Multi-Unit Franchisee Magazine Issue IV, 2016 - Page 44

D OM I N A T O R S Reconnect not taking any salary out of the company for themselves, the plant is back in the black—and manufacturing parts they can purchase and use in the family’s Dunkin’ locations and other businesses. Last year the business decided to sell some Dunkin’ locations in Florida, including their five Baskin-Robbins locations. Although they had been successful in the Sunshine State, their expansion model relies on business partners living and working in the markets they operate. “In this case it was my sister-in-law and her husband. They decided they were ready to have children and wanted to raise them in New England, surrounded by family,” he says. Together, they decided to sell and realized a healthy profit. “We were able to avoid a large breakup fee on our loan deal by trading a LIBOR-based swap, so it ended up being a solid win for our business and for our family.” Branca, never content to sit still, is always searching for the next strategic move and remains open to all opportunities and possibilities. While much of the next 5 years remains unknown, Branca plans to keep fighting for the future of franchising and the investments of those in it as they face a continuing barrage of governmental overreach and regulation at the local, state, and federal levels. BOTTOM LINE Annual revenue: NA. Growth meter: How do you measure your growth? EBITDA and transaction count in our Dunkin’ business. Vision meter: Where do you want to be in 5 years? 10 years? Ideally, having added dozens of profitable units and new Class A properties full of successful tenants. Realistically, surviving the regulatory environment and litigation onslaught enabled by it, and taking market share from the smaller competitors and chains that will not be able to weather this storm. How is the economy in your regions affecting you, your employees, your customers? Prices are rising because of intrusive regulations piling on to all aspects of our economy. Real estate taxes and rents are rising, labor is tight, and service is suffering. The tensions between employees and employers fostered by the new regulations and outside actors has put stresses on our team at all levels. These things are decidedly not helping entry-level workers. Quite the opposite is happening. We have been able to cut costs by vertically integrating many things that other people pay for, like legal work, general contracting, HR, and repairs. We are often our own landlord, which helps. Others don’t have those resources available to them, and we see businesses closing or scaling back in every market where we operate. The big will get bigger, which is exactly the opposite of what these outside forces say they want. Are you experiencing economic growth in your market? We are innovating new products and seeking new specialized sales training to successfully drive transactions, but our population base in the Northeastern U.S. is not growing and costs are. Our Midwestern market is growing nicely. How do changes in the economy affect the way you do business? We manage our labor hours relentlessly, and we innovate products with a top screen on taking labor hours out of the business. If we can automate something, we will do it. Efficiency has always been important in business, but today it can be the difference between a business dying or living to fight another day. We also invest more in businesses that are not employee-intensive. How do you forecast for your business? We look at previous sales, the competitive set, pending legislation, the credit environment, and our ability to increase transactions with existing capacity. We try to expand capacity and efficiency with any remodels we do. What are the best sources for capital expansion? Retained earnings. We try to acquire and develop property with our own capital and then 42 seek low-cost financing later to recapitalize. The deals are easier and less costly that way. Experience with private equity, local banks, national banks, other institutions? Why/why not? We are involved with all of this. We are lenders/investors in the private equity space and borrowers with regional, national, and international banks. We continually negotiate terms with our lenders and compare them. We have been blessed with some really good relationships in that space. While you can say that our lenders are literally invested in our success in a legal sense, it also feels that they are personally as well. What are you doing to take care of your employees? We try to model our benefits programs to meet their needs. In one example, we provide up to three weeks of paid leave (in addition to required paid sick leave). This allows certain employees to travel to “the old country” for an extended period without losing income, and we in turn get their kids who are on school break to work with us. The household gains extra income, our people get to go back to see family and experience the births, weddings, and other important family life events, and we get trusted people who are trained from their previous school vacations, knowing that they have a waiting job. If we can achieve these win-win scenarios, that is the best situation, especially with such high youth unemployment. How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? We have pushed to grow top-line sales and reduce labor and other costs. Retaining good employees is a critical focus. We have also aggressively renegotiated leases where we don’t own the property and renegotiated interest rates with lenders. The current low interest rate, fuel, and commodity cost environment has helped, as have some modest price increases and reduction of labor hours. We have automated some really expensive labor procedures. How do you reward/recognize top-performing employees? We use traditional bonuses, but we also have helped key performers by leveraging our construction company to do things like remodel their homes or provide atcost services. What kind of exit strategy do you have in place? More growth! Seriously, though, we have all done robust estate planning in the hope that we can pass our businesses on to the next generation. Our real estate strategy and lobbying on things like t he death tax is a big part of that. MULTI-UNIT FRANCHISEE IS S UE IV, 2016 muf4_profile_branca(36,38,40,42).indd 42 10/6/16 5:06 PM