Franchise Foundry Press
The route a newly established franchiser usually takes when seeking outside advice is to hire an expensive consultant. Franchise Foundry is a consultant, but it doesn't charge fees. Instead, the Orem-based firm creates a joint venture with the franchiser. Franchise Foundry invests money, takes a minority stake and works as a partner to develop the strategy to grow the franchiser's business.
"When we make an investment ..., which we do in most cases, we help them with legal compliance, we help them prepare franchise agreements and then we also help with marketing and sales of franchise opportunities," Christian Faulconer said. Faulconer's company is just 2 years old, but already has seven companies that it works with -- some in Utah, a few in other parts of the U.S., and one in Canada.
"They are relatively new in franchising and have achieved a lot in a very short time," said Paul Segreto, CEO of franchisEssentials, an online franchise-consulting site. "I've seen more from them, an upstart company in this industry, than companies that have been in this industry 15 or 20 years," Segreto said. Franchise Foundry's business model is uncommon, Segreto said. Like a venture capital firm, it puts its own money into a client company instead of charging a consulting fee. "It's unusual..., and I think they do it basically as having skin in the game. They are looking long-term," Segreto said. "And when [Franchise Foundry] does that, they are looking at it from both perspectives: the brand perspective and their perspective, which actually puts them in a place for a longer-term relationship," he said.
One of Franchise Foundry's joint venture partners is Spoon Me, the Orem-based frozen yogurt franchiser. "Franchise Foundry is our franchising arm. It's the vehicle we use to source franchises," Spoon Me CEO Brad Whitaker said. Spoon Me has 12 franchise stores, including seven in Utah, and one each in Arizona, Idaho, Ohio and Alberta, Canada. Another 30 stores are in the pipeline, Whitaker said. Faulconer doesn't take credit for Franchise Foundry's concept. It came, he said, from some of the company's investors. His job, Faulconer said, is to make the concept successful.
A gauge of whether the concept works is franchise sales. Franchise Foundry sold 58 franchises for three companies last year, Faulconer said. One of the companies was Fairway Divorce Solutions, a Canadian divorce-mediation service. Faulconer said his company helped Fairway Divorce expand into the U.S., where today franchises are operating in Columbus, Ohio; Sacramento, Calif.,; San Diego; and the Dallas-Fort Worth area.
"We create videos and a website. We attract great candidates and then we qualify them for franchises," Faulconer said. Fairway Divorce officials were unavailable. But in a statement, CEO Karen Stewart said, "the results they helped us achieve in 2009 speaks loudly about their ability to do what they said they would." Faulconer said Franchise Foundry only works with small, profitable brands that want to grow through franchising. They frequently have trouble getting bigger on their own because of a shortage of cash.
"There are a lot of people willing to help successful franchisers but not a lot who are willing to help franchisers getting started," he said. Cash is a big factor for small franchise brands because they operate off a royalty structure, typically 6 percent of sales. So it requires lots of sales by lots of stores before the franchiser can build up enough revenue to finance growth without outside help. "Economies of scale don't kick in until you cross 50," Faulconer said.
Read the article: Salt Lake Tribune