An Overview of the Challenges Facing Franchising - International ...

An Overview of the
Challenges Facing Franchising
Nigel Travis, President & CEO, Dunkin’ Brands, Inc. (Dunkin’
Donuts/Baskin-Robbins)
Mark Edwards, SVP, Senior Loan Administrator, BB&T, Commercial
Credit Administration
Bob Dorfman, Five Guys Burgers & Fries (Multi-Unit Franchisee)
Hank Bharmal, FASTSIGNS International (Two-Unit Franchisee)
Shelly Sun, CFE, CEO & Co-Founder, BrightStar Franchising, LLC
Todd Jones, Managing Director, GE Capital Americas, Franchise
Finance
Moderator: Mary Jo Larson, Publisher, Franchise Times

Business and Banking
Partnerships
Short-Term Capital Investments, Long-Term Economic Benefits
Hank Bharmal, FastSigns franchisee

Investment Scenario
$100k to $150k short term loan
3 to 5 year term
6% to 10% loan rates
If for equipment, risk mitigated by depreciated
value of the equipment
$500k to $1 million long term loan
7 to 15 year terms
6% to 10% loan rates
Based on sound business planning and financial
projections

Wider Economic Return on Investment
Short Term Loan – ROI over term of 5 year loan
Payroll increase by $300 k to $500 k ($60k to $100 k a year)
COGS expenditure increase by $450 k to $ 750k (90k to
150k a year)
Subcontracted services increase $ 200 k to $ 450 k (40k to
90k a year)
Taxes generated – approximately $500 k to $750 k (includes
sales, corporate, payroll)
$100 k can return over 10 x return over the term of the
loan above and over the repayment of the loan and
continues to increase the return in the larger economy.

Wider Economic Return on Investment
Long term Investment – ROI over 7 years term of loan
Payroll can increase to over $1.4 Million ($200k to $250k a
year)
COGS can increase to over $1 Million ($150 k to $200 k a
year)
Subcontracted services increase to over $500 k (70+ k a
year)
Taxes Generated $750 + k ($125+ k a year includes sales,
corporate, payroll)
$1 Million can return 3.6 x multiplier to larger economy
above and over repayment of loan on an ongoing basis
every loan term time segment

Investment in Existing Businesses and
Business Ideas
Improves repayment of loans
Improves overall economy by:
Multiplying long-term payroll
Goods and Services expenditure
Improves the chances of new untried businesses to
succeed by having vibrant environment to operate in.
Allows business owners and managers to work on their
businesses rather than work in their business which
leads to much faster growth and much more profitable
businesses.

Five Guys, the franchise
Five Guys started in 1986 by the Murrell Family in
Virginia.
Franchising began in 2002; only 8 Five Guys existed.
Today, there are approximately 770 restaurants coastto-coast,
120 of them corporate locations.
Fastest growing restaurant chain in 2009 & 2010.
Simple, high quality menu.
Outstanding economic business model.
Bob Dorfman,
Five Guys franchisee

TCH Restaurant Group
Doing business as a Five Guys Burgers & Fries franchisee
Joined the system in 2005.
Acquired the development rights for Tampa, FL, Columbus, OH,
Houston and South Texas. Total rights for at least 103 stores.
Opened first restaurant in Tampa, FL in 2006.
Today, we have 29 restaurants open, projected to have a total of
40 opened by year end.
Second largest Franchisee in the Five Guys System and largest
contributor to Five Guys overall growth in 2009.

Why help us grow
Very strict franchisor processes, systems and operating standards.
Impressive economic investor model.
Investor returns have exceeded projections.
TCH has demonstrated significant year-over-year EBITDA growth.
We are willing to share equity for accelerated growth.
We have the infrastructure in place to rapidly grow, both within our
development territories, and outside.
Franchisee consolidation provides a huge growth opportunity.
We have identified pertinent exit strategies.

How we can work together
Lenders need to gain a better understanding of
franchising, and we’re willing to help.
Investing in successful franchise systems is less
risky.
Banks and other lending institutions need to not
only look at historic performance, but reasonable
going forward projections, based on the use of
capital provided.
Private investors remain a very viable source of
capital.

Panel members
Nigel Travis, President & CEO, Dunkin’ Brands, Inc. (Dunkin’
Donuts/Baskin-Robbins)
Mark Edwards, SVP, Senior Loan Administrator, BB&T, Commercial
Credit Administration
Bob Dorfman, Five Guys Burgers & Fries (Multi-Unit Franchisee)
Hank Bharmal, FASTSIGNS International (Two-Unit Franchisee)
Shelly Sun, CFE, CEO & Co-Founder, BrightStar Franchising, LLC
Todd Jones, Managing Director, GE Capital Americas, Franchise
Finance
Moderator: Mary Jo Larson, Publisher, Franchise Times