Franchise Excellence honorees share secrets of their success

Nation's Restaurant News,  April 30, 2007  by Ron Ruggless

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SCOTTSDALE, ARIZ. -- Executives representing the three 2007 Franchise Excellence Award winners shared their formulas for success during the recent Restaurant Leadership Conference here.

The award for Leadership in Franchise Management was presented to El Pollo Loco Inc. of Irvine, Calif.; the award for Franchisee Entrepreneur of the Year went to Greg Flynn, chairman and chief executive of Apple American Group LLC of San Francisco, the largest franchisee of Applebee's Neighborhood Grill and Bar; and the Franchisee Star Award was given to Coaxum Enterprises Inc., a New Orleans-based McDonald's franchisee.

Nation's Restaurant News presents the Franchise Excellence Awards each year to recognize achievements of both franchisees and franchisors in the restaurant industry.

Steve Carley, president and chief executive of the 360-unit El Pollo Loco chain, said the company has developed what it calls "The Franchisee-Franchisor Rules of Engagement" to provide success for franchise groups and the chain as a whole.

"A couple of years ago when we decided embark on expanding across the country, we had to focus the company on supporting franchisees," Carley said. "We run 160 company stores ourselves, so diverting the resources from that and onto franchising was key.

"We took $1 million and created a 'franchise restaurant opening group'--FROG," he explained. "These are operations and training professionals dedicated to helping our franchisees successfully open in new markets."

As soon as franchise groups sign a development deal, a "FROG person" becomes their direct one-on-one contact, Carley said.

"They are the single point of contact through the whole process, and they have direct access to me if they have any issues," he said. "They go through the real-estate/site-selection process, construction and pre-opening. There is a team of six people to guarantee that store opens, and they stay a week after."

Greg Flynn, chairman and chief executive of Apple American Group, said the $370 million company's vision "is to be the premier franchise group in the Applebee's system."

"It's a very narrow approach to this industry," he said. "I believe that by being a category killer and defining our mission very, very closely, we can be better at it."

The 19-year-old company owns and operates 135 Applebee's locations in California, Delaware, Indiana, New Jersey, Ohio, Pennsylvania, Washington state and West Virginia.

It has acquired existing Applebee's franchise units in addition to developing its own. In February the company bought six restaurants in Flynn's home area of San Francisco.

"The key is that it's a development territory," he said.

"The key to Apple American is a 'state-and-federal' model," Flynn said. "The states are run by 'governors' who are genuinely empowered to run the business. They cannot only make operating decisions without going through me or the chief operating officer, but they can run it like it's their business. They can make mistakes."

The process, he added, "results in more productive people all around."

"They are equity owners in the business," he said, "which created a financial opportunity for them."

The corporation, or "federal level," supports the units with a team for purchasing, marketing and training, Flynn said.

"We want the focus to be on the field," he said. "The 'state' is where the action is."

Franchisee Star Award winner Coaxum Enterprise and its owner and president, Henry Coaxum, showed franchisee resilience and corporate support.

Ellen Koteff, editor of Nation's Restaurant News, said the company "has a compelling business story of devastating loss and triumphant recovery."

Coaxum, who spent nearly two decades in corporate management with McDonald's, opened his first franchise unit in 2002. When Hurricane Katrina devastated the New Orleans area in August 2005, he was forced to close three units. Coaxum, however, rebounded and now owns and operates seven McDonald's in the area.

"Last year at this time, I was just getting back into the business after losing three of my restaurants, office complex and my own home to Hurricane Katrina," Coaxum said. "One thing that I've learned along the way is how collaboration is key to a franchisee's success."

Coaxum builds McDonald's that offer "destination-style" amenities, such as Internet access and even stages for neighborhood music.

"Katrina affected more than 100 McDonald's locations," Coaxum said. "Employees were scattered across the country. Schools, homes, businesses and hope were washed away. I was one of four franchisees who were taken completely out of business. I was down for six months, but I'm happy to report that I was able to open five locations last year and another one just this past January."