants, franchising began to pick up steam, and ever since, the number of franchised businesses steadily grew. Today, there are more than 800,000 franchise opportunities worldwide in the over $2 trillion industry.
Yet, after all these decades, it was only two years ago that the modern franchise world welcomed its first franchisee-sponsored and managed equity fund, NRD Capital. Boasting a seasoned team with more than 50 years of franchise experience—from single store operations to public company management—the company focuses on acquiring, positioning and growing small to medium-sized brands for accelerated success. In its first year, NRD Capital had already acquired two major franchises—first Frisch’s Restaurants Inc., and, most recently, Fuzzy’s Taco Shop.
Chances are, those familiar with the franchising world will recognize this franchisee fund’s Founder and Managing Partner—Aziz Hashim. And there is also a good chance that those people will be quick to say that thanks to Hashim, multi-brand and multi-unit franchise development as we know it is being rewritten.
“Aziz Hashim is the embodiment of a shifting balance of power over the last few years that puts many multi-unit operators on equal footing with, and in many cases several rungs above, the franchisor whose stores they buy and whose rules they follow,” wrote Beth Ewen, editor of the Franchise Times. “Hashim is a man in franchising to be reckoned with.”
For Hashim, it all started with the founding of NRD Holdings in 1996, when he opened his first KFC restaurant in Atlanta. He soon opened a Subway next door. Fast forward three years, and he had built up a 10-unit empire, which he quickly grew to more than 60 units. But it was never just about building volume—diversification was also important to Hashim, and he eventually invested in various concepts including Checkers & Rally’s, Popeye’s, Domino's, and more.
From there, things took off. As a leading multi-state, multi-brand and multi-national franchisee, Hashim rapidly ascended as one of the top 20 franchise operators in the U.S. By 2014, Nation’s Restaurant News named him one of the “50 Most Powerful Leaders” in the foodservice industry. Hashim’s success was also noticed by the entire franchise industry—a sentiment highlighted by his recent appointment as the 2016 chairman of the International Franchise Association.
As a well-respected leader among his peers, Hashim is also keen to share what he has learned over his 21 years in franchising—and just about everyone is eager to listen.
“There’s a point where you have to make decisions about the way forward. I have a passion for people on the same path that I was on. My goal now is to help others,” Hashim said.
1851 Franchise spoke with Hashim to hear his insights on multi-unit franchising and his advice for single-unit owners who might want to follow in his footsteps.
1851: How did your journey into multi-unit, multi-brand ownership begin?
Hashim: Very early on, I was interested in diversification. I was privileged to have access to some really smart people early on in my life, and I had a lot of mentoring into the aspects of how to de-risk your business. To do that, you adhere to the old adage of not putting all your eggs into one basket. In franchising, I learned that it’s important to spread your investment across multiple brands, so that if something were to happen—if something were to go wrong with one brand—you’ll at least be able to fall back on another brand. From bad press to a supply chain problem, you never know what can happen. Whatever the case, I wanted to spread my risk out a little bit. I didn’t want all my assets and hard-earned efforts to go into a single brand, and the best way to do that was to dive into multi-brand ownership.
1851: What are some of the biggest barriers that you’ve experienced in multi-unit and multi-brand ownership?
Hashim: It’s a full-time job moving forward to multi-brand ownership. You don’t want to be overly burdened. Franchisees need to ask themselves if they’re prepared to grow. If the answer is “yes,” then they need to be prepared to put their trust and confidence in other people to make decisions for them. That’s often the most difficult part, because as entrepreneurs, we’re naturally prone to be micro-managers.
That was hard for me. I would get very frustrated that the operations weren’t exactly how they would have been if I were at the helm every day. I had to learn to get over that. Identifying the right talent isn’t easy or simple—but it’s imperative. Hire talent you believe in, and then step aside and let them do the job.
1851: How would a franchisee know when they’re ready to take the next step into multi-unit ownership?
Hashim: I made that leap very early, starting with my second store. I started my career by opening stores in downtown Atlanta, so they were very close and it allowed me to go into multi-branding a little easier. I could simply walk from one store to another. That was 25 years ago. Today, that’s much less common. Franchisees are often concerned about moving from Brand A to Brand B before having the right foundation in place. I could watch over all of my stores because they were close to each other, but in reality, multi-unit franchisees will have locations scattered miles and miles apart. They won’t be able do everything themselves. The problem is, people dive into this point before they even learn to swim.
I would advise that people have a little bit of critical mass in one brand before leaping into another—multi-unit franchisees need experience before moving on to brand two. At the minimum, get to five units of one brand. Strengthen your foundation before venturing forward.
1851: People often say that you set the standard for multi-unit and multi-brand franchisees. In what ways do you feel you’ve redefined this type of ownership?
Hashim: There are a few ways. First, I focus on the whole notion of how to incentivize management—to create the feeling of ownership within the ranks. Create an incentive structure to allow people to participate in your upside. Franchisees don’t mind giving bonuses, but they’re not always willing to give a piece of the pie. Highly-talented people deserve a true stake in the business, and if they don’t get it, they’ll likely go somewhere else. Recognize and appreciate the value they create. It’s about generosity. It’s about being a good business person. When you truly embody that type of incentive, what you give, you will get back far more in loyalty.
Second, it’s about shifting the balance between the franchisee and the franchisor. It’s not good when the brand has an upper-hand, making the franchisee feel subservient. There needs to be a spirit of partnership. I’ve always wondered why in the world of franchising, franchisors are so reluctant to take advice from franchisees. How many board of directors within a brand include franchisees? Almost none. I find it fascinating. You’re in the business of franchising, and there’s a franchisee out there who owns 200 units, and you don’t think you can learn anything from that guy and help your brand?
For some reason, franchisors are reluctant to accept the sophistication of franchisees. That’s why I created NRD Capital—it’s an attempt to pull multi-unit franchisees together and use their horsepower to get into a higher-return business, which is brand ownership.
1851: What advice would you have for single-unit franchisees interested in making the leap into multi-brand or multi-unit ownership?
Hashim: Do a self-examination as to why they want to do this in the first place. What do they want to achieve? It’s so important to have clarity, because it’s not just about growing the amount of units you own. Too often, people will see other owners expanding, and they simply think it’s the thing to do. And unfortunately, when this happens, I see multi-unit franchisees that are not happy. Suddenly they have 20 units, they’re overburdened and they’re losing money. When I ask them why they did this in the first place, their answer is simple: “Because the opportunity was there.” If you don’t have a clear vision, multi-unit ownership isn’t for you.
Once they have that clarity, you have to realize that expansion comes at a cost. You don’t just decide to go to multi-brand or multi-unit—you need to invest in your infrastructure to grow. In the short run, you make less. You’ll have to be ready for that reduction in income while your multi-brand takes off and you solidify and strengthen your system. But people don’t often want to take that reduction in order to grow, and they end up treading water. But when you take the time to truly invest in the dream team—the right advisors, the right lawyer or the right accountant—you’re protecting yourself and you’re protecting what you have.
1851: Looking toward the future, what are some of your main goals as the chairman of the International Franchise Association?
Hashim: My focus by far is on the most immediate problem—our business model is under attack. The biggest reason behind that is due to a lack of understanding of the model, and the distrust surrounding the model. If you have a major brand associated with the building you work in, somehow there’s this false idea that that franchisor controls everything. Even our own employees don’t understand who they work for—they work for the franchisee, not the brand.
That educational gap is huge. My goal is for the IFA to create a system of tools so that people can start educating the rest of the world on what the business model is. It’s about creating the right respect for our business model. It’s truly helping to make the American Dream possible. We have to do a better job at getting that story and that message across. Everyone in franchising has to become an ambassador for the franchising business model as well as their own brands.