Franchising | March 2012 | By Daniel P. Smith
A New Team
On a brisk 50-degree Saturday afternoon in High Point, North Carolina, Red Mango founder Dan Kim and NASCAR driver Bobby Labonte greeted nearly 800 customers at the frozen yogurt concept’s newest store.
Smiles filled the restaurant as customers enjoyed a free yogurt, snapped pictures, and celebrated the opening of the savory establishment.
“In today’s fast-paced world, I see the hectic, multitasking lives people lead,” Labonte says. “People want to get in
and get out with something they enjoy in hand. Red Mango can be just that product.”
For Labonte, who’s made a career of rushing around racetrack curves, his latest adventure as Red Mango franchisee seems an odd turn. Yet a closer look reveals logical ties between the athlete and the role of quick-service franchisee. There’s the shared risk-reward mindset, a commitment to teamwork, the ability to strategize, and a drive to win.
For the franchisee as much as the athlete, Labonte says, “It all starts with passion.”
It’s those characteristics combined with athletes’ financial means that have quick-service franchisors and athletes increasingly linking up as teammates.
NBA great Magic Johnson, an often-cited example of post-athletic success, owns a business empire that includes a string of Starbucks stores. Shaquille O’Neal’s franchise group oversees 19 Auntie Anne’s. NFL quarterback Drew Brees is a Jimmy John’s franchisee, while tennis star Venus Williams entered the Jamba Juice system last summer.
Although athletes may earn a nice chunk of money during their playing days—average annual salaries are about $2 million in the NFL, $3 million in MLB, and more than $5 million in the NBA—careers last on average less than four years. For nearly all pro athletes, the end brings the sobering reality that the skill they’ve been honing for years is no longer a moneymaker.
Motivated by their professional leagues, teammates, and horror stories of evaporated earnings, a growing number of athletes are examining life beyond sports with a critical eye.
New York-–based attorney Daniel Etna, who consults a number of NFL and NBA players on private investments, says athletes are routinely pulled into hospitality and entertainment ventures.
“Those are the low-hanging apples on the tree of forbidden fruit that athletes just can’t seem to resist,” Etna says.
With restaurants, Etna says, astute athletes see the franchising model as a lower-risk venture—even if franchising limits the individuality they can bring to the business.
Milwaukee Bucks forward Drew Gooden is one such example. Last summer, Gooden inked a deal with Wingstop to open four stores in Orlando, Florida, the first of which will open this summer. Playing in his 10th NBA season, the 30-year-old Gooden says frankly that “basketball won’t last forever,” and he’s prepared diligently for life beyond the hardwood.
Gooden was attracted to franchising’s reliable systems. “There’s no need to reinvent the wheel,” he says. “Franchising means I don’t have to start from scratch.”
The franchise system also allows athletes to tap into athletic attributes that translate well to the restaurant business. For example, athletes are entrepreneurial and undeterred by risk and hard work. They’ve developed thick skins and the ability to perform in challenging conditions. More so, many are eager to attach their name to something beyond sports.
There’s appeal on the franchisor’s side, as well.
Restaurant management teams know most athletes possess the financial power to buy into their systems. Most athletes are also comfortable working within the confines of an established system and executing a playbook, and are responsive to coaching.
“When you bring this all together, you can create successful results,” Auntie Anne’s president and COO Bill Dunn says.
Dunkin’ Brands senior director of franchise sales, Jeremy Vitaro, says athletes can also generate excitement for a brand given their notoriety and community ties. Dunkin’ Donuts franchisee and former NFL lineman Jumbo Elliott regularly attends charity events and golf tournaments in the New York metro area, which drives exposure for both Dunkin’ Donuts and Elliott’s stores. Auntie Anne’s has even summoned O’Neal to entertain its landlords.
After nearly 30 years in the restaurant franchising industry, however, Fran-Systems CEO Karen Spencer is skeptical about brands over-leveraging an athlete’s popularity.
“Rarely was it because you believed [the athlete] could open a store,” Spencer says.
One notable example was Atlanta-based burger concept D’Lites. Founded in 1981, D’Lites had its eyes set on 1,000 units by the early 1990s and, in a rush to expand its presence and profile, signed football star Herschel Walker to a multistore deal in 1984. The buzz sparked the company’s 1984 IPO to produce $14.2 million.
Blinded by its success, D’Lites focused more on celebrated names and store counts than franchisee support and a stable operations model. By mid-1986, Walker was out of the system. By the end of 1987, D’Lites sat in bankruptcy.
“This relationship never works if an athlete or the franchisor is only interested in attaching to the other’s name,” Spencer says.
The boom and bust of D’Lites and other brands was a warning to the industry.
Franchisors, largely driven by recession-era economics, have recognized the wisdom of returning to the basics of sound operations. Today, wise franchisors understand they must thoroughly vet all franchisees regardless of their individual fame and that lax corporate support impacts both unit-level economics and growth.
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