Multi-Unit Franchisee Magazine Issue I, 2013 | Page 68

Know When to Fold ’Em!
around!’ True operators are always reluctant to close down
a unit. But the reality is that by doing so, you can redeploy
capital and resources, which is so much better for the organization,” he says.
“I had a Denny’s in Deland, Fla., that had always been underperforming. It took me 9 years to close it. I always thought
we could turn it around. About 5 years before I bought that
unit, the previous owner had built another unit about 3 miles
away and the volume on this unit declined 20 to 25 percent. I
always assumed that with better service and marketing I could
bring the unit back to its former level. I tried everything—renovating, billboards, couponing, changing management—and
nothing changed. I felt that I could turn it around. I wouldn’t
accept the reality that the market was too thin,” Metz says.
“Nobody wants to lay off staff, admit their baby is ugly. You
just keep plodding. I owned the real estate, so I had an additional incentive to keep it. I tried to see what my alternatives
were and finally sold to a car wash operator. I walked away
covering the mortgage debt on the property, but everything
else was lost. I didn’t lose that much, only the last 2 years had
a significant loss. I wished I’d closed it earlier.”
Umphenour has traveled the same road, more than once. “I
look back on my history and realize there were a lot of times I
could have closed stores but I had this belief….”
It might have been the neighborhood or road had changed,

a new building was hiding the sign, or it was a bad site to begin with. “I tried everything you can—a new team, marketing,
cleaning it—but at some point I had to say, ‘Okay I need to
look at my ongoing expenses.’ But being the eternal optimist,
I didn’t confront things as quickly as I could have.”
When you reach the point where the facts are undeniable,
he says, talk to the landlord to see how you can negotiate your
way out of the lease. Then go to the franchisor, lay out all your
P&Ls, and tell them, “This store’s not making money and I
want to close it,” he says. “If everybody’s objective about it, I
think that works pretty well.”
Umphenour cites Jim Collins’ idea in Good to Great of
confronting the brutal facts. “I read that after I’d been in
business 20 years,” he says, and took his team through the
book, applying that concept to his own company. “Rather
than spend too much time turning around a loser, you can
do more by focusing on your better stores.” Trying to f