Franchising | March 2012 | By Daniel P. Smith
A New Team
“We’ve reached a tipping point,” Spencer says. “The good franchisors have responded with support and recognized that if they’re going to grow, they need strong operations above all else.”
More athletes are also seeking financial and legal advice before signing onto a franchised brand.
Whenever asked for counsel on a restaurant venture of any type, Etna tells clients: “If you want to wine and dine, then you have to do the time.”
NBA forward Gooden did just that before formally entering any agreements. He investigated other quick serves, including Five Guys and Jimmy John’s, and reached out to Wingstop (which also counts football players Willie McGinest, Raheem Brock, and Ron Stone among its franchisees) on his own accord.
When he was a member of the Mavericks, he would routinely visit a Dallas store before road trips to bring a 100-wing order onto the team plane. His teammates’ hunger for the wings fed Gooden’s entrepreneurial instincts. So he filled out the franchise application online and directed his accountant to follow up with Wingstop’s corporate office.
Gooden later attended a nine-hour Discovery Day with Wingstop officials. He listened to presentations on marketing and development, and shared a candid conversation with Wingstop spokesman and NFL Hall of Famer Troy Aikman about post-career plans.
“[Gooden] took the entire process to heart, and that was important for us to see,” says Dave Vernon, senior vice president of development at Wingstop. “He’s a guy with good people around him. He receives solid financial advice, and he understands the value in having a partner with operational control.”
Spencer says smart franchisors either demand an industry professional as an operating partner or require the athlete to undertake the full training program, including hands-on work with an established operator.
“Otherwise, you could be setting yourself up to buy a franchise back or save it from failing,” Spencer says.
In preparing to open his Wingstop outlets, Gooden interviewed a handful of experienced operators before tabbing a 12-year restaurant veteran who impressed him with his work ethic and smarts.
“At the end of the day, you want to give the first right of authority to the professional in that field and someone you trust,” Gooden says. “He can’t play my position, and I can’t play his.”
Not all athletes are so well prepared for a business venture. If franchisors are successful in gaining an athlete’s ear, integrating them into their system can have its challenges—most notably the mismanagement of finances.
A 2009 Sports Illustrated feature reported that within two years of retirement, “78 percent of former NFL players have gone bankrupt or are under financial stress,” while “an estimated 60 percent of former NBA players are broke” within five years of retirement.
Some athletes lack the time, interest, or motivation to understand and monitor their investments. For others, the thrill of sexier ventures trump sound financial investing.
For every Magic Johnson, there are multiple counterparts who have jumped into the restaurant franchising pool without the necessary swimming skills. In his June 2010 bankruptcy filing, NFL quarterback Mark Brunell, who’s estimated to have made more than $50 million over his 19-year NFL career, cited a bungled investment in 12 Florida-based Whataburger franchises as a key contributor to his financial misery.
Most often, failures tend to arise when athletes don’t understand what they’re purchasing.
“The franchisor may teach you how to cut the chicken, but he won’t teach you how to be a business owner,” says Spencer, who calls athlete franchisees a “mixed bag of success and failures.”
Fortunately, there is an emerging movement to reach out to athletes and help them understand franchising culture, including the need to fit within a system and follow strict operational standards.
Dunkin’ Brands, Jersey Mike’s, and Moe’s Southwest Grill are among the earliest quick-service members of the budding Professional Athlete Franchise Initiative (PAFI), an organization started in late 2010 by former NFL cornerback Michael Stone to educate athletes on the franchising world and link them to established franchisors.
“Athletes are bombarded by different business propositions,” says Dunkin’s Vitaro, noting that successful athlete franchisees in a system quickly boost credibility for quick serves.
To stand out from the crowd, Auntie Anne’s participated in an NBA Retired Players Association event at the NBA’s All-Star weekend in 2011. This allowed the Pennsylvania-based brand to serve its pretzels and discuss franchise opportunities with athletes.
“With so many athletes seeking a transition to life beyond sports, we want to open their minds to franchising as a possibility because it’s a model with attractive qualities,” says Stone, whose organization recently formalized a partnership with the International Franchise Association (IFA) to develop the Athlete Franchise Education Program.
The program pairs players with multiunit systems during their off seasons to provide training and real-world insights into the franchising world.
PAFI also works with professional athlete groups, including the Canadian Football League and the National Basketball Retired Players Association, to raise awareness about franchising.
Spencer suggests companies even establish an athlete incentive program, similar to the deals many concepts offer to military veterans. Laying out the precise specifications, she says, will help athletes discern if franchising is the right move for them.
“With a formal program, a brand can clearly define the parameters and allow franchisors to stand their ground on entry,” she says.
“There’s no one-size-fits-all approach,” Dunn says, “but it’s clear both sides need to understand one another and what motivates the other.”
With a mutual understanding of needs, motivations, and goals, he says, enthusiastic scenes like the one Labonte and Kim created at the North Carolina Red Mango store are more likely to be repeated.
“Ultimately, we need to find the solution that puts everybody in the right spot to succeed,” Dunn says.
Food & Beverage