3 Questions With Steve Romaniello

Steve Romaniello,
Managing Director of Roark Capital Group

In addition to Managing Director of Roark Capital Group, Steve Romaniello is Chairman of the Board of FOCUS Brands, the franchisor and operator of nearly 2,200 ice cream stores, bakeries, restaurants, and cafés in the United States, the District of Columbia, Puerto Rico, and 32 foreign countries under the brand names Carvel®, Cinnabon®, Schlotzsky’s®, Moe’s Southwest Grill®, and the franchisor of Seattle’s Best Coffee® on military bases and in certain international markets. Focus Brands also sells its famous ice cream cakes in over 10,000 retail outlets through New Britain, CT-based Celebration Foods, Carvel’s manufacturing and distributing division. Romaniello also serves on the Board of Directors of FASTSIGNS Holding Corporation, the International Franchise Association (IFA), the IFA’s Diversity Institute, and the Atlanta Franchise Alliance.

Prior to joining Roark, Romaniello was President and Chief Executive Officer of FOCUS Brands (2002-2008). Steve joined Carvel in January 2002 as President of the franchise and foodservice division, and led the strategic turnaround of Carvel, one of America’s favorite ice cream brands. During his tenure at Focus Brands, Steve led the acquisition of Cinnabon® and Seattle’s Best Coffee® International in 2004, Schlotzsky’s® in 2006, and Moe’s Southwest Grill® in 2007.

Prior to Focus Brands, Romaniello was President and Chief Operating Officer of US Franchise Systems (USFS). Romaniello helped grow USFS from one brand with 27 hotels in nine states to three brands with over 500 hotels in 47 states and 5 countries. Before joining USFS, Romaniello was a Vice President at Holiday Inn Worldwide’s, responsible for franchise sales, services, support, and training for the 1,700 hotels in the U.S., Canada and the Caribbean operating under the Holiday Inn and Crowne Plaza brands. During his tenure, Holiday Inn Worldwide increased its franchise from 60 in 1991 to 300 franchises in 1995. From 1988 to 1991, Steve held various positions with Days Inn of America. Romaniello is a graduate of Tufts University.

Since moving over to Roark as a Managing Member, what have been your primary initiatives?
Since moving to Roark my primary initiatives have been to support certain of our franchise portfolio companies, including Focus Brands, Money Mailer, McAlister’s, and Fast Signs (Roark affiliates also control Primrose Schools and Batteries Plus, two other leading franchisors). I have also helped organize the second annual Roark Franchise Summit which brought together 90 executives from our franchise companies for leadership development training and to work on best practices. Finally, I have been helping the team in finding investment opportunities in the franchise space and evaluating and acquiring brands. Roark has over $900 million to invest and we recently announced an agreement to acquire Pet Valu, a leading Canadian based franchisor of specialty retailers selling pet food and pet products.

When do you foresee an improvement in our economic climate?
I think the economy is at or near the bottom though we expect choppy waters on the way back up. Our best guess is that the improvement will be gradual and recent improvements will likely not accelerate until unemployment bottoms out sometime next year.

As a franchisor in Atlanta, what regions have you seen attract the most franchisors and why?
Atlanta is home to a large number of franchise companies- some of the best brands and franchise leaders in the industry are here. One other notable area is Colorado, specifically Denver. While I am not sure what attracted them to the region initially, I think their presence is more visible because the leadership there is top notch and committed to franchising as an industry.

BONUS: Where is your favorite travel spot and why?
Italy! Do you really have to ask why?

Interested in connecting with Steve Romaniello from Roark Capital Group, (404) 591-5215, http://www.roarkcapital.com/; stever@roarkcapital.com.

Three Questions, interviews conducted by Stan Friedman, President and Co-Founder of RetroTax, appears twice a month exclusively at http://www.retrofacts.blogspot.com/.

IFA Convention Less Than One Month Away

As you probably read on my previous blog post regarding Franchise Expo South, I am convinced that franchising will rebound from our tough economic situation more quickly than many other market segments. Still lots of rocky road ahead, but hopefully, this prediction will be shared by others in San Diego, at the upcoming annual IFA Convention.

This is going to be a compelling year for new ideas to come to the fore, regarding the growth and development of franchised businesses. These challenging economic times make attendance at this year’s convention all the more compelling.

Start-up franchisors – IT IS ESSENTIAL FOR YOU TO ATTEND THE CONVENTION. Once you are registered, start your planning. Use the Convention as your opportunity to get focused. This conference has gotten too big to just attend without an action plan. Tailor your plan around learning during the concurrent educational sessions and networking on the floor of the tradeshow. Don’t leave anything to chance with reference to connecting with and speaking to those who can most positively impact your business. The days of just running into the right people at the IFA are gone. Anymore, the convention is just too big to go and just "hope for the best."

Established franchisors – this applies to you, too. It’s a whole new world out there and you want to maximize every opportunity to positively return your investment of time and money.

Last word in these challenging times, for ALL franchisors, regardless of size or maturity of your brands, I invite you to make yourselves rockstars to your franchisees by offering them the opportunity to glean the benefit derived from the tax credits that RetroTax administers. By telling your franchisees that “but for the fact that you’re one of our franchisees, RetroTax would quite likely never have known about you or your business... and that because of that, RetroTax will perform these services at the single unit level, something that is usually available only to much larger businesses.” Feel free to email me (stan.friedman@retrotax.com) to schedule some time to talk, either at or before the Convention. I am looking forward to making many new friends at this year’s IFA, as well as seeing all of my long-time associates from all over the world of franchising.

RetroTax Continues Social Networking Expansion

What is your franchise concept doing in the Social Networking/Social Media atmosphere? If you aren’t connected, you certainly should be.

In the last year, I have created this blog. I have also entered the world of LinkedIn (many franchisors and suppliers are in this network) and have connected to several other communities that are subsets of LinkedIn, pertaining to diversity, franchising, and certain cities of interest around the country.

I cannot count the number of new relationships that have been born out of the online and face-to-face communities that I have become involved with in the past year. It’s viral in a good sense and quantum in the results that it provides to me.

Best I can tell, Franchisors are not as connected as they should be. Just this past fall, at the Franchise Update Leadership Conference, I mentioned blogging during the CEO Summit and every head in the room turned my direction, curious as to why and what I was doing in that virtual universe.

Blogging, no doubt, has helped build the RetroTax brand in the virtual atmosphere. It also has established a cultural link to both me and my brand for those who have just been introduced to us. It helps us capture moments in time that would otherwise be lost. It allows us to broadcast our moves and news globally without relying on a third party (such as the media) for all distribution. It has allowed us to gain a competitive edge in the world of franchising, as well.

In the years to come, do I see social atmospheres as the future of franchise lead generation? Yes I have. Yes I do. Yes I will. These environments may never drive the kinds of number that portals or paid advertisements might, but from a quality perspective, they cannot be beat. What are you doing with Social Networking/Social Media outlets? I am curious to hear from you, and/or, share more with you about what works for me. Feel free to reach out to me via email at stan.friedman@retrotax.com or leave a comment on this blog. I will surely respond.

Youth Movement Will Be Interesting

To my surprise, with no pushing or prodding, completely on his own, my son shocked me this fall, when as a high school senior, he told me that after years of hearing me pontificate, (to no avail) he decided to join DECA. He made me extremely proud, both of him and his decision to join legions of other young visionaries who will lead America's next wave of marketing and business professionals.

During my years of involvement with DECA as a judge, mentor and advocate of their national advisory board, I've met many DECA kids that blow me away with their appetite for knowledge, initiative, and an uncanny instinct for business. I've also met those who are still "testing the waters" and “just want to chill”. I think each matures at his/her own speed and accordingly find their own watermarks at the appropriate times.

Those kids that are driven to climb to the top, will potentially have a great impact on franchising. Franchising has always struggled with generational issues and legacy. Often, great “first generation” franchisees retire and leave the business to the next generation that may (or may not) possess the same level of commitment and/or passion for the franchised business. With the impact that today's DECA is having on higher education and creativity, today’s youth will, I hope, step in, step up and innovate the business model of franchising in the years ahead.

Another trend, that has been highly publicized in industry trades, is the “youth movement” that is afoot in franchising. I for one, have not just seen a lot younger applicants recently, but older, as well. Gen Y is certainly on the rise and there are many new concepts that lend themselves to the younger set. As we continue to slide into what certainly appears to be a deepening recession, I think too, that more and more boomers might try getting out of the stock market (if they still can) and reinvest what's left of their 401, 301, or hopefully not 201 (K's), into franchised businesses that they can control and protect, rather than sticking it out on Wall Street and praying for miracles.

For those boomers that do jump into franchising, there will still be the need to be reliant on our youth, to help operate their businesses. Organizations like FBLA, SIFE and my personal favorite, DECA, all provide incredible platforms for real-world experience for today's kids and tomorrow's business leaders. I am really looking forward to seeing how DECA helps shape my son's future interests and where my son and his peers go with their careers. While times are certainly changing, let's always remember that change is certain... GROWTH, is optional.

Franchise Industry Shows Cautious Optimism at West Coast Franchise Expo

This past week, Nov. 7-9, I traveled cross -country to speak at the annual West Coast Franchise Expo in Los Angeles. Some might suggest that it was less than a perfect time for the Expo, given the state of the economy, its impact on franchising and how the recent elections will impact both.

Everyone I spoke to though, seemed to express a similar sentiment – cautious optimism. Certainly, everyone is concerned about the state of the economy, but no one was willing to concede defeat or believe that the economic meltdown would defeat our (franchising’s) ability to continue to thrive as a business model. Nobody was going negative.

On the surface, some suggested that foot traffic was lighter than years past, but most franchisors that I spoke with were extremely pleased by the steady stream of quality of prospects that they saw. If traffic was lighter, it could easily be attributed to the state of the States. My belief is that the "perfect storm" of sub prime and what it did to tighten credit, coupled with the downturn in the economy and melt-down on Wall Street is the only reason why franchising's gotten caught up in the storm. Once credit issues loosen up though, even in a recessionary market, we should see franchising pick up steam again. The few franchisees I got to speak with were on par with franchisors in that they seemed upbeat and optimistic that today's economic troubles would not prevail.

The one thing I saw universally from franchisors, franchisees and suppliers was the absolute unwillingness to fold the tent and quit. That’s a testament to the backbone of those who live and breathe the American dream. I fully expect similar views and responses at upcoming franchise industry events. Just around the corner, I will be attending the Franchise Expo South in Florida, (Jan. 11-13), which will be my last opportunity to get a collective gut check from my peers, prior to the IFA convention in February.

One last word about the West Coast Franchise Expo... From top to bottom, Tom Portesy, president of MFV, continues to foster a great culture of professionals. Rich Del Giorno, Steve Gross, Joel Goldstein, Scott Burford, Fabio “Skinny” Scocimara (holy smokes how much weight has HE lost) and the rest of the MFV team have become like family to me. I look forward to seeing them as much as anyone else, when I attend these shows.

What The Election Means for Franchising

This is a historic moment in time for Americans of all races, creeds, religions and genders to celebrate. In his own words, Barack Obama said it best last night when he addressed his victory party in Chicago:

“If there is anyone out there who still doubts that America is a place where all things are possible; who still wonders if the dream of our founders is alive in our time; who still questions the power of our democracy, tonight is your answer.”

With a new President in office, franchising will face some new changes in the coming months and years. This election was a big win for organized labor. What bodes well for unions, though, does not bode well for employers, as well as for everyday “Joes”.

I am concerned about how all the “Joe the Plumbers” will fare under the new leadership. Everyday “Joes” that aspire to own a business and fulfill the American dream of limitless opportunity will likely be confronted with unlimited taxes. This will be something to watch out for in franchising, especially as franchisors continue to find ways to support their franchisees. Tax credits will become all the more valuable for all business owners, and the need will be paramount, for our franchisees to educate them on how the tax credits that we administer will help them through some potentially tougher times.

Thankfully, as far as the Senate is concerned, it fell short of the 60 seats needed to exercise complete control and avoid filibusters by the Republicans on controversial legislation. Some aspects of franchising will likely face some new and critical challenges, as new leadership steps in.

Politics aside, the election of our nation’s 44^th President is a historic mile marker for all Americans. No matter who won the election, change was necessary because nothing stays the same. While some shun it, change is a fact of life. Certainly, with the global economic meltdown and the state of the world in general, change is not a bad thing. Change, though, just for the sake of change, or change for the sake of emotion is not enough. Yes, we needed a change and we certainly got one, but now comes the difficult part.

Let’s see how the new leadership impacts us and where they take us. I am certainly happy that this 20-plus month election is finally over. Now it’s time to hunker down, adjust accordingly and get on with business.

Are You in Atlanta? The ATLFA Wants You!

For those of you not familiar with our franchise group, The Atlanta Franchise Alliance is a networking group that I Chair in Atlanta. Our mission locally, is to follow the IFA's model of bringing franchising’s best practices and people together. We meet several times a year to network, learn, share fellowship, and exchange valuable nuggets that help us each individually and collectively, to strengthen the business model that is franchising. Whether you are a franchisor, a franchisee or a supplier, you are more than welcome to attend any of our events.

In 2008 our Alliance grew significantly and in 2009, we are going to get bigger and better. We will grow by bringing in more people to our networking events and providing them with everything that they came looking for and more. We will host networking events on the following dates, so mark your calendars: January 15; May 21 (also an IFA franchise political action committee fundraiser); August 20; and November 12. Locations for these meetings are TBD and will be posted on our Web site, at least two weeks in advance of each event (http://www.atlantafranchisealliance.com/).

Anyone interested in attending these meetings can find more information at our site. Don’t hesitate to email me (http://www.blogger.com/stan.friedman@retrotax.com) either, if you have questions or would like to be added to our mailing list.

Franchise Appreciation Day Drives Business

As in the past, attending the International Franchise Association's Fall Leadership Meetings and Franchise Appreciation Day in Washington, DC, is about spreading the good word about franchising on Capitol Hill to politicians who represent the franchisor’s and franchisee’s communities across the country. In the past, when I worked for established service and restaurant brands, part of my mission in DC was to represent my brand to these politicians. This year though, was different.

Now, as Co-founder and President of RetroTax, a start-up concept, my mission took a slightly different tack. Sure, I still attended the leadership meetings as Minorities in Franchising Committee Chair and First vice-chair of IFA's Diversity Institute, but every bit as important, especially for my business, was meeting with potential franchisees and clients in the Greater DC area.

The reason I bring this up is two-fold. First, no matter what city I travel to, there's no shortage of interested parties to speak with. I mean who would turn down the opportunity to have thousands in tax credits made available to them, especially when there are no up-front fees required for qualifying? Second, I am establishing business for my future franchisees. I am validating the viability of these markets by ensuring companies are indeed interested in working with us. The RetroTax business model allows me to set up theses accounts virtually, without having a "physical" brick and mortar location.

Times are changing. Never before could I go into a new market, where I had no previous presence and be in business just like that. But, with RetroTax, I can travel to any of some 200 "Zone" markets and set up shop immediately. This should more than validate the potential of our opportunity for our future franchisees.

As in the past, Franchise Appreciation Day was a tremendous networking and relationship building event. This time though, it took on even greater meaning, because of the new relationships that I was able to generate, with potential new clients and franchisees.

RetroTax Featured in Franchise Times

Empowerment -- RetroTax helps companies get credits

South Carolina businessman Joey Dixon had the concept 13 years ago: help businesses access tax incentives from the federal and state governments.

Stan Friedman, a franchise development executive for real estate franchise ERA, would head up the franchise end of the company. The third friend, Al Newcomb, would roll his similar businesses into Dixon's and then be charged with operations and sales.

It was a good dream, but the company they dreamed up was never launched. Dixon became ill with ALS (commonly referred to as "Lou Gehrig's Disease") a year after the trio got together, and died soon after. Newcomb went back to his business in Atlanta, continuing to offer tax incentive processing to businesses there, and Friedman headed back to franchising and ERA.

"Our paths were just not ready to connect in business, but the two of us remained friends and maintained our connection," says Friedman.

Over the years, when Newcomb and Friedman got together for dinner, Friedman said, "I would beg him to franchise his business." Newcomb, however, was content to keep it local in his hometown of Indianapolis.

Friedman, continued to be intrigued by the subject of empowerment zones, which was part of the tax incentive business. When he joined Blimpie International, Friedman used what he had learned from his friend and helped the company expand in empowerment zones - impoverished urban and rural neighborhoods in which businesses are encouraged to build via tax incentives in order to offer the community jobs and opportunities.

Fast forward to today

Friedman finally convinced Newcomb to franchise the venture. ACI Franchising was launched late last year under the brand name RetroTax.

The basic premise is this: RetroTax helps business owners gain federal and state tax credits and incentives. According to Friedman, state and federal governments legislate these incentives and a fair amount of the resulting dollars go unclaimed. The franchisees are trained to help businesses claim these dollars.

There are two types of businesses that can best take advantage of these incentives:

1.) Businesses that are geographically located in empowerment zones. They employ people who live in the empowerment zone and receive a tax credit for each employee. "Each of these employees could be worth up to $3,000 a year in tax credit," said Friedman. "Before you've made your first sandwich, if you have 10 qualified employees you have $30,000 worth of tax credit."

2.) Businesses with employees who qualify demographically. Certain demographics, such as employees who come from a family that may receive some assistance, those who are part of the Welfare to Work program or returning veterans with disabilities are employees who would be qualified to earn tax credits for a company. This could account for up to $2,400 per employee, per year in tax credits.

Stan Friedman, right, worked with Cincinnati Mayor Mark Mallory on city incentives that give tax breaks.

The RetroTax target customer is smaller businesses, said Friedman. "Most companies don't know these credits are available and don't have the resources to do the onerous paperwork to get the credits." Worse, he says, is that many of these small companies believe these types of credits are being taken care of by their accountant, and usually they aren't.

RetroTax franchisees charge 15 percent of the dollar value of the credit they help the customer gain. The franchisor splits that 15 percent with the franchisee, since the franchisor does the paperwork to claim the credits. "The franchisee is the relationship manager," said Friedman.

The best franchisee for the concept will be someone with high-level, tangible sales experience, he added. It is a home-based opportunity for someone who desires a 9-to-5 business.

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Finding The (Right) First Franchisee

TEAM RETROTAX™ welcomes our first franchisee Kevin Culkin and his partner Dennis Headings to our organization. Kevin and Dennis will operate their RetroTax business in Atlanta.

SIGNING DAY: (From Left) RetroTax's first franchisee Kevin Culkin; his partner Dennis Headings; RetroTax's President Stan Friedman.

Many emerging franchisors leave the starting gate without having had the benefit of years of franchise experience to draw from. So, they get very excited and thrilled when they launch their concept and sometimes rush into awarding their first franchise too quickly, or for the wrong reasons.

At RetroTax, we decided from the onset, that we were going to be very methodical about our process. We identified six key markets to focus on for our initial development and then looked at our established relationships within those markets, searching for potential franchisee leads. Well, I'm happy to report that the strategy is paying off, as we have just this week awarded our first franchise in Atlanta, GA and we could not be any happier about our choice. Not only will RT-001 operate in a very lucrative market for our opportunity, but he will do so literally in my backyard. RT-001 was awarded to someone that I have known personally and professionally for more than 18 years. Yes, RT-001 is a franchise development professional, turned franchisee. What's more, our kids have grown up attending the same schools and he and I have grown into our franchising careers together, albeit with different companies... until now.

It is with tremendous pride and pleasure that I announce Kevin Culkin as our first RetroTax franchisee. Kevin has the perfect skill set for our franchise, strong interpersonal skills, high level, intangible sales experience and the focus and resolve to succeed in our business. Just as my partner Al Newcomb and I go back more than a dozen years, how much better can it get, then to also have a known entity as your first franchisee. Well, believe it or not, it DOES get better, as Kevin has invited Dennis Headings, a 28 year friend of his, join him in the new business. Kevin and Dennis are here in Indy, training this week and preparing to hit the ground running next Monday morning. How sweet it is. More good news to follow...