There couldn't be a better success story. At ages 19 and 20, Michael and Aaron Serruya wanted to purchase a franchise, but no company would take a chance on them. So instead, they came up with an original frozen yogurt concept called Yogen FrÃ¼z and opened their first store in 1986 in Toronto; their younger brother, Simon, joined the team in 1989. Thirteen years after opening, Yogen FrÃ¼z is the world's largest franchisor of frozen dessert outlets, with 4,799 locations in 82 countries, and tops this year's Franchise 500Â®.
Employing a philosophy of never incurring debt, Yogen FrÃ¼z has expanded tremendously by co-branding with Pizza Hut Canada, using master franchisors throughout the world, and scooping up several U.S. companies in acquisitions, including Bresler's Ice Cream; I Can't Believe It's Yogurt (ICBIY); Ice Cream Churn; and Integrated Brands Inc., parent company of Swensen's Ice Cream, Steve's Homemade Ice Cream and Heidi's FrÃ¶gen Yozurt.
The Serruya brothers and Yogen FrÃ¼z mark an interesting chapter in the history of franchising. Instead of letting the corporation take on a life of its own, the Serruyas have used entrepreneurial creativity to sustain their growth and a strong sense of family to foster their franchise network. We spoke with Aaron Serruya about the company's success as well as the brothers' hopes to remain a family-style, entrepreneurial company.
Entrepreneur:As the No. 1 franchisor in the Franchise 500Â®, you've beat out well-established companies like McDonald's. Why do you think you've been so successful in such a relatively short time?
Aaron Serruya: If franchisees call me, I pick up the phone and speak to them. They're the people who got us where we are. I think things like that have made us successful--not losing grasp of where we came from and how we got [here], and that's the franchisee. You're only as good as your franchisees are.
It's an incredible honor to be mentioned with companies that have been doing business for 40 and 50 years. It's something we pride ourselves on.
Entrepreneur:How does your company differ from the franchise model represented by larger companies like McDonald's and Taco Bell?
Serruya: I firmly believe we've been able to do what we've accomplished based on our master franchise arrangements around the world. I know we couldn't have done this directly without master franchisees. But we find a local partner who acts on our behalf to grow the concept and educate the consumer. Our biggest difference from the McDonald's Corp.s of the world is we are very much in tune with the local markets in every country because we have local people [representing us]. I think that gives us an advantage.
Entrepreneur:You've said you still run your franchise like a family business. Will you be able to uphold that philosophy despite continued expansion?
Serruya: I'd like to have it [that way]. Is it feasible? It gets harder every day. The more we grow, the harder it is to have that relationship with every one of our people. But [with our master franchisees], we'll always have that family feeling. And I hope we [imprint] in their minds the feeling we have together, and they do the same with their local franchisees. We're all one, and we're here to work together to make our business that much better.
Entrepreneur:With a rapidly growing franchise, do you and your brothers still feel like entrepreneurs?
Serruya: Oh, very much. We live for the next exciting deal and thinking of ways to grow our brands within [saturated] areas. When we look at markets like Canada, where we thought we were almost at a point of saturation, a new [idea for expansion] comes along. That's where the entrepreneurial [thinking] comes in, coming up with ideas to grow our brands and grow areas we're not in with co-branding.
Entrepreneur:Does your entrepreneurial attitude help you relate to franchisees?
Serruya: It helps us considerably, because they're all entrepreneurs in their own way. They're trying to make themselves the leaders of frozen desserts in their area. And with the things we feed them from marketing and new product development, we give them the tools they need. It's their job to take those tools and use them as effectively as possible.
Entrepreneur:You've grown through acquisitions, particularly in the United States. Why did you choose this expansion route?
Serruya: When we went public, it gave us a new vehicle to [grow]. Yogen FrÃ¼z has been debt-free all its life. We used to grow with the money in our pockets. Being public gave us access to a form of financing different from the traditional way--banks.
When we finished [traditional franchising in] Canada, we looked everywhere except the United States because the market was mature there for frozen desserts. For us to really be able to capture the U.S. market, we had to look at acquisitions to enhance and diversify our brand.
About five years ago, we came up with a Yogen FrÃ¼z ice cream. But it didn't sell because we did such a good job letting people know we're yogurt that they couldn't comprehend us being ice cream. When we bought Bresler's, we brought it into Canada and put it in every one of our stores. Now, 17 percent of our sales in Canada are from ice cream, where before we couldn't reach 1 percent under the Yogen FrÃ¼z name.
Entrepreneur:What are your future plans for expansion?
Serruya: We're looking at acquiring more companies, doing more products and continuing the growth of our international and domestic franchising. We have rights to Tropicana, Betty Crocker and Yoplait [through brand acquisition and are] doing those brands in supermarkets. We want to do what we do best--marketing and new product development.