By J. Perry Maisonneuve
According to the Canadian Franchise Association’s (CFA’s) 2017 Accomplishments Report, there are an estimated 1300 franchise brands supporting more than 78,000 franchised locations in Canada. Given these numbers have remained relatively constant for decades, the question begs to be asked: “Why haven’t more franchisees become franchisors?”
If even one per cent of the franchisees operating in Canada turned their minds and resources to franchising their own businesses, the total number of franchised brands would grow by 60 per cent to more than 2000 systems. A mere two per cent conversion rate of franchisees to franchisors would increase the number of franchised brands to 2860 brands, representing a 220 per cent growth.
This article explores the journeys of four people, two individuals and one couple, who have successfully made the transition from franchisees to franchisors of their own brands and franchise systems. Tom O’Neill, Rio Infantino, and Priya and Andy Gogia have, as some in British Columbia would say, made the journey ‘from sea to sky!’
In his consulting practice, the author has often been fascinated by the notion of ‘economic mobility,’ which is the propensity of businesses to grow through distinct, identifiable stages of maturity. Applied to the business-format franchise (or simply franchising) model, this would trace the genesis of franchise systems from the owner-manager-founder of a given retail concept to proving the model through establishing multiple locations. Once the concept is proven to be sustainable and easily replicated, the founder may then have enough intellectual and business know-how to attract third-party investors
However, history has proven that franchising requires a different form of know-how than needed to operate the original retail business. So, one might say a franchisor’s business actually requires two forms of know-how: retail and franchising business practices.
The following stories of Tom O’Neill, Rio Infantino, and Priya and Andy Gogia describe how each of these individuals leveraged and applied their skills and experience acquired from being franchisees to becoming successful franchisors. Their retail business and product knowledge was acquired through a partnership with an existing business or by developing their own unique retail offering. Both strategies proved successful.
Tom O’Neill was a self-proclaimed ‘hippie’ until he was 30 years old. He was born to Canadian parents in the UK. O’Neill’s father was a Francophone from Quebec City of Irish descendent. His ancestors were part of the exodus from Ireland during the great famine in the mid-1800’s. His father was a psychiatrist and neurologist, while his mother was a psychiatric nurse.
The family settled in Montreal, but after the premature death of O’Neill’s father, his mother moved back to her home town of Miramichi, N.B., where O’Neill completed high school. Although O’Neill started his undergraduate studies in political science and history at Mount Alison University, he eventually dropped out. He says he was ‘looking for a path’—and academia was not it.
The journey began with O’Neill finding himself running operations for conventions. The logistics and organizational demands were challenging, but he had a knack for it. Ten years later, in 1986, an old university buddy pitched an idea to bring a new franchise concept into Ontario. Scott Linkletter had recently partnered with a business associate to acquire the rights to develop Atlantic Canada as an area developer. The restaurant concept was an emerging brand out of Milford, Conn., by the name of Subway Restaurants. Shortly after, O’Neill and Linkletter joined forces to acquire the Subway area development rights for Toronto.
“Everyone was self-taught,” recalls O’Neill. “There were only 10 area developers slated to grow all of Canada. Back then, Subway had very few systems to speak of and none for Canada. “We were on our own to figure out supply chain and logistics for equipment, food products, real estate, and banking.”
With perseverance and hard work, the Ontario area developers soon became the ‘leaders of the pack’ in Canada. For O’Neill, this experience was formative as he learned how to be a franchisor from the ground up. In the process, Tom also ponied up to become a franchisee by owning and operating four locations himself.
In 2001, almost 15 years later, O’Neill left Subway and found himself once again on a path of self-discovery. He bounced around as a consultant in the franchise community for a few years before joining Quiznos Canada as the vice-president of franchise sales.
In 2007, O’Neill’s journey took a right turn. Still with Quiznos but increasingly restless, he was walking downtown in Toronto one day, looking for some lunch, when he came across a small restaurant on Wellington and Blue Jay Way with a line-up outside its door and down the street. The restaurant specialized in Mexican cuisine in a quick-service format. O’Neill had never heard of the place before. The name of the restaurant was Quesada.
First and foremost, O’Neill loved the product. “Fresh ingredients, and not overly heavy with fillers like rice and beans. They made your meal ‘the way you like it’,” describes O’Neill. “It was healthy food with a lovely taste sensation.”
Soon after that initial visit, O’Neill met the founders—two brothers, Steve and Greg Gill. They were operating three successful locations at the time. Steve, an honours computer science graduate from the University of Toronto, was responsible for developing the concept originally in 2003. Steve is credited for developing the tremendous flavor profile that defined the Quesada menu offerings from the start. This flavour profile, generating directly from the quality of the ingredients used as well as their method of preparation, has proven to be a key competitive advantage to Quesada’s ability to successfully compete in a crowded marketplace. Greg was also an honours student from the University of Toronto with a degree in civil engineering. Steve started the concept from scratch at the first location on Church and King. He simply figured things out as he went along. Greg joined his brother several years later. Neither of the brothers had a food background.
During that first meeting, O’Neill asked the brothers if they had ever thought of franchising. They admitted they had but had no idea how to go about it. The day of a new win-win opportunity dawned.
O’Neill and the brothers met every week for the better part of a year after that. They were considering a business partnership. They did not really know each other. Building relationships— trust and respect—takes time. Over that time, O’Neill and the Gill brothers found they shared common values and a mutual vision of Quesada’s potential as a franchised business opportunity. It became evident they shared a vision to which they could all commit. It took more time and effort to structure and launch the franchise model itself. O’Neill was fiercely determined to structure a franchise model where franchisees were treated fairly, everyone was transparent and accountable, and both franchisees and the franchisor could be profitable together by serving great food to happy customers. That said, his biggest challenges were in developing systems, infrastructure, and supply chain networks for an incubation franchise concept. O’Neill’s experience at Subway was focused on Ontario—specifically the Toronto area. Now he was focusing on Ontario to start, but quickly growing to support a chain operating coast-to-coast. He had to expand his expertise and knowledge beyond anything he had ever attempted before. Ten years later, Quesada boasts more than 135 locations across the country and 20 more in development.
Whether it was a case of luck or happenstance, O’Neill’s search for lunch that day led to the discovery of a ground-floor opportunity with a couple of astute, accomplished entrepreneurs who had been operating three successful locations for the better part of four years. The brothers recognized O’Neill as an ‘experienced hand.’ His hard-won experience as one of the first Subway area developers and a franchisee of multiple locations in Canada, combined with the compelling product offering and operational excellence developed and refined by Steve and Greg Gill proved to be a powerful blending of skills and experience in the Quesada franchise system.