Kevin Krabill has plenty of time to talk about his company, Alliance-based We’re Rolling Pretzel Co. Inc.
He is road-tripping to Eastern Pennsylvania to oversee the final steps before a store’s grand opening. “I’d better get out there and make sure everything’s done,” he says, his cell phone crackling.
This accountant-turned-pretzel-maker’s attention to detail — a credit to his early days at Ernst & Young in Cleveland — and his passion for his product have won the company spots in Entrepreneur magazine’s Top 500 Franchises and Franchise Times’ Fast 55. Since January 2002, it has more than quadrupled in size and its goal for 2004 is to have 100 stores open or under contract.
In addition to pretzels, We’re Rolling Pretzel Co. offers pizza pretzels and knot sandwiches as meal items, and unlike the competition’s large venue locations, its stores are located in smaller cities with little, if any, direct competition.
Shortly after this interview with Krabill, Cedar Fair offered to buy Six Flags in Sandusky, where We’re Rolling Pretzel Co. had one store on the ride side and one on the animal side, which Cedar Fair did not plan to reopen. At press time, Krabill hoped to move the animal-side store to the ride side and was awaiting word from the park.
“(The purchase by Cedar Fair) will be good for the park long-term,” Krabill says. “Six Flags had a lot of debt, and Cedar Fair is a good operator.”
We’re Rolling Pretzel Co. maintains 30 locations in five states, including stores in Wal-Mart Supercenters, is building eight stores and is pursuing college campus and turnpike locations.
Smart Business spoke with Krabill, president and founder of We’re Rolling Pretzel Co., about franchising and the Wal-Mart relationship.
What makes a good franchisee?
We send out an initial interest package with a personal profile form. It’s a high-level questionnaire where we get information about their financial background. We ask why they want to buy this business and who’s going to be in charge of day-to-day operations. Once we get that back, we pull a credit report to filter out people who have past payment issues. Then we meet the prospect at an existing store and give them a tour, and we sit down to talk about why they’d like to do this.
I equate franchising with getting married. You don’t make the sale and then walk away; they’re with us for a minimum of five years. What we’re trying to do is understand their philosophy and personality. Are they a good fit? Do they want to be part of the team? Can they follow the system? I think they’re doing the same thing to us.
We’ve developed a system that is almost 8 years old, and we have a high level of documentation on how to run one of these businesses, from what to do when you open, how you talk to customers, what the product should look like, how to do inventory and keep accounting records. We’re looking for somebody willing to follow that system, even if they may not agree with it in the beginning. The people who are most successful follow that system to the T. People who want to go out and be the Lone Ranger tend to fail, sell to somebody else or are not as happy.
It is a learning process because our system continues to evolve. Periodically, we get people who say, ‘Why don’t we do this instead of the way we’re doing it today?’ We try to be open to that because they come up with some really good ideas. But at the same time, if we decide this isn’t going to work, they have to be willing to accept that. That’s hard for some people to do.
How did you secure your company’s relationship with Wal-Mart?
A local developer once said to me, ‘How many stores do you have?’ and I said, ‘Two,’ and he said, ‘When you have 100, call me back — CLICK!’
That was my impetus. I said, ‘We have something here that I think is very different, one that many mall developers have overlooked.’ They had Auntie Anne’s and Hot Sam, and they didn’t want to look at what we were doing different.
So I said, ‘Who else is out there that we could talk to?’ And I thought, ‘Wal-Mart is a good opportunity.’ I didn’t even know if 1-800-WAL-MART was the right phone number; I just picked up the phone and called. A receptionist answered. I told her what I wanted, and I left a short voice mail message.
A lady in Bentonville, Ark., called me back 45 minutes later, and we talked for about an hour. At the end of the phone call, she said, ‘How would you like to come down and pay us a visit and make a presentation?’ So she picked a date, and I said, ‘Sure, I’ll be happy to be there.’ I hung up the phone and thought, ‘Oh my gosh, I have nine days to prepare.’
I immediately called my franchise attorney friend and another friend who was a graphic designer, and we put together this short but nice presentation. I flew to Bentonville and made the presentation to seven people who manage real estate for the entire country. They asked lots of questions … and at the end of the meeting, the lady who invited me said, ‘Kevin, we’d like to give you five stores as a test.’
It was pretty heavy stuff, and we’ve just grown from there.
Everybody is always talking about Wal-Mart being so hard to deal with but they’ve been incredibly helpful. They do business with some of our competitors, and I’ve often heard from some Wal-Mart people that they like us better — and we’re much smaller than some of our competitors.
The one thing we’ve always done — even if it means we work a 24-hour shift to get a store open — we have never missed a grand opening. … We made them a promise to deliver what they need. The penalties for not delivering are pretty severe. If you miss a grand opening by an hour, it’s a $5,000 penalty and, more importantly, (Wal-Mart says,) ‘We should reconsider whether we should be doing business with you or not.’ In the beginning, that’s somewhat daunting. … It’s a landlord-tenant kind of relationship; those are all individual franchisee deals, where Wal-Mart is our landlord.
The company has received a lot of recognition lately. How do you plan to keep up this momentum?
We support our existing franchisees to the absolute highest level possible. That is priority No. 1, always. … Most franchises sell equipment to their franchisees and make money; we do not. Most people sell product to their franchisees and make money; we do not. There’s all kinds of ways to make money in this business that are somewhat hidden to the franchisee. They learn, sooner or later, and then they’re not very happy about it.
We are very up front that we get a 5 percent royalty and a 1 percent advertising royalty, which goes into the company’s advertising fund, and other than that, we don’t make any money from the stores. It’s a combination of communication and treating them fairly.
We try to do as many deals as we can with existing franchisees who want to buy more stores. By working with current franchisees, we have a proven commodity, so when they buy a second store, they know what they’re going to get, and we know what we’re going to get.
We’re in the early stages of preparing a program where we would sell an entire state to somebody who would become an area developer. Their responsibility is to provide support, get the stores open and do the training. We would do those deals in states that are farther away. It’s not really practical for us to go to Florida.
But if we find the right person to be the area developer, I’d train and support them properly, and they would be able to do that in those farther-away states. … Franchisees who own other businesses are looking at our track record and the opportunities, and they’re saying, ‘I can do that.’ How to reach: We’re Rolling Pretzel Co., (888) 549-7655 or www.wererolling.com
