Capital Access

Aziz Hashim turned his back on what would have been a lucrative career in electrical engineering following college, to return to his passion for the franchise business - where he first worked during his high school years. He loved the social interactions he experienced in the food business and was drawn back to it. His very first franchise location was a KFC he opened in downtown Atlanta in 1996.

"Through bootstrapping and borrowing money and credit cards and doing all the things entrepreneurs do, I was able to grow the business steadily," he says of his initial financing strategy. "The first store was successful. We built two in '97 and three in '98. It was very rapid growth after that. Financing was made available because of the advent of commercial loan securitization and we took full advantage of it."

Today, 15 years after he left Rockwell, Hashim's restaurant company manages 4 different franchise concepts at 44 locations (27 Checkers/Rally's; 9 Popeyes; 4 Moe's Southwest Grill; 4 Subway) with more than 900 employees.

It's a big operation and we wanted to know how the economy and the state of financing have affected his operations. Here's what he told us:

How has the most recent economic cycle affected you, your employees, your customers? I would say that because of our risk management culture we somewhat anticipated the downturn. We didn't over-leverage and we didn't keep poor assets. We felt pain but managed through it, adding good staffers. With the franchisees, employees, franchisor, and suppliers all working together, we've muddled through.

Are you experiencing economic growth or recovery in your market? I would say we're seeing a moderate sales recovery and many real estate opportunities to position us for the future.

What did you change or do differently during the recent tough economic times that you plan to continue doing into the future? Keep a frugal approach toward administrative expenses, continue to innovate, keep leverage under control, and always upgrade talent regardless of conditions.

How do you forecast for your business during trying times? Can you even forecast at all? Yes, I think downturns can be forecasted. It depends on how you get your information. If you get your information through the nightly news then that's a lagging indicator. We believe that investing time and resources in top-notch business intelligence is essential.

Where do you find capital for expansion? Modes of capital and capital structure change, but good deals always get done. Today, regional banks and nontraditional lenders are more involved.

Is capital getting easier to access? Sources are loosening up. There is a sense that the worst is behind us.

Have you used private equity, local banks, national banks, other institutions? Private equity is more a partnership than debt. We have not taken that road, but we do have relations with high-quality private equity firms, so that if a sufficiently large transaction comes along we can manage it. We have had success with local banks and traditional franchisee lenders.

What kind of exit strategy do you have in place for your business? No plan is complete without an exit strategy, and we have a variety of strategies to monetize the business depending on the time. There's always the ability to sell to employees or existing management, an option for an IPO, and always an option to merge with another firm or sell markets piecemeal. We're nowhere near doing that, but there should be no expansion without a defined exit strategy.

How are you handling rising employee costs (payroll, healthcare, etc.)? I think we have exceptional internal negotiators on the team. Being informed on cost drivers provides a disciplined approach to vendors. We make sure we acquire the best possible information.

How do you reward/recognize top-performing employees? We have a wide range of programs, from "spot bonus cards" to redeem music downloads and so on to giving away a car, a Kia Soul currently, to a restaurant manager twice a year. That causes a great feeling. I go through the drive-thru and give the keys to the manager. We're blowing horns, cheering. It's really exciting.