Zaxby's Franchising LLC’s Post

FRANCHISEE v. FRANCHISOR PROBLEMS IN PIZZA HUT: Kudos to Jonathan Maze for detailed reporting on more big problems in the US Pizza Hut System. The issue now is with, EYM one of its largest franchisees, who closed 15 units last week and is behind on royalties. It's been unable to sell the whole entity and Pizza Hut is terminating. There were numerous cross-accusations between franchisee and franchisor. To me, this is yet another reminder that restaurant franchising is not the goldmine some might assure. It takes ACTIVE MANAGEMENT, pre acquisition analysis, financial plannng and review to get to the potential for success. [Yes, I do that kind of work.] More importantly, it is so regretful to see the large lost investment of the franchisee in this brand that the article details.

🔺MYTH: The perception headlines like this fuels is a belief that it costs millions to get into a franchise. 🟢 FACT: Most franchises run between 75k to 285k all in to get into the business. Visit YourFirstFranchise.com today to explore your options and take the first step towards franchise ownership. #yourfirstfranchise https://lnkd.in/gCAUHy8j

Scott Greenberg a leading authority in franchising, has written a thought-provoking article on the ever-evolving issue of joint employer status. As Scott points out, this topic isn’t new, but it’s poised to disrupt the franchising landscape. If you’re in the franchising world or considering franchise opportunities, this is essential reading. His book is a “must read” as well. #FranchisingInsights #JointEmployer #MustRead”

I've been monitoring the numerous bankruptcy filings of both franchisors and large franchisees in the industry this year. The recent news about MOD Pizza exploring all options to fortify its capital structure came as yet another sharp blow. Named as one of the fastest-growing restaurant chains in the U.S, MOD Pizza was a shining example of how to make it big in the ‘made-on-demand’ pizza sector. With nearly $700 million in system sales from over 550 locations, they were outpacing rivals like Blaze Pizza by a staggering $300 million. Their fundraising ability was also noteworthy, having generated a considerable $160 million in 2019 alone. However, the harsh realities of the pandemic, coupled with rising inflation, have dramatically changed the landscape. Targeting 1000 locations within five years now feels like a distant dream and the closure of 26 under-performing locations clearly indicates their struggle. The decrease in the count of their locations on their website is a testament to their challenging situation. As a franchise attorney, the situation at MOD Pizza points towards another potential bankruptcy filing in what has already been a landmark year in the industry. This adds to a growing list of franchisors and franchisees that have been forced to seek protection under the country's bankruptcy laws due to continued financial distress. However, the company remains hopeful. They have a plan in progress and they strongly believe in their brand and their team. The journey to recovery may be steep, but with determination and strategic planning, a successful turnaround is possible. As we continue to navigate these unpredictable times, it is a reminder to all us in the franchise industry about the importance of resilience and adaptability. Here's hoping for a brighter future for all those affected, including MOD Pizza. 🍕💕 #franchise #franchising

You know that you need to update your franchise system when the FTC may use its investigation into the sale of Subway to Roark Capital to seek concessions into the treatment of franchisees. Legacy franchise systems are often out-of-date and out-of-touch with functional and modern franchise structures. This can be corrected with the right advice and investment. #franchising #roarkcapital #subway #mergersandacquisitions #franchisebusiness #franchiseconsultant

I loved this discussion around franchising because it illustrated one of the key aspects that often goes ignored. The differentiation of individual restaurants plays a big part in the broader identity of a restaurant brand. The parts that are uniform across a franchise should speak to the broader mission, but the unique parts should instead speak to a local community. This can be a tough balance to strike, but it is one that makes all the difference when it comes to successful franchising as we have learned here at Happy Joe’s 🍕. #Restaurant #Franchising #BusinessSuccess

Not everyone knows this McDonald’s story! From setting up burger stations to opening up multiple locations, this clip from “The Founder” shows how they have been in business for over 80 years. - Mainly because of the efficient systems built around it! Everything in their kitchen had a strategic place, from the placement of workstations to the step-by-step process that goes into making a meal at the franchise. This system was then made into a playbook or a manual that new franchise outlets would use which was fairly simple to set up. “Fast food” is fast only because the systems are efficient and quick. McDonald’s was one of the first businesses to crack this. This was a few decades ago. But now, building systems has gotten easier. With the right franchising technology, businesses can build efficient systems and grow them through it!

McDonald's Secret Billion-Dollar Empire: You Won't Believe What They're REALLY Selling 🤯 So we all know McDonald's owes its money to those golden fries and burgers right? That’s actually wrong. Mcdonald's is not only a Fast Food company but also a Real Estate company. 👉Here’s how they do it: 💥Franchise Model: McDonald's primarily operates through a franchise model. This means that McDonald's owns a significant portion of the land on which their restaurants stand. 💥Land Ownership: McDonald's is one of the largest owners of commercial real estate in the world. They strategically acquire valuable land in prime locations, often at high-traffic intersections, and lease it to franchisees. 💥Long-Term Leases: McDonald's typically signs long-term leases with franchisees, which can extend for 20, 30, or even 50 years. This guarantees a stable income for the company and allows it to maintain control over its real estate assets. 💥Franchise Fees and Rent: While the revenue from selling burgers and fries is significant, McDonald's also earns a substantial amount from franchise fees and rent. These fees often include a percentage of the restaurant's sales and a base rent amount, adding up to a substantial income source. 📌Now here’s what I learned from this: 1. Always have a side hustle. It saves you from the unpredictability of one income source. 2. Specifically for business professionals, it's important that you show up yourself to create a good brand identity. McDonald's has many franchisees, but owning the land and leasing it to franchisees gives McDonald's greater control over its brand image and the locations of its restaurants. 3. Asset Appreciation: Real estate tends to appreciate over time. McDonald's capitalizes on this appreciation, further enhancing its financial strength. Invest in things that will increase over time. It might not be real estate, but your own upskilling, learning etc! Let me know your thoughts about this in the comments below! #mcdonalds #financestrategy

It is with a heavy heart that I observe the ongoing plight of Rubio's Coastal Grill, a revered fixture in our fast-casual dining landscape. The company has navigated tough waters for years. With a second bankruptcy filing within four years, Rubio's is a crystal-clear illustration of the immense challenges restaurant brands (and especially franchises) are currently facing. The persistent rise in operational costs, especially within states such as California, where a $20 fast-food wage is implemented, combined with the downward trend of in-store traffic, is causing a strain beyond sustainability. The decision to shutter a third of restaurants has only magnified the problem, not alleviated it. Yes, bankruptcy can be a strategic move, as with Rubio's Chapter 11 filing, utilizing it as a springboard to seek a buyer amongst the tumultuous waves. Yet, the listing of assets valued between $10 million and $50 million against liabilities ranging from $100 million to $500 million clearly indicates the stormy seas Rubio's is navigating. This is not just about Rubio’s. For me, as a franchise attorney, this paints an alarming picture of the ever-increasing number of restaurant franchise bankruptcies. The year 2024, I predict, will be a watershed moment - a year where adaptation is not an option but a necessity for survival. Rising interest rates, shifts in consumer behaviors, and an increasingly anti-business environment are challenging the resilience of many brands in the franchising sector. The landscape is transforming, and the franchise brands that will sustain or even flourish are those prepared to pivot. Can they counter the rising tide of operational costs? Can they find innovative ways to entice consumers back through their doors? Will they be agile enough to navigate the legal and business labyrinth that is becoming ever more complex? Alas, Rubio's is not an isolated case, but a stark reminder of the profound challenges that lay ahead for franchised food service brands. It's a call to arms for strategic realignment, innovative thinking, and a relentless commitment to growth and adaptation. Will your favorite restaurant brand rise to the occasion or fold under the pressure? This, I believe, is the defining question of the year 2024 for franchised restaurant brands, and indeed for us all, who treasure the rich tapestry of dining options we have grown accustomed to. #restaurants #franchise #franchising

Remember the multi-unit franchisee bankruptcy wave? 🌊 Interesting turn of events. Burger King 🍔👑 bought out a significant share of its franchisee, Meridian Restaurants, at a bankruptcy auction. Read on for the inside scoop. 🕵️♂️ Meridian, a major operator, filed for bankruptcy in March. The good news: 70 out of 91 remaining restaurants are being sold to different franchisees, and unexpectedly, the brand itself. Who bought what at the auction? 🛍 Burger King emerged as the biggest individual buyer, chipping in $4.4 million for 29 restaurants spread over Utah and Montana. 🍔🌄 KRAF Inc., another Burger King franchisee, paid $7 million for seven Arizona locations, with $1.5 million reserved for hurricane damage repair. 🗺🔧 More franchisees join in. Kansas King is snapping up 16 locations in Nebraska and Kansas for $2.2 million. (Fun fact: this deal includes $1.5 million in “support funding” from Burger King itself.) The fate of the unsold restaurants is uncertain. Some reports hint at closures post-auction, suggesting that only just more than half of Meridian's pre-bankruptcy 120 restaurants might survive the process. 🏚 Here's some food for thought. Burger King, unlike rivals McDonald’s, Wendy’s, and Taco Bell, had a rocky recovery post-pandemic. Rising costs coupled with slower sales growth led to around 60 closures last year. Now, with Burger King buying out its franchisee, could this be a calculated strategy for a comeback? 🎲 By the way, Burger King seems to have a new focus: smaller operators with fewer than 50 locations, geographically closer. CEO Josh Kobza yearns for a world where owners could drive to all their restaurants. 🚗🗺 Despite the bankruptcy wave, Burger King has shown signs of improvement lately. With improved sales and operational tweaks, the brand might be turning the corner. One thing's for sure - it's an intriguing time in the fast-food franchise world. Stay tuned for more developments! 📡 Time to share - What are your thoughts on Burger King's new strategy? Comment below! 👇 #franchise #franchising #bankruptcy