When cousins Jim Tselikis and Sabin Lomac were growing up outside of Portland, Maine, family gatherings invariably meant locally caught lobster on the table. Like sweet corn in the Midwest or fresh salmon in the Pacific Northwest, lobster was a regional delicacy they took for granted.
Both cousins eventually moved away: Tselikis, now 30, to the Boston area, where he sold medical devices, and Lomac, 33, to Los Angeles, where he worked in real estate while pursuing an acting career.
In 2011, Tselikis flew to California for some sunshine and a visit with his cousin. Playing their favorite childhood video game, NHL ’94, they reminisced about all the good meals they’d had as kids, and how difficult it was to find high-quality Maine lobster throughout the U.S. Even in some parts of Maine, Tselikis had discovered, there was a preponderance of cheap, low-quality lobster from other areas.
Impressed by the burgeoning L.A. food-truck scene, they hit on their big idea. “We said, ‘Let’s take what we grew up with—this awesome Maine lobster—and let’s bring it to where it’s not accessible,” Tselikis recalls. “Food trucks were blowing up then in L.A. We thought if we served it via truck, the trend was bound to continue and expand to the rest of the country.”
Over the next year, the duo worked on the project while holding down their day jobs, and in April 2012, the first Cousins Maine Lobster truck lifted its window in L.A., serving lobster rolls, lobster tacos, bisque and clam chowder. There was a 60-person line throughout that first night, and they completely sold out.
The truck’s popularity continued, and six months later Tselikis and Lomac quit their jobs to work on the concept full time. By 2014 they had a fleet of four trucks serving Southern California and had signed on 10 franchisees in locations across the U.S. They also launched a mail-order business that overnights lobsters and other New England-inspired products directly to customers’ doorsteps. Revenue since launch has topped $8 million, a figure they hope to increase exponentially as their franchisees come online over the next couple of years.
It seems like there’s a new franchise concept every few days. While some, like Cousins Maine Lobster, come out with buzz and grow quickly, most take years to reach double-digit unit figures—if they get that far at all. Many would-be franchisors eventually close their doors or simply remain small, local chains. Some spend time and energy perfecting a concept, but where they get into trouble is in adapting that concept for franchise expansion.
Tselikis and Lomac weren’t thinking of franchising when they opened their first truck. In fact, they thought of lobster as a side business. But that quickly changed. Buoyed by buzz on social media, they got a call from a producer for Shark Tank. Knee-deep into their launch, the pair initially passed on the opportunity to appear on the entrepreneurial-pitch TV show. When they did take part in July 2012, they convinced judge Barbara Corcoran to invest $55,000 in the business and take on a mentorship role.
“Barbara became a very close friend, advisor and partner,” Lomac says. “After Shark Tank, people reached out to us with a million opportunities and plans for expansion. But neither of us had done this before. The hardest part was learning what ideas weren’t good and which were right for us. That’s where Barbara came in handy.”
Corcoran convinced the two that franchising was the right track for their company, even recommending a franchise development group to help with legal work and creating the systems and operations manuals needed to get started. But taking that step proved challenging.
“There were two friends of ours who owned their own business and had recently franchised,” Tselikis says. “They thought it was a waste of money for us to hire a franchise group.”
Looking further, the cousins realized that their friends probably could have handled their business better—and they decided they needed experts. They began interviewing development companies and eventually hired Buffalo, N.Y.-based Franchise Development Group. “They could speak so eloquently about our business,” Tselikis says. “They felt like they were already vested in it and cared. ”
While Franchise Development Group took over drafting the company’s Franchise Disclosure Document, the cousins did some heavy lifting of their own.
“From this vantage point, just thinking about what we did looks a little crazy,” Tselikis admits. “We were only a year into running our corporate trucks. We were still learning basic business skills like understanding payroll, insurance and quality control. We were figuring out how to run an e-commerce company that could ship overnight from the right to the left coast … We put a new business on top of the one we already had. We definitely had an entrepreneurial spirit.”
The two benefited from a good working relationship. Together, they created training manuals and courses, and attended grand openings—while picking up the slack when one or the other was burned-out or had personal obligations.
“We did all these things like creating an employee handbook and figuring out exactly how many legumes go into our soup, in addition to running the business,” Lomac recalls. “Toward the end, we needed to kick it into high gear. We were in the office until 11 or 11:30 every night. Otherwise we weren’t going to get everything done.”
Soon after getting their FDD and other materials finished, the cousins appeared on a follow-up segment for Shark Tank and announced that they were franchising. That yielded more than 1,000 requests from potential franchisees, and the flood hasn’t stopped. They defer those leads to Franchise Development Group for vetting, to ensure that candidates are in the right markets and have enough liquid capital and the right personality for the business. After that, Tselikis and Lomac interview prospective franchisees by phone or Skype. When prospects come to L.A. for Discovery Day, the cousins make the final cuts.
“What we’ve learned from signing the first franchisee to the 10th is incredible,” Lomac says. “Meeting them in person, you get a real good feel for their interest level and how they are to work with. We’re not desperate for money. For us it’s about finding the right entrepreneurs.”
Since selecting that first round of franchisees, they have refined their approach. “One thing I’m going to do is give them more homework. They need to do more market research,” Tselikis says. “When they get that initial phone call they need to be more savvy. I got on some calls with guys who were just bumbling. They didn’t know anything, and I’d think, Why am I wasting my time?”
Now, he wants prospects to have specific local knowledge, from the most lucrative places to park their food trucks to how many people their competitors are serving each day. He has also come to rely heavily on the opinion of his cooks. “After the candidates come out to L.A. and spend some time in the truck, I’ll ask the cooks how they’re doing,” Tselikis explains. “They’ll tell me, ‘This guy’s ready,’ or ‘They’re clueless.’ The guys in the kitchen are usually right.”
For Lomac, the most difficult part of the process has been making the transition from an independent business owner to a franchisor, putting his concept into other people’s hands. “I went to Phoenix for our first grand opening, and I was looking at this truck in the street,” he remembers. “It was mine, but it was not mine. It’s a crazy feeling. You feel proud and uncomfortable and excited.”
He also felt a duty to enforce the standards he and his cousin had worked hard to develop. “I was more tough with their cooks,” he says. “If I didn’t like the way the food looked, I was fierce. You have to set the tone for the quality you expect.”
Leaving that quality control in the hands of a franchisee for the first time was nervewracking. “Getting on the plane I was very nervous. It’s like having children going off to college,” Lomac says. “We want the best for them, but, boy, it’s scary. We have to do check-ins and secret shoppers. Still, I had to pinch myself and ask if this was really happening. I mean, this is an idea we came up with over drinks. It’s a very powerful feeling.”
While developing their franchise, the cousins are glad they haven’t made any drastic errors in judgment. They do, however, wish they had made their initial operations manual more detailed.
“Some things seem so obvious that we didn’t even think to put them in the manual—like the exact amount of ketchup or mayo to give a customer,” Tselikis explains. “There are things we missed that would have made our franchisees’ lives a lot easier. Including pictures in our manual for how to lay out the truck and exactly where things like plates and pans go would have been helpful.”
Such realizations will help them as they continue to expand. But they have not set any quotas. “We’re not in the business of having 100 mediocre trucks. We want 10 that are phenomenal and want to make whoever signs on with us extremely successful,” Lomac says. Looking back on the past two and half years, he has no regrets: “In hindsight, I know we wouldn’t have done anything differently. It was stressful, and at times we did go a million miles an hour. But we wouldn’t change it at all.”