“I’ve been in the franchise business a long time,” says Kelly Saxton, founder of Dallas-based The Saxton Group, who started his career in 1982 by opening two Mazzio’s Pizza restaurants. After growing the franchise to more than 50 Mazzio’s restaurants, Saxton sold his pizza operation in 2004 to launch McAlister’s Deli, a more progressive fast-food brand that, unlike the very competitive pizza market, Saxton knew he could rapidly grow. In 2009, he added the trendy Pinkberry Frozen Yogurt to his portfolio, becoming the first Pinkberry franchisee outside of California and New York. Thirty years later, The Saxton Group has evolved into the one of the largest McAlister’s Deli franchisees in the country with 27 McAlister’s throughout Texas, and four Pinkberry locations in the Dallas area. With continued expansion and plans to open over 20 stores in the Dallas/Fort Worth area in Texas in the near future, Saxton shares his recipe for a smart, successful food franchise.
1. Keep Tabs on the Gross Margin
Most business owners know to keep a pulse on profit, but Saxton has learned that in the franchise business it’s especially important to focus on the company’s gross margin. “You need to have a gross strategy,” Saxton explains. “I’ve never found in franchise business that our numbers of units were the same year over year. You’re either growing or you’ve reached a plateau.”
2. Be Open to Change
In addition to keeping close tabs on the business, Saxton realizes when it’s time to make changes. “In 1999, I was living in Jackson, Mississippi, operating the Mazzio’s restaurants,” Saxton says. “At that time, the pizza business was saturated. Mazzio’s was similar to Pizza Hut, but a regional brand. [Pizza joints] had become commodity business, not so much driven by the service or product, but through advertising. We wanted something more focused on a fast-casual niche, a daytime/lunchtime restaurant that was appealing to females. McAlister’s, being a fast-casual concept, was a good fit for us.”
3. Focus on What You Can Control
Each time he launched a new franchise, Saxton made a point to spend his energy on what he knew he could control. “The brand is established, the systems are already in place,” Saxton says. “As franchisees, we develop and we operate. We don’t control brand strategy.”
4. Choose Franchisor Carefully
Because franchisees only have so much control, choosing the right franchisor is critical. “When you’re searching for a franchisor, look at the quality of people, the management, the capital they’re bringing, the overall strength of the franchisor,” Saxton explains. “Someone could go to a restaurant and say, ‘Man, I love that restaurant. I want to be in the restaurant business.’ Then all the sudden, they start franchising. The franchisor is thinking, ‘I want to get these guys to sign a contract and [start making money].’ But this is a recipe for disaster [and] a strategic miss for a lot of people. They overestimate the support that the franchisor is going to give them. Research your franchisor and look at their success with other franchisees.”
5. Know Your Market
Like the old adage, ‘stick with what you know,’ Saxton also attributes some of his success to sticking with a market he’s familiar with. When The Saxton Group launched Pinkberry in 2009, Saxton knew he wanted a franchise that would be successful in the Dallas area. “We were looking for a brand we could do specifically in the Dallas metroplex,” Saxton explains. “We [always look] for brands we can do within markets we already understand. There may be some great brands in Scottsdale, Arizona, and Chicago, but they might not necessarily be good for the markets we operate in. We know Texas and want to work with brands that we believe will thrive here.”
6. Service is Everything
Part of staying committed means consistently providing good service. “We have to do it right every single day,” Saxton says. “ We might do it right 10 days in a row, but when one thing goes wrong, the customer may not forget. Bad day? No break. As consumers today, you’re going to go somewhere you have total confidence in. You have 30 minutes, or an hour, or whatever you have, and you don’t want any surprises, do you? You have to be willing to start over every single day. Execute, execute, execute.”
7. Engage Employees
In addition to focusing on the customers, Saxton goes out of his way to create opportunities for his employees. “Our goals are not based on numbers,” Saxton says. “Sometimes people can be too pragmatic. If you create opportunities for the people working for you, then you’ll create opportunities for the company.”