Do Your Homework
A Pizza Hut franchisee shares the steps he took when researching his franchise.
As a teenager in Miami, Al Salas manned the counter at Burger King. Working his way up through the company, eventually he landed in the accounting and finance department.
Salas' work at Burger King caught the eye of Pizza Hut, and the company recruited him as director of operations for the pizza franchise.
After being named divisional vice president for Pizza Hut, Salas decided it was time to go into business for himself. "I decided to expand," the 41-year-old franchisee says. "I basically wanted to own something, and Pizza Hut is what I wanted to own."
Salas formed Koning Restaurants International in 1998 and purchased 87 company-owned Pizza Hut restaurants from parent company Tricon.
Though Salas worked for Pizza Hut, he still felt the need to do his homework before investing in the franchise. Franchise Zone spoke to Salas about the process he went through when researching his franchise.
Franchise Zone: Why did you want to have a franchise?
Al Salas: My family came here [from Cuba] with very little, and it was a dream of mine to own a business. I had worked for franchises before, and I fell in love with Pizza Hut-the product, the people who are there and what they stand for, which is taking care of customers and making them number-one.
When I put the deal together, I was in Miami running the Southeast division-close to 700 restaurants-and I woke up one day and said, "This is what I want to do," and I never gave up. It was a dream I had. I did my financial and operational homework, and Pizza Hut was the company I wanted. It's the company I had the most experience in, and to be honest with you I'm very, very happy I did that.
What were you looking for in a franchise?
I was basically looking for stability, stability at the top, the right leadership. We have David Novak, the chairman of Tricon; Dave Deno, the CFO I used to work for; and Aylwin Lewis [Tricon's COO], whom I also worked for. Actually, I was enjoying my role as vice president of operations, but I said to myself, "I really want to own a Pizza Hut franchise. What better time than now, when these guys are in charge?" I put together a deal that I guess they couldn't refuse.
What was the first step you took in research?
There were really two parts to the research. One was regarding Pizza Hut and the other was regarding the location, Miami. I didn't want to do anything else but pizza, mainly because pizza brings families together. If you think of pizza versus hamburgers, when you set that pie at the table, everybody gathers around. If you have hamburgers, it's a little different-you're spreading around the bags and so forth. It may sound a little corny, but I'm big on family and I'm big on team, and I know pizza is the right thing to do from a business perspective. In good times we sell a lot of pizzas; during bad times, we still sell a lot of pizza.
Our number-one target is households with incomes of $50,000 or less, and that's kind of where I grew up, with a household income of $50,000 or less. I knew I could talk to that [market], so I chose Pizza Hut.
I chose Miami, because I grew up here and I know the area and the people of Miami very well. I knew I could have an impact in the community.
Who did you talk to when you were looking into doing this? Where did you go for advice or information?
I worked for the company, so a lot of what I did was on my own. If I didn't have any experience in the company, what would I do? The first thing I would do is basically look up the company on the Internet, not just the financial reports, [but] what their mantra is. If I could visit the company, I would speak with some of their leaders. And I'd speak to franchisees. I'm not big on just looking at an annual report. I would basically walk up to the managers in the store and say, "Hey, do you like working here? What kind of sales do you do?" You'd be surprised-people give you that information.
Then I would basically get involved with the company, somehow, and understand where they were going and what they were doing. I get a lot of calls from folks saying, "Hey, Al, I'm thinking about becoming a franchisee. What would you do?" And I tell them you have to know the restaurant business first. It's not an easy business. Your heart has to be in it-you need to have a passion about serving customers, even if it means cleaning dirty floors when they spill something. You need to be service-oriented, not just financially driven. It takes, I think, a different breed of individual.
What was the most important piece of information you found?
The three-year plan. I wanted to know what [the corporate officers] were going to do this year and the next two years, not only with new product and marketing campaigns, but what were they planning to do with the competition. I focused on that a lot-how they were going to tackle the competition and better serve customers.
Did you talk to any franchisees?
I spoke to a couple of Pizza Hut franchisees, and to a couple of folks from the corporate office of [another pizza franchise]. I didn't tell them it was me. I went to the competition and said, "What do you think of Pizza Hut? What are your plans for [competing with] Pizza Hut?" I got some interesting results. They didn't have a convincing plan, and I liked that.
Were these corporate people or franchisees?
These were corporate people. I made a couple of calls and sent a couple of letters and some e-mail. I acted like I wanted to become a franchisee for [the other franchise], and asked them, "What are your plans for the competition?"
How long was your research and decision process?
About two to three months. I just wanted to get more information on the company from other angles, but I already worked for the corporation, so it was a little easier for me.
When did you realize buying a Pizza Hut franchise was the right decision?
I had two options-to continue to work for the corporation or to take a bigger job somewhere else. I knew deep down in my gut this was the right corporation, because the people I work with were loyal to me and I was loyal to them. I knew once I had the feedback of some of the franchisees and some of the corporate folks and some of the competitors, that this was what I wanted to do. I'm happy I'm a franchisee today.
Is there anything you didn't do in the research process that you wish you had?
No, I don't know what else I could have done. Some things I could have done better. There was a time when I got anxious. One part of becoming a franchisee is getting funding, making sure you have the right bank and so forth. I had a great bank, but I could have done a couple of things better to put the deal together.
What advice would you give to other people looking into buying a franchise?
I think franchising's great, but you have to have a strong knowledge of the franchise and to have commitment, not only from yourself but from your family. Make sure you have the right financial backing. And you have to do your homework on the industry and on the franchise.
If you're not willing to clean the floor when somebody spills a pizza on it or you're not willing to clean a window, it's not for you. The business is about walking the talk. And you're only as good as your last pizza; you're only as good as the last customer you served. It's not a one-man team. To be successful, you have to surround yourself with great people, folks who are as hungry and as willing to work as you are. It's very rewarding. It's fun being an entrepreneur, and it's fun being a franchisee.