Slim’s Trio Takes Flight Partners Set To Franchise

Although the birds they serve up are flightless, Fayetteville-based Slim Chicken’s restaurant is taking wing with two new ventures.
Anyone with the dream of slinging fresh poultry and the business chops to pull it off can franchise their own Slim Chicken’s for a one-time fee of $25,000, plus a percentage of annual store revenue. Also, by 2008, customers should be able to pick up their favorite Slim’s sauce — ranging from an original tangy orange sauce to a popular cayenne Ranch sauce — at the grocery store.
Tom Gordon, Ryan Hodson and Greg Smart have been friends since their high school days in Little Rock. Although the three pursued somewhat different paths after college — Hodson and Smart owned a sporting goods store and Gordon was a bartender in Los Angeles — what brought them together was a taste for chicken.
The dilemma was that no one in the area was offering up fresh fare. They decided to take matters into their own hands, and in 2002 they started cooking — in Smart’s garage.
Over the course of several months, the three would-be restaurateurs tested countless recipes, inviting friends and neighbors over to taste the results. Finally, they hit on a winning formula.

Right Time
They began work on entity filings and logos, and in February 2003 the first Slim Chicken’s opened on College Avenue in Fayetteville.
Some other items were added to the menu, but otherwise “what we serve now is the exact same as day one,” Smart said.
The restaurant was flying high, and in June 2005, the trio opened a Slim Chicken’s on Walnut Street in Rogers.
The partners had always been keen on the idea of franchising, but the fact that there was so much walk-in interest didn’t hurt. Customers, many of whom said they had a child who’d gone off to college and came home raving about Slim Chicken’s, inquired about whether more restaurants were in the works, Gordon said.
They decided the time was right, and have spent the last 18 months working out the details.
“Then we learned how expensive it is,” Gordon said.
The two stores continue to do well and are very profitable, (the Fayetteville store alone brought in more than $1 million in total sales for 2006, based on city tax records) but the franchising process has cost the partners about $75,000, Gordon said.
The trio hired Miller and Martin PLLC, a law firm in Atlanta, to help with the process, but they haven’t resorted to using outside consultants such as McGrow Consulting or The Franchise Builders.
So far there have been nine serious franchise inquiries.

Franchise Fundamentals
Franchising is regulated by the Federal Trade Commission, which offers a set of guidelines and regulations, as well as tips and advice, for potential franchisees. Franchisors must give the FTC a plan proving a business is viable and can succeed anywhere, Smart said.
The partners put together an operations manual and a Uniform Franchise Offering Circular, a document required by the FTC. The UFOC provides information about the franchisor’s financial and litigation history, fee structure, earnings claims and other relevant data. A franchisor must give a potential franchisee a copy of the UFOC for review at least 10 days before contracts are signed or any money changes hands, according to the FTC Web site.
There is scrutiny on the other end as well. The partners want every franchise to be successful, so applicants will be carefully examined, their full financial history and legal standing are reviewed and net worth is assessed to ensure they have financial staying power.
Slim Chicken’s corporate has the final say on whether an applicant is approved. They conduct considerable research into the proposed area, such as demographics, traffic, population density and visibility.
The initial, one-time franchise fee is $25,000 per store, plus an annual fee of 7.5 percent of the store’s revenue (5 percent goes to corporate for royalties and 2.5 percent is a marketing fee).
Of that marketing fee, 1 percent is applied to corporate marketing and research and 1.5 percent goes toward advertising in the store’s area.
When Slim Chicken’s corporate decides the offer is viable, the company presents the UFOC to the applicant. Once the agreement is inked, the franchisee goes back to school, specifically, Slim Chicken’s school, which is a two-week training course with both classroom and hands-on experience in the restaurant.
One aspect of the franchise agreement is neither the corporate office nor another franchisee will open a competing Slim Chicken’s within a radius of 50,000 people, though the franchisee can opt to open another store in that area. If a franchisee decides to sell the store, Slim Chicken’s corporate has first buyout option.

Fresh Difference
The old standby about how it takes at least a year for a new restaurant to turn a profit is true in the franchise business as well. Because Slim Chicken’s isn’t as obvious as a burger outfit or as well known as Subway, it takes time to educate the public on what the restaurant offers.
The franchisee must be able to make it through the initial startup period, but Gordon is confident that once customers taste the product, the “fresh-not-frozen” difference will keep them coming back.
Although Slim Chicken’s might not have the name recognition of larger companies, they can still offer franchisees significant benefits.
Essentially, Smart said, the franchisee is paying for the first three to four years of blood, sweat and tears the trio poured into creating a successful business model. They also get the purchasing power of a franchise. The same price points have been negotiated for every store, and vendor relationships have already been established. So no matter the location, fresh Tyson chicken will be served, the same sauce ingredients will be available and the same breading mix will be shipped in.
Judging from the number of requests Gordon has fielded, more Slim Chicken’s could be on the horizon soon. He gets inquiries daily about franchising from all over the state, and as far away as Florida, Colorado and Nevada, he said.
The care they’ve taken in getting everything in order for franchising means the company is poised for further success, said Josh Austin, general manager of the Fayetteville store.
Austin and Rob Byford, general manager of the Rogers store, have been very hands-on with the operation of the stores and will continue that with new corporate locations.
“The sky’s the limit,” Austin said.
The partners plan to open more company stores, though they didn’t disclose any specific locations. They will also begin renovations on the Fayetteville store soon, including resurfacing the parking lot, painting and improving the deck.

Standing Out
The big challenge for the restaurant has been developing the consistency needed for a franchise operation, Gordon said. But consistency is what keeps customers coming back and is what will help sell a franchise.
Another significant factor is dealing with fresh chicken, which is more difficult to work with because the sanitation protocols are meticulous, Smart said. Others in the restaurant business have told the three they could save time and money using frozen chicken.
But quality and customer retention are more important than convenience, he said, and a key part of that is fresh chicken. The chicken is hand-breaded and the sauces are all made daily.
“We’ve focused on quality and differentiated ourselves from the competition,” Hodson said. “There are a thousand burger and chicken joints, but our focus on quality makes us stand out.”