RECON 2011: Franchises called force for recovery
Officials say industry can offer needed jobs, reliable tenants
BY VALERIE MILLER
Snooty cities and landlords take note: Franchises can be dependable bets when it comes to job creation and reliable tenants.
Franchise development executives from some of the country's biggest brands say franchising is the economic force in the recovery.
A group composed of representatives of Dunkin' Brands Group, the Canton, Mass.-based parent company of Dunkin' Donuts; Dallas-based 7-Eleven; and Atlanta-based Huddle House restaurants, pointed to predicted employment growth in the sector.
The group spoke May 24 at the "Franchises Offer New Uses for Retail Space" session at the International Council of Shopping Centers' Real Estate Convention, or RECon, at the Las Vegas Convention Center.
Franchises accounted for three-quarters of a million establishments in the United States, 7.6 million jobs and $706 billion in economic impact in 2010, said Aziz Hashim, the panel's moderator.
The number of establishments is expected to grow by 2.5 percent nationally this year, while franchise jobs are also projected to increase by 2.5 percent this year, said Hashim, the chief development officer for Washington, D.C.-based National Restaurant Development.
Economic output from franchises is expected to rise by 4.7 percent this year, he said, citing International Franchise Association data.
The recession and millions of lost jobs -- many gone forever -- have made franchising an even more viable option for job creation, Hashim said.
"Franchising is a viable option for people who have 10 or 15 years on the job and are laid off," he said.
Also, franchise operations don't simply include the typical convenience stores and restaurants. Automotive, businesses and professional services are all part of the franchise options.
Landlords benefit from the background checks performed on potential franchisees and the high standards applied, said Mike McCormick, panelist and franchise development director for 7-Eleven.
Panelist Mark Whittle, Huddle House's chief development director, said his company holds franchisees to high standards after they go into business.
"If one guy runs a bad store, it could hurt all operators," Whittle told the audience. "The customer won't remember if the restaurant was owned by Joe, they just remember it was a Huddle House."
Dunkin' Brands, which operates in Las Vegas, screens franchisees strictly because Dunkin' operates only franchise stores, said Grant Benson, vice president of franchising and marketing for Dunkin'.
And, he said, Dunkin' will take back franchises, if necessary.
"The franchisee is not really buying the business," Benson said. "They are buying the location for a certain period of time."
Huddle House, too, will sometimes revoke franchises, Whittle said.
All the high standards mean a great likelihood of franchisee success, Aziz said.
Therefore, instead of landlords turning up their noses at franchises, commercial owners should embrace all the positives that come with a McDonald's or Dunkin' Donuts tenant, he added.
"As a franchisee, we are usually required to advertise, and that means free advertising for your shopping center."
City officials can be problems, too, Hashim continued. The recession, however, has made franchises more attractive to job-starved communities.
"I tell a municipality, 'I want to bring a Popeye's Chicken to your town, and it will create 35 jobs. But if you don't want it, I'll take it to the city across the street.'"
Audience member Bob Berger, the owner of the College Square shopping center in Henderson, worried that too many stores are given to one franchisee.
That sometimes results in failure, he said.
"There is nothing sadder than seeing a store closed up."
Contact reporter Valerie Miller at vmiller @lvbusinesspress.com or 702-387-5286.