The Wolf of Franchises

Every chain, every franchise, should be looking at Claim right now. Especially if you're in a college town. And my take: especially if you're in F&B.

When we think of successful franchise products, we think of products made of atoms (burgers, fried chickens, treadmills). At Sandbox VR, we've been able to roll out 50 global locations by offering bytes (premium VR experiences). Selling bytes is immensely powerful because it leverages technical scalability and network effect. I had the opportunity to discuss this further with The Wolf of Franchises. You can catch it here - https://lnkd.in/gEySbWDi

Interested in having an impact on your community’s health and wellness?  Then check out the F45 Group, the global leader in fitness franchises. With over ten years of experience and almost 2,000 studios across 65 countries, F45 Training empower franchise owners like you to lead high-intensity, functional training and Pilates workouts that are progressive, efficient, and results-driven. It's more than a business; it's a chance to foster an entire community dedicated to health and fitness. You'll benefit from their unmatched support in marketing and operations, and be part of a movement that’s reshaping fitness globally. Take a look below for additional info. #Sponsored https://hubs.ly/Q02HnP8s0

At first I thought this was another dry white paper...but boy was I wrong. Some big mistakes being made by brands trying to manage explosive franchise growth, including public FTC violations for all the world to see. Also includes the first available financial performance data coming out of the pickleball world. Pro tip: read the paragraphs beyond the charts to get the real scoop. If you’ve got 15 minutes and have an interest in franchising, pickleball or not, it’s worth reading this! **PSA for transparency: I am an investor in Ace Pickleball Club, one of the brands in the report**

Tune in to the latest episode of our podcast where we spotlight Soccer Stars, the nation's premier youth educational soccer program. With over 20 years of experience, Soccer Stars is more than just a game. They've set themselves apart by focusing on teaching soccer fundamentals in a fun, non-competitive environment. Designed for kids as young as 1 year old and up to teens, their unique curriculum not only improves soccer skills but also builds self-confidence and socialization skills. Learn how this mobile-based franchise is making a difference in children’s lives across the country and learn about their age-specific programs that nurture young talents. Listen to the full episode below #ad https://lnkd.in/eUkFwZpx

Deb Merrill built her first Jimmy John's in 2008. Today, she owns 12 locations. Deb is the only owner operator in her franchise ownership group - with the others contributing capital and other services. So when Deb opened location number 2 just ~6 months after the first one, she realized she had a problem: It's impossible to be in 2 locations at the same time! This is a classic problem every multi-unit franchise owner has to face at one point. How do you build a team that can run the business, so you can focus *on* the business? For Deb, over the years there have been many lessons learned in building a team that has allowed her to now oversee her 12 Jimmy John's. A big part of that success is using Workstream, a software solution used by 25,000 restaurants in the US that streamlines operational efficiency. Whether it's hiring, sourcing candidates, interviewing, or managing hourly workers, Workstream handles it all for Deb and has cut down on her administrative time MASSIVELY. To hear Deb's full story, check out my conversation with her here: https://lnkd.in/eTUpBq3k And to learn more about Workstream, you can visit here: https://lnkd.in/eN8KhbYn

Steve Jobs offered Nolan Bushnell a 33% stake in Apple. But Bushnell was too busy bringing his restaurant idea to life... Nolan Bushnell graduated from The University of Utah in the late 1960's. He worked as an engineer at an electronics company before founding Atari in 1972. Atari became an immediate success, as they invented arcade classics still played to this day: • Pong • Asteroids • Centipede Bushnell is widely considered a founding father of the ~$300 billion video-game industry. But even before Atari, Bushnell was more interested in restaurants. According to his co-founder, Ted Dabney, Bushnell was constantly looking at different pizza parlors in the Bay area, brainstorming restaurant ideas. "Chuck E. Cheese was always his passion project, even before Atari" In 1975, a former employee approached Bushnell about investing in his computer company. The employee - by the name of Steve Jobs - offered him 33% of Apple for just $50,000... Bushnell declined. He knew what his next project after Atari would be... In 1976, Bushnell sold the company to Warner Communications, personally earning him ~$15 million (~$82M today). He now had the means to fully explore his passion project. His first idea was to serve pizza, and have Atari arcade games there to keep customers busy while waiting. Chuck E Cheese would be the distribution model for the newest Atari releases. But...Warner Communications had no interest in operating restaurants, so Bushnell ventured on his own. The 1st Chuck E Cheese was an immediate hit, which eventually led Bushnell to franchise the concept. This led to a fateful deal with Robert Brock, a big hotel operator who agreed to open 200 locations. Brock later cancelled the deal to start a competitor, ShowBiz Pizza Place - and the 2 companies competed fiercely in the 1980's, taking on debt in the name of expansion. But in 1984, the video-game industry was in a recession, and stores for both brands were struggling to survive. Chuck E Cheese would declare bankruptcy. ShowBiz managed to avoid the same fate, and in a wild twist ended up acquiring Chuck E. Cheese for $35 million. This was the end of Bushnell's involvement. Meanwhile, ShowBiz converted all locations to Chuck E. Cheese's, as it was the more popular brand. They grew to 300 locations by 2000, and enjoyed great years as the go-to birthday party spot for kids nationwide. But since this golden era, they've been on an absolute roller coaster: • Leveraged buyout by Apollo Global in 2014 • Failed IPO attempt in 2019 • Bankruptcy in 2020 They re-emerged from the dead in 2021 after eliminating $705M of debt, and are currently exploring *another* sale of ~$1 billion. Nolan Bushnell, despite missing the opportunity with Apple, had this to say: "I've got a wonderful family, I've got a great wife, my life is wonderful. I'm not sure that if I had been uber, uber, uber rich that I'd have had all of that". He is a legend either way 🤝

🚨 Tropical Smoothie Café just got acquired by Blackstone for $2 Billion. Founded in 1997, the franchise had 1,372 locations at the start of the year. The average location in 2023 generated about~$980,000 in revenue, which created ~$76 million in royalty revenue in 2023 (+15% YoY). Total revenues for the franchisor tallied $163M. Hell of a business

At it's peak in 2007, Quiznos did $2B in revenue across ~5,000 stores Today, they have 141 stores left and can't stop the bleeding. This is how the toasted sub empire collapsed 👇 In 1978, Jimmy Lambatos & Todd Disner started a fine-dining restaurant in Denver called Footers. It was there where they had the idea for an Italian style deli, so Footers became a testing ground for baguettes, dressings, etc. The partners opened the first Quiznos in 1981, which was an immediate hit. Locals loved how toasting the sandwiches enhanced the flavors and melted the cheese. This is why Quiznos is known as the home of the toasted sub. By 1991, they were up to 18 (mostly franchised) locations. That's when Lambatos & Disner SOLD the company to local franchisee Rick Schaden, a 26 year old who owned a few Quiznos with the help of his father. Here's where things take off... By 1993 they doubled the store footprint to 40 locations. Then in 1994 they took the company public, raising $4M in an IPO. With funds from the IPO, they accelerated growth and hit 1k locations by 2000. This is when they made a FATEFUL decision to form a subsidiary: American Food Distributors (AFD). They required franchisees to purchase ALL food and paper products through AFD. Suddenly Quiznos was making mountains of cash supplying franchisees with goods. In peak years, Quiznos made $200M+ from AFD, more than 2x royalty revenue. This fueled more growth and they hit 2k locations by 2003. But franchise owners weren't happy - they were forced into offering low prices while paying above market prices on their food and paper goods. Somehow Quiznos continued growing, and hit ~5k stores in 2007, but internally the company was ready to implode. Hundreds of franchisees banded together and sued Quiznos for the markups on their food supplies and the mandated retail prices that made it impossible to turn a profit. When the Great Recession hit in 2008, the already struggling stores began to shutter. 2k+ stores closed by 2012. The store closures created a death spiral that couldn't be stopped. A majority stake buyout in 2012 by Avenue Capital Group wasn't enough to save Quiznos, as they filed for bankruptcy in 2014 - reporting $875M in debt. They ultimately settled multiple major lawsuits, one costing $200M and another $95M for franchisees who couldn't even open. The franchise model is amazing when it works, but can go the opposite direction too. Quiznos lost focus on supporting franchisees as partners, & instead became an expensive food distributor that treated them as transactional customers. A quote from a former franchisee sums it up: “What they’re doing is criminal. I lost my savings. I lost my wife. I cashed in my life insurance policy. I lost everything, but I’m so happy just to be out of it.” Today, Quiznos is still attempting to revive itself. They signed a 30 unit development deal at the end of 2023...perhaps a sign a turn around is in the works 👀