Advice From a Multi-Unit Franchisee: Craig Dunaway, Penn Station East Coast Subs

Multi-Unit Franchisee: Craig Dunaway

Franchises: Penn Station East Coast Subs

Craig Dunaway isn’t just the chief operating officer of Penn Station East Coast Subs — he’s a multi-unit franchise owner. 

In an interview with 1851 Franchise, Dunaway shared his journey into franchising, beginning with his background in public accounting. He recalled his first foray into franchising in 1985 when he and college buddy Charlie Hensley, both accountants, were asked to help with financial projections for a Papa Johns franchise in Indianapolis. This experience inspired them to switch from their initial dream of real estate to franchising.

“We met with Papa Johns, which was looking for young, aggressive entrepreneurs,” Dunaway said. “We liked what they had to say, and they liked us too … We started opening Papa Johns in Cincinnati.”

Dunaway emphasized the importance of scale from the very beginning: “We knew on the first one or two or three or four restaurants, we were not building a business. We were opening restaurants.” Once they had several units, they could implement infrastructure and systems, allowing them to build a company. Choosing Cincinnati as their market was a strategic decision as they felt the city had the capacity to support numerous restaurants.

When evaluating a franchise opportunity, Dunaway highlighted the significance of the product and the franchisor's stability. “The first thing was loving the product and feeling proud to sell it,” he said, emphasizing his preference for family-friendly products. He also looked for brands with proven scalability, noting that although Papa Johns had early growing pains, they were stable by the time he got involved.

For franchisors seeking to capture his attention, Dunaway valued full disclosure and management integrity. He advised understanding the franchisor's motivations, saying, “Understanding the goals of the brand is highly important.” This includes the intentions of management and ensuring there is no high turnover in leadership.

Dunaway’s advice for aspiring multi-unit franchise owners was to focus on understanding and aligning with the franchisor’s systems while adding personal policies where needed. “Be a sponge for the first six to 12 months, learn everything you can about the system and work with management,” he said. “This will create long-term success.”

A transcript of Dunaway’s interview with 1851 Franchise is included below. It has been edited for clarity, style and brevity.

1851 Franchise: I'd like to start by hearing your personal story. How did you find your way into franchising?

Craig Dunaway: It’s not a sordid story, but I'll take you back to the early 80s. My background is in public accounting. I was a partner at a firm in Louisville, Kentucky, from 1983 until 1999. My first foray into franchising was in 1985. My buddy Charlie Hensley and I, both accounting majors who went to college together, dreamed of buying real estate. After college, we both went our separate ways and went to work at different accounting firms. Around 1985, he joined our firm as the controller, and we rekindled our discussion about investing.

A friend of ours, Greg Bennett, wanted to become a Papa John's franchisee. Since we were both accountants, he asked if we could help him model projections for Papa Johns in Indianapolis, and we did. This experience made my partner and I consider franchising instead of real estate. We met with Papa Johns, which was looking for young, aggressive entrepreneurs. We liked what they had to say, and they liked us too.

At that time, there were only about 50 Papa Johns locations. We wanted a big market, even though we didn't have big money. We started opening Papa Johns restaurants in Cincinnati. I stayed in public accounting while my partner eventually left to oversee our Papa Johns business. Over 11 years, we opened 11 Papa Johns restaurants. That was my initial foray into the restaurant business.

1851: It sounds like you aimed for growth from the start. How much did you consider scale when you first started?

Dunaway: Scale was super important to us. We always began with the end in mind. We knew that with the first few restaurants, we were not building a business but simply opening restaurants. Once we reached four or five units, we could put infrastructure and systems in place, which meant we were building a company. We didn't know exactly how big we wanted to get but knew we had to scale to achieve our financial goals. Cincinnati was a big market and could handle many restaurants, which matched our growth ambitions.

1851: When you're evaluating a franchise opportunity, what do you look for in a franchisor?

Dunaway: For me, when I was involved with Papa Johns and later became a Penn Station franchisee in 1998, the first thing was loving the product and feeling proud to sell it. I wanted something family-friendly and something I could stand behind. I also looked for brands that had scale and demonstrated that the franchisor would be a going concern. For instance, Papa Johns had growing pains early on, but by the time we got involved, we knew they would be around for the long term.

1851: If a franchisor wanted to capture your attention, how would they do that?

Dunaway: It’s about full disclosure and integrity of management. Longevity of management is also crucial. There shouldn't be a lot of turnover. You should understand the motivations and intentions of management. Are they looking to grow rapidly, double in size or sell to private equity? As a franchisee, you’re investing a lot of money, and you need to feel comfortable with the people you’re dealing with. Understanding the goals of the brand is highly important.

1851: What advice would you have for first-time franchisees wanting to become successful multi-unit franchise owners?

Dunaway: First, find a brand you love and understand the management and their goals. Speak to existing franchisees and those who have exited the system to understand their experiences. It's critical to understand the financials and ensure they align with your long-term goals. Be prepared to work hard, as the restaurant business, for example, is demanding. Follow the franchisor's systems and add your own policies and procedures as needed. The more you follow the system, the better your chances of success.

1851: Was there anything else you’d like our audience to know? Maybe something I neglected to ask?

Dunaway: Summing up, franchising is staged entrepreneurialism. You don’t have to create something from scratch. The best franchisees follow the model and add their own policies and procedures. Recognize that you’re leasing the model from someone else. Be a sponge for the first six to twelve months, learn everything you can about the system, and work with management. This will create long-term success.

Every great franchisee had help buying a franchise. Want to learn more about how 1851 helps franchisees find the right franchise opportunity? Visit www.1851growthclub.com and start your journey.