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How to Succeed as a Multi-Unit Franchisee: Luis San Miguel, Auntie Anne’s, Cinnabon and Carvel

San Miguel is the owner of 50 locations of three different brands. Here’s how he grew a successful franchise portfolio.

Luis San Miguel is the president and CEO of Fresh Dining Concepts, a franchisee group that owns a total of 50 Auntie Anne’s, Cinnabon and Carvel locations across New York, Florida and Pennsylvania. San Miguel is a true franchise industry allstar — he has been a financial manager and CFO, worked at Burger King Corporate, been a Burger King franchisee and is now the third-largest Auntie Anne’s operator in the country. 

When it comes to what makes him successful as a multi-unit owner, San Miguel points to two different, yet complimentary paths. “I am a very high-energy person, but I am also a stickler for detail — all the organizations I’ve built are fast-paced and at the same time thorough,” he said. “Some people may view the notion of being fast as being the opposite of deliberate, but both can be accomplished with the right team.” 

Further, San Miguel says the reality of today’s business world is the ability to mutli-task, but he reminds his staff that the most important thing is completing the tasks, because that is how businesses achieve success in the end.  

On the business side, San Miguel says store profitability is the most important thing, but the way profitability is achieved will depend on the business. “We are laser-focused on specifically driving sales to improve profitability, as opposed to cutting down on expenses,” said San Miguel. “I don’t want to minimize the importance of controlling expenses, but since our margins are 80%, we are better off selling one additional dollar of product over saving one or two cents on expenses. With this strategy in mind, we train our employees to boost sales and develop local marketing initiatives at an incremental cost to our P&L.” 

San Miguel also notes that risk diversification is another important factor in successful multi-unit ownership, but that will mean something different for every operator. “We are currently only operating in malls, so for us, risk diversification is about opening stores in different geographical areas to mitigate the risk of weather disasters, local economic issues or otherwise,” he said.

For franchisees looking to grow their portfolio, San Miguel says the key is maintaining the same discipline that made them successful with the first unit. “The franchisee should be very deliberate about achieving consistent unit level economics, finding the right markets and honestly assessing their ability to operate a new unit,” he said. “We all love growth, and we get very excited about new opportunities, but I believe slow and steady wins the race.” 

Due diligence is another important part of the multi-unit development equation. “In evaluating potential entry into brands, I’ve conducted extensive research across the board in order to understand their unit level economics and their operating challenges while also gaining insight into the team’s long term strategy for growth,” said San Miguel. “This info is regularly available for public companies; in addition, there is a great deal of this that is contained in the FDD.” 

San Miguel also points to the groups of investment bankers who actively participate in the trading of franchises as another good source of information. “These are folks who are interested in getting deals done, and they especially value relationships that are going to be long-lasting,” he said. “A prospective franchisee should reach out to one or various of these groups and get their perspective on the experience they’ve had with other franchisees and how they’ve worked with the management team of franchisors.” 

If a franchisor is looking to find someone like San Miguel, he says they need to offer a viable and profitable concept, a strong support infrastructure and the kind of competitive differentiators prospects can be enthusiastic about. 

“There are a lot of brands out there that want to become franchisors, but they don’t want to make the investment in brand development, operational support or their supply chain,” he said. “Instead, they just want franchisees to enter into development agreements. Through our evaluation process, we can easily see through this and we avoid those opportunities. My advice to franchisors is to make sure they have a concept that they’ve proven beyond one or two units and will be able to support the franchisees they are looking to sign.”

For more, check out the full video interview above.