Franchising | July 2013 | By Daniel P. Smith
2013 Best Franchise Deals
National brands with name recognition, profit potential.
Total U.S. Unit Count: 576 (539 franchised)
Franchise Fee: $20,000
Total Start-Up Costs: $178,376–$625,801
Royalty: 6% of net sales
Renewal Fee: 25% of then-current franchise fee
Marketing Fee: 3% of net sales
Last year, Firehouse Subs opened 95 restaurants, added 144 new franchisees, entered nine new markets, and watched AUV jump 12.7 percent to $731,000. For the 19-year-old, Jacksonville, Florida–based concept—founded by firefighting brothers Robin and Chris Sorensen—the chain’s ascent has been one wild ride.
“We’ve been afforded an incredible opportunity to help a lot of people [and] the more we grow, the more opportunities we’re able to provide,” Robin Sorensen says.
Firehouse says its franchisees can be in business for themselves, but not by themselves. The concept consistently sits near the top of Franchise Business Review’s franchisee satisfaction rankings, and executives tout its litigation-free history with franchisees.
“[Our team] embraces a culture in which we strive for excellent communication with our franchisees—both individually and collectively—and we ensure that we are fundamentally fair in our business practices,” says CEO Don Fox.
The chain’s “family-style” franchising includes an area representative model that provides a higher caliber of local training support and a continuity of relationships. Firehouse also offers financing to its established franchisees to spark additional system-wide growth with long-term partners.
An Outside Perspective: Citing its positive relationship with franchisees and track record of AUV increases, McKee calls Firehouse “one of the premier opportunities for a franchisee.” She credits Firehouse for developing its systems and business model prior to attempting a major growth program and commends leadership for its transparency with franchisees.
Total U.S. Unit Count: 3,130 (2,482 franchised)
Franchise Fee: $5,000
Total Start-Up Costs: $175,000–$250,000
Royalty: 5% of net sales
Renewal Fee: $4,000
Marketing Fee: 7% of net sales
In the 2012 American Customer Satisfaction Index, Papa John’s claimed the top spot among all
limited-service restaurants and national pizzerias. The Louisville, Kentucky–based chain was also named Pizza Brand of the Year in a 2012 Harris Poll. Such honors underscore Papa John’s credibility with consumers, but also excite current and prospective franchisees, who are eager to participate in a proven, streamlined system where AUV tops $800,000.
Ongoing corporate support includes quarterly visits with a franchise business director and operations support person, a regional marketing director, online training, and a no-cost secret shopper program that helps breed positive customer experiences.
“The history of our brand has demonstrated that franchisees have a high degree of success if they follow our culture and recommendations,” says Papa John’s vice president of global sales and development Joe Smith.
An Outside Perspective: “Papa John’s will continue to be a darling of the pizza industry for years to come,” McKee says. With its national advertising program, industry reputation, and steady record of making impactful decisions that drive franchisee ROI, McKee says, Papa John’s will continually attract new franchisees and see its existing operators open new units.
Total U.S. Unit Count: 565 (467 franchised)
Franchise Fee: $35,000
Total Start-Up Costs: $209,500–$646,100
Royalty: 6% of net sales
Renewal Fee: 50% of then-current franchise fee
Marketing Fee: 2.5%–4.5%
Chicken concept Zaxby’s has watched its system-wide sales surge toward the $1 billion mark and its AUV surpass $1.7 million. The compelling numbers continue to silence early concerns that the 23-year-old concept would struggle to grow beyond its Southern roots.
Zaxby’s executives cite a proven growth record built on a sound financial and business model that includes distinctive store design, high repeat-diner frequency, and a collaborative culture driven by mentoring and sharing best practices among operators.
“Coaching, mentoring, and consistent franchisee support give our licensees a jump-start on profitability by focusing on proven processes, systems, and efficiencies, and eliminating problems and risk before they occur,” says Zaxby’s senior director of franchise administration Amy Camp Pritchett.
An Outside Perspective: “Some brands develop across the U.S. without truly realizing how their resources, both financial and personnel, will be impacted,” Simon says. “Zaxby’s has built the right way: grassroots, one restaurant at a time.”
Simon adds that Zaxby’s training, operations systems, and franchisee support procedures have produced high-revenue restaurants and a solid foundation of 500-plus units that should galvanize prospective franchisees.
Jersey Mike’s Subs
Total U.S. Unit Count: 584 (566 franchised)
Franchise Fee: $18,500
Total Start-Up Costs: $215,843–$394,063
Royalty: 6.5% of net sales
Renewal Fee: 0
Marketing Fee: $7,500
Though Jersey Mike’s has been franchising since 1987, methodical early development has given way to robust expansion. In 2012 alone, the fast-casual sandwich chain opened 92 new stores, a 33 percent jump in new-store growth over 2011. While Jersey Mike’s does not disclose AUV, an estimate from research firm Technomic places that figure near $640,000.
Jersey Mike’s Franchise Systems president Hoyt Jones says leadership is consistently seeking ways to help franchisees improve, whether it be through staff training, corporate-backed customer loyalty programs, or ROI-generating technology such as the advanced “Super App” Jones says will debut next year.
“Ultimately, success breeds success,” Jones says. “Our existing operators are excited to extend the Jersey Mike’s brand … [and we’re] attracting interest from new multibrand, multiunit franchisees that share our passion.”
An Outside Perspective: Simon says Jersey Mike’s has expanded by focusing on store profitability and training, elements that promote additional development by existing franchisees.
“The training and simplicity of the model allows the owner to focus on growing his business outside his four walls [and] becoming a part of the community,” Simon says.
The Hall of Fame
Some brands are destined to make this list year in and year out. The Best Franchise Deals Hall of Fame includes quick serves worthy of this year’s list that have already made an appearance at least two times.
Food & Beverage