Franchising | July 2012 | By Daniel P. Smith

2012’s Best Franchise Deals

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Moe’s Southwest Grill

Total U.S. Unit Count: 451 / 435 franchised

Franchise Fee: $30,000

Total Start-Up Costs: $450,615–$768,843

Royalty: 5% of net sales

Renewal Fee: 10% of then-current franchise fee

Marketing Fee: 4% of net sales

In the competitive fast-casual Mexican segment, Moe’s has created a niche with its quirky stores and on-trend practices, including its mobile ordering app, the addition of Coca-Cola Freestyle machines to its locations, and customized dishes featuring eco-friendly ingredients like organic tofu, all-natural chicken, and grass-fed steak.

“Moe’s is mindful of a consumer base that craves more choices faster,” Moe’s vice president of franchise sales Steven Corp says.

In 2012, Moe’s will open more than 50 restaurants, led by expansion into nontraditional spaces such as airports, universities, and malls. Corp says Moe’s ambitious development is driven by conscientious corporate support and sales-driving menu extensions, such as catering, that allowed franchised restaurants open for three or more years to report average total net sales of $1,102,495 in 2011.

An Outside View: Moe’s 2007 acquisition by FOCUS Brands, Jameson says, “brought strong business acumen to a brand that was too focused on brand growth versus brand and franchisee success.” He believes a focus on operational execution, customer service, and thoughtful menu variety allow Moe’s to compete in a crowded segment.

Newk’s Express Café

Total U.S. Unit Count: 45 / 38 franchised

Franchise Fee: $40,000

Total Start-Up Costs: $752,000–$1,054,500

Royalty: 5% of net sales

Renewal Fee: None

Marketing Fee: .5% of net sales

Since opening its first location in 2004 in the shadow of the University of Mississippi, this culinary-driven fast casual has built a loyal customer base with a distinctive flavor profile characterized by “made from scratch, made fresh daily” recipes.

In 2011, Newk’s AUV approached $2.4 million, a tally few in the quick-service industry can match. That figure also places Newk’s average sales-to-investment ratio over the 2:1 mark, which vice president of franchise operations Stephen J. Hinkis says spurs interest in Newk’s franchising initiatives.

The Jackson, Mississippi–based brand, which was created by the founders of McAlister’s Deli, plans to open 20 units this year, with an additional 32 units in the development pipeline for 2013. Newk’s corporate team assists in all aspects of the restaurant, including site selection and pre-opening, as well as ongoing support initiatives in purchasing, marketing, and operations.

An Outside View: Omholt says Newk’s “tops anything I’ve seen in quite a while.” He says the combination of high-quality fare and low prices puts Newk’s in a strong position and predicts the chain will have more than 100 units within the next two years.

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