Multi-Unit Franchisee Magazine Issue I, 2013 | Page 64

Know When to Fold ’Em!
sion. The rent there is $1,800
a month, but he’s decided to
weather the recession that
slowed growth in the area
and keep it open. “We’re not
making a profit, but we’re
not losing too much. We’re
waiting for Atlanta to grow
out to it.”
“It’s all about causality,”
agrees Hashim. How did a
unit get into this situation
in the first place, and is the
cause reversible? “You owe
Greg Thomas
it to yourself to have a very
robust review of every unit you’re having trouble with to see
you didn’t overlook something,” he says. “I’ve had stores that
were down for a year and came back. There was construction
up the road I didn’t know of, or new competition came in, but
then the novelty wore off and customers came back.”
Feeling the pain

Once you’ve decided to close a unit, it’s time to deal with the
how-to. The key is to communicate with all parties it will affect as early as possible. Denial is not a strategy.
“Once decided, what to do with the franchise agreement is
an entirely different conversation,” says Thomas. “It’s a question of who’s going to take the hit.”
“Everybody needs to feel
some pain in a turnaround
situation,” says David Ostrowe, who operates 25 Burger
Kings in Oklahoma and Louisiana. “Most people focus on
the financials, but it’s also the
people, operations, and internal financial matrix. Then you
have to go after the big deals,
which involve pseudo-legal
discussions.”
“In my previous business,
we closed some restaurants David Ostrowe
but I always made the lenders
whole,” says Russ Umphenour, whose RTM Restaurant Group
operated 775 Arby’s when he sold it to the franchisor in 2005.
Since November 2008, he has been president and CEO of Focus
Brands. “Not everybody believes in that as strongly as I do.”
As a franchisee, he says he never left lenders in the lurch.
“If you don’t have the money, go to the lender and renegotiate
the terms, and wrap that into your other stores,” he says. The
same holds for leases. “If you have any intent of staying in the
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