Firehouse Subs is Attracting New Franchisees with Its Business Model

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Founded in Jacksonville, Fla. in 1994 by firefighter brothers Chris and Robin Sorensen, Firehouse Subs arrived in Canada last year via Puerto Rico. “It was a genesis of sorts,” says Greg Delks, VP of Franchise Development at Firehouse Subs. “About five years ago we partnered with a Puerto Rico-based group (Latin America Subs, LLC) that owns 185 Burger King locations. They were looking for an additional brand and they came to us.”

Although international expansion wasn’t on the brand’s radar at the time, Delks said the success of the 26  locations opened the company’s eyes to possibilities outside of the U.S. — including Canada. “As we did our recon into the landscape of foodservice in Toronto, the thing that really excited us was that there were very few fast-casual sandwich opportunities here, so we felt we were ahead of the curve in that genre and could do very well in Canada.”

Enter the OnFire Restaurant Group, franchise owners of Firehouse Subs’ first Canadian outpost located in Oshawa, Ont. The partnership of life-long restaurateurs Alex Gerzon, George Heos and Richard Jodoin will lead Firehouse Subs’ Canadian brand expansion and support new franchisees in the opening and basic management of restaurants. “When we came to Canada, the single most important decision we made as a brand was to find the right partners,” says Delks. “We use area representatives — currently I have 45 strategically placed in cities all over the U.S. — and Alex is our guy in Canada, the CEO of Ontario with Toronto as the focus.”

As part of its development agreement, OnFire Restaurant Group will open 90 Firehouse locations over the next 10 years in Ontario. “Durham [Region], and specifically Oshawa, was an area we wanted to be in. I’ve done a lot of work in Oshawa in my career — it’s a great restaurant market and a community that supports local business,” says Gerzon.

The 2,150-sq. ft., 59-seat Oshawa location, which opened last October, was a $450,000 turnkey investment for Gerzon and his team and it’s already paying off. The total investment from a franchisee standpoint is $400,000 to $500,000; in terms of equity, franchisees would require $150,000 in cash. “The brand resonates with Canadians. People love the food and we’re getting lots of repeat customers and local regulars,” he says.

The new fast-casual eatery offers a family-oriented atmosphere with a firefighter theme. Firefighting equipment is positioned throughout the store and the menu features themed sandwiches, such as the Hook & Ladder made with smoked turkey breast, Virginia honey ham and melted Monterey Jack ($8 for a large).

Gerzon says its first Canadian location is generating great franchise interest. “Now that we’re open and people can see, touch and taste the brand, we’re getting a lot of inquiries.”

With competitors such as Panera Bread, Chipotle and Five Guys Burgers and Fries, Gerzon says gaining brand recognition is Firehouse Subs’ greatest challenge. “Although there are those who know the brand because they vacation down south, most people don’t know who we are. We’re spending a lot of time making sure our staff are educating guests on how we’re different.”
That difference, he says, is in the menu. “At the end of the day it’s a premium product, premium experience — we freshly slice our meat and cheese every day, we pile it super high and we serve it steaming hot. It’s got a unique taste profile.”

According to Delks, the company is committed to sourcing as many of its ingredients locally as possible. “For the first restaurant we’ve worked with our [U.S.] supply chain and some of the product is coming from the U.S. because we have certain taste profiles that are characteristic to us. As we open more restaurants and have more buying strength, we’ll source as much as possible in Canada. But with only one restaurant currently, we’re not able to get some of the items in a cost-effective way.”
Delks says Firehouse Subs has always taken a disciplined approach to expansion and he and his team have attended a number of franchise expos prior to launching the brand in Canada. “People were inquisitive and there was some brand awareness, but over the last 120 days we have received more than 125 franchise inquiries,” he says, adding that many potential franchisees are now in various stages of due diligence on the brand and meeting with the OnFire team. “We have great momentum going from a franchising perspective,” agrees Gerzon. “We’ve already signed our first franchise agreement for two restaurants in Ottawa and have a number in the pipeline that are getting to the documentation stage.”

All Canadian locations of Firehouse Subs will be franchised, as corporate policy dictates keeping all company-owned units in Jacksonville. When searching for real estate, the company prefers in-line, leased space in strip centres with visibility, accessibility, ingress/egress, parking and signage. “We do have a few stand-alone [units] but they were really opportunistic — such as a closed Taco Bell,” says Delks, adding destination dining spaces around big box retail space is also desirable.
Rollout plans include opening three to five units in 2016 and then eight to 10 a year until all 90 Ontario locations are open. “If everything goes well, in the next couple of years we’re probably going to take the brand to other provinces,” says Gerzon.

Volume 48, Number 11

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