Franchising empire builders thinking big

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Franchising empire builders thinking big

 

BY KATHERINE YUNG
DETROIT FREE PRESS BUSINESS WRITER

 

Mohamed Shetiah and his brother Fathy own 20 Biggby Coffee shops. Robert Leger controls 25 Hungry Howie’s pizza stores. And Louis Dortch Jr. and his family have built an empire of 43 Subways.

 

When it comes to the superstars of the franchise industry, these Michigan entrepreneurs are on the A list, destined to one day join the ranks of mega franchisees.

 

Though these multiunit operators tend to shun the spotlight, they are full of business savvy and ambition and are quietly expanding, opening stores in Michigan even during the recession.

 

In a world where bigger is better, these business owners are taking franchising to the limits. Humble and hardworking, they relish the challenge of operating dozens and dozens and dozens of quick-serve outlets. They employ hundreds of people, but each started out small.

 

The Shetiahs became Biggby’s largest franchisee after leaving their native Egypt for dreams of a better life in East Lansing.

 

Leger got his first taste of the pizza business at age 16 when he began making pies at a Hungry Howie’s store in Berkley.

 

And in 1987, Dortch and his father decided to branch out from their dry cleaning business by opening a Subway store in Flint.

 

“We love the business. We love the brand,” Dortch said May 18, the day his company opened its 42nd Subway on 8 Mile near Dequindre Road in Detroit. “It’s been really good for us.”

 

The 48-year-old Grand Blanc resident belongs to an exclusive club. Of the more than 17,000 Subway franchisees worldwide, he’s one of only 38 who own 40 or more stores.

 

His firm, Dortch Enterprises, is expanding from Genesee and Oakland counties into Detroit. If all goes well, Dortch expects to open his 50th Subway by year’s end. “For us, bigger is better,” he says.

 

Finding right people is key for four franchisees

 

It takes a special kind of franchisee to run dozens of stores. Here are the stories of four of them:

 

• The Coffee Kings:In 1989, Mohamed and Fathy Shetiah left their home in Mansoura, Egypt, to live with relatives in East Lansing. While the younger Fathy went to school, Mohamed worked in the restaurant and hotel business. He met Robert Fish, Biggby’s cofounder, and the two became close friends.

 

In 2001, Mohammed bought the first Biggby Coffee shop in East Lansing, which used to be called Beaner’s.

 

In 2006, Fathy joined his brother’s business after several years at banks. By that time, Mohamed owned 10 Biggbys. Today, Mohamed is Biggby’s largest franchisee, with 20 stores or about 15% of the company’s 133 locations. Eight are in the Lansing area, six in Toledo, three in Kalamazoo and two in Ann Arbor. Another store in East Lansing closed in December but will reopen at a different location.

 

Mohamed, 41, declined to be interviewed. Fathy, 36, described his brother as a workaholic who “loves the restaurant business.” The two work out of a small, no-frills office just off I-127 in East Lansing and employ a small group of store managers. Both make daily visits to one or more stores and have become addicted to American coffee, something they didn’t drink in Egypt.

 

To keep growing, the Shetiahs invest their profits back into the business. That allows them to reduce the amount of money they need to borrow when they open new stores.

 

Like other successful franchisees, they recognize that having good products to sell is only half of the battle. “The hardest thing is finding the right people,” Fathy said.

 

• The Pizza Baron:In 1978, 16-year-old Robert Leger was making pizzas at a Hungry Howie’s in Berkley. Today, the 49-year-old Troy resident runs a company that manages 45 Hungry Howie’s locations, mostly in Michigan. Leger is the majority owner of 25 of them and was named the pizza chain’s franchisee of the year.

 

Though Leger works out of Hungry Howie’s headquarters in Madison Heights, you can also find him at one of his many stores, helping out during the dinner rush.

 

Because of their size, franchisees like Leger benefit from lower fixed costs for things like utilities and waste disposal. But they don’t get any special breaks when it comes to franchise fees.

 

For Leger, franchising is all about people. A believer of the “build–from-within” management strategy, he has learned how to identify talented employees and groom them.

 

Running so many stores requires teamwork. Leger has 11 business partners for the 25 Hungry Howie’s he controls. They have built a network of regional directors, supervisors and general managers to ensure operations run smoothly.

 

“It’s the people that motivate me,” Leger said. “It’s a fun business. It’s not rocket science.”

 

• The Sandwich Mogul:For the past 24 years, Subway has been one of the fastest growing quick-serve chains, thanks to franchisees like the Dortches.

 

In 1987, when Subway had just 1,800 locations, Louis Dortch Sr. visited a store in Flint and fell in love with the brand. He and his son opened five Subways in the Flint area in 13 months, using profits they had earned from their dry cleaning business.

 

Today, Grand Blanc-based Dortch Enterprises is a$30-million company that just launched its 43rd Subway in Oakland Township. And Subway has more than 34,600 stores worldwide.

 

These days, Dortch Sr. is semiretired, so his son runs the business, which employs 1,200 people. In December, the company acquired Halo Burger, an 88-year-old hamburger chain with nine locations in the Flint area and Birch Run.

 

Large, successful franchisees like the Dortches have an easier time than small operators getting banks to lend them money, not to mention buying existing stores. But the bigger you get, the more complex things can be. To operate so many Subways, Dortch Enterprises employs a vice president and several managers.

 

“We sell sandwiches, but we’re in the people business,” Dortch Jr. said. “You’ve got to out-hire and out-train.”

 

Original article: http://www.freep.com/article/20110529/BUSINESS06/105290404/Franchising-empire-builders-thinking-big