Barista Magazine

APR-MAY 2018

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Is Franchising the Business Model for You? By Tracy Allen SHANTNU LINCOLN CHAUDHRY HAS OWNED A ROCK 'N' JOE coffee-shop franchise in Scotch Plains, N.J., for just over a year. As a former owner of a Dunkin' Donuts franchise, he has a unique per- spective on franchising. "At Dunkin', we weren't really the owners," he says. "The brand decides and dictates everything—there were no independent decisions." Shantnu was attracted to Rock 'n' Joe, based in Pittburgh, for its reputation for listening to franchisee insights about their particular markets, and related decisions such as pricing, store layout and decor, and even menu items. "I like how responsive and supportive the Rock 'n' Joe team is. I can call them anytime and they will listen to what my particular store, my customers, may need. Brand support is unpar- alleled, and I feel like a real owner, not a glorifi ed manager." He's looking at opening a second location—a drive-through—next year. Rock 'n' Joe CEO Shawn Levine confi rms that its company franchi- sees have the ability to "make it their own," even though the recipes, marketing, and design are pretty much set. Franchisees are "buying into what we do well—medium-roast espresso and 10 core coffees we feature every day via pourover and French press—but we do want to hear about anything we can improve on the local level." Autonomy not guaranteed—but franchise support may be worth giving up some freedom The level of autonomy that Rock 'n' Joe's appears to offer is unusual in franchising because strict brand and business guidelines are meant to help maintain a consistent customer experience across stores—and maximize the odds of fi nancial success with a proven model. It's not necessarily a bad thing to buy in to a top-to-bottom formula—especial- ly if you have little to no business (or coffee) experience. The upside of giving up some autonomy can include all those years of experience and brand recognition. "The hardest lesson I learned— and it took me seven painful years to learn it—was my targets and goals," says Brandon Knudsen, owner of Ziggi's Coffee, which is based in Longmont, Colo., and franchising nationwide. That meant fi guring out what his percentage of labor should be—and how he could afford to offer great service and still be profi table by paying the right amount of rent and setting prices correctly. "Every year we get better at it. Franchisees are buying that knowledge and history." The one downside to brand recognition is vulnerability to public backlash in the wake of a health scare at another location, or a corpo- rate scandal that makes the news. Neither are likely to happen, but they're worth factoring into your decision. Do you fit the franchise mold? With or without some level of autonomy, all franchise businesses are looking for a particular kind of entrepreneur—one that will fi t into their corporate culture. Ziggi's Coffee "encourages suggestions from franchisees," says Brandon, "because the only way we will be success- ful is if we work together as a team, but we do have processes that need to be followed to assure success—for how to order, how many bars you need, and how to do your bookkeeping—so you can focus on having a great experience with customers and employees and be the best part of their day." Usually, franchise companies sell locations to two types of owners: individual owner/operators, or investors (or groups of investors) who plan to have the day-to-day operations managed by employees. Bigg- by Coffee based in East Lansing, Mich., and franchising in nine states, however, does not do the latter. "We have a clause in our agreement that an owner operator will work in the store as much as six hours a day," says co-CEO Mike McFall. "It sets the expectation that you have to be a good, strong barista and know the business at that level to be successful." Brandon of Ziggi's emphasizes that they're looking for highly engaged owners, whether or not they log time behind the bar. "Even if you're not in your store every day, you have to be a people person. We do personality tests to vet potential franchisees because we fi rmly believe your employees are going to be just like you," he says. Rock 'n' Joe's gravitates toward potential franchisees with at least a year of coffee shop experience. "People who already know they have that passion for coffee and want to be their own boss and want to be part of their community and fi nd out what people want from their store—whether that's an open-mic night, a coffee meeting with local law enforcement, or live music one night a week," says Shawn of Rock 'n' Joe. All of the franchise models interviewed for this story emphasized the importance of a team atmosphere. "We want a strong link between owner operators and our marketing advisory council—so everyone can weigh in on our marketing and branding," says Mike of Biggby Coffee. "It's a community that's building this brand, and that includes us mentoring franchisees and them mentoring each other." It's not cheap, but neither is opening an independent shop Opening a franchise can cost anywhere from $80,000 for a kiosk or cart to $400,000 or more for a sizeable café. In terms of physical infrastructure— the building, coffee equipment, etc.—you'll get what you pay for. Ziggi's stores are 620 square feet in high-volume locations with "a great building and landscaping," says Brandon. "We're not slamming these things anywhere we can fit them." Shawn notes that all of Rock 'n' Joe's equipment and processes are top of the line. "We use Victoria Arduino machines, we hand-tamp shots and top all drinks with art—to show our love and passion. We also have an executive chef who works on food and drink concepts and combinations to help franchises succeed." You'll pay less to open an independent shop—but how much less? If you're willing to pay a little more, but possibly get to profi tability quicker, then franchising could be for you. And if your skills are weak in sales, marketing, or operations, then a franchise may be your abso- lute best bet. You also get a full business plan with a franchise and access to lower 114 barista magazine

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