Industry News | October 4, 2012 | QSR Exclusive Brief

Cousins Subs Seeks Growth with Franchising Program

All franchisors want the best for their franchisees, but Cousins Subs—a Wisconsin-based deli sandwich chain with 150 stores in six states—is truly walking the walk with its recently launched Founders Program.

In an attempt to spark franchise expansion and attract potential franchisees, the sub brand has created a program that will put nearly $100,000 back into the hands of franchisees who invest in three to five–store development deals.

While Cousins Subs is primarily located in Wisconin, the brand hopes to further explore the Midwest, as well as the Southwest and Southeast, with the help of the initiative, says Christine Specht, president and COO.

The franchising program breaks potential franchisees down into two categories: founders, who agree to a five-store deal, and co-founders, who sign a three-store development deal.

Specht says the program’s main draw is the fact that it reinvests all franchise fees—$25,000 for the first store and $17,500 for each additional store—into local store marketing for each property.

“One of the biggest challenges I think any restaurant has is when they break into a new market, they don’t have the brand awareness and the recognition that they maybe have on their home turf,” Specht says, adding the best way to build awareness is through dedicated marketing. “We thought, ‘Of course it takes money to do that, and why not invest the franchise fees instead of taking them in as income?’”

Typically, Cousins Subs stores invest $10,000 in marketing per store, but the Founders Program allows franchisees to receive almost 15 times this amount over the span of three years. (Co-founders will see a total of $60,000 for marketing over three years).

These dollars will be put toward events like grand openings, which Specht says attract widespread hype from fans and the surrounding community, as well as marketing practices like direct mail that franchisees couldn’t afford before.

Specht says the program goes beyond just gaining brand recognition and growing in new markets. It’s also about doing what’s best for the franchisee.

“Anybody can sign a franchisee agreement; anybody can say they’re going to open up a store in multiple different states,” she says. “But what really counts is, Are the stores going to be sustainable and successful throughout the term of the franchise agreement and possibly beyond?

“We’re kind of taking the high road here in the sense that we’re forgoing immediate income opportunities at the corporate level because we’re taking all those franchise fees and putting them back into the markets where the new stores are,” she continues.

She says that it’s this long-term approach—rather than short-term income—that will help the brand form true and lasting commitments from its franchisees.

“We really want to have the nice, healthy relationship with our franchisees, who are operating profitable businesses for a 10-year-plus period,” she says.

Specht also points out that the program will help not just franchisees, but also the surrounding community in new markets. “We’re reinvesting in the community by giving opportunities for employment,” Specht says. “If the investors open up restaurants and start with one, and they grow to two, to five … that means jobs for people in the community, which is obviously what everybody wants.”

She says the brand isn’t only looking for franchisees who have the financial wherewithal to invest in the organization (though more folks should now be able to, as the franchisee capital requirement has dropped from a net worth of $300,000 to $200,000).

Instead, Cousins is searching for “somebody who’s really willing to be a founder,” Specht says. “Someone who wants to take on that risk, but do it in a way to minimize it, because we’re reinvesting into the marketplace.”

By Mary Avant