A Franchise Leader on the Benefits and Challenges of Multi-Unit Ownership
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When asked where his journey to multi-unit, multi-brand mogul began, Aziz Hashim points back to a humble beginning: mopping floors and washing dishes at his uncle's Los Angeles Burger King franchise at the age of 14. Over the next eight years, he worked in various Burger Kings, advancing to cashier, then to manager. But he always saw fast food as a means to an end, a way to pay for his college education. When he graduated with a degree in electrical engineering from the University of California, Irvine, he expected to leave the restaurant world behind for good.
Instead, Hashim now says, "I realized within a few short weeks of being employed as an electrical engineer that it wasn't for me. I much preferred the restaurant environment. Within 90 days of getting that job, I tendered my resignation and decided I was going to try to find my way in the restaurant business."
He moved to Atlanta and opened his first franchise, a KFC, in 1996. He followed that with a Subway next door, and within three years he'd grown his empire to 10 units. Today, as president and CEO of NRD Holdings, Hashim owns 35 franchises in Georgia, California and Toronto and employs about 700 people. In keeping with his original vision, most of his units are restaurants--Popeyes Louisiana Kitchen, Rally's and Subway--but he has also expanded into pet stores with Canadian brand Pet Valu.
Hashim is highly involved in the franchise community, serving as chairman of the 2014 Multi-Unit Franchising Conference and as treasurer for the International Franchise Association (IFA). In 2016, he'll be the fourth franchisee to become IFA chairman in the organization's 50-year history.
We asked Hashim to share some insights on multi-unit franchising and advice for single-unit owners who might want to follow in his footsteps.
What would you say to a single-unit owner thinking about expansion?
You must know yourself. You must understand whether you are able to delegate and be comfortable stepping away from your business and letting other people work for you. That's a lot more difficult than it sounds, especially for entrepreneurs. We want to be in the trenches and doing the work ourselves, but at some point you have to get yourself out of the day-to-day fray so you can work on your business instead of in your business. As a multi-unit franchisee, your role changes from operations to development.
There's also more risk involved, because you're going to take on more debt and have a larger operation to manage. There were times when I was paying more to supervisors and staff than I was able to make. That kind of sacrifice is required if you want to grow. You have to invest in infrastructure; there's just no two ways about it. You're going to have to hire people and incur the cost. If you decide you're going to invest in infrastructure only once you have revenue, you may never have the revenue.
What are the benefits of multi-unit franchising?
Along with the higher risk comes the potential for a much higher reward. The bottom line, of course, is more profit. But having a larger organization also gives you more freedom, because your business runs somewhat independently. Because of the infrastructure I have in place, if I don't go in to work tomorrow, my stores are still going to open, and business will go on as usual. It gives me an opportunity to give back to the franchising community and to spend more time with my family, so I think the quality of life is better.
I also see growth as a human resource strategy. If you've got really good people working for you, but they don't see any further growth on the horizon, it's very likely that they'll seek their growth somewhere else. So multi-unit growth is developing not just for yourself, but for your team. And the better the team you surround yourself with, the better you're going to do in franchising.
How do you put that team together?
A significant portion of a multi-unit franchisee's time has to be dedicated to HR. It's one of the few things that cannot be delegated completely. I know the culture of my business and who would fit into it, so it's very important for me to be integrally involved to make sure the right leadership is brought onboard. We use all the traditional tools of recruiting, but our best successes have been people we've developed from within the company. They've grown with our culture, so they understand very well what we stand for and what our expectations are.
Do franchisors prefer that franchisees own multiple units?
During the recession, the outlook toward multi-unit franchising changed. Brands that previously had not given it a lot of thought noticed that multi-unit franchisees survived the recession better than single-unit franchisees. Also, many franchisors decided they needed to cut back in order to improve their own profitability, and it's much easier to have a handful of very large, well-capitalized franchisees to support than to have a very large cadre of individual franchisees who may run into trouble when sales are volatile. So every brand you talk to now is interested in soliciting multi-unit franchisees.
Is every brand right for multi-unit franchising?
Not necessarily. Multi-unit franchisees have needs that are different from single-unit franchisees. They're traditionally more sophisticated, better capitalized and need less day-to-day hand-holding, but on the other hand, they're capable of developing at a faster rate, and the franchisor has to be able to keep up with that level of development. You can't ask someone to build five stores if you can't support the opening of those five stores. You have to invest and build your infrastructure ahead of time in order to support multi-unit franchisees.
What else do you look for when choosing brands to work with?
First and foremost, I have to be comfortable with the product. It has to be exceptional. Second, I look at the unit economics: Can this product or service that I like so much actually be sold profitably? The third thing I look at is brand management. I meet with the senior management team and discuss what their vision is going forward to make sure I understand and agree with the trajectory of the brand.
Then I look at what their view toward franchisees is. I like brands where the franchisee is the No. 1 priority. If you're going to convince people like me to invest millions of dollars in your brand and diligently operate that brand day in and day out, but you're not going to be concerned with whether that franchisee gets an adequate return on their investment, then that's a failing model--it's not sustainable.