By David Chilton Saggers
Innovation is the name of the game in the domestic franchise industry. Something new or different—or even a new take on an established product—can work extremely well if that innovation is employed in every part of the system. Each of the three successful concepts here are innovators and have home-grown roots in Canadian soil.
National Mattress Outlet Plus+
Rafal Kieliszek was on course to become a chartered accountant before dipping his toes into franchising. But after deciding to change career paths, he teamed up with a partner to market and sell a traditional Polish lemon liqueur known as Lemoniada.
Then Kieliszek ran into someone who had his own business selling mattresses, who encouraged him to join in. When that didn’t work out, the young entrepreneur found himself left with 30 unsold mattresses and the equipment needed to move them. As difficult as that situation was, it introduced Kieliszek, founder and CEO of National Mattress Outlet Plus+, to others in the mattress-retailing sector. Soon, he was off and running selling mattresses from his warehouse in Mississauga, Ontario.
Today, there are three corporate stores in the Greater Toronto Area and franchising began earlier this year. National Mattress’s first franchise will open in Hamilton, Ontario, and in the next two to five years, Kieliszek aims to have 10 to 20 franchises in Ontario in cities including Ottawa and Kitchener-Waterloo. He says that national expansion will follow. The total investment for a franchise is $250,000 and training takes one to two weeks at head office in Toronto, plus online instruction. The “sweet spot” for a store is between 6,000 and 7,500 square feet, and Kieliszek’s target customer is anyone shopping in the value-priced segment.
Retail or business experience is not necessary to secure a franchise, says Kieliszek, but he does want to encourage prospective franchisees to be comfortable using technology and to be fit, because of the physical side of the business. He also wants a hands-on approach: “I don’t want people to be just an investor. I want them to get to know their own market.” Men seem most interested in the system, but Kieliszek says he’s also seeing more couples making inquiries.
COVID-19 has battered many businesses in Canada, but for his company, the opposite has been true. Kieliszek brought in a plan to make sales and delivery as contactless as possible, including the now widespread front door delivery. “It’s crazy how well it worked out during COVID-19,” he notes. In 2020, volume sales remained steady and when lockdowns were lifted, sales went up.
As for the benefits of a National Mattress franchise, Kieliszek says his system is young and in growth mode. Plus, the system has a real online platform and presence—National Mattress was one of the first to use Google ads—and a strong backend structure including working with franchisees to find the best real estate opportunities for their new locations.
Philthy Philly’s Cheesesteak and Poutinerie
Hockey is one of Canada’s beloved national sports. And it was hockey that presented Danny Kotsopoulos with an opportunity to start Philthy Philly’s Cheesesteak and Poutinerie.
Founder and CEO Kotsopoulos says it was driving his hockey-playing son to Philadelphia that acquainted him with a real local specialty: the Philly Cheesesteak. His sandwiches are just like they make them in the City of Brotherly Love, with shaved ribeye steak, provolone cheese, Cheez Whiz, and optional sautéed onions all served on an Amoroso’s bun straight from Philly.
Kotsopoulos founded Philthy Philly’s in 2013 in Newmarket, Ontario and began franchising in 2015. There are now 14 franchises in the system, including the original store, with another four locations expected to open in late fall 2021. Initially Kotsopoulos says his target market was 18 to 36 year olds, but he quickly found that his sandwiches are so popular, the system is attracting everyone from “kids to seniors,” with heavy customer traffic at all times of day.
Above all else, Kotsopoulos wants to see investors who are customer-oriented. “We value every customer who walks in our doors or orders from us online,” he notes. Philthy Philly’s training program is four weeks and is delivered in person at its support centre. The cost of a franchise is $175,000 to $300,000. Philthy Philly’s uses both new builds and retrofits for its storefront operations, with stores of 1,000 to 1,500 square feet preferred. Kotsopoulos’ stores are in and around the Greater Toronto Area, as far west as London, Ontario, and as far east as Whitby, Ontario. He’s eyeing further expansion, explaining how he wants to be established nationally across Canada, and noting he’s already seen interest sparked from franchise prospects in Alberta and Atlantic Canada.
When the COVID-19 pandemic broke out, Kotsopoulos says he was unnerved and concerned about the business. “We worried about how we would make this work.” Fortunately, as an essential service, Philthy Philly’s has never had to close, and thanks to online website ordering and delivery using SkipTheDishes, DoorDash, and Uber Eats, the franchise system has thrived during these uncertain times.
The benefits of investing with Philthy Philly’s are numerous, says Kotsopoulos. As a young and growing company, the brand is popular with customers of all ages, and is backed by Kotsopoulos’ more than 30 years in franchising and restaurant industry experience.
The first strEATS Kitchen was born in Calgary in 2017. Since then, the innovative and contemporary street food system has grown to 11 franchises in Western Canada and Ontario, with another dozen more expected within a year.
As a part of Joey’s Franchise Group, which has a large portfolio of brands, strEATS is headquartered in Calgary, Alberta and is overseen by founder and CEO Joe Klassen, who first began franchising Joey’s Only Seafood Restaurants back in 1985.
Today, vice-president of marketing and design, Dave Holland, says that the strEATS take on food is different from other restaurants. For example, customers can try tacos stuffed with Portuguese-style peri-peri chicken, or poutine topped with Mexican beef. There’s also a creative range of vegetarian options. Holland says that at first, it was thought that strEATS would attract a mostly younger demographic, but the concept has proven to be popular across all age groups. “It’s hard to say who doesn’t like this food,” he says.
The cost of a strEATS franchise varies between $270,000 and $350,000 for a new store, and from $175,000 to $310,000 to convert existing premises that a franchisee already owns. Holland says that the sweet spot for a store is 1,200 square feet, and strEATS considers locations in both malls and on street fronts. The system’s franchisees are mainly businesspeople, with an interest in multiple units. Training is generally held in Calgary, but the system can train new franchisees regionally. Potential franchisees will need hands-on leadership skills and should be tech-savvy and problem solvers. Holland adds, “We prefer people with food service experience.”
The COVID-19 pandemic was a shock, and the hard part was managing restrictions in different provinces, notes Holland. strEATS fought back by promoting awareness of its mobile ordering application. Regardless of how it’s delivered to customers, he still says, “Our food is awesome for both take-out and delivery.”
The principal benefit of buying into a strEATS franchise is the food. But, Holland says there’s also a solid franchising record behind the system, a strong digital advertising strategy, and “the brand has an above average return compared with other concepts.”