Multiple-unit franchising continues to lead restaurant growth





According to research by IFA, more than 50% of all franchises
are owned by 20% of franchisees. The old days of franchisors
looking for single-unit franchisors is all but over. Multi-unit
operators can open stores more quickly and efficiently. In addition,
they can cross market different brands. Franchisors are offering
multiple brands like Fransmart, Focus Brands and Yum!Brands.



Fransmart portfolio includes Boardwalk Fresh Burgers and Fries, Elevation
Burger, Freshii, Mazzio's Italian Eatery, Nature's Table, Oliveto Italian Bistro,
Sandella's, Sonoma Chicken, Tossed, Vapiano and ZPizza.

Focus Brands features Moe's Southwest Grill, Schlotzsky's Deli, Carvel Ice
Cream, Seattle's Best Coffee and Cinnabon's.

Yum!Brands combines Taco Bell, KFC, Pizza Hut, Long John Silver's,
A&W Restaurants and Wing Street.

These franchise development companies use co-branding to cross
market concepts. Schlotzsky's puts Cinnabon's and sometimes
Carvel Ice Cream inside their restaurants. Long John Silver's
and A&W go under the same roof.

Working with different brands allows you to branch out after
saturating a market with one brand. Hearing about different
ways to operate a brand helps franchisee's adopt new methods
for each restaurant.

The three largest restaurant franchisees in the country are NPC
International Inc. with 1,100 Pizza Huts, AAFES (Army and Air
Force Exchange Service) with over 800 A&W Restaurants, Baskin-
Robbins, Seattle's Best Coffee and others and Carrolls Restaurant
Group with 559 Burger Kings along with Taco Cabana chain and Pollo
Tropicals. These are called "mega-'zees" operators.

However, there are risks with large multi-unit operators. Doc
Cohen a Texas based entrepreneur has run franchise stores
since 1979 including Great American Cookie Company, TCBY
and Pretzel Time. Doc has seen the progression to large mulit-unit
operations. He says, "It scares me when I see a new or young
system selling large areas." "They need to keep their options open.
What if a guy gets the rights to develop Texas, opens three stores
and decides that's enough?" That's why many companies only sell
the rights to develop five to seven units at a time. Also a large
franchisee can begin butting heads with the franchisor expecting
specialtreatment or discounts. They could force their own changes.

Multi-unit franchisee will continue to be the standard for future
franchise growth as companies realize the benefits to owning
more than one brand.

Some Theaters enter competitve restaurant business

Dinner and a movie used to be a big attraction for restaurants wanting to

feed off the traffic from theaters. However, more and more theater chains

are combining dinner with the movie experience. The latest is Gold Class

Cinemas from the west coast that just opened in Fairview, TX just outside

Dallas. Movie tickets are $17.50 for members enjoying huge individual

reclining lounge chairs in a smaller home theater experience. Waiters

serve up $16 artisan pizza or farfalle pasta for $14 while you enjoy first

run movies. The developer boasts the increase sales to your restaurant

by locating next to the theater. but is anyone really going to be looking to

eat after that experience. Gold Class is run by restaurant people not

theater people so you know they intend to push their menu and drinks

during the movie. Movie Tavern and Studio Movie Grill sell movie tickets

at the market rate with a lower price points on their food. They all want to

take away dining dollars from your restaurant. Right now cinema eatery chains

only account for 1% of all movie screens, but this is a growing trend.

Theaters like Cinemark and AMC are still great draws for your restaurant

dinner and weekend business. The movie business is still strong. Make sure

you are not competing with the dinner movie theaters.

Franchising for fast casual restaurants starting to pick up steam. Many
groups seeing big opportunities to grow in the Texas market as well
as many cities across the country. For example Schlotzsky's coming
out with new prototype with "Lotz better" design. Opening first one
in Dallas/Carrollton in August. Adding more colorful upscale interior
and branding the logo. Qdoba signing up large franchise groups to
expand in major markets in Texas like Dallas and Houston with
thier new prototype. Smashburger and Mooyah Burger gaining
momentum as they open up units with strong sales volume as they
offer a better alternative to fast food burgers.