Multi-Unit Franchisee Magazine Issue IV, 2011 | Page 52

Sink or
Swim?
By Helen Bond

W

Dealing with
underperforming
and distressed
units
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hen Greg Thomas decides
whether to fix or ditch a
financially troubled store,
he typically thinks big. “I don’t pay attention to pennies, nickels, and dimes,”
says Thomas, franchisee of more than
30 Great Clips salons in the Southeast.
“When something is distressed, saving a
few nickels, dimes, and pennies doesn’t
do anything. You have to increase sales
25 to 50 percent overnight.”
Not everyone has his constitution—nor
his experience turning distressed franchise
units into profit-makers. Thomas, president
of Parkside Ventures in Duluth, Ga., has
made it his business to know whether a
store has profit potential or will continue
to bleed red (for an in-depth profile of
Thomas, see www.franchiseupdate-digital.
com/franchisee/2011iss3).
When a franchise unit flounders, knowing where trouble lies can make or break
a multi-unit operator’s effort to launch a
successful turnaround. The direction that
effort takes depends on whether the business is underperforming (not meeting its
potential) or is in financial distress (cannot pay its bills). The distinction can be
critical when turnaround time is money
and operators face increasing pressure
on several fronts.
“Landlords don’t want to adjust rents,
franchisors don’t want to adjust royalties,
and no one wants to take a haircut,” says
Anand Gala, president and CEO of Costa

Multi-Unit Franchisee Is s ue IV, 2011

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