In 2009, Paul Damico faced a happy conundrum. More than 2,000 well-capitalized individuals were lined up to buy franchise outlets at Moe's Southwest Grill, a "fast casual" restaurant franchisor where Damico is president. Many of these would-be entrepreneurs had cash but no experience in food service or franchising. Rather than take their money and hope they learned on the job, Damico set up a restaurant internship program designed to separate the serious from the speculators. He spoke about the program recently with Smart Answers columnist Karen E. Klein. Edited excerpts of their conversation follow.
Karen E. Klein: Moe's was founded in 2000 and acquired by Focus Brands in 2007. Tell us about Focus Brands.
Paul Damico: Focus is the franchisor and operator of several national outlets, including Carvel, Cinnabon, and Schlotzsky's. The corporation generates $1.1 billion in total revenue from 2,200 franchise businesses.
The franchise industry typically puts new owners through company training before they open their own outlets. Why add a restaurant internship program?
We created and invented this program 18 months ago because we had so many applications from individual entrepreneurs. Some of them wanted to do multi-store deals, and they had experience in the business world for 20 years or more, so we wanted to convert them into franchisees.
But lots of them did not understand the financial implications of the restaurant industry and what it takes to spend 10 hours a day dealing with the public and preparing food. It's a tremendous amount of work, but if you put your heart into it, you can have a great business.
Once you've identified the potential franchisees, they show up at your corporate-owned stores in Atlanta for a month and work 10-hour days, six days a week learning the ropes. What does the training include?
During those four weeks, the interns are evaluated as they touch every aspect of the restaurant. They learn everything from food prep to guest services, how to work the cash register and do the cleaning. They learn how service and leadership make for a successful restaurant. If they are successful, we sign legal agreements with them, and they come back for three weeks of certification training while their restaurant is under construction.
How many people have participated so far?
We have five people in the program now and four who've already gone through. Our first graduate just opened a restaurant in Chicago and is looking at a second location.
How do prospective franchisees react to the requirement that they spend a month working in the trenches—for free?
They are thankful that we have a program to support our initiatives. If we didn't have a program like this, they wouldn't qualify to become a franchisee. So we're providing an opportunity for them, and we're able to sell more franchises to highly qualified people.
These entrepreneurs have to prove that they have $300,000 in liquid assets and $1 million net worth. How do they respond to jobs like mopping restrooms?
It's new to them, and a little bit of a shock, but that's the goal of the program. We want people who are willing to wash the toilets two or three times a day.
We want people who can talk to customers and get out and talk to the community. Part of being a successful restaurant owner is "table touches"—asking guests how they're doing. Every time someone walks into one of our restaurants, we yell out, "Welcome to Moe's!" It's a brand differentiator that we own, but not everyone is comfortable doing it.
Has anyone dropped out?
We had one person wash out. That person was a very bright individual, but he was completely disengaged and could not deliver the level of guest service we look for. Fortunately, because it's a nonpaid internship and no legal paperwork is signed, it's easy for either side to back out.
What are your expansion goals for the future?
We are selling in 34 states now and just opened five more. We hope to have 420 locations by the end of this year, and we plan to add 100 more every year for the next five years.