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An Interview with Ron Berger, Franchise Industry Leader and CEO of Figaro’s Pizza

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This is part one of a two part interview with Ron Berger, CEO of Figaro’s Pizza. Ron has been in the franchise industry for 36 years and has been a member of the IFA Board of Directors in the 1980’s, 90’s and until February, 2010. The interviews are an opportunity to cover a broad range of topics with someone who has built several franchise companies and has contributed to the growth and vitality of the franchise industry.

FKH: Ron, you started in the franchise industry around 1974. What are the most significant changes you’ve seen over these 36 years?

RB: When I started in the industry there was no UFOC or FDD and there were a number of franchise concepts that were either ill conceived or scams. A lot has changed since then.

First, the introduction of the UFOC provided more disclosure to prospective franchisees and required compliance by franchisors. This made it more difficult for bad franchisors to start-up.

Second, the recent change in the FDD regarding earnings claims allows for more pertinent financial disclosure to franchise prospects. In the past franchisors were reluctant and often confused regarding the financial information that could be disclosed. Some franchisors wouldn’t disclose basic operating expense data.

Third, today franchisees and prospective franchisees are more sophisticated when it comes to understanding franchising and they have more business acumen. The information available from the FDD and organizations like the IFA has served to better educate franchise prospects.

Fourth, advances in technology have dramatically improved franchise operations. As an example, Figaro’s provides its franchisees the operations manual, marketing materials and electronic and print ads online. From Portland, Oregon to Dubai franchisees can access the same information in seconds. Also, years ago franchisors would grow in concentric circles from their corporate headquarters, in order to provide services and maintain oversight. Royalty and Activity reports were mailed to the franchisor. There was no e-mail or robust PC’s. Today, franchisors like Figaro’s can use on-line chat rooms for franchisees.

FKH: You brought up chat rooms. I know some franchisors are reluctant to introduce this tool for their franchisees fearing it becomes a vehicle for chronic complaints.

RB: If a franchisor has a sound program and is providing the services they agreed to then it makes more sense to be aware of possible franchisee problems than put your head in the sand.  After all, the franchisees could e-mail each other or communicate off line. I prefer to have open communications with my franchisees including using a Franchise Advisory Council. If there are issues I want my staff and I to know about them ASAP so we can address and correct them.

FKH: Ron, there are so many franchised Pizza concepts, what makes Figaro’s different from the others?

RB: Of course every business needs to have some features that set it apart from competitors. In the case of Figaro’s we offer a choice between a take home pizza for baking and a pizza baked on site. This allows our customers to have a choice. Our ingredients are fresh and our cheeses 100% pure. Since we deliver, the customer can order a combination of baked pizzas and take at home for baking.  If there is a birthday party or function then the customer doesn’t have to order all baked pizzas some of which can go stale or get cold. Our locations do about 80% of their business after 4PM and our customer base consists primarily of young families.

FKH: Figaro’s is primarily in the Northwest, Wisconsin and Southern Cal. What has been your program for controlled growth?

RB: Since Figaro’s originated in the Northwestern U.S. we already had a strong presence in the NW, we focused on that area. However, we want to be sure that when we enter a market area there will be enough Figaro’s to establish a strong brand and to advertise efficiently. We will enter new markets but there needs to be a commitment from the franchise to develop a minimum number of locations. It could be 3 in one market or 5 in another.

FKH: What is your process for screening and selecting qualified franchisees?

RB: First of all, we won’t depart from our minimum financial requirements. Undercapitalized franchisees are a major reason for a number of franchisee failures. Secondly, each qualified candidate must spend some time in an existing Figaro’s location so that they fully understand the scope and requirements of operating a Figaro’s franchise. Also, I personally interview every qualified candidate before they are granted a franchise.

FKH: Ron, recognizing that franchisors will invariably have some franchisee problems, what is your approach to control or minimize franchisee dissatisfaction?

RB: I’m a big proponent of FAC’s and chaired an IFA committee that developed a franchise relations manual. A franchisor must have a sound franchise program where franchisees can earn a fair return on their investment. Franchisees must be well qualified and the selection process thorough.

Part two of the interview will focus on future developments and how Figaro’s has introduced a program to help its franchisees add new customers and revenues.

© 2010 FranchiseKnowHow, LLC

Ed Teixeira is the President of FranchiseKnowHow, LLC. He can be reached at franchiseknowhow@gmail.com

 

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