India’s retail market is expected to reach $535 billion by 2013, says a report on fashion and lifestyle franchises released here on Thursday.
“With anticipated $30 billion fresh investment over the next five years, modern retail will show impressive compound annual growth rate of 40 percent,” said the Fashion and Lifestyle Franchise Report 2009-10.
“With this growth rate, the market is expected to reach $535 billion by 2013,” added the report compiled by Franchise India Holding Ltd, a franchise solutions provider.
“The growth of organised retail will be driven by the franchise model in future,” said company president Gaurav Marya while releasing the report at the two-day Franchise India summit on retail trade that began here Thursday. “In fact, that is the reason that many big companies going into retail mode are adopting it,” Marya said, adding that he expected business deals worth Rs.150 crore would be struck at the summit.
About 250 firms including 30 foreign brands are participating. India’s franchise segment is growing at 38 percent annually with the market size, currently valued at $7.2 billion, expected to reach $20 billion by 2013, the report said.
There are 1,200 active franchise concepts and over 110,000 franchisees in India, it added, and identified apparel retail, education and food leading the pack.
Source: http://retail-guru.com/indian-retail-market-to-reach-535-bn-by-2013-report/
Wednesday, January 6, 2010
Tuesday, January 5, 2010
Entering into a franchise agreement
The franchise agreement is a legally binding document spelling out the rights and responsibilities of both the franchisor and franchisee.
Before you sign the agreement you should obtain as much information about the franchise as possible. Consider the following questions:
What are the details of the business?
* Do you have all the relevant information on the business?
* What is the track record of the franchisor?
* What are the franchisor's current motives for franchising?
* Does the franchise have a strategic plan and what are the plans for the future?
* What is the success rate of other franchisees in the same business?
What is included in the sale?
* Does the sale include the use of business name, products, reputation/goodwill, site location, advertising budget or back-up assistance?
* What are your intellectual property rights and obligations?
* What are the terms of sale of goods? Can you purchase them from outside the franchise network?
What are your obligations?
* What are your occupational health and safety obligations?
* What are your obligations upon termination of the franchise?
* Are there guidelines/costs when you sell the franchise?
* Are the operating procedures, employee responsibilities, and standards spelled out in the franchise manual?
What fees do you need to pay?
* An initial franchise purchase fee?
* Franchise renewal fees?
* Franchise service fees/royalties?
* Advertising fees?
* Transfer fees?
* Training fees?
Source: http://www.smh.com.au/small-business/resources/entering-into-a-franchise-agreement-20091218-l0hk.html
Before you sign the agreement you should obtain as much information about the franchise as possible. Consider the following questions:
What are the details of the business?
* Do you have all the relevant information on the business?
* What is the track record of the franchisor?
* What are the franchisor's current motives for franchising?
* Does the franchise have a strategic plan and what are the plans for the future?
* What is the success rate of other franchisees in the same business?
What is included in the sale?
* Does the sale include the use of business name, products, reputation/goodwill, site location, advertising budget or back-up assistance?
* What are your intellectual property rights and obligations?
* What are the terms of sale of goods? Can you purchase them from outside the franchise network?
What are your obligations?
* What are your occupational health and safety obligations?
* What are your obligations upon termination of the franchise?
* Are there guidelines/costs when you sell the franchise?
* Are the operating procedures, employee responsibilities, and standards spelled out in the franchise manual?
What fees do you need to pay?
* An initial franchise purchase fee?
* Franchise renewal fees?
* Franchise service fees/royalties?
* Advertising fees?
* Transfer fees?
* Training fees?
Source: http://www.smh.com.au/small-business/resources/entering-into-a-franchise-agreement-20091218-l0hk.html
Monday, January 4, 2010
How much can you make by taking up a Franchisee???
By: James Walker - Staff Writer for Red Hot Franchises.com
How Much Money Can You Make as a Franchisee?
When investigating a franchise opportunity one of the most difficult pieces of information to get from the franchisor is how much money you might make. This may be frustrating because you are not going to invest in a business until you have a good idea of what you can earn. In most cases the franchisor is not being purposely difficult.
There are two reasons for the exclusion: first, there is no possible way to predict how well any one franchise can do over another, regardless of other franchise successes. A franchisee will likely take these facts to heart, pursue the opportunity, then begin to retaliate should these figures not come to fruition. Secondly, earnings claims will include financial gains and losses and people new to the business world have a difficult time understanding anything to do with “loss.”
Therefore, by keeping the earnings claim portion out, franchisors are less likely to lose a franchisee candidate during the early stages of the franchising process. But, that doesn’t mean they won’t show you some actual income statements from existing outlets. If you’re lucky to get some samplings, it will happen later in the process, at the point where the franchisor senses your willingness to move forward.
However, there are ways to get this essential information………..
The Back Door Approach to Getting the Numbers
If getting cold hard figures doesn’t seem possible, you will have to take another approach to determining if the franchise opportunity will make you money. Listed below are some good questions to ask.
1) How long have you been in business?
2) How long did it take you to get comfortable with your franchise?
3) Has your business been growing year by year?
4) How long before your business broke even each month?
5) Are you getting the support you were promised from the franchisor?
6) Do you see yourself in this business over the next 5 to 10 years? If no, why?
7) Is your annual salary after all these years where you’d expected it to be?
What’s a reasonable level of earnings for a franchise business?
Once you have earnings data, your next question will be whether the probable earnings represent a good return on your investment.
Remember that when you invest in a franchise, you are investing both your time/talent and your money. Therefore, you should reasonably expect a greater return than you would for a passive investment of money only.
If a good return for a passive investment is 15% to 20% per year, you will want to see a greater return in a franchise opportunity. After all, the time you put into your new business should yield you a return at least equal to the return on the money you invest, maybe not the first year but certainly down the road.
A second important point to consider is that a higher franchise investment does not necessarily mean a higher rate of return. While this seems contrary to common knowledge, there are plenty of low to mid-range investment franchises that provide great return on investments. Don’t limit yourself only to high-investment franchises when seeking that business with a high ROI.
How much money you will make as a franchisee depends on many factors - from the structure of the franchise (e.g. retail versus service), to how long your franchise has been operational, to how well you understand and embrace the system, to your enthusiasm for the business and how it will help you realize your dream. But, with a little research, you can get enough information to decide if this opportunity makes financial sense for you.
Source: http://www.redhotfranchises.com/articles/Franchise_Basics/How_Much_Can_I_Make?
How Much Money Can You Make as a Franchisee?
When investigating a franchise opportunity one of the most difficult pieces of information to get from the franchisor is how much money you might make. This may be frustrating because you are not going to invest in a business until you have a good idea of what you can earn. In most cases the franchisor is not being purposely difficult.
There are two reasons for the exclusion: first, there is no possible way to predict how well any one franchise can do over another, regardless of other franchise successes. A franchisee will likely take these facts to heart, pursue the opportunity, then begin to retaliate should these figures not come to fruition. Secondly, earnings claims will include financial gains and losses and people new to the business world have a difficult time understanding anything to do with “loss.”
Therefore, by keeping the earnings claim portion out, franchisors are less likely to lose a franchisee candidate during the early stages of the franchising process. But, that doesn’t mean they won’t show you some actual income statements from existing outlets. If you’re lucky to get some samplings, it will happen later in the process, at the point where the franchisor senses your willingness to move forward.
However, there are ways to get this essential information………..
The Back Door Approach to Getting the Numbers
If getting cold hard figures doesn’t seem possible, you will have to take another approach to determining if the franchise opportunity will make you money. Listed below are some good questions to ask.
1) How long have you been in business?
2) How long did it take you to get comfortable with your franchise?
3) Has your business been growing year by year?
4) How long before your business broke even each month?
5) Are you getting the support you were promised from the franchisor?
6) Do you see yourself in this business over the next 5 to 10 years? If no, why?
7) Is your annual salary after all these years where you’d expected it to be?
What’s a reasonable level of earnings for a franchise business?
Once you have earnings data, your next question will be whether the probable earnings represent a good return on your investment.
Remember that when you invest in a franchise, you are investing both your time/talent and your money. Therefore, you should reasonably expect a greater return than you would for a passive investment of money only.
If a good return for a passive investment is 15% to 20% per year, you will want to see a greater return in a franchise opportunity. After all, the time you put into your new business should yield you a return at least equal to the return on the money you invest, maybe not the first year but certainly down the road.
A second important point to consider is that a higher franchise investment does not necessarily mean a higher rate of return. While this seems contrary to common knowledge, there are plenty of low to mid-range investment franchises that provide great return on investments. Don’t limit yourself only to high-investment franchises when seeking that business with a high ROI.
How much money you will make as a franchisee depends on many factors - from the structure of the franchise (e.g. retail versus service), to how long your franchise has been operational, to how well you understand and embrace the system, to your enthusiasm for the business and how it will help you realize your dream. But, with a little research, you can get enough information to decide if this opportunity makes financial sense for you.
Source: http://www.redhotfranchises.com/articles/Franchise_Basics/How_Much_Can_I_Make?
Sunday, January 3, 2010
Is franchising for you?
By Roberto Pace on Saturday, 2 January 2010
How does a franchiser pick a good franchisee and is franchising for you?
For anyone who has aspirations to run their own business, franchising has long been considered a low-risk stepping-stone from employee to boss. It’s also a leap of faith.
For the business owner, franchising means placing their good name in your hands. For the franchisee, it’s taking a chance on a new way of life.
With 74 franchisees across more than 125 properties in Australia, New Zealand and Fiji, Quest Serviced Apartments has built its business on the franchising model. Quest franchisees come from all walks of life and some have made huge career changes to take on running a serviced apartment business. Among Australia’s Quest franchisees are former accountants, a nurse, a teacher, a chef and even a priest.
General manager of franchising, Nick Suriano, said the company’s investment into finding the right franchisees has been key to the success and growth of the business. “That really makes a difference: passionate, motivated people, implementing the best system,” he says.
Why franchising works
The franchise model has been extremely successful for Quest since its inception more than 20 years ago. Initially, some of the company’s properties were corporately owned and some were franchises. But Quest opted for a 100 percent franchise strategy when it was shown that the franchise businesses were outperforming the corporate properties.
“The results were quite polarised. It was almost chalk and cheese,” Suriano says. “The franchised properties were able to deliver a better bottom line. They had a smaller infrastructure and were run by motivated operators who were enthusiastic about driving their business. In almost every case where a business was converted to a franchised model, the performance doubled. Since we focused on franchising, the company’s growth has been in excess of 20 percent every year.”
How do you pick a good franchisee?
Quest receives more than 500 applicants for a year for an average of 10 franchised properties so competition is stiff. New Quest properties are only offered to existing franchisees and the company has a strict set of criteria, such as a proven financial track record, a clear business plan and a succession plan, making sure if they take on a second business that their first one does not suffer.
When it comes to new franchisees, Quest is looking for a number of qualities: business acumen, personal organisation, demonstrated leadership skills, strong sales orientation, communication skills and family and social support.
Franchise manager of Quest Newcastle and Quest Singleton, Belinda Stevenson, said the most important prerequisite for a franchisee is people skills: “You have to have a passion for people and you need to be customer focused because it’s a service industry.”
Employee versus franchisee
Franchisees agree that the number one difference between being an employee and a franchisee is responsibility. “The buck stops with you,” says Stevenson. Quest Ballarat Mews franchise manager Andrew Hoffman, said his responsibility “increased tenfold overnight”.
But with more responsibility, comes more reward. “It’s very satisfying to work for yourself,” Stevenson says. “And you have the franchiser and many other franchisees around you for support, which is a huge bonus.”
Suriano says more than anything he sees franchisees grow into great business people in their own right. “There’s a philosophy here that Quest is about creating business people. The Quest system empowers them to develop and use their management skills. If you’re thinking you’re sick of working so you’re just going to become a franchisee and sit in a back office, you’ve got the wrong attitude and you’ll fail.”
Benefits of being a franchisee
Those looking to take the step into running their own business will weigh up the pros and cons of a regular small business versus a franchise. Suriano believes one of the biggest arguments in favour of a franchise is the reduced risk for those starting out.
“There’s significantly less risk when you’ve got systems and processes and a strong brand behind you,” he says. “We’ve never had a business fail in 22 years. It’s a proven business. We do a lot of research before we select our next franchise opportunity.”
Support from head office and other franchisees is another advantage. “You’ll get excellent training, ongoing support, a refined business model, access to a strong customer market, a niche product, sales and marketing assistance and franchise mentoring,” Suriano says.
And finally, there is the power of a network of like minded people. “People love belonging and it’s a socially-charged network. It’s not just head office expertise, it’s also about sharing hundreds of years’ of experience and similarly-minded people with a desire to share ideas and resources.”
So when do you take the plunge?
For Hoffman, the decision to take on a franchise came down to the support the company offered. “It was the upfront training. If we were just going to buy a motel, I’m pretty sure we’d be broke by now. With those businesses, as long as you’ve got a chequebook, you’re in. I came from a building background—I was a roof tiler—so it was a complete change of lifestyle overnight.”
The two-week intensive training course Hoffman and his partner Sandy Cook undertook was invaluable and took away much of the risk of embarking on a new business. While Quest’s training was the sealer of the deal for Hoffman, it was by no means an overnight decision.
“For us, it was three years in the planning,” Hoffman said. “We talked about it for a long time, but I’m so glad we went that way. We’ve been there four-and-a-half years next month and we’ve never regretted it. You learn every day.”
For Stevenson, the decision to take on her own franchise was inspired by her own experience working in sales and marketing at Quest. “I’d always had a desire to own my own business and we’d looked at many other options and this was the best for us.”
Suriano says there were two distinct groups of franchisees; around half are home grown (former company employees) and the other half are new franchisees. “In terms of most of our franchisees, they would be in their mid-forties, probably sitting in a middle or senior management level job, looking beyond their current role to 20 years down the track and not liking what they see,” he says. “They see the whole business opportunity and the chance for independence.”
Source: http://www.dynamicbusiness.com/articles/articles-franchising/is-franchising-for-you4939.html
How does a franchiser pick a good franchisee and is franchising for you?
For anyone who has aspirations to run their own business, franchising has long been considered a low-risk stepping-stone from employee to boss. It’s also a leap of faith.
For the business owner, franchising means placing their good name in your hands. For the franchisee, it’s taking a chance on a new way of life.
With 74 franchisees across more than 125 properties in Australia, New Zealand and Fiji, Quest Serviced Apartments has built its business on the franchising model. Quest franchisees come from all walks of life and some have made huge career changes to take on running a serviced apartment business. Among Australia’s Quest franchisees are former accountants, a nurse, a teacher, a chef and even a priest.
General manager of franchising, Nick Suriano, said the company’s investment into finding the right franchisees has been key to the success and growth of the business. “That really makes a difference: passionate, motivated people, implementing the best system,” he says.
Why franchising works
The franchise model has been extremely successful for Quest since its inception more than 20 years ago. Initially, some of the company’s properties were corporately owned and some were franchises. But Quest opted for a 100 percent franchise strategy when it was shown that the franchise businesses were outperforming the corporate properties.
“The results were quite polarised. It was almost chalk and cheese,” Suriano says. “The franchised properties were able to deliver a better bottom line. They had a smaller infrastructure and were run by motivated operators who were enthusiastic about driving their business. In almost every case where a business was converted to a franchised model, the performance doubled. Since we focused on franchising, the company’s growth has been in excess of 20 percent every year.”
How do you pick a good franchisee?
Quest receives more than 500 applicants for a year for an average of 10 franchised properties so competition is stiff. New Quest properties are only offered to existing franchisees and the company has a strict set of criteria, such as a proven financial track record, a clear business plan and a succession plan, making sure if they take on a second business that their first one does not suffer.
When it comes to new franchisees, Quest is looking for a number of qualities: business acumen, personal organisation, demonstrated leadership skills, strong sales orientation, communication skills and family and social support.
Franchise manager of Quest Newcastle and Quest Singleton, Belinda Stevenson, said the most important prerequisite for a franchisee is people skills: “You have to have a passion for people and you need to be customer focused because it’s a service industry.”
Employee versus franchisee
Franchisees agree that the number one difference between being an employee and a franchisee is responsibility. “The buck stops with you,” says Stevenson. Quest Ballarat Mews franchise manager Andrew Hoffman, said his responsibility “increased tenfold overnight”.
But with more responsibility, comes more reward. “It’s very satisfying to work for yourself,” Stevenson says. “And you have the franchiser and many other franchisees around you for support, which is a huge bonus.”
Suriano says more than anything he sees franchisees grow into great business people in their own right. “There’s a philosophy here that Quest is about creating business people. The Quest system empowers them to develop and use their management skills. If you’re thinking you’re sick of working so you’re just going to become a franchisee and sit in a back office, you’ve got the wrong attitude and you’ll fail.”
Benefits of being a franchisee
Those looking to take the step into running their own business will weigh up the pros and cons of a regular small business versus a franchise. Suriano believes one of the biggest arguments in favour of a franchise is the reduced risk for those starting out.
“There’s significantly less risk when you’ve got systems and processes and a strong brand behind you,” he says. “We’ve never had a business fail in 22 years. It’s a proven business. We do a lot of research before we select our next franchise opportunity.”
Support from head office and other franchisees is another advantage. “You’ll get excellent training, ongoing support, a refined business model, access to a strong customer market, a niche product, sales and marketing assistance and franchise mentoring,” Suriano says.
And finally, there is the power of a network of like minded people. “People love belonging and it’s a socially-charged network. It’s not just head office expertise, it’s also about sharing hundreds of years’ of experience and similarly-minded people with a desire to share ideas and resources.”
So when do you take the plunge?
For Hoffman, the decision to take on a franchise came down to the support the company offered. “It was the upfront training. If we were just going to buy a motel, I’m pretty sure we’d be broke by now. With those businesses, as long as you’ve got a chequebook, you’re in. I came from a building background—I was a roof tiler—so it was a complete change of lifestyle overnight.”
The two-week intensive training course Hoffman and his partner Sandy Cook undertook was invaluable and took away much of the risk of embarking on a new business. While Quest’s training was the sealer of the deal for Hoffman, it was by no means an overnight decision.
“For us, it was three years in the planning,” Hoffman said. “We talked about it for a long time, but I’m so glad we went that way. We’ve been there four-and-a-half years next month and we’ve never regretted it. You learn every day.”
For Stevenson, the decision to take on her own franchise was inspired by her own experience working in sales and marketing at Quest. “I’d always had a desire to own my own business and we’d looked at many other options and this was the best for us.”
Suriano says there were two distinct groups of franchisees; around half are home grown (former company employees) and the other half are new franchisees. “In terms of most of our franchisees, they would be in their mid-forties, probably sitting in a middle or senior management level job, looking beyond their current role to 20 years down the track and not liking what they see,” he says. “They see the whole business opportunity and the chance for independence.”
Source: http://www.dynamicbusiness.com/articles/articles-franchising/is-franchising-for-you4939.html
Corner Office: Papa John's John Schnatter is Building a Better Pizza Empire
When John Schnatter first fell in love with pizza (and first obsessed over fresh dough and cheese-to-sauce ratios), he was a 15-year-old kid promoted from dishwasher at Rocky’s Sub Pub. Anything is better than washing dishes, right? But Schnatter took to pizza making right away, not just to get away from dish duty but to prove he deserved the promotion.
“If you didn’t do it right... then it would come back about half-eaten because [customers] wouldn't want to take it with them,” says Schnatter, Papa John's founder and chairman. “I had an intuitive grasp on what the consumer wanted at a very young age, which ended up being a tremendous advantage."
Whether it was putting a smile on customer's faces with a well-made pie or writing notes to his girlfriend using pepperonis, Schnatter says the experience was so fun that he knew he wanted to be in the pizza business.
That intuition and love of pizza led Schnatter to create Papa John’s, inception in 1984—when Schnatter tore down the wall in a broom closet at his father’s tavern in Jeffersonville, Ind., and installed a pizza oven. Today, with more than 3,000 stores worldwide, Papa John’s is a booming enterprise that brought in around $1.1 billion in total revenue in 2008.
Even with steady early growth and increases in sales yearly, Schnatter didn’t really feel Papa John’s success until his Louisville, Ky., store was voted “best pizza” in town in 1989. Then, as he saw his Jeffersonville store beating the nearby Domino’s by leaps and bounds, he realized the potential of his little back-room pizza company. “
I thought, ‘If we can beat them in Jeffersonville in Indiana, with one store, then why shouldn’t we be able to beat them in the rest of the world?’ ” Schnatter says. “We just believed early on that if we take care of our people and take care of our product and we do the right thing and run a good, clean business, where it's a win-win [for everyone], we could build a successful enterprise.”
That enterprise continues to deliver the promised "better ingredients,better pizza." Its commitment to quality has earned Papa John's the highest customer satisfaction rating among national pizza chains in the American Customer Satisfaction Index for nine of the last 10 years.
"Everything we do, we try to do it just a little bit better, and that costs money. We're willing to pay up,” Schnatter says. "I bet, on average, our competitors can make a pizza for 2 bucks. That same pizza will cost us $3-plus. But that extra dollar is the thing that makes Papa John’s different, and we think the consumer can tell the difference.”
"We just believed early on that if we take care of our people and take care of our product and we do the right thing and we run a good, clean business, where it's a win-win [for everyone], we could build a successful enterprise."
In addition to perfecting pizzas and seeking ingredients without artificial flavors, the Papa John’s team is always researching new ideas to improve on the existing product without drastically changing the pizza consumers have come to love—from ideas as simple as strengthening the boxes holding the pizzas and making sauce measurements more precise to more complex oven calibrating processes that ensure even heating in the front and back of the oven.
Schnatter calls these improvements a process of refinement rather than radical change. He has worked to instill the habit of constant advancement into their companywide culture, modeling a consistent desire to get better.
Thanks to this vision, business growth is definitely on the horizon, but that’s not the only kind of growth in which Schnatter is interested. He says watching the growth of Papa John’s employees is one of the best parts of his job and believes relationships within the Papa John’s system could be as big a competitive advantage as a solid product. He places a heavy focus on attracting and keeping talent. “We want to get to the point where everyone wants to be on the Papa John’s team,” he says.
Grooming the next generation of leadership at Papa John’s is part of this team building. Schnatter is still very much involved in guiding executives through the process, but he realizes that teaching autonomy is vital to the company’s future. “We’re giving them a nice little test run here on how to run this [company] in case John gets hit by a bus,” Schnatter says with a smile.
“If I’m doing my job right and you’re doing your job right, Papa John’s should be a people-growing machine,” he says. “We’re seeing people that two or three years ago did not think they could run a department and now think they can run a division. That is very fulfilling to watch people grow.”
Always looking ahead to the next task, challenge or goal is another one of Schnatter’s strengths. Papa John’s is already the third-largest pizza franchisor in the world, but Schnatter still has his sights on reaching the No. 2 slot and, eventually, becoming the No. 1 pizza chain in the world.
And why not? Schnatter is not the quitting type. Rather than quit college to start Papa John’s early, he took summer and night classes to finish his degree in business administration at Ball State University in three years. When his father’s bar was failing, he sold his car (a ’71 Z28 Camaro) and jumped in to help pay off the debt. When everyone said that car was lost for good, he kept the search up and was recently reunited with it.
Schnatter’s drive isn’t the only thing propelling the company in the direction of the No. 1 slot. It seems more and more franchisees are choosing Papa John’s. In 2009, it celebrated 25 years of business, and in all that time it hasn’t lost momentum. The company was recently ranked as one of the fastest-growing franchises and was given the No. 10 slot in Entrepreneur magazine’s 2009 “Franchise 500”—just three places behind Pizza Hut, ranked No. 7.
“I never give up hope. Sometimes I go to bed and I’m a little beat up, but when I wake up in the morning, I just always have a lot of hope,” he says.
Source: http://www.successmagazine.com/papa-johns-john-schnatter/PARAMS/article/947
“If you didn’t do it right... then it would come back about half-eaten because [customers] wouldn't want to take it with them,” says Schnatter, Papa John's founder and chairman. “I had an intuitive grasp on what the consumer wanted at a very young age, which ended up being a tremendous advantage."
Whether it was putting a smile on customer's faces with a well-made pie or writing notes to his girlfriend using pepperonis, Schnatter says the experience was so fun that he knew he wanted to be in the pizza business.
That intuition and love of pizza led Schnatter to create Papa John’s, inception in 1984—when Schnatter tore down the wall in a broom closet at his father’s tavern in Jeffersonville, Ind., and installed a pizza oven. Today, with more than 3,000 stores worldwide, Papa John’s is a booming enterprise that brought in around $1.1 billion in total revenue in 2008.
Even with steady early growth and increases in sales yearly, Schnatter didn’t really feel Papa John’s success until his Louisville, Ky., store was voted “best pizza” in town in 1989. Then, as he saw his Jeffersonville store beating the nearby Domino’s by leaps and bounds, he realized the potential of his little back-room pizza company. “
I thought, ‘If we can beat them in Jeffersonville in Indiana, with one store, then why shouldn’t we be able to beat them in the rest of the world?’ ” Schnatter says. “We just believed early on that if we take care of our people and take care of our product and we do the right thing and run a good, clean business, where it's a win-win [for everyone], we could build a successful enterprise.”
That enterprise continues to deliver the promised "better ingredients,better pizza." Its commitment to quality has earned Papa John's the highest customer satisfaction rating among national pizza chains in the American Customer Satisfaction Index for nine of the last 10 years.
"Everything we do, we try to do it just a little bit better, and that costs money. We're willing to pay up,” Schnatter says. "I bet, on average, our competitors can make a pizza for 2 bucks. That same pizza will cost us $3-plus. But that extra dollar is the thing that makes Papa John’s different, and we think the consumer can tell the difference.”
"We just believed early on that if we take care of our people and take care of our product and we do the right thing and we run a good, clean business, where it's a win-win [for everyone], we could build a successful enterprise."
In addition to perfecting pizzas and seeking ingredients without artificial flavors, the Papa John’s team is always researching new ideas to improve on the existing product without drastically changing the pizza consumers have come to love—from ideas as simple as strengthening the boxes holding the pizzas and making sauce measurements more precise to more complex oven calibrating processes that ensure even heating in the front and back of the oven.
Schnatter calls these improvements a process of refinement rather than radical change. He has worked to instill the habit of constant advancement into their companywide culture, modeling a consistent desire to get better.
Thanks to this vision, business growth is definitely on the horizon, but that’s not the only kind of growth in which Schnatter is interested. He says watching the growth of Papa John’s employees is one of the best parts of his job and believes relationships within the Papa John’s system could be as big a competitive advantage as a solid product. He places a heavy focus on attracting and keeping talent. “We want to get to the point where everyone wants to be on the Papa John’s team,” he says.
Grooming the next generation of leadership at Papa John’s is part of this team building. Schnatter is still very much involved in guiding executives through the process, but he realizes that teaching autonomy is vital to the company’s future. “We’re giving them a nice little test run here on how to run this [company] in case John gets hit by a bus,” Schnatter says with a smile.
“If I’m doing my job right and you’re doing your job right, Papa John’s should be a people-growing machine,” he says. “We’re seeing people that two or three years ago did not think they could run a department and now think they can run a division. That is very fulfilling to watch people grow.”
Always looking ahead to the next task, challenge or goal is another one of Schnatter’s strengths. Papa John’s is already the third-largest pizza franchisor in the world, but Schnatter still has his sights on reaching the No. 2 slot and, eventually, becoming the No. 1 pizza chain in the world.
And why not? Schnatter is not the quitting type. Rather than quit college to start Papa John’s early, he took summer and night classes to finish his degree in business administration at Ball State University in three years. When his father’s bar was failing, he sold his car (a ’71 Z28 Camaro) and jumped in to help pay off the debt. When everyone said that car was lost for good, he kept the search up and was recently reunited with it.
Schnatter’s drive isn’t the only thing propelling the company in the direction of the No. 1 slot. It seems more and more franchisees are choosing Papa John’s. In 2009, it celebrated 25 years of business, and in all that time it hasn’t lost momentum. The company was recently ranked as one of the fastest-growing franchises and was given the No. 10 slot in Entrepreneur magazine’s 2009 “Franchise 500”—just three places behind Pizza Hut, ranked No. 7.
“I never give up hope. Sometimes I go to bed and I’m a little beat up, but when I wake up in the morning, I just always have a lot of hope,” he says.
Source: http://www.successmagazine.com/papa-johns-john-schnatter/PARAMS/article/947
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