Dallas-Fort Worth a big target for franchisorsDallas Business Journal by Steven R. Thompson, Staff Writer
Date: Friday, March 30th, 2012
Dallas-Fort Worth has long been the home base for such large franchise companies as 7-Eleven Inc., Brinker International and RadioShack, but as Texas continues to fare better than other states during the recession, DFW has become a target for outside franchisors looking to expand.
"We constantly hear of a lot of companies and people moving into the Texas area. And with Dallas being one of the largest cities in the state and having a huge population, it's large enough for a master to attract unit franchisees," said Judy Walker, vice president of marketing for Pompano Beach, Fla.- based Anago Cleaning Systems.
Anago, which plans to open eight franchise cleaning services in 2012, is one of many companies with its sights set on Dallas. In the past six months, non-DFW based companies such as Mama Fu's, Capriotti's Sandwich Shop, European Wax Center, Zoe's Kitchen and KoKo FitClub have publicly made Dallas an area of priority.
"There is a growing trend of franchising expanding in the south and the west," said Matt Haller, spokesperson for the International Franchising Association in Washington, D.C. "Given the broad cross section of types of business lines that are using the franchise model and are made up in the IFA umbrella, I think Dallas is certainly a target for many of them."
The IFA estimates that in 2012 there will be 21,772 franchise establishments in DFW consisting of almost 250,000 jobs. The 2012 sales for franchising in DFW will be about $25 billion, Haller said. The prediction is a 19 percent increase from $21 billion in pre-recession 2007.
The IFA predicts that business output from franchising will increase 5 percent globally in 2012 to $782 billion from $745 billion in 2011.
Anago's Dallas-area franchisee is expecting even more dramatic growth. Bob Piazza recently bought the Anago rights to the DFW area from another master franchisee and plans to grow revenue in the region 70 percent this year. Piazza oversaw the Dallas area for Anago as a corporate employee in 2007 and 2008.
"There is so much potential here in Dallas. Being here six years, seeing the region grow - the growth potential for any business here is amazing," said Piazza, who has been in franchising for 17 years. Anago, which is a commercial-based cleaning service, is able to sell franchises for as little as a $1,000 down payment.
"What I really enjoy about it is giving people the opportunity to not have a job in the cleaning industry, but to have their own business," Piazza said.
Even other Texas companies see DFW as a target market. San Antonio-based Massage Heights LLC plans to open 30 locations in the DFW area in the next three years.
J.D. Busch and his wife, Tammy, recently purchased the rights to DFW after developing the Houston area.
"Houston is the number one region for Massage Heights right now," Busch said. "After doing much research I know that Dallas is even a stronger market for our demographic."
Busch worked with Fort Worth-based site selection service Buxton and found out that the demographics in Dallas fit the company's ideal customer.
Busch, who describes himself as a serial franchisee, recently sold his Texadelphia restaurant franchise to focus on developing Massage Heights in the DFW area.
Total initial investment for Massage Heights' units, which average about 2,500 square feet, is between $400,000 and $500,000.
Busch believes his franchise model in Houston will be easy to replicate in Dallas.
"I don't have to reinvent the wheel," Busch said. "I already know how to make the region and the locations successful. I've just got to implement what I've been doing in Houston in Dallas."
While outside companies see DFW as fertile ground, Dallas-based franchises also have seen success by building a foundation here. Restaurant concepts such as Genghis Grill, Corner Bakery, Red Mango, Dickey's Barbecue Restaurants and Wingstop have all predicted strong growth in 2012 after adding dozens of franchises in 2011, although mostly outside DFW.
Dallas-based Safeguard, which specializes in printing and promotional products, has been able to grow its franchise business by acquiring independent operators and reselling them to existing franchisees.
"Our parent company made an investment in us and our distributors. 'We'll provide the funding. You don't have to worry about bank financing,'" said R. Scott Sutton, vice president of franchise sales for Safeguard. "That investment has really been the catalyst that has helped us grow."
Safeguard is owned by Shoreview, Minn.-based Deluxe Corporation (NYSE: DLX). Safeguard, which has 290 locations in the United States and Canada, was able to do $40.7 million in deal value in 2011 and hopes to continue its acquisition strategy in 2012, Sutton said.
Sutton, who has been in franchising since 1992, said being based in Dallas helps the company's franchising spirit.
"Dallas is a major hub for franchising," Sutton said. "All the major players from FastSigns to Pizza Hut to 7-Eleven are here."