Out of more than 30 pizzerias that applied to be considered for Entrepreneur’s 2016 Franchise 500 listing, Toledo, Ohio-based Marco’s Pizza logged the greatest domestic growth, beating out industry giants such as Pizza Hut and Papa John’s. Its banner year was 38 years in the making. Italian-born founder Pasquale Giammarco began franchising in 1979, seven years earlier than “Papa” John Schnatter, but after 25 years, the company counted only a little more than 100 restaurants in three states. In 2004, restaurant-industry veteran Jack Butorac acquired the franchise rights and pulled together an experienced team to turn the modest Marco’s into a national brand.
“Without a lot of track record in growth, we were finding it very difficult to find lenders [for franchisees],” says Bryon Stephens, president and COO of the company. “We knew that we were going to have to take some extraordinary measures.”
So they initiated captive-leasing programs to provide direct funding to franchisees. They also created Marco’s Assurance, diverting a portion of every franchise fee and royalty into a fund to guarantee franchisees’ loans. Though unprecedented, that move proved vital.
Then in 2012, Marco’s took another outside-the-box approach to growth: a partnership with Family Video. The movie-rental chain became Marco’s largest franchisee, placing pizzerias within about 130 of their stores to date, so customers can get pizza and a movie at the same time -- in store or delivered. Today, Marco’s has almost 700 stores in 35 states, and a 10-year goal to grow to 2,500.
Though creative strategies have certainly accelerated growth at Marco’s, Stephens says that the foundation for its success is still good food and good service. To attract and retain high-quality people to deliver on both counts, Marco’s offers its best employees the chance to earn equity in the stores they work in. Forgoing franchise fees and instead allowing people to work toward ownership is a unique tactic designed to reward Stephens’ number-one requirement: passion. “It’s not just about how much money you have to invest,” he says. “You’ll be miserable if you can’t share our passion for our culture, our customers and our product.”