Multi-Unit Franchisee Magazine Issue I, 2012 | Page 33

MEGA

MANAGEMENT
Management method or style: Persistent. I also strive to find self-motivated people who take pride in their work and in our company.
Greatest challenge: Balancing opportunity, capital, and risk.

As an operator, what are the two most important things you
rely on from your franchisor? A great system/product and resources we
don’t have.

How close are you to operations? I know a lot about the respective
industries we are in. I try to understand the key metrics of each as well as the
challenges our managers face. My job is to help them grow and be successful
managing their own business.

What gets you out of bed in the morning? The opportunity to move
forward.

Have you changed your marketing strategy in response to the
economy? How? We are constantly reevaluating our marketing spend and
try to place dollars that generate profitable revenue.

How do you hire and fire? I always interview key holders or managers
once they have been recommended by managers or supervisors. I generally
only discipline or fire supervisors or office staff.

How is social media affecting your business operations? The evolution of social media in the past few years is nothing short of phenomenal. We
are incorporating it wherever possible.
Are you in the franchising, real estate, or customer service
business? Why? Some of all, but customer service is the foundation of our
company. We cannot grow without providing real value for our customers.

What’s your passion in business? Seeing people grow.
How do others describe you? Precise, focused, and driven.

How do you train and retain? We are always looking for ways to train
and engage our staff. Franchisors generally provide great material for this. We
also use third-party seminars and bring in people to teach classes for our staff.
How do you deal with problem employees? Directly. Honesty either
moves them in the right direction or moves them out.

BOTTOM LINE
Annual revenue: Undisclosed

Where do you find capital for expansion? Cash flow and debt.

2012 goals: We are planning to open a few Koko FitClubs this year. We are
also evaluating additional Palm Beach Tans and Massage Envys.

Is capital getting easier to access? Why/why not? Hospitality has
been unbelievably difficult in the past few years. It seems like it has started
to get better, but the rules have permanently changed: different loan-to-value
ratios, different cash flow expectations from lenders, different amortizations,
etc. Loans for our retail businesses (without real estate) have been nonexistent.
If you have real estate, strong cash flow, and don’t really need the money, the
banks are delighted to lend to you.

Growth meter: How do you measure your growth? Bottom line
cash flow before and after debt service.
Vision meter: Where do you want to be in 5 years? 10 years?
We are always seeking profitable growth. I am not fixated on a particular number of units or certain annual growth limits. That said, I believe we will double
our size in the next 5 years. In 10 years I believe we will be growing out of
active cash flow and de-leveraging. We really like membership-based businesses
and see that as a growth vehicle for the coming years.
How has the most recent economic cycle affected you, your
employees, your customers? As a company, we have been remarkably
fortunate to build profitable revenue when the general economy has been poor.
This has also allowed our employees to continue to grow. Without question, our
customers have less to spend. This has forced us to provide more value for their
limited dollars.
Are you experiencing economic growth/recovery in your market? Growth.
What did you change or do differently in this economy that you
plan to continue? Diversify, diversify, diversify.
How do you forecast for your business in this economy? We
have tempered our expectation for growth and realized that you can’t project
the same growth for all the market segments we operate in. We feel like if we
are beating the industry average, we are being successful.

Have you used private equity, local/national banks, other institutions? Why/why not? I have never used private equit