Growing Up Franchising: Taking over—and expanding—the family business

Name: Rachel Wallace

Title: Franchisee, CEO

Company: CHF (Cup Half Full) Investments, SRW Management

No. of units: Subway 25, Scooter’s Coffee 3 open (11 total signed), 1 Best Western Plus

Age: 47 

Family: Parents, one older brother and sister-in-law, two nephews, fiancé

Years in franchising: 20

Years in current position: 10

Some people might look at Rachel Wallace and assume it was just natural she would turn to franchising. After all, she grew up with it. Her parents bought their first Subway when she was 14, and much of her childhood was endowed with talk of business at home and examples of what you do when you own a business—like walk away from your Christmas celebrations because your employees working that day are overwhelmed with customers. 

That immersion was intense enough that Wallace didn’t start her post-college career at a franchise. Instead, she spent several years as an accountant with a food production company named by Fortune magazine as one of the world’s most admired in that industry. “It was just a matter of proving that I could go out and do something on my own,” she says. “You need to have that real-world experience, and I’m very glad I did. I came to appreciate how the corporate world works.” 

When her parents retired in 2012, she took over the franchise and doubled the number of Subway businesses in Southern Illinois. Wallace focuses her Scooter’s Coffee and Subway expansion on small towns ranging from 2,000 to 20,000 residents eager for new development.

She also decided early on that her version of corporate culture would be more personal than seemed usual, especially with her upper-management team. Her goal? “To produce a culture that people want to be with.” With the size of her franchise holdings now, she must delegate and put faith in her employees. “I can’t do without them. I have wonderful people who do an amazing job.”

PERSONAL

First job: Subway at age 14.

Formative influences/events: Both of my parents owned their own businesses over the years and bought into their first Subway when I was 14. Growing up, I spent a lot of time listening to them discuss business, riding around looking at properties, hearing about employees and different issues. I learned so much from these times. What I would call “common business sense” was really the kind of knowledge that universities teach these days to those who don’t grow up listening to it. I was blessed with a free education in entrepreneurship.

As for an event that stands out, we once all went to Subway on Christmas Day to work because that store was the only restaurant open in town. (It was near the interstate.) It was so busy the employees were overwhelmed and called us for help. We all left Christmas dinner and went in to get them caught up. It was quite the family affair. That’s just what you do—whatever needs to be done.

Key accomplishments: Getting my first real job as an accountant with Archer Daniels Midland. Building a hotel from the ground up. Becoming a Governor with Best Western. Winning the M. K. Guertin Award with Best Western—twice. Building and opening three Scooter’s Coffee kiosks in one year.

Biggest current challenge: Being in two places at one time. I try very hard to be engaged in each of the towns where I do business. Because my radius of business is up to 2½ hours from my home, it is difficult to be everywhere when I need and want to be. The ideal situation would be a helicopter, but I don’t really see that in my future. Basically, it’s going to have to come down to better time management.

Next big goal: Opening the remaining eight Scooter’s Coffee kiosks currently under contract. 

First turning point in your career: When I realized that my body wasn’t going to work as hard as I wanted to. About 12 to 13 years ago I was working in the stores and my back wasn’t allowing me to do the physical part of the job any longer. I started to move into the office and learn the job that my parents were doing then. I started to take over the operations details and lead upper management. I was beginning to build the team to be as I envisioned it and to start to change the company culture. I also began to learn more about the details of planning, building, financing, insurance, human resources—all of the factors that go into a business that people don’t always think about—not always the most fun, but they are so important. Not long after this, my parents stepped out for good and I found myself at the helm. 

Best business decision: Taking chances and diversifying. 

Hardest lesson learned: No matter how hard you work, failure can happen. I opened a Rosati’s Pizza and Sports Pub franchise 3 days before the world shut down for Covid in March 2020. That obviously was a very difficult time, and the work put in to that restaurant was immense. After 2 years we closed. I had to realize the reasons for the failure were many—and several of them were because of choices I made or didn’t make. It seems a lot of the hardest lessons are also the most expensive!

Work week: Usually I work Monday through Friday, but my phone is always on and I’m always available. If something comes up and I’m needed, I am willing to drop what I’m doing and be there.

Exercise/workout: This part of my life could use a lot of improvement. I try to take the dog for a walk every night. In the summer I swim a little, but mostly that means getting in the pool and pretending that I’m working out.

Best advice you ever got: “It ain’t right, but that’s the way it is.” In other words, know that sometimes the world isn’t fair. There are times that not everything is going to work out in your favor, but you will make it through and find a way to accept it or adapt and move on. Getting caught up in the why or dwelling on it will only bring you down. Move on and figure out a new solution. 

What’s your passion in business? I thoroughly enjoy making people smile and ensuring they have a great experience at one of my locations. I love to go in and wait on customers myself. I love to go in and have a great time with the crew, provide fast service, and have fun while doing it. If I make mistakes in front of the customers and they get a good laugh, even better. I want to show my crew that I’m willing to do exactly the same job they are doing and that it can be fun.

How do you balance life and work? That starts with having a fiancé who appreciates your work life and even works for the company. My life doesn’t revolve around my job, but I do need people in my life who can respect what I do. That means understanding that at any given time my phone may ring or a text may come through that is work-related. It takes a special person to understand this and, luckily, I have that person in my life. He also recently came on as the director of construction for the company and has become an integral part of building the new Scooter’s buildings, as well as remodeling many of the Subways and other repair work. I have also taught my staff how to handle most every situation. 

Guilty pleasure: Watching reality TV. It’s so ridiculous, but I love it. 

Favorite book: Although I enjoy reading from time to time, I don’t know that I have a favorite book. I like to read murder mysteries.

Favorite movie: I have seen the movie “Clue” so many times I can recite it. Same with “Gosford Park.” Very different, but both favorites.

What do most people not know about you? I have an accounting degree and that I worked 4 years for Archer Daniels Midland in Decatur, Illinois.

Pet peeve: Pen clicking in a meeting. It drives me nuts when I’m in a meeting and there are people clicking their pens or making some kind of nervous noise. 

What did you want to be when you grew up? The joke has always been that when I was asked this question when I was young, the answer was, “in charge.” I didn’t really know what that meant or what all it entailed, but for some reason that was the goal. 

Last vacation: Just getting ready to take a cruise in the Caribbean. 

Person I’d most like to have lunch with: Unfortunately, she has passed, but the Queen of England. I have always had a fascination with the British monarchy. Queen Elizabeth saw so much during her reign. She is someone who took over at such a young age and was able to navigate in a male-dominated world and develop so much respect. I would love to know all of the things you would probably never get out of her because she was so good at being the queen.

MANAGEMENT

Business philosophy: Make It Happen. 

Management method or style: I am very democratic in my leadership style. I take a lot of information from each of my key team members, and often we make decisions together based on what everyone feels is the best choice. There are times I will be the final say if necessary. I rely on the people in the field to give me the information necessary to make decisions. 

Greatest challenge: Too many opinions sometimes. With so many stores, there can be an endless number of options of how to answer one question. Often, each answer will work. 

How do others describe you? Opinionated. Not afraid to speak. Quick-witted. 

One thing I’m looking to do better: When you work as the leader, you become used to speaking up anytime you want to. When I get into meetings with other franchisees or other leaders, I have been working to keep myself quieter and to be less emotional about certain subjects that can sometimes cause me to be more aggressive with my opinions.

How I give my team room to innovate and experiment: I am not the creative one in my bunch. If my team comes up with an idea they are willing to try, such as a sales contest, I’m very happy to support them in finding a way to reward the winners. If they can give me a spelled-out plan that is fair and measurable and inspire others to put in the work I am happy to give them the budget needed to reward participants.

How close are you to operations? I have a director of operations at of each of the QSR chains, and I have a general manger at the hotel. I also have a director of business and employee development in Subway and for the hotel who is also my partner-franchisee in Scooter’s Coffee. Then there are two regional managers and six district managers and a store manager at each Subway. I have monthly meetings with the district managers and above. I am involved in all promotions and pay raises. I also monitor each store’s progress. 

What are the two most important things you rely on from your franchisor? Communication and assistance. One of the number-one things I need from my franchisor is to know who to contact when I have an issue. Scooter’s is amazing at this. They excel at franchisee support in almost every area. Communication from the franchisor is also of utmost importance. 

What I need from vendors: Loyalty. A vendor that can stick with me through the issues that arise with products is one that can earn my business. If they can admit a fault and fix it quickly instead of making excuses and dragging out an issue, they can earn my trust. 

Have you changed your marketing strategy in response to the economy? Because my businesses are franchises, my marketing is controlled at the corporate level for the most part. 

How is social media affecting your business? Social media is a double-edged sword for sure. As quick as it is to alert customers to your great news, it’s just as quick to alert them to something that may be just a rumor a disgruntled employee is spreading. It can be your best friend your worst enemy. 

How do you hire and fire? I don’t currently do much of the hiring, and I’m only involved in the firing process if it’s a major deal. 

How do you train and retain? I find that it’s important to ensure that you are giving plenty of feedback to new employees or to employees who are in a new position. We have job descriptions of each of the levels that are in the company. We give 3-month, 6-month, and annual reviews to new management trainees. 

How do you deal with problem employees? The best thing you can do in this situation is to speak with them directly. In this day and age, so many managers will try to do this by text or email. As uncomfortable as it may be to sit down and speak with a person face to face these days, it is still the best form of communication.

Fastest way into my doghouse: Lie to me. This is one of my big three rules. If you screwed something up, come and tell me and we will work through it.

COVID-19

How did Covid-19 affect your business? It was a devastating hit to the restaurant and hospitality industry. It was a learning experience that will certainly not be forgotten.

How have you responded? Every day was something different. We had to learn to pivot with each new rule and regulation that came out. Our concerns had to focus on the safety of our employees while maintaining the longevity of our businesses.

What changes do you think will be permanent? I think that the customer demand for cleanliness has increased. There has also been an odd twist on tipping in the industry that began during Covid and has continued. Now, many minimum-wage-level staff are getting tipped for a job they are getting paid full wages to do.

BOTTOM LINE

Annual revenue: $22.5 million.

2023 goals: Remodel five Subways and build two Scooter’s kiosks.

Growth meter: How do you measure your growth? By the number of personally signed Christmas cards that I send out to every employee each year. My goal is to be over 500.

Vision meter: Where do you want to be in 5 years? 10 years? I hope to have completed the Scooter’s builds and perhaps even expanded to more markets if possible. It wouldn’t be out of the question to have another hotel in my future either.

Do you have brands in different segments? Why/why not? Yes, I have restaurants and a hotel. I find that there is a need to be diversified. The pandemic is a wonderful example of why we need diversification. 

How is the economy in your regions affecting you, your employees, and your customers? We are definitely feeling the higher food and labor costs and the decrease in customer counts in the restaurant business. With so many benefits available to people these days, employees are less likely to come to work for a minimum-wage job. 

Are you experiencing economic growth in your market? With Scooter’s, I believe there is room for growth in some of my markets. The coffee business is one that is much more insulated from inflation. 

How do changes in the economy affect the way you do business? You have to find more and more ways to be frugal. 

What are the best sources for capital expansion? Much of what we have done has come from within the family partnership. We also use our local bank.

Experience with private equity, local banks, national banks or other institutions? Why/why not? We strictly use a couple of local banks we have developed relationships with. There is a higher level of trust with a local bank. There is also a much higher level of service. Local banks know you personally, know your track record, and are willing to take a chance on you if necessary. 

What are you doing to take care of your employees? I don’t do any of this job by myself. I am surrounded by so many incredible employees who have been on my team for many years, several for more than 15 years. It is important to me that they are recognized for their work. They also know that I will have their back if necessary. I do for them what I can to make their quality of life better. 

How are you handling rising employee costs (payroll, minimum wage, healthcare, etc.)? This is an issue I’m still trying to navigate. We have to raise prices for our customers, but at some point we can’t go any further.

What laws and regulations are affecting your business and how are you dealing with them? So many businesses are looking for employees—quality employees. Unfortunately, as businesses we cannot compete with what the government gives away free. 

How do you reward/recognize top-performing employees? Last year we started the Wally Award to recognize the manager who best stood out for the year as leading with our company values. They receive a plaque and an iPad in front of all of their peers. I make it a point to recognize milestone anniversaries with the company.

What kind of exit strategy do you have in place? A great question that perhaps I will be ready for next time we talk.