Podcast

S1 E2: How to Create a Dunkin’ Donuts Empire

When you’re not ready to join the family business, franchises are a solid alternative. Usman Chaudhry is now the owner of six locations and scaling fast.

Usman has made the transition from corporate worker to multi-unit owner, but not before he learned all the lessons that have made him a success.

Now with six Dunkin’ Donuts stores under his belt and three more under construction, he has his eyes set on growth.

The Wolf and Usman discuss what it’s like growing up the son of entrepreneurs, why doing in-depth research is the foundation to building a successful business, and how to assess lenders based on specificity rather than emotional response.

You’ll hear why Usman is fine with paying royalties, how to tackle banks who may not want to lend to you, and the advantages of opening a franchise near a college campus.

Deep thinking and research are Usman’s superpowers, and this dedication to detail is something he shares with show sponsor FranShares, who are making it easier to build, manage and grow your franchise empire from as little as $500. Find out more at: franshares.com

Follow Usman on:

Twitter: twitter.com/UsmanJazab

Check out The Wolf’s newsletter: https://workweek.com/brand/the-wolf-of-franchises/

Stay up-to-date on all things Franchise Empires by following The Wolf on Twitter: https://twitter.com/franchisewolf


Episode Transcription

The Wolf of Franchises:

Welcome to Franchise Empires, where aspiring entrepreneurs learn exactly what it takes to become a successful franchise owner from one location to 10 and beyond. I’m the Wolf of franchises.

Today on the show we have Usman Chaudhry who owns three Dunking Donuts franchises with another three under construction. In this conversation, we run the gamut from talking about the power of Duncan’s brand and how that’s impacted his journey compared to if he opened up his own coffee shop. We also discuss the pros and cons he sees in owning a traditional location in a strip mall versus the two locations he owns on college campuses. I especially enjoyed this conversation because Uzman is a deep thinker who doesn’t rush into the decisions and respects the value of good research and assessing all your options. This came into play when he was choosing the franchise route versus going on his own when he was looking at financing options and beyond. I hope you enjoyed this episode, and I think you’ll learn a lot from Uzman.

Narrator:

The Wolf of Franchises is the CEO of Wolf Pack Franchising, as well as a creator at Workweek Media. All opinions expressed by the Wolf and podcast guests are solely their own opinions and do not reflect the opinion of pack franchising or workweek. This podcast is for informational purposes only and should not be relied upon as a basis for investment decisions. The Wolf Workweek and Wolf Pack franchising may maintain positions in the franchises discussed on this podcast.

The Wolf of Franchises:

One of the big reasons I started this podcast is to teach people that franchise ownership isn’t just for the ultra wealthy, and one of the tools that makes that possible is F shares. With F shares, you can invest anywhere between $500 and $500,000 and let the passive income roll in be the first to get access by adding your name to the wait list [email protected] I think a good starting point would just be like what was your first exposure to franchises and how did you just become interested in the beginning?

Usman Chaudhry:

I don’t think I started looking into concepts as franchises first. My family’s been in business for quite some time. They’re all in retail, gas stations, that sort of thing. And I always knew I wanted to own my own business and the businesses that I was looking into just happened to be franchises. I wasn’t quite ready to do the jump right into the family business, so I kind of wanted to find a different brand and Duncan is what I picked, but I was open to other concepts or starting something of my own, anything like that. I wanted to find something that worked for me, and then it just happened to be a franchise.

The Wolf of Franchises:

Okay, gotcha. And did you have any reservations of the franchise model versus your own? Cause I, it’s a common critique right off the bat from some people is, oh, a franchise you have to pay royalties, franchise fees, I don’t want to do any of that. You kind of navigate that in your head.

Usman Chaudhry:

I feel like it’s more about educating yourself more than having some of those reservations. I hear about it all the time of like, oh, well you pay X amount in royalties. Well, royalties are important in terms of what percentages you pay, but it’s equally as important as to what the brand does with those royalties. With Duncan, one of the things that I looked at was we pay a percentage towards our marketing fund, and that’s regionally as well as on a national level and what they do with that marketing fund. How’s their social media presence and how’s their radio and Instagram and TV ads and all this kind of stuff. And if they’re using it wisely, then I don’t mind paying it, right, because it enhances my brand value of my stores. So that was the biggest thing for me. It was like I didn’t go into it with any reservations, I just went into it as like, let me just absorb all this information first and then let me talk to people who are in the system of other brands and see how they feel about their royalties and what it’s spent on, and then compare it to what kind of deal I’m being presented.

The Wolf of Franchises:

Yeah, for most things in life, I think it’s a good philosophy to, before making a snap decision or snap judgment, just do the research and then come to a decision after you understand the pros and cons of each situation. So I like the calculated approach. So you own Duncan locations now, and we’ll get into how many and how it’s been going so far. What were you doing, what time did you start and get into the Duncan system, but also what were you doing before then? Were you working, were you trying your hand at other businesses or did you jump from a corporate gig into franchise ownership?

Usman Chaudhry:

Yeah, so I grew up in Maryland in and around the Annapolis area, and my father, as I mentioned briefly my family’s been doing this business for basically the early nineties in terms of gas stations, convenience stores, strip centers, that sort of thing. So there was not a fast food franchise like Duncan in the portfolio, but I was exposed to it a little bit while I was growing up. I didn’t really know what I wanted to do, went to Catholic U for undergrad, went to Duke for grad school, and then I was thinking about joining the family business and my father made it pretty clear to me that that was not an option right off the bat. He wanted me to get experience in corporate America first, which I think is incredibly valuable. I think all the mistakes that I made in terms of just growing and maturing in the professional world, I made on other people’s dime and I learned from other people and processes that were already in place.

I worked at Oracle doing tech sales for a little bit. I did staffing afterwards for about a year or so, and that was kind of just a pivot into something that I thought was kind of interesting. It was a little bit more fast paced and things like that. And it was really cool to learn about how to hire people, how to buy into a client and then be able to sell that client to a prospective candidate and vice versa. And being able to really understand how people are convinced and supported through their professional journey, which has been awesome for me in terms of hiring people now. So

The Wolf of Franchises:

Yeah, I was going to say I would guess that now that you’re kind of in the thick of it and have some experience as an owner, I got to imagine some of those skills probably transfer over from just recruiting, sales, all that stuff into being a business owner.

Usman Chaudhry:

Definitely. I think it definitely helps. I wouldn’t say that it was the master key to everything that I do now. It’s definitely not that, but it definitely helped. And I think also it allowed me to bring in some semblance of corporate organization and understanding of how people do things on a mass scale to a small business and being able to combine those two things and really understand the best way to hold meetings and staff meetings, the best way to communicate with teams, the best way to hire in mass quantity, those things I think are great and have been really beneficial. So I left the corporate world in mid to late 2017, and I started Dunkin with a business partner who has already been in the system since about 2010, and I met him through just some mutual relationships and he was looking for help. He had grown to three stores in about seven years, but he had three kids a fourth on the way. He was trying to balance a million different other things in his personal life, and he didn’t want to let the opportunity to go to waste with the franchise model of meeting the quantity of stores meeting your development plan. And so met him, hit it off and gave it a shot, and here we are about five-ish years later.

The Wolf of Franchises:

Awesome. Yeah, and I guess just for the listeners who may not know, just something that’s common with franchises is you can purchase a territory up front that can be a metropolitan area, a portion of a city, a county or multiple counties, and you know, pay a certain amount in fees up front to kind of reserve that territory, but in order to keep it so to speak, so that it’s exclusive and that you’re the only operator within certain zip codes or county lines, there’s typically what’s known as a development schedule, which is what Uzman referred to there. And so if you are dragging your feet and you’re not meeting what you agreed upon with the franchisor, they could have the ability to say, Hey, we could be growing faster. You’re not meeting what we agreed upon. And so they could theoretically sell territories in your location to keep up with their system-wide development schedule.

All right, so you join in, your buddies got three locations, you’re going to help ’em grow to more locations. So how did things go with that first location? It sounds like right, you had experience in entrepreneurship, you grew up in a family that was of business owners, and so how were you thinking about the risk mainly with in 2017 when you’re starting, right? Duncan’s obviously already a major national brand, but financing, that’s a big question on people’s mind. So how did you approach it as far as what resources did you use that were your own versus things that are out there, whether it’s a bank or b, a loans and things of that nature?

Usman Chaudhry:

I mean, I think in terms of risk, some self-awareness is always great, and I knew that I was dealt pretty fortunate cards in terms of my family’s expertise in the area as well as their position in terms of being somewhat well to do in this space as well. So that level of just comfort of knowing that this is a space that where my support system is very comfortable and they know this space really, really well, I was pretty confident in terms of whether this would be a good deal. I had opportunities to go to people in my family in extended circles and being like, Hey, these are the terms that I’m looking at, this is what I’m thinking in terms of financing. Do you have banks? Who do you guys use? All that type of things. Ultimately I ended up going with a lender that specializes in fast food and fast casual restaurants because that’s who my partner had used at the time.

And so he had already had a relationship. So that was kind of the first lesson there in terms of how partnership works. The person that I was being told and wanted to use, the lender was a more traditional lender and he had already had a relationship with this other lender. And so that was the first big thing of, okay, well this is where we kind of disagree in terms of comfort zone, but just learning to defer to experience over anything else, any sort of emotional aspect of, I’m only familiar with traditional lending at this point, and so we used this other lender in terms of our first store and it worked out great. We were able to use his other portfolio in the past to be able to get great terms, and then subsequently we evaluate every deal based off of what lender is offering and ensures that we’ve opened since we’ve used traditional lenders.

So I think from that, I don’t think it’s like whether you go into SBA or traditional lender or something very market specific that you have to be that guy, you know, don’t have to be the guy who’s like, you know what? I did SBA the first time, it was tedious, but it worked out so next time I’m going to have to do SBA again, and so on and so forth. So I would just caution people against that idea and just making sure that, you know, really bid it out to everyone and you let everyone compete for your business

The Wolf of Franchises:

Now. Yeah, I love that. I mean, it sounds like going back to what we said earlier as far as even just your approach to franchises, which was let me do all my research and then assess, you seem to have a theme of that where you just did that with lenders as well, assess them all and then I’ll make a decision on what I want to do.

Usman Chaudhry:

Yeah, absolutely. I mean, I think one thing that’s kind of always been common that someone mentioned to me years back was when you start a small business and you are pouring a quarter of a million dollars or half a million dollars or whatever it is, a hundred thousand, any amount of money that you’ve worked really hard for, you need to understand that there’s a line between being disrespectful about it but also being too passive. And you need to understand that you are the one that’s made this investment, and ultimately you need to feel comfortable with these decisions that you make. And so not to be pressured by this lender or that lender or let SBA a drag their feet for too long, any of those things, you got to take some ownership of it, of the process and understand that you are actually providing them business.

The Wolf of Franchises:

Yeah, no, that’s a super important distinction to make. And yeah, you really got to kind of almost respect yourself because everyone call it what you will, but everyone’s got their own agenda. The lenders trying to win business, they probably know they’re competing and getting shopped out versus competitors and all that. So yeah, you really got to make sure that you’re taking care of yourself and just kind of establishing those boundaries. And it sounds like you did a great job. So just one question and cause this is probably a concern for many when they’re starting a business is how much collateral do they have to put up? How much do they personally have to risk? How did that go with the lender you ended up working with? Right. Is there a personal guarantee on the line when you started this in 2017?

Usman Chaudhry:

We didn’t do a personal guarantee the first time around because we used the existing businesses that my business partner had, and then I separately personally guaranteed to him my portion of the loan just because we were new at this at the time, didn’t have a past business relationship. But I will say that in terms of capital allocation and things like that, in my experience as the franchise world and restaurants in general is that banks are very, very tough on lending to those things. They need to be a little bit in terms of convinced of what the concept is and also and probably more importantly, why you’re the best person to run it. And in my experience, one of the first conversations that I ever had was with the lender when they called me personally, not my business partner, was, yeah, we’re familiar with Duncan, we’re familiar with your business partner, but our risk is partially caught up in who you are and what your experience is.

And everyone I’ve ever seen that starts afterwards has some level of the bank asking them, well, yeah, we’re happy to give you this money. You’re doing a very well known franchise restaurant, you’re not opening up Guzman’s coffee shop or something, but why are you the person that can run this and make sure that we’re going to get paid every day or every month for the next seven years? That would probably be my biggest advice to just know your background. Just having the down payment for it is not always enough, especially in markets like this where banks are getting deals from a million different places in industries and spaces that they know a lot better, mostly commercial real estate or residential real estate, those are things that they’ve nailed down to a T. So why should they invest in you bringing raising canes to Northern Virginia or Taco Bell to some small town in Kansas, something like that. These are things that they don’t have to do. They have other options there. So

The Wolf of Franchises:

When you’re talking about this narrative that you have to present to them of why you’re a good fit, is the owner, is that even quantifiable or is that really just a sales pitch on yourself to them?

Usman Chaudhry:

Yeah, I mean I think it’s definitely about some confidence. It’s probably the biggest audition you have in the process after getting it from the brand. But I don’t think it’s something to overthink. It’s just if you know can do it, you should have some idea and rationale as to why you can do it, right? It’s not necessarily a pipe dream. It’s really more of this is my goal and this is how I can achieve it and this is my plan. And for me, it was very clear on the idea that I have some background from the business school aspect of it, but more importantly than that, I know the business, I can speak to it, I’ve grown up in and around it. I can show you the reference point as to what my experience is. I can have people vouch for that. My business partner who’s already in the space is willing to do it with me. And that was also probably the biggest asset in the process. And that’s just about choosing a partner strategically that buys into you as much as you buy into him or her.

The Wolf of Franchises:

Yeah, no, for sure. And especially I think for someone new starting out, it’s not definitely not a requirement. I mean, there’s stories of big time franchisees who basically started with zero network, so it’s not a requirement, but if you do happen to have that kind of advantage where there’s someone who that could be an asset to you in your venture and getting them involved in some capacity, it can definitely pay dividends. So that’s an awesome strategy. All right. So you get in 2017, today you have three locations.

Usman Chaudhry:

In 2017, my business partner and I had three locations when I entered, and now we have six currently. And then we have three more in various stages of development between leases all the way to doing the final order ordering of equipment. We’re sitting on hopefully nine in a couple of months. We’ll see how it chicks out. We thought we would get there before we would get there in 2020. And then obviously everyone knows what’s been going on for the last 24 months.

The Wolf of Franchises:

So we’ll get into a few things. I want to one kind of talk about are your locations traditional versus non-traditional? Because that’s a big thing with QSRs and fast foods in general that for those concepts specifically the investment profile of a traditional versus non-traditional, and even just the expected returns, just the act of having a drive-through is a major factor in staffing in revenue. It’s just a whole nother animal to tackle as an owner what kind of location you go with. But before we get there, from a macro perspective, why did you Duncan so much as a business to start as it relates to what products they sell and what margins you get with their higher selling products?

Usman Chaudhry:

The number one reason that I’d like Duncan was that it was something that I was familiar with and I knew that other people in this area were familiar with. It’s not a chain that I knew from grad school or from when I grew up in some other part of the country or something like that. It’s a very strong brand in this specific area that I wanted to put it in. It was started six hours away in the Boston area, so it’s not like I’m bringing something from Texas to Maryland or from California to Florida, it’s anything like that. So from that perspective, I really like the brand. And then I also really liked the fact that the products were simple, not in terms of they can get a little hectic to be on a busy day or something, but just in the sense of I knew that there were three biggest product categories and that was donuts, coffee, coffee and drinks, and then sandwiches.

There’s not 75 things on the menu that we’re trying to make, and it’s not a tedious process in terms of operations or supply chain from that perspective. But the biggest reason I would say is I think I might have told you this a while ago, but for me, I would say that the best piece of business advice I’ve ever given to anyone is if you’re going to do a business, make sure whatever you sell has the highest profit margin. And for me, that’s coffee, iced coffee is great profit margins and it’s the most expensive part of an iced coffee is the cup. And so for me, I wanted to make sure that if that’s what I’m selling, then the most of I, I’m, I’m going to be okay. And no, not all brands do that, right? For some brands they’ll sell a ton of something to get people into the door, but their highest profit margin is something that they have to upsell every single time. That’s not great for me from a scale perspective. I know I can sit, I’ll be motivated to stand at the register and upsell every single person, but I know that as I grow, I’m not going to be in able to be in every store every single minute. So how is that going to scale? Am I going to be leaving things on the table? That sort of thing.

The Wolf of Franchises:

It sounds a little obvious in a way is hey, try to make your top selling skew also have the highest margin. I mean, that’s kind of making money 1 0 1, but as you said, right, there’s a lot of businesses that aren’t like that. It’s the mentality of would you fries with that burger, so to speak? So where you’re trying to drag someone in with your highest selling item, and that’s more just a loss leader for a lot of businesses. And then the upsells is where they really try to make their profit.

Usman Chaudhry:

I think when you go into any sort of franchise mean for anyone who listens to this the last time you went in and someone actively tried to upsell you on an item in a good customer service way and not in a badgering you to and asking you seven times if you want fries with something or whatever it is, the last time that’s happened to you is probably not that. It’s probably been a while. So I mean, from that perspective, I think employees are not as incentivized to do those things, and frankly, some of them are just not the salespeople to do that. They don’t have the customer service skills. So you’re making it harder on yourself if you’re choosing something that has one or two items, one or two SKUs that have great profit margin and you end up selling 50 of those a month or something like that, right? It’s not great in the food franchise world to be in that position.

The Wolf of Franchises:

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Usman Chaudhry:

I think that’s the thing, right? People will always ask me, oh, how much do you make on a latte? And they’ll use that as a litmus test as to what a latte profit margin looks like. But I think when you’re getting into the business and you’re looking at margins, the best thing to look at is margins specifically to where you’re going to put the store. So some of my locations are on a university campus not technically on the campus, but I would say 20 feet from campus lines and so very, very close. And they’re in housing complexes and they’re margins. My margins on that coffee is significantly different. Those students will buy significantly more beverages than any other store that I have, but they will also ask for extra swirls or alternatives to cream like oat milk, almond milk in mass quantity. And so from that perspective, yes, we do upcharge a little bit for those things, but my margins look differently to that end.

So I can’t look at it and be like, Hey, this is what I think in terms of what the profit margin looks like at one store and then what it’ll look like at another store. It’s just so different. I think it’s really, really location specific, and if you’re going to talk about putting a food franchise or a retail franchise or something in a specific location, you should really work backwards before you get into margins in terms of what the demographics of the customer base look like, what the purchasing power of that customer base is, what their traditional concepts of what they will pay extra for. Not those things are really more important than the margins because of the trends that you’ll see as soon as you open a location in one place versus the other.

The Wolf of Franchises:

So how do you think of what you have on a college campus where it’s more of a captive audience, college kids, or For the most part, at least, unless things have changed since I graduated, but it’s different than a city where you can walk, maybe take a subway or some form of public transportation to a bunch of different restaurants, whereas college campus, it’s captive. And then so sure, the ceiling might be a little lower, but it’s some different aspects to it versus I would imagine your traditional location that you also own. So how do you look at each and what do you prefer if you do prefer a specific form?

Usman Chaudhry:

In terms of the differences there? When you’re on a college campus, the first thing you have to realize is that you’re in a non-traditional operation. So the other comparables, if you’re not looking at things like around a college campus, is if you put your franchise in a beach town or in a hospital or in an airport or anything like that, those types of stores are very different because you’re basically going to have to do 12 months of business in a specific time. If there’s a Duncan in Ocean City, Maryland or Ocean City New Jersey or something that’s not like South Beach or something, that’s always very busy. Those places have four months to do 12 months of business because they know that in February or in January of the year or whatever it’s too cold. And in people typically aren’t frequenting the beach in October either.

So for me, it’s eight months out of the year to do 12 months of the business because students are not there for four months. And that creates my own challenges. And those challenges could be things like, well, how do I keep the staff? Where do I give them hours? The other side of it is that I get four months of downtime to make repairs to the store, to play around with different ideas, to interview for top candidates. Those things like story is always going to be open, but the peak season allows me to stay on top of it and do a refresh in terms of the customer experience there every year. So just pros and cons. I don’t know if I would say I prefer one or the other. I think when you sign on with a big player, Duncan, you really have a territory.

So in my territory I have non-traditional stores, but then also part of my territory is the college campus area. So I was going to build a store there. I didn’t have a choice to avoid that. I would say that for me, I would say that my best piece of advice was to would be to not start with a non-traditional location, just because if you’re going to start with something like that, then you might not be able to be prepared to then go the traditional route just because the business model is a little bit different. You’re hiring practices are a little bit different, that type of thing. I think it’s easier to start with a standard boiler play and really nail that down and then branch off into whatever makes sense for you from a special location or any sort of thing like that. And you’ll really learn the business a lot faster in a traditional sense.

When we started the business, I had to learn all about the sandwiches we sell and the different types of products. And one of the stores is a combo store, so we sell, one of the traditional ones is a combo store. So we saw Baskin Robbins and ice cream in there and things like that, so, so those things help me a lot more than if I had started with a college store and been focused on a vast majority of just beverages because that’s what we sell the most of there. So I think it’s been a little bit, there’s pros and cons there for both, but

The Wolf of Franchises:

Yeah, no, definitely. I mean, it makes sense. Cut your teeth kind of on the standard location and then you can start branching out on the Baskin Robins location. Is that you as well, or is that a separate owner, or is that corporate?

Usman Chaudhry:

No, it’s me. It’s a combo store. So I don’t know if I would do combo stores very often, but sometimes brands will allow you opportunities to combine some of their other offerings. Duncan is now owned by Inspire Brands, so they have Sonic and Arby’s and all these things under their umbrella.

The Wolf of Franchises:

Yeah, it’s a massive portfolio they have. It’s crazy.

Usman Chaudhry:

So there are other opportunities that they push, but I think it’s really getting ahead of yourself as if you’re just entering into the arena, you know, should just work your way up a little bit in terms of what you think you like and what you like in terms of work-life balance and all aspects of basically running two stores in one 2000 square foot space.

The Wolf of Franchises:

Yeah, yeah. Okay. No, I could see that. I mean, it’s almost a Achilles heel to ambitious people who want to be business owners is, and I would put myself in this camp, your eyes get really big and you see dollar signs when you hear a combo store that that’s what popped into my head is, oh, you can be selling coffee all day and then nighttime you’re selling ice cream. Yeah, why wouldn’t I want to do that? But I do see what you’re saying that maybe it’s getting ahead of yourself.

Usman Chaudhry:

We could talk more about it later on if you’d like. But I think the problem is is that one of the things I mentioned earlier was that I always wanted to be my own business owner, and that makes sense. And I’ve been there, so I can totally see why people think that way. But for me personally, I think you are working if you have that mentality in terms of being a franchisee, you are working top down and you should really be working bottom up in terms of your mentality there, because being a business owner is great, but if you are not passionate about the other things that come with being a business owner and specifically why you want to be a business owner, what you like about it, what brands you like, what they offer, why you’re passionate about the customer base you’ll be serving, those things are the things that I think prospective franchisees should do some self-reflection about before they want to be a business owner.

The Wolf of Franchises:

Yeah, no, I mean, I’ve spoken to many franchisees and it’s definitely a grind, like any job so to speak can be. So if you’re not finding enjoyment and the little things, I would imagine it’s going to make it things a lot harder as an owner. And I guess to start wrapping up here, I mean, COVID obviously been a major curve ball for everyone, but especially as a business owner, there’s certain implications there. So how have you been navigating that, and even in general right now as you record this episode in mid-February 2022, where labor’s tough to come by, have you been dealing with it? Has there been major struggles? Any specific resources you recommend?

Usman Chaudhry:

I think in terms of Covid, COVID was such an interesting start into what’s been a roller coaster of a ride for 24 months. But I think one thing that I did pretty early on was I recognized my brand value to my landlords during the early stages of the pandemic when we were closed and we weren’t able to operate, I a wholeheartedly believed that the burden should not fall on any one party more than the other. So I’m not going to go out of my way to try to make sure that I’m paying rent and doing all these different things if my store is not operating anywhere close to maximum potential capabilities. For me, it was just pretty simple. It was like, I am of incredibly strong brand here. I add tremendous value, both from a aesthetic sense to your strip centers or your whatever, but also from a traffic count.

I am the reason that my or store, I keep saying I am, but my stores are the reason that you get 400 cars at 8:00 AM to your strip center. That visibility’s all me, right? Yeah. So from that perspective, it was like, you know what? You’re going to need to work with me. So I think it’s really important to know the value of the brand that you have to your respective landlords or whoever you put your stores in. That’s something you should think about, right? I really truly believe that I’d be in a much different position if I opened up U’S Coffee Shop in 2017 and had to navigate the pandemic versus having a strong national brand name Duncan, who was putting out advertisements during March and April of 2020 start of the pandemic. My brand was still advertising. They were still pushing different things and pushing drive-throughs and all that kind of stuff they were working.

And I think that that aspect has been really good to navigate in terms of hiring, it’s not great. I don’t really like to put myself in a position of, I don’t want to be ever going to be that guy who’s just complains about the labor market all the time. I think that’s pretty tone deaf in terms of what employees have experienced and voiced concerns over. But I will say that one thing that we definitely do is we try to create a really positive work culture. We will pay for students if they’re working for us and they’re in school and they want to take a business course, we help pay for some of those books or some of those tuition costs. We do incentivization things. We are using a app called Zao that does employee time and attendance and incentivization so the employees can use points to earn things like gift cards, pizza parties, things like that or whatever.

So yeah, helps streamline and manage those things as well. So that’s been great. And then ultimately, I think I really do think that the thing that we do best is we, or sorry, we empower our managers to run the ship. It’s theirs, and they really, really care. And they hire people that they’re so passionate about working with, and they make sure that those are the people that are in the store every single day. I’m not in the store every single day, but those are the people that are in the store every single day. So if they’re doing their job well, then the stores do pretty well, and the employees are really, really positive in general, typically about their work life their work experiences.

The Wolf of Franchises:

Yeah, no, I mean, I think you hit on a couple really powerful things there. I think one, we saw how the brand name can be such a big asset, and it’s a lot tougher to build that as an asset if you go independently. And I mean, we’re a pretty extreme example, to be fair. I mean, it’s one of the biggest coffee chains in the world. But even for folks who maybe they’re evaluating an earlier stage franchise, just knowing that if you do get into a good system and the brand does develop over time, that that’s what you’re hoping for is that it can become something that gives you a lot of leverage in situations what happened in March of 2020 where you know, can kind of flex that power. And that’s awesome to be able to have that, right? As at the end of the day, what you are is still a small business owner. And as far as the managers, I think for any employer, just giving people trust and freedom to run the show, if they’re in a leadership position, I know it from my experience, it can be very freeing in a good way, and that’s what makes them happy to show up to work every day. So it sounds like that’s paid a lot of dividends for you.

Usman Chaudhry:

The other thing is ultimately, man, these people that are working for me, they know me. They probably at this point know me more than I know them, but they know who I am. They recognize me when I walk into the stores. They’re super respectful and they’re very, very, very good employees in general for the most part. But the reality of it is that they’re working more for my managers on a day-to-day level than they are for me. So as long as those employees have a good relationship with my manager and vice versa, things will work out from an employee perspective. And if they’re not working out, then I know because I’ve empowered my managers who to seek answers from. I’m not trying to scramble and figure out, okay, well where can I plug what person in or whatever. I can call my manager and be like, Hey, are we short staffed?

Why are we short staffed? What resources do you need from me to be able to hire people that you prefer to work with and have on your crew line? And because they’re empowered and they know what they like and what they’re preferred method of working is, and team and all that kind of stuff, they do pretty well. And so that, that’s a big thing, but I think it also allows me to not have to be in the store every single day. I know that might sound salicious here, but that’s very, very important to me. So I’m a big believer on working on your business as opposed to in your business as you’re trying to scale. I think a lot of times employees, or sorry, franchisees fall into the black hole of working in your business as opposed to working on your business.

The Wolf of Franchises:

That’s what a lot of people have the goal to do is to eventually scale themselves out. I don’t believe that there should be any shame in saying that, right? As long as, like you said, you have good managers who are maintaining a positive culture and the store’s customer service and performance is up to par. I think that’s what most owners would hope for. So it begs the question, you’re at three stores now, and I know you’re close to developing and opening another three, but if you’re able to somehow quantify just to get people an idea of what’s possible, how much would you say you’re working on those three open Duncan stores on a weekly basis? So are you working 40 hours a week doing that, or is it less?

Usman Chaudhry:

I would say that the three existing stores probably take about 25 to 30 hours a week in terms of things of whether in the store or working on something with supply chain or some vendor or fixing a piece of equipment, anything like that, checking in on some employees, all that kind of stuff. But that being said, I also want to be very, very clear that there are going to be people who will tell you that they have one store or two stores or three stores, whatever they’re growing is what I’m trying to say. And they spend double or tripled the amount of hours that I do. But I am a big believer in leaving some stuff on the table, leaving some money on the table to a live a well work life balance or have some balance in your work between your work life and your regular social and other stuff going on. But more importantly than that, I think it also allows me to hire and empower better people overall. So it really helps but it’s really a focal point in terms of how I think business owners should be. But some people will disagree with that. Some people will work endlessly and there’s nothing wrong with that either. They want to maximize financial value out of every investment that they make in every store, and that makes sense too. It’s just not who I am personally.

The Wolf of Franchises:

Yeah, no, and I think the beauty of it is, is as an owner, you kind of give yourself that optionality to do what you want to do. So if you want to be the one grinding in the stores, 60 plus hours a week, you probably can do that, or you know, can give yourself more of a balance if that’s what makes you happy.

Usman Chaudhry:

And I will say that, man, it’s not binary, right? It’s not you have to be one or the other. When I first started our first store, I was in the store at 4:00 AM some nights and leaving at 6:00 PM It was brutal. And then there comes a time I got married and I have a bunch of other things going on and all these different things. I opened up some other businesses in North Carolina, and so there are other things going on. So to be able to pivot and not just be one or the other type of person, I think is a very valuable skillset to have.

The Wolf of Franchises:

Definitely. Definitely. So as you scale up, do you see efficiencies coming, you know, kind of guesstimated 25 to 30 hours a week on the current stores? When you open the next set of three, you’re going to be at six. Are you doubling, so you’re doubling your store count? Are you doubling the hours? Are you going to be working 60 hour weeks?

Usman Chaudhry:

No, I think if that was the case, then the returns would have to be significantly more, right? The whole point of scaling is to not increase necessarily your workload, but even if you have to increase a little bit to infinitely increase your take home or your profit margins or whatever your overall revenue. But for me, we have some operational efficiencies put in place. We have a district manager, we have a operations lead who does things like food safety for us and who does things like hiring between all the stores, coordinating with the managers for resumes, job postings, things like that. And then we will hire an intern for marketing and social media every year and give them some valuable experience to manage our Instagram accounts and things like that. So we have some of those in place. I think as we grow, we’ll probably have to hire more, but that’s how you go from being a quote restaurant owner to being the owner of a company. And I think the goal for me has always been to, I want to have a company that just happens to own Dunking Donut stores as opposed to being the guy who owns a Dunking Donut store. That’s just kind of my goal, but there’s no right or wrong answer there.

The Wolf of Franchises:

That’s awesome to hear. And I think the multi-unit ownership model I is attractive to a lot of people. How do you get there? Do get from one to three, and you’re about to be at six, which is awesome. So this has been great, man. I guess I just want to wrap up with one question. If you could own one franchise and try to take financials out of it, it’s just for fun. What brand out there in any industry would you like to own?

Usman Chaudhry:

I don’t know if I would do it differently, man. I think I would stay in this space. I would’ve loved to own Chick-fil-A or something like that. But I don’t know. I think, I guess I’m really trying to say is that I wouldn’t change the industry or the space within any of those big major brands, man, I would love to be a part of. I think they’re all so fascinating in terms of how they market themselves to customers and different things like that. One of the reasons some of those other brands would be a little bit better is, or potentially a little bit better, is man, they’re not mourning businesses. It’s rough when you’re dealing with customers who literally haven’t had their coffee yet. That’s literally why they’re there. A long time ago, a customer got so angry about something that she threw her bagel at me.

The Wolf of Franchises:

Oh my gosh.

Usman Chaudhry:

And I was shocked. But then as I’m walking out and later on in that day, I’m passing a Chipotle and I’m like, man, you guys are open at 11:00 AM to 9:00 PM No one is coming in cranky into a Chipotle usually. But for us, it’s like people come in at 5:00 AM and I have sleep deprived customers, sleep deprived employees, and it’s like a bad mixture sometimes. So I would’ve loved to be part of something that is really busy from noon to 6:00 PM or 7:00 PM but everything has pros and cons, man. So

The Wolf of Franchises:

Yeah. No, that’s hilarious. Sure. You’ve been on the ultimate front lines of customer service because like you said, I mean, you’re providing the elixir of life in the form of coffee every morning.

Usman Chaudhry:

Ultimately, man, that is not something that we enjoy having happen to us, but at the same time, it’s just part of the way the world is, right? So it’s not all sunshine and roses, right? It’s like not they’re going to be some moments like that. So as long as it doesn’t make you lose your composure, I think most people will be fine, man.

The Wolf of Franchises:

Yeah. Well luck, this has been an awesome conversation, so I appreciate you coming on. Where can folks, if they want to follow you, reach out, ask questions? Is there a certain platform that you’re most active on?

Usman Chaudhry:

I’m pretty responsive on Twitter. I don’t have the follower account that you do by any means, but I’m pretty active there, so people can always follow and shoot me a dm. My Instagram handle is, sorry, my Twitter handle is U S M A N, so like us man, and then J A Z A B as in boy. So Uzman right there, and yeah, you can follow me you could DM me. People are more than welcome to get some time on the calendar with me. I’m always happy to talk to people about different concepts and whether they’re doing them anywhere around me or not, just if they want some one to bounce ideas off of, I would love to help grow that part of the community.

The Wolf of Franchises:

Awesome. Yeah, and we’ll put the Twitter handle in the show notes for folks, so if you want to follow ’em, just check that out. But all right, man, thanks again and we’ll talk soon. Okay.

Usman Chaudhry:

All right. I appreciate it, man. Thanks for having me. Take care.

The Wolf of Franchises:

Thanks for listening to Franchise Empires. We’re coming to you soon with actionable insights to take the next step on your franchise journey. So make sure to subscribe on Apple, Spotify, Google, or wherever you listen.