Southwest Florida is ripe for franchising and national companies, such as Baskin-Robbins and 7-Eleven, have picked Southwest Florida as a key market to build their brands.
Some franchisors slowed their growth as the economic downturn ripped through business communities across the country. But this year, companies are pushing to grow franchise operations in Lee and Collier counties.
Some are hosting seminars to draw potential franchisees to their brands, and other owner-operators with successful franchise locations for companies, like McDonald’s and Moe’s Southwest Grill, are launching new restaurants in the area.
“The economy got hit pretty hard down here so I was just trying to pay the bills, pay my employees and manage a good operation,” said Mike Silverman, a franchise owner of Moe’s Southwest Grill restaurants. “We made it through and now it’s time to grow.”
Silverman, who owns seven restaurants, opened two new Moe’s locations since December 2010, but more than three years went by before he felt it was the right time to invest in opening a new store. He opened the bulk of his fast-casual, Tex-Mex restaurants from 2005 to 2007 and then stopped, he said.
It helps that the brand is well-known and has a strong customer base, but there were also opportunities for deals on leases to open new stores, he said.
McDonald’s franchise locations are also popping up in the area.
Tim Frederic, an owner-operator of McDonald’s franchises in Southwest Florida, has two new restaurants opening this year. One location in North Fort Myers is slated to open on June 18 around the same time another store breaks ground in Cape Coral at Burnt Store Road and Pine Island Road, he said.
The Southwest Florida Marketing Association, a co-op of McDonald’s franchisees in Lee, Collier, Glades, Hendry and Charlotte, runs 53 fast-casual restaurants and plans to add four more in the next year. The last new restaurant opened in 2007 — one that Frederic operates in Cape Coral.
Part of the appeal of opening a franchise has to do with its stability as a business, said Neil Slevin, an adjunct professor of management at Lutgert College of Business at FGCU.“You’re starting up a business that already has all of its business processes and strategies set.”
The franchise opens with a pre-established brand awareness, has the decor and layout mapped out, the products or services outlined and employee and company policies set, he said.
But, opening a franchise can be a costly venture sometimes reaching as much as $1 million to buy plus additional continual franchising fees. Franchising doesn’t offer much flexibility for creativity or adjusting the corporate structure either, Slevin said.
The high cost mixed with the downturn created an economic environment where people didn’t have the capital to buy a franchise, he said.
Now that things are picking up, Slevin said more people have money available to invest in franchising again.
Almost 50 percent of 7-Eleven’s roughly 130 stores from Marco Island to Ellington are franchise-owned, and the company plans on selling the bulk of the remaining corporate locations to franchisees in the next three or four years, said Asif Qureshi, franchise sales manager for Southwest Florida.
It’s kept up a strong pace for sales and new store openings since the franchise sales division opened in Fort Myers in 2009. In 2010, it sold 12 stores and opened four new stores, and in 2011 it sold 18 existing stores plus another six new stores, he said.
This year, the company will open five to six stores, and has sold 22 stores since January, he said.
“Obviously the economy is still bad,” he said. “People still have trouble finding a job. They have a little money saved up and invest in the franchise.”
Qureshi said the investors who are buying 7-Eleven stores in Southwest Florida borrow from their 401(k) retirement plans or use $50,000 to $60,000 they’ve saved as capital to invest in a franchise.
As the economy moves slowly toward recovery, franchises are expected to grow by 1.7 percent in 2012 and employ up to 2.2 percent more people — a small margin, but the first sign of growth after four years of decline in the franchising industry, according to a May study by IHS Global Insight on behalf of the International Franchise Association.The report showed 774,016 franchise locations in the U.S. in 2008, but as of 2011, the number of franchise establishments dipped to 736,226, with a 3.5 percent decline from 2008 to 2009 and marginal declines at less than one percent each year since then.
But it’s the strong companies that came out of the downturn smarter and better, said Grant Benson, who leads the national sales team for Dunkin’ Brands and Baskin-Robbins.
Franchisees in the company have become more innovative in terms of product development and marketing and are focusing more on customer service, he said.
Baskin-Robbins held informational franchise seminars earlier this month at Gulf Coast Town Center, and plans to open as many as 15 new locations from Fort Myers to Miami over the next several years.
Focusing on Southwest Florida has to do with the opportunities available and the goal of developing expertise in a concentrated area. The company is working to capture a significant number of stores and market share by focusing resources to small geographic areas rather than opening stores at great distances — such as one store in Florida and another in Texas, he said.
“We know that the brand can handle at least that many locations,” Benson said. “Now, we need to find franchisees to secure those areas.”