3 Smashburger Franchises on a Roll

Posted Wed, 2009/01/14 - 00:32 by Don Sniegowski

Photo/Smashburger website

SAN ANTONIO (Blue MauMau) - SB Alamo Development, LLC, has signed a franchise agreement with Smashburger, a gourmet hamburger chain, to develop 45 stores in eight years. Those locations will be in San Antonio, Austin, West Texas and New Mexico. The first unit in San Antonio, Texas will be launched no later than April.

Lawrence Harris, CEO of franchise SB Alamo, declares, “We are thrilled to be in on the ground floor with the next biggest success in the restaurant industry, and we look forward to bringing Texas and New Mexico the best burger they’ve ever tasted.”

Smashburger is a start-up franchise concept that is affiliated with private equity firm Consumer Capital Partners, developers of Quiznos. Rick Schaden, founder of Quiznos, is a board member of CCP. Serving gourmet burgers, the start-up franchise chain touts itself as "The best burgers you ever tasted Fresh, never frozen Certified Angus Beef".

“It is a testament to the Smashburger management team and the strong partnership that exists with CCP that 105 franchise locations have signed on within a period of about three months,” said David Prokupek, Managing Partner and Chief Investment Officer of Consumer Capital Partners. “We know that corporate growth will take us only so far in our quest to be the top ‘better burger’ in the country, which is why partnerships with quality franchisees like SB Alamo are critical. The talent, experience and reputation of Larry, Allen and Jason, adds further validity to the Smashburger model and will undoubtedly be a benefit in attracting additional quality franchise and joint venture partners in the future.”

The development roll-out of Smashburger is markedly different than the small mom & pop single-unit franchise owners of Quiznos. Headquartered in Denver, the firm first started developing a few company-owned restaurants and then signed two large franchise agreements to commit the franchisees to open 60 franchises. Where Quiznos shops are run by owners who typically have not been restaurateurs, Smashburger wants franchise owners with at least 5 years of managing 10 restaurants or more.

SB Alamo Development is Smashburger's third franchise, bringing a total promise to develop 105 future locations for the franchisor. The chain plans to expand to 30-60 locations by the end of 2009 and ultimately to grow to 500 quick service restaurants in 30 markets.

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22 Comments

A Deal That Should Be Refused by Guest

Submitted by Guest on Tue, 2009/01/20 - 21:29.

This is a very stupid move. Sure, these franchisees may be smart enough and strong enough to change many of the contract clauses that put thousands of Q franchisees in the poorhouse. But if you're that smart aren't you smart enough to open a gourmet burger restaurant without signing a pact with these born and soon to be convicted liars? They will screw you and you won't enjoy it. Just remember... You can prick your finger, just don't finger The Dicks.

Just Another Scam Courtesy of The Dicks by Guest

Submitted by Guest on Sun, 2009/01/18 - 17:57.

There's a sucker born every minute and the Dicks are there with their hands open to take their money. Another hamburger restaurant? Gee, that's an original concept. Openning in a recession? Great timing. Business acumen of those signing agreements with the Dicks? None.

Now 4 Franchises on a Roll, Phoenix Today Commits to Open 30 by Don Sniegowski

Submitted by Don Sniegowski on Thu, 2009/01/15 - 01:35.

Business investor SunWest Burgers LLC has signed a franchise agreement with Denver-based Smashburger to commit that it will open 30 franchises for Phoenix and Maricopa County - or else.

The firm is a subsidiary of Phoenix-based SunWest Restaurant Concepts. The firm's principals are David Doty, Chuck Riske and Robin Yoshimura, who also own and operate six Jerry’s Restaurants and six Black Bear Diners in Arizona and are involved in over 30 other restaurants in six western states.

David Doty, CEO of SunWest Restaurant Concepts, stated, “We were initially drawn to Smashburger due to the extensive talent pool behind the concept and as we did our due diligence, we developed a deep respect not only for the Smashburger team but also the operational elements they had engineered into the concept. We are honored to be a part of the Founders Club and we look forward to lending our own operational excellence to the Smashburger brand while bringing to Phoenix the best burgers our city has ever tasted.”

Smashburger/Quiznos-a matter of time.... by Guest

Submitted by Guest on Wed, 2009/01/14 - 11:03.

I see that the Schaden/Myers crooks have drained just about all they can from Quiznos franshisees so now it's time to open up a new revenue stream for this "food distribution company".

Work for Richard by michael webster

Submitted by michael webster on Wed, 2009/01/14 - 07:06.

Here is some more information about Schaden's newest marks :

"Based in San Antonio, SB Alamo Development, LLC principals Lawrence F. Harris, Allen J. Jones and Jason R. Kemp collectively bring over 80 years of restaurant industry experience to Smashburger with brands such as Pizza Hut, PepsiCo Foods International, Boston Market and Applebee's. In addition, Harris, Jones and Kemp currently operate 22 Buffalo Wild Wings, 30 Little Ceasers and 15 Zio's Italian Kitchens. SB Alamo Development is Smashburger's third 'Founders Club' member-a designation reserved for only the first five large franchisees to join the Smashburger team. 'Founders Club' members will provide valuable input on the future direction of Smashburger and will act as field counsel on critical decisions as Smashburger grows"

You have to love the pitch: high end burger market, exclusive founder's club, field counsel, only those with serious experience need apply, blah, blah, blah and double blah.

Harris, Jones, and Kemp the latest too smart to fail idiots who fell for a known conman's pitch.

And what is the big attraction?

According to Harris: "'As restaurant developers, we saw early on the great potential success of Buffalo Wild Wings when that brand was in its infancy, and we see all the same attributes in Smashburger. We are thrilled to be in on the ground floor with the next biggest success in the restaurant industry, and we look forward to bringing Texas and New Mexico the best burger they've ever tasted.'

Oh, and no difference between the two corporate cultures? Any Buffalo Wild Wings franchisees killing themselves in despair over the way the corporation treated them? 40% of the Buffalo Wild Wings franchisees not making money? Buffalo Wings to do an IPO, then squeeze out the stockholders to go private?

Richard, polish up your smash mouth talk. San Antonio will be calling.

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Re: Now 4 Franchises on a Roll, Phoenix Today Commits to Open 30 by maddog

Submitted by maddog on Mon, 2009/01/19 - 01:38.

These are merely press releases. In current recessionary times, and in lieu of Schaden's fleecing of Quiznos and Fitness 123 franchise owners, why would anyone want to do business with Smashburger? This concept is doomed from the getgo. We will be discussing Schaden's bankruptsy filing in the not too distant future .....

Smashburger is the Quiznos of the future by A Schaden Victim

Submitted by A Schaden Victim on Wed, 2009/01/14 - 02:22.

"Smashburger wants franchise owners with at least 5 years of multi-unit, 10 locations or more, restaurant management experience." I am sure that is only because Rick Schaden is looking for deeper pockets this time around. After bankrupting hundreds, if not thousands, of franchisees through Quiznos and 123 Fitness, I am sure he's moving on to the next round of victims through this newest scheme. Schaden's purpose is not to run a restaurant chain, but to feed his own insatiable greed. I have no doubt that if someone had the money but not the 5 year multi-unit experience, Schaden would make an "exception." Anyone who buys into any of Schaden's operations goes in with their eyes wide open. I, for one, won't shed a tear for anyone who loses his home, his wife and every cent he has because he bought into Smashburger.

I doubt they will be calling me, because by RichardSolomon

Submitted by RichardSolomon on Wed, 2009/01/14 - 08:52.

People with that kind of focused experience and money can make a success out of things that ordinary FranWads cannot. Such folks also can negotiate the more goshawful clauses out of franchise deals - fraanchisors will make concessions to get platinum franchisees - and these are platinum franchisees. Having themselves better positioned, experientially and contractually, they will walk with relative impugnity should Shaden pull a Schaden on them.

Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

Re: I doubt they will be calling me, because by Guest

Submitted by Guest on Mon, 2009/01/19 - 19:42.

You're right. But why would even a sophisticated investor choose to get involved with persons with such a dark reputation? If the Schadens haven't the intelligence to build it big by building it win-win (as their history indicates), then the concept is doomed to eventual failure. There must surely be better franchisors out there.

Sophisticated Fran Wads by michael webster

Submitted by michael webster on Wed, 2009/01/14 - 09:35.

Richard, you must be missing your morning cup of coffee to believe that a contract trumps character. An old Cuppy's vetran like yourself can hardly believe that bedding down with Schaden, no matter what the contract says, is going to be anything other than a one way ...

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

I expect folks to suspect that at my age I may be losing it, by RichardSolomon

Submitted by RichardSolomon on Wed, 2009/01/14 - 10:44.

but I have often represented real franchise veterans in deals, and Schaden or no Schaden, they are not people you can mess with. The agreements I have helped them fashion with the franchisors who are always drooling at the prospect of getting real pros like these folks are always good deals. Not even a Rick Schaden can get around those agreements. By way of illustration, since they are already in the food business, covenants not to compete go entirely or almost entirely out the window. There are never liquidated damages clauses in any of these deals. With those as givens, the only way to keep them in the fold is to treat them with respect. They can easily afford to reidentify and move out. The pros will walk away before they give anyone a strangle hold. With their experience, there is always a long line of folks willing to negotiate to get them on board.

Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

Losing It by michael webster

Submitted by michael webster on Wed, 2009/01/14 - 10:52.

Naw, I wasn't thinking that. I was thinking that I wouldn't sign any deal with a Rick Schaden type no matter how well the contract protected me.

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

I wouldn't either, but I'm not the client. by RichardSolomon

Submitted by RichardSolomon on Wed, 2009/01/14 - 13:45.

Once I tell 'em the reputational information, it's their call

Richard Solomon, FranchiseRemedies.com, has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

He is after more sophisticated investors by Barbara Jorgensen

Submitted by Barbara Jorgensen on Wed, 2009/01/14 - 03:14.

I saw a special on television about how people are going to be eating more expensive hamburgers than steak. It was interesting. I have to admit even if I do not agree with Rick's business practices he keeps on top of what is hot. People will give up eating steaks and go for gourmet hamburgers. Paying $8.00 to $12.00 for a hamburger instead of a $40.00 for a Filet is more inviting during hard times. (I don't know the price of steak because I don't eat meat.) People who have more money to invest may loose big. Look what happened to investors who went with Madoff's scam. They lost millions. The Schaden's will always have their eye on the almighty $ and not the welfare of anyone. Unfortunately he was wrong about the fitness business. What do you think? Will Quiznos be able to survive? Or do you think Rick is going to let Quiznos go? Only time will tell. If Smashburger is the next Quiznos I guess everyone will expect another franchise with many unhappy zees blogging on sites like BMM. And certain people will call them whiners and not people trying to warn others not to make a big mistake. Remember Madoff looked sophisticated, successful and all he did was scam people. The only difference I see with sophisticated investors is they will cover their butt as much if not more than people like Quiznos and 123 Fit. I bet they will have to negotiate with them. Unless they are like Madoff's investors who don't know better. They just have more money to loose and Rick and his partners will take full advantage of them.

I failed to tell by Barbara Jorgensen

Submitted by Barbara Jorgensen on Wed, 2009/01/14 - 14:41.

that the news reporter ate a gourmet hamburger at three establisments that were well known eaterys. Nice resturants. Smashburger looks very plain. Not exactly a fine steak house like Daniels Steak House. People interested in Smashburger should check out steak houses and see how much people are paying for a gourmet burger. The news show a steak house grinding steaks to make their fantastic burgers. The reporter ate a burger for breakfast than went to another resturant and ate a burger for lunch and yes he ate another for dinner. All different taste and he loved all the burgers. Not to mention for a side dish some had a huge pile of thin sliced fried onions, thin french fries, thick fries. The portions were enough for two or three people. Will Smashburger be able to compete with the fine dinner houses who grind their own steaks to make their burgers? If I am going to pay $8.00 to $12.00 for a burger I want to be in a place that is nice and be able to order a glass of wine.

Why grind by Ray Borradale

Submitted by Ray Borradale on Thu, 2009/01/15 - 04:32.

A month ago I stopped into a small eatery and there was a sign for Wagyu steak burgers [350days grain fed]. Now this steak is a wonderful experience for any meat lover and a few days prior I had a small family BBQ based on Wagyu steaks. I couldn't resist and paid $14.95 but when it arrived it had been minced to hide what ever the hell it really was. Hamburgers are minced - a great steak burger should be hanging out of the bun so your napkin works overtime and with a large cold beer.

This was just another failure to ask questions which led to another whinge when what you thought you were getting didn't end up even closely resemble the sales pitch. Where have I heard that before?

Australian Franchise Opportunities, a common sense approach to franchising

Sophisticated Dummies by michael webster

Submitted by michael webster on Wed, 2009/01/14 - 07:30.

Do Diligence writes: "I saw a special on television about how people are going to be eating more expensive hamburgers than steak. It was interesting. I have to admit even if I do not agree with Rick's business practices he keeps on top of what is hot. People will give up eating steaks and go for gourmet hamburgers."

Are you kidding me? Who cares about some fantasy explanation about what people may be doing in next year when you are developing a 10 to 15 year concept? Rick Schaden is pitching whatever some too rich to fail, too rich to see idoit wants to hear.

Michael Webster, a franchisee attorney in Toronto, Ontario, publishes a website on business opportunities and franchises called "The BizOp News"

Fantasy explanation by Barbara Jorgensen

Submitted by Barbara Jorgensen on Wed, 2009/01/14 - 13:40.

I agree with you Michael 110%. People who are not informed will focus on what is said by so called experts on the news. I expect to see more gourmet hambuger businesses to pop up. There is an old saying when everyone is doing it, it is too late.

Re: Fantasy explanation by Guest

Submitted by Guest on Sun, 2009/01/18 - 20:54.

you are a true visionary. Because of you, i also expect to see these types of units popping up to address the economy. Of course, the economy could rebound before one even has an opportunity to build out the leasehold improvements on your 10 year lease unit, but why get bogged down in details?

Re: Fantasy explanation by FuwaFuwaUsagi

Submitted by FuwaFuwaUsagi on Wed, 2009/01/14 - 15:01.

You might want to look at the structure of the entities that are coming on board. There are ways to make money even if you are not making money. One was is to start a Corporation and sell your shares as others buy the stock because it is suppose to become the next hot thing. If this is your strategy than you care about appearance more than substance, because you intend to sell out before the unit operating results become material. See Krispi Crème.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers."

Would you trust Madoff? by Rich Piotrowski

Submitted by Rich Piotrowski on Wed, 2009/01/14 - 02:23.

There might be some people out there who if Maddof, while hunkering down in his mutil-million dollar pad in NYC, came up with a new "investment oportunity" would jump right in. Just like there are people willing to believe that that Prince in Nigeria really does want to give a percentage of his 5 trillion dollar nest egg to someone who he doesn't know, who just happened to answer that blind email.

Maybe also they believe in the toothfairy, that gnomes steal underwear at night, and that you really can be arrested for removing that tag from your mattress.

That being said, I'm tempted to say, let those fools go ahead and lose their money to Rick Schaden. Go ahead and ignore all the warnings.

But no, here I am still wanting to warn them, when you get that email from Nigeria... RUN AWAY... FAST!

When you see Schaden with a plan to "be in business for yourself, but not by yourself"... RUN AWAY EVEN FASTER!!!

At least the Nigerian scam artist will just take your money from you once and leave you alone. Schaden will have his lawyers haunt you, figuring they have you on the hook, and bleed you till you just want scream.

Yep, I have more respect for the email scammers.

I think its funny by Ray Borradale

Submitted by Ray Borradale on Wed, 2009/01/14 - 04:25.

There should be a big red flashing sign on BMM's front page; "No stupid smashed smashburger zees allowed to whine - BMM is currently operating at full capacity."

Well perhaps not; maybe they had difficulty researching Schaden's reputation. Or perhaps their banker, lawyer, acountant and business advisor helped them with their due diligence. Perhaps Schaden has magnetic charisma.

This all goes back to Fuwa's signature [Never underestimate ...idiots]. From swinging door franchises to swinging door franchisors. Why not?!

Maybe its not funny but it is definatley rediculous.

Australian Franchise Opportunities, a common sense approach to franchising

3 Smashburger Franchises on a Roll

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