To Franchise or Not to Franchise?

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Anyone who wants to start a restaurant business has two basic options. The first is to buy an existing restaurant or build your own. The other option is to purchase a franchise and operate a franchise restaurant. According to the International Franchise Association, there are 552 restaurant franchise concepts worldwide—a mind-boggling number for any aspiring restaurateur in the United States to choose from. Host Marriott alone uses more than 60 concepts in the restaurants it runs in more than 200 airports, shopping malls and travel plazas. A number of franchisers no longer accept new franchisees because of an over-saturation in markets and complaints from existing franchisees that new units eat into their sales. On top of that, the most successful franchisers tend to accept only experienced restaurateurs who have enough money or quick access to it. In short, the world of franchise restaurants, seemingly neat and tidy from afar, is anything but when examined closely. 

In evaluating the pros and cons of running your own independent restaurant or franchising, it’s important to know the potential rewards and risks associated with each of those endeavors. You don’t need a management degree to know that the rewards—both financial and aesthetic—can be high for a restaurant that proves to be a success. But if the restaurant fails, the losses are equally high. Franchises are not without their risks either—some pretty well-known chains, such as Boston Market, have declared bankruptcy. And with hundreds of franchise concepts to choose from, it’s not easy to decide which one to invest in.

That’s why it’s equally important to assess your own ambitions and personality as well. What are your business goals, and do you have the temperament to achieve them? To get an idea of what it’s like to run a franchise restaurant, we caught up with Anthony Le, a Vietnamese American who, along with his brother, owns three Robeks franchises in Granada Hills and Burbank. Robeks is a smoothie and juice franchise that was started by Los Angeles native David Robertson in 1995. According to the company website, Robertson founded the business because he was “dismayed by the lack of healthy, on-the-go food options.”

For 20 years before they launched their first Robeks franchise, Anthony and his brother were real estate and finance professionals. Anthony had some experience managing McDonald franchises as a teenager—but other than that neither of the brothers were steeped in the restaurant culture, which probably makes them ideal models for the average reader of this book. In fact, they’re still active in real estate but not as actively as they used to be. Excerpts from the interview:

Your voice is pretty commanding. Does it help with your business?

Yes. I speak very loud and clear because I like to make sure people hear me well—that there is no mistake or misunderstanding in my communication with customers or employees. I don’t want anyone to say that they didn’t hear me or that they heard me wrong. This is very important because I want my customers to know exactly what they are buying and what they’re paying. Employees can always go back and say that they misheard me or that I was mumbling. Whether on the phone or live in person I communicate very crystal clear. If people don’t hear me, there’s no reason for them not to say so on the spot.

When did you start your first Robeks franchise—and why did you choose Robeks ?

I stared in 2007. My brother and I chose this product—this franchise—because when we started out the corporation was still in its infancy. Robeks launched in 1995. So when we joined it, the company was only 12 years old. In choosing a corporation, it’s a good idea to look at its longevity. Everything has a cycle. You’re born, you grow up, you become old, you dies. It’s the same with corporations. Take Kodak. Nobody knew it would die—but it did. There are other factors why I chose Robeks. It’s not oversaturated, and the locations of the stores are strategically laid out. Some corporations have franchises on every corner of the street. Not Robeks. There are some demographic parameters that have to be met before a new store is opened.

Surely you were looking at other franchises too.

Absolutely. We looked at a Starbucks inside a Pavilions supermarket that was up for sale for $1.8 million. We also looked at El Pollo Loco, Pinkberry, Subway. Unlike franchises that sell seasonal products, like ice cream, Robeks can sell forever. It appeals to three generations. The first generation is the grandmoms and grandpops—those in the 70 to 80 years bracket. At that age, people think of life in terms of health. They need vegetable juice, less sugar. They automatically approach the healthy concept product. The next generation is middle-aged people—40-50 years old—like myself. That age bracket has widespread cancers and is also concerned about health. They want to eat less fat and consume more healthy products, like juices. The final generation is kids. Kid nowadays are not like we were 30-40 years ago, when we ate whatever our parents fed us. Kids choose what they eat—and they know what the eat and drink. And they, too, are choosing healthy products.

People go to Jamba Juice for smoothies. What do they come to Robeks for? I get a very positive response from customers who previously went to Jamba Juice. Jamba Juice does no offer a wide spectrum of fresh fruits or vegetables. According to some statistics, the sugar content in Jamba Juice products is 20% more than Robeks. Jamba Juice and Robeks can use the same products but how those products are managed can also make a difference. I manage my products efficiently. I don’t leave my produce out at room products—I keep them in my refrigerator at 37 degrees. If you leave your produce out for three days it will deteriorate and become soggy. In the summer, we use Valencia oranges, which have a tangy, feisty sourness combined with sweetness. I wish we could use Valencia oranges around the year, but we can’t because there are no Valencia oranges in winter. So in the off season, in winter, we use a cheaper variety that is a lot more sour and has a bit of bitterness. It lowers the quality of fresh-squeezed orange juice a little bit. That’s what separates me from my competitors—the quality.

Why did you open a franchise business and not an independently owned business?

Good question. Why didn’t I just open Anthony’s Juice? So I don’t have to pay any royalty, I don’t have to deal with a corporation—all that stuff. Nowadays, especially the way the economy is going, people are losing their jobs, poverty is around the corner, opening up a small business with your own name is very hard. With today’s high rents and food and labor costs, it’s difficult to promote an independently owned business.

I started my first franchise right when the Great Recession kicked in because I strongly believed in the product. The vitamins, anti-oxidants and fiber that fresh juices and vegetables contain is something people need regardless of the state of the economy. At the end of the day it’s the need, not the desire, of the customer that wins. My product is a need, not a luxury.

Your employees are young, vibrant and have good attitudes. They smile—and they know how to make juices. How important is it to find good employees?

Very important. You can hire anyone in the age range that my employees are in. But you have to train them right at the start and manage them well. It’s always nice to hear good customer feedback about how good my employees are. But ultimately my business benefits because the employees work efficiently, create less product waste, and deliver better customer satisfaction because of their good temper.

Do you have any experience in the food industry?

Yes, I do have experience but way back when I was a teenager. I was the sole manager of two McDonald franchises in Van Nuys for five years.

Did you get a bank loan to start any of your franchises?

No, we funded them entirely from our savings.

What was the cost of launching a Robeks franchise?

A brand-new startup Robeks store costs roughly $300,000. That includes everything from the building, construction, equipment, franchise fee.

How many hours on average do you spend at your franchises daily?

When I started seven years ago, I used to work Monday through Sunday. Over the years, I slowly relaxed the pace but I still spend about seven hours on average at the stores, Monday to Friday. I work as a manager, I take care of product inventory, product ordering, but by the same token I also work as an employee. I stay on the floor, with the crew, just like an employee. I take orders, make products and offer them to customers.

What do you think if you didn’t have such a hands-on approach and were more of a classic manager?

I would have probably met the fate of some of absentee owners of franchises whose stores closed down. There was one owner who showed up every two or three months. When you do that, everything suffers. That’s why my number one priority is customer service. It doesn’t matter if you have a good product in your store. Doesn’t matter if your prices are low. If you don’t have good customer service nobody is going to come back for a second visit. I tell my employees from the very beginning to smile at customers and to be nice to them.

My crew is so efficient that when I take off on weekends they never call me. I keep telling them to call me if they have any problems but they never do.

Do you sometimes pop into your stores unannounced on the weekends because you have nothing better to do or you’re bored?

No. Once I step away from my business and hand over a million-dollar enterprise to my crew I have to trust them. If I go to the stores to see how the crew is doing on the weekend without me, that shows them that I don’t trust them. And if I don’t trust them, not only does that not make them feel good, it raises another question: Why did I step away in the first place? To hand the key to my employees I have to trust them. I have to believe in my product and I have to believe in my people.

What kind of people do you go to for advice before you started your franchise business?

To be honest, I went to nobody. I did all the research on my own. I surveyed several franchise options—El Pollo Loco, Subway, Pinkberry. When you do all your due diligence and narrow down your options to one business or franchise my advice is to go with your instinct. Just go for it. Don’t get into any ifs and buts about the issue because opportunity only comes knocking on your door once. If you miss the train you miss the train. That train will never come back. Have you ever seen a train that turns around on the rail track? Never! That’s reality.

How have you modified or improved upon the best practices that you’ve inherited from Robeks? Have you brought your own touch to the franchises?

I have revised certain policies of Robeks by turning my crew into more of a hip hop crew. Robeks originally had a dress code for employees. We had to wear black or khaki slacks—no shorts, no jeans. When I opened my Robeks, I let my crew wear jeans and shorts in the summer. They had to wear presentable clothes—nothing torn. In a sense I have revolutionized the dress code for Robeks crews. I think Robeks should present a young, hip hop type of image. Customers should feel energetic when they go there. They are there to rejuvenate themselves by getting all these vitamins into their bodies. You want to feel young and healthy. The crews want to feel the same way—young, vibrant and energetic. Robeks used to come down and say, Oh, you can’t let the crew wear shorts and jeans. I would say, Why not? It makes them feel comfortable—and the customers are also comfortable around the crew. By contract, I have to follow Robeks guidelines, but I went against their dress code. And now Robeks has revised their dress code policy. Jeans are OK, shorts are OK now.

How regularly do you get your produce—what’s frozen and not frozen?

I get the produce twice a week. Fruits for smoothies are frozen, without any added preservatives, and all other fruits such as apples, grapes and bananas are fresh. Produce—vegetables—are also fresh.

How do you control the quality of your juices?

I myself make sure that the sugar content of juices is within our guidelines. And my crew members know exactly what they have to do. My customers have mentioned that my products are somehow better than those at other Robeks stores. That’s because my crew fully understand what goes into a particular drink. They memorize the recipes. How do I control that without being there? I don’t like to be on their backs, breathing down their necks. What I do is pick out a few facts and emphasize them to my crew. I tell them how important it is for us to do certain things correctly. For example, I make them aware of people with peanut allergies or with allergies to fruits and vegetables. And I tell my crew, Can you imagine what you carelessness could to a customer who has allergies? What if you put mistakenly strawberries in a drink that a customer with an allergy to strawberries has ordered? I hit the button right in the crews’ mentality.

Is there a type of personality ideally suited to owning a franchise business as opposed to mom and pop business?

You have to be the type of person who understands what it means to be part of a larger structure that helps you with your business every step of the way at different levels. You have to share the franchise’s corporate vision, which may be on a national scale. A franchise is not for somebody who just has the money to invest and wants everything set up for him.

The other difference between a franchisee and a mom and pop business owner is that if you run an independent business you have your own guidelines and you make your own decisions and rules. Whether you choose to follow them or not is all up to you. Nobody’s going to tell you or guide you. In a national franchise, there are corporate guidelines for everything—customer service, quality control, cleanliness, the whole works. If you can follow those guidelines strictly, then you are the type of person who is suited to running a franchise. But if you’re too hard-headed to follow anyone else’s guidelines then you don’t fit the type of category to won a business on a national, franchise basis.

When I opened my first Robeks store in Granada Hills, I had a partner who cashed out within a month. He used to look at the Robeks recipe cards and wanted to alter the recipes by adding and subtracting certain ingredients. I told him that even though the taste is probably going to be better and we would save more money, we’re not supposed to modify the recipes. I said that Robeks has been in business for 20 years and has spent millions of dollars to come up with these recipes. They have been successful because of these recipes. We have joined the organization just a month ago—we don’t have the experience to modify recipes.

He was also one of those anxious people who liked to stand on people’s backs and breathe down their necks. The kind of man who, on the very first day, stands in the store to see if employees are wasting any produce or scooping too much into the serving cups. I told him to leave the crew alone and manage from a distance.

The idea behind managing from a distance is an important one. When you study a problem from up close you only see a tiny area of the problem. But when you stand back, you see the whole picture. You don’t have to be breathing down your employees’ necks. Even when I’m at the sink, washing dishes, I know exactly what went on in a blender jar minutes or hours ago. I can tell if my product has been wasted either because there’s too much left over of the product lacks a smooth consistency and hasn’t been blended well.

What ups and downs have you had with Robeks so far?

I have had no problems at all in my relationship with Robeks. There are many things that I would like to improve, but those are on the corporate level. I own my own business, I follow the guidelines, and I have let Robeks set the course throughout the years.

What are your top three pieces of advice for someone who wants to start a franchise?

My three dos are: Do your due diligence—collect all the advice and opinions and do the necessary market surveys. Once you’d done that, forge ahead.

Number Two: Spend time in your business. Don’t think you’re going to invest $300,000 in a franchise—or in some cases a million or two million for a restaurant—and sit home and collect the profit every month. Work on your relationships with your employees—they are the ones who will be working day in and day out in your million-dollar business. The customers are the most important element of a business. But to me, deep down, employees are more important because it’s up to them whether or not customers like my business.

Number Three: Do not micromanage your crew. Let things run their course. Let them make the mistakes. Tolerate their deficiencies. Then manage those mistakes and deficiencies so that things can be done correctly next time.

Work on your relationships with your employees—they are the ones who will be working day in and day out in your million-dollar business. The customers are the most important element of a business. But to me, deep down, employees are more important because it’s up to them whether or not customers like my business.

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