When Pizza Hut bought out Straw Hat Pizza nearly 10 years ago, Straw Hat franchisees faced a dilemma: Either convert or go independent. For a number of franchisees, neither option was appealing, so they came up with another alternative. They opted out of the Pizza Hut franchise and established a cooperative to retain ownership of the Straw Hat name, operating systems, recipes and logo.
Today, Dublin, California-based Straw Hat Cooperative Corp. is going strong, with 50 members and 65 locations throughout California, Nevada and Washington. An average of six new stores are added each year. All decisions guiding the company are made by an elected board of directors.
"It's a shared strength," says Joshua Richman, president and CEO of the cooperative. "The idea is that these pizza restaurants will be stronger as part of a group than on their own."
The benefits are numerous. The backing of 60-plus stores helps when negotiating deals with suppliers. Co-op members also save money because Straw Hat manufactures its own cheese, dough, meat toppings, sauce, boxes and cups. The royalties are low, and all marketing materials are provided.
Says Richman, "We've found it is a real formula for success in our industry, which is extremely saturated and competitive."
Quintuple Or Nothing
By Holly Celeste Fisk
Dual branding is one of the hottest trends in franchising. Now Ed Blair, founder of Dallas-based Main Street Concepts LLC, is turning up the heat. Blair launched the first quintuple-branding location, dubbed Main Street, in July. The Farmers Branch, Texas, location combines a Shell Oil gas station with a five-restaurant food court.
"We found out that fast food generates three times as much revenue per square foot as a convenience store," says Blair, who spent almost two years persuading franchisors to give his concept a shot. Most were reluctant to allow Blair to build units where employees would work side by side with employees of competing franchises, a problem Blair addressed with a unique point-of-sale system that ensures each franchisor receives its due royalties.
"I look at it like coaching," says Blair. "If everybody works as a team, we're likely to win the game."
The Farmers Branch Main Street includes Pizza Inn, Hardee's, Popeyes, La Creme and Taco John's outlets, but future Main Streets will be customized to best match the customer demographics in their areas.
Blair and Monty Whitehurst, Main Street's vice president, are working on the rights to three more franchises, including Baskin-Robbins, and permission from Shell Oil to build 17 more units in Texas.
With fuel for the fire, quintuple-branding just might be the hottest thing since the drive-thru window.
Piece Of The Pie
By Lourdes Aguila
Like most entrepreneurs, Stephen Hanulik, 36, had to overcome obstacles to business ownership. Unlike most, the Springdale, Pennsylvania, man had to triumph over one extra obstacle--getting people to look past his wheelchair and see him, not his disability.
Hanulik, who has muscular dystrophy and is a quadriplegic, was working at a hospital when a colleague told him about Business Enterprise Venture. The federally funded program, run by the Pittsburgh Blind Association, helps people with disabilities become entrepreneurs by providing guidance with feasibility studies, business plans and financing.
Hanulik didn't waste any time. "I've always dreamed of owning my own business," he says. Through the program he met advisory board member Jim Fox, founder of Fox's Pizza Den. Then fate stepped in: A Fox's Pizza Den franchise right down the block from Hanulik's home was up for sale.
"I knew that this deal was going to work," recalls Fox. "[Hanulik] is a very inspiring person." With business start-up assistance from Business Enterprise Venture, plus a home equity loan, Hanulik bought the franchise in May 1995.
Today, with 1996 sales projected at $100,000 and eight part-time employees, Hanulik is living his dream. And his enthusiasm has been contagious: Fox has added a whole subdivision to Fox's Pizza Den to attract franchisees with disabilities.
Tis The Season
By H.C.F.
Franchisee philanthropists know it's better to give than to receive. Some of the projects franchises are involved in:
- Super 8 Motels' Rooms at the Inn program offers free rooms on Christmas Eve to holiday travelers visiting friends in nearby nursing homes, veterans' homes, hospitals and treatment centers. The program was started by franchisee Linda Aamold Tharaldson in Fargo, North Dakota, in 1987; Super 8 adopted the program in 1990. More than 650 Super 8 motels donated about 1,500 rooms last year.
- Franchisee P.K. Sindwani displays a Christmas tree decorated with cutout angels in his Trappe, Pennsylvania, Little Professor Book Center as a part of the Adopt an Angel program he began in 1994. Each angel bears the name of a needy neighbor and either a book they would like or a list of their interests. Customers who purchase the books receive a 25 percent discount, and a star with their name replaces the angel on the tree. Last Christmas, all 150 angels were purchased.
- Auto appearance franchise Maaco Enterprises donates any leftover toy cars, which are usually sold to franchisees to use as premiums, to the U.S. Marine Corps' Toys for Tots program. Started at Maaco's King of Prussia, Pennsylvania, headquarters in 1993, the campaign has picked up speed, with 12 more franchises donating their stocks of the popular toy cars.
Tasteful Idea
By C.M.
Customers got all the pizza they could eat, charities got donations, and pizzerias got a slew of new customers. The setting for this win-win-win situation? The first Buffalo Grove Chamber of Commerce Pizza Challenge in Buffalo Grove, Illinois.
Michael Jonas, a sales representative for direct-mail advertising franchise Coupon-Cash Saver in Deerfield, Illinois, came up with the idea as a way to help charities and businesses at the same time. The all-you-can-eat tasting, held in February, gave local pizza restaurants the chance to showcase their pizzas. Attendees either paid a $3 entry fee or donated six cans of food--then chowed down. Both cash and food were later distributed to five local food pantries; and at the end of the day, consumers placed their votes for the town's best pizzas.
"The purpose was to help the charities out, but it was obviously a very good value for consumers who wanted to try all the pizzas in town," says Jonas, who is also a chamber member. "Win or lose, the pizzerias had a great time and earned a lot of new customers." Approximately $1,000 and 1,500 pounds of food were collected at the event, which drew about 800 more people than Jonas expected.
The second annual Pizza Challenge is again set for February. "I want to help raise money during a [slow] time for the food pantries," explains Jonas. "They get inundated with food during the holidays, but when spring comes, there's no real push to donate."
Contact Sources
Coupon-Cash Saver, 1020 N. Milwaukee Ave., Deerfield, IL 60015, (847) 537-6420;
Fox's Pizza Den, 540 Pittsburgh St., Springdale, PA 15144, (412) 274-6797;
Fox's Pizza Den (headquarters), 3243 Old Frankstown Rd., Pittsburgh, PA 15239, (412) 733-7888;
Little Professor Book Center, Trappe Centre, 130 W. Main St., #102, Trappe, PA 19426, (610) 454-0640;
MAACO Enterprises, (800) 521-6282, ext. 6180, fax: (610) 337-6176;
Main Street Concepts LLC, 5220 Spring Valley Rd., #525, Dallas, TX 75240, fax: (972) 392-0722;
Pittsburgh Blind Association, 300 S. Craig St., Pittsburgh, PA 15213, (412) 682-5600;
Straw Hat Cooperative Corp., 6400 Village Pkwy., Dublin, CA 94568, (510) 829-1500;
Super 8 Motels Inc., 339 Jefferson Rd., Parsippany, NJ 07054, (800) 889-8847, (201) 952-2956.
This story appears in the December 1996 issue of Entrepreneur. Subscribe »
