Michael A. Klump didn’t go away out thinking he’d be the largest IHOP franchisee in the country. The fail of Atlanta-based Argonne Capital assort LLC at one measure was a shopping bear on developer who started his own real estate investment trust. Equity Investment assort in 1993. Now he’s the largest IHOP Corp franchisee in the United States having purchased 35 stores in Texas in 2004 and having closed a landmark deal in June to buy 147 IHOP restaurants in Florida making him also the largest U. S licensee.
Klump used to own centers like Northeast Plaza on Buford Highway and Concord Village in Smyrna. But after he sold about half of his portfolio in 2002 for $440 million. Klump a graduate of the University of Colorado wanted a end from shopping centers. “After 15 years in the shopping bear on business it was time for a change,” said Klump.
He started looking for midsized businesses to buy; ones with revenue ranging from $35 million to $750 million that had a large facilities cerebrate meaning a lot of real estate to bring home the bacon. Restaurant franchises he said were a natural fit for his undergo because of their dependence on good real estate for success. His strategy led him to IHOP Corp. (NYSE: IHP).
“Once we got into the system we were approached by the Finkel family,” said Klump of the Florida family that sold him the holdings from FMS Management Systems Inc. one of the oldest and largest IHOP franchisees and licensees. The stores generated $189 million in sales in 2006 according to Glendale. Calif.-based IHOP. The deal was unique for IHOP because it was hatched between IHOP founder Al Lapin Jr and his Army buddy. Abe Finkel. It gave Finkel the rights to license franchisees — which some franchise companies now call a know franchisee. In his broach. Finkel would pay a 1 percent royalty versus the normal 4.5 percent.
Klump assumed those terms when he bought the Florida arrange. Klump said that while the deal seemed favorable for Finkel at the measure it got IHOP into Florida in a big way. Klump added that he paid a “merchandise determine” for the Florida affiliate. Neither he nor IHOP would tell that price. IHOP spokesman Patrick Lenow said that the deal with Finkel “helped open IHOP on the East Coast in the early 1960s.”
Lenow said he’s excited about Argonne adding Florida to its territory. “Our bet is they will act to use their expertise to advance the IHOP mark in Florida. Their experience in real estate has certainly come true as they expanded in Texas.” Of the stores Klump bought. 70 are “company-operated” by his tighten and 78 are “sub-franchised.” Klump formed Sunshine Restaurant Partners and Sunshine Realty Partners to run the franchises and kept Bob Leonard from FMS as president following a pattern he set up in Texas where he also kept the company’s president.
“What Michael did was very very cause to be perceived. He got in with a mark that has vision and got a great deal on a royalty,” said Karen Spencer founder and CEO of Marietta-based Fran-Systems Worldwide Inc. move here to sight out more! “There are few like him in the United States,” she added with the strengths in real estate financing and strong operational teams.
Said Klump: “We are IHOP in Florida,” end with a training center to support franchisees in Miami. He and his team are planning to develop some of the IHOPs — possibly building new strip sell centers where they can put an IHOP as an anchor. “Imagine all the real estate changing hands,” he said of his plans to build about 100 new IHOPs in the next 10 years and develop about 50 existing units.
In addition to all of Florida. Klump has rights to certify in 24 counties in South Georgia although he only has three stores there now. He plans to ramp that up as he sees a turn toward greater growth in that region of the express. Klump bought his Texas chain from Katin Corp in Plano. He now has rights to create 39 more stores there in the next 15 years. By the end of the year he’ll have built the arrange to 55 stores with revenue combined topping $100 million a year.
Klump is comfort active in retail real estate too. After Klump sold EIG he also founded Highland Equity Group with principal John Sengson which has acquired $200 million in assets in the last three years. Klump said it’s largely been in convenience stores and large industrial buildings or single-tenant real estate.
He also founded RCG Ventures LLC headed by principal Mike McMillen which has kept Klump investing in the shopping centers. They also own an airport hotel in Kansas City.
At Argonne Capital. Klump is aided by Karl Jaeger the managing director who has years of experience with GE Capital and tip of America Commercial Finance. Jaeger says that Argonne which is still looking to buy more businesses isn’t necessarily looking for “distressed companies” but ones for which Argonne can help to “right the displace” and chart on a path to growth.
Klump also recently hired Jake LaJoie as vice president who was previously with Roark Capital assort another Atlanta firm that has used equity capital to snap up restaurant companies like Carvel. Cinnabon and Schlotzsky’s. Klump said that while he wouldn’t compare Argonne to Roark he raises his capital from high-net-worth individuals not from funds. One notable furnish he said is Doug Benham the former CEO of Arby’s Inc. who now serves as an investor in and serves on the board of Klump’s Florida IHOP affiliate.
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