Let's Make a Multi-Deal!: Franchisors, Developers... -
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Published on: 4/14/2004
Last Visited: 7/15/2006
They traveled down to Tulsa a month later, met with the founders, David and Camille Rutkauskas, and decided to go with the concept.
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"Being a banker at heart, we looked at the numbers, the financials," says David Ostrowe, president and CEO of Ostrowe & Associates in Oklahoma City, discussing his purchase of four Captain D's company stores in October 2002.The biggest appeal, says Ostrowe, was the undersaturated, underperforming market."We knew we could turn this market around fast."
Ostrowe remodeled all four stores in 9 months to reflect the new look of Captain D's.He also ran 26 weeks of TV last year, in a market where Captain D's previously had zero TV exposure."Our commitment financially to this market has been tremendous, and the sales have paid off," he says.
As a franchisor of the four former company stores, Captain D's has earned more money in royalties than they earned in net profit when they owned the market themselves, says Ostrowe."Both parties are making money now.
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Ostrowe, in his initial meeting with Captain D's, was impressed by the company's willingness to build more company stores."As an operator, I think it's important to know the franchisor sees the viability of the concept.I personally would shy away from companies that only franchise.I would question, 'Are your returns not there?'"
In addition, Ostrowe says his company is operationally driven and he needs to deal with people who speak his language."I want to be able to sit down with the corporate director of operations and say, 'We're having this problem, are you?'" As he sees it, if a concept is 100% franchised, "Their goal is to sell more franchises and get more royalties.What is their priority?"he asks.
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As a multi-unit developer, you want the franchisor to know more than you and possess the talent set to help you, says Ostrowe, and not vice versa. (See sidebar, "Promises & Priorities.) "My team has experience with more than 100 restaurants, more than some franchisors."He sees Captain D's with a new VP of franchise marketing in place and a renewed commitment to building company stores and getting back to core disciplines."I'm impressed with their management team," he says.
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Yet no matter what level you're playing on, there's one more crucial ingredient required to get the most from the partnership, says Ostrowe.
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At Camille's, owners David and Camille Rutkauskas are being extremely careful in selecting franchisees, says McCracken.
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"David knew I had passion, he knew I had desire.He saw that burning desire.I think many franchisors will just pick up anybody who will fill out the form and put down the money.They're not doing that."
"Fire in the belly is essential," says Ostrowe, who has achieved a great deal at a young age.
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