• The story behind Hyde Park Ventures and how Jody Goehring started his franchising journey
• How franchising works and what the relationship between franchiser and franchisee looks like
• Advice for entrepreneurs considering franchising as an option

There are many paths to entrepreneurship, and in this episode of “Masters and Founders” we focus on the franchisee. You probably encounter franchises often as a consumer, and today we sit down with Jody Goehring to explore the other side of the relationship. Jody Goehring is the co-founder and managing partner of Hyde Park Ventures, which is a “vertically integrated management company” that “acquires, develops and operates multi-unit restaurant franchises and triple net real estate assets.” Our conversation with Goehring focused mainly on the multiple Five Guys locations that Hyde Park operates as franchisees. 

After earning an MBA and garnering experience in investing and business across diverse industries, Goehring partnered with his colleague and Hyde Park co-founder Greg Vasey to pursue franchising Five Guys restaurants. 

He was interested in building a “forward-thinking” portfolio and Vasey had experience in restaurant operations, so they turned to the hospitality industry. Rather than start a restaurant from the ground up, the partners were attracted to franchising for a few reasons. First of all, the level of support from the franchisers was appealing – because franchisees essentially outsource branding and marketing to the franchiser, they’re able to focus solely on operations, product, and consumer experience, thus enabling faster return on investment and a more scalable model. The restaurant business is notoriously volatile, while Goehring and Vasey discovered through research and analytics that franchises offer a consistent, incremental return no matter what the economy and markets are doing. 

While many franchise agreements are structured in a similar way, Goehring emphasizes the importance of choosing a product and brand that is meaningful and exciting for the franchisee. He was drawn to a fast, casual restaurant because it was the perfect medium between a fast food joint and a full-service establishment, which aligned with the kind of operations and pricing model that he was interested in being involved in. Goehring also loved the family-focused philosophy of the brand, and of course, is a huge fan of the sustainably sourced and delicious product that has made Five Guys so famous across the world. 

The Five Guys Franchisers are also uniquely involved and supportive, and typically return the initial investment to their franchisees in 12-18 months. Goehring encourages any entrepreneurs considering the franchise route to do their due diligence and research the company that they are considering franchising, because the partnership between the franchisee and the franchisers can vary in degree of support and involvement and it’s crucial that you are satisfied with the details of the arrangement. 

In addition to opening Five Guys in new markets globally, Hyde Park is growing. As an investor and operator hybrid team, Hyde Park is interested in expanding their portfolio and will look for new opportunities in the hospitality space, including hotels and resorts. 

Goehring encourages entrepreneurs to consider franchising as an option, as it takes a level of focus off of the immediate need to build a brand and be involved in the creative up front so that you can focus on the quality of the product and the operations. He encourages those exploring their franchiser options to make sure that you are in love with the product and aligned with the brand’s founding philosophy before choosing who to partner with. 

Make sure that you check out this fascinating episode, full of advice and insight for anyone still considering how to start their own unique path to entrepreneurship. You can check out our other “Masters and Founders” episodes here! 

Masters and Founders is a founding_media podcast created in collaboration with foundingAUSTIN.

Host: Dan Dillard

Guest: Jody Goehring

Transcript: 

this is a founding media podcast if welcome to another episode of masters and founders this week we’re sharing one of the interviews we did live at the long center during south by southwest we had a great time speaking to some amazing folks who were in town for the festival and also features some inspiring local gas as well during this episode we’re speaking with Judy gearing of Hyde Park ventures Hyde Park ventures portfolio includes Boston based Hyde Park burgers in the third largest five guys franchisee in the United States Jody to list all about how they got started and why the franchise model works well for their business let’s jump into my conversation with Judy 

I’m really excited to share some knowledge here with with Jerry’s gonna bring to the table around franchising so it’s also about what had purchased us and franchise in other words involved yeah well thanks for having me I’m delighted to be here  it’s a great topic in one of excited talk about  Hyde Park ventures is the third largest U. S. based five guys burgers and fries franchisee we’re based up in Boston Massachusetts with offices  down here in Austin Texas as well we started  back in two thousand and nine my business partner Greg veis he bought the rights to develop five guys in the north shore of Boston right when we graduated from business school at university Chicago we graduate into a a quite an economic market for ourselves and he was  he had the foresight to to find a really good Brandon a really good market to develop and over the course of that the next five or six years 

he built a nice little portfolio for himself we’re on vacation with our families have back in two thousand fifteen and  decided let’s let’s get together and build some really fun what do you know how to do and what do you know how to do it turned into  into well I know how to run restaurants in in my background previously was an investment banking and he said well you know how to buy things right as a why I guess so so why don’t we team up and figure out how we can build a really forward thinking   hospitality portfolio on the back of my experience in in in in a in technology and his experience in restaurant operations so fast forward we did two major acquisitions over the course of the next couple of years  and now we sit at thirty three units with a twenty five units in development  and we own from the states of Maine through the state of Rhode Island while so I want to back of us that was a lot we just observe Thomas start back with inception 

so white why not go and build one restaurants bars versus going the franchise model  yeah I would say it scale matters and having a system that can support the franchisee and support the entrepreneur is incredibly important  one of the differences between working within a franchise system and outside of franchise system is a level of support so structurally we pay a percent of our sales that we make to the brand as a royalty we also pay a smaller percent of sales as a marketing fee so basically we’re outsourcing our creative in our brand and really focused on running really tight operations and really creating an optimal experience for the customer and a perfect product so  when we thought about what we what we wanted to do whether via or restaurant or were part of a franchise not finding the right franchise was was a really key for us  and it starts with the right product we wanted to make sure you can’t build a business whatever it is if you don’t have your product right and the same goes in franchising so we loved the five guys product 

we love the burger we love the milkshake we love the French fries instead of the consumer and it’s one a lot of awards subsequently  so we started there so  when we found five guys we had had a great product it had a great growth trajectory and it had a great sales to invest ratio so we knew when we want to start we’re gonna build something big and great wanted to build something today and you need to do on the back or really strong platform so that’s how we start makes little sense yeah what  fears were something that you’ve tackled with twenty first decided like  yeah let’s do this at restaurants are tough  you know you hear a lot about some restaurants doing phenomenally well in some struggling and that’s a real factor  over the course of the last couple of years as we develop restaurants we’ve certainly had a couple that they didn’t do so well and those are tough they’re tough to absorb so  you know making sure that the business model itself works just like anything else do the unit economics of each of the stories you build make sense it costs X. to develop when do I think about getting my money out of it and how do we think about continuing to to pay myself impaired Vester is return to something that’s top of mind 

so being very insightful and and be in being able to think through and plan and model your investment returns to understand what the investment thesis actually is is paramount to start early be detailed be thoughtful lean on your advisors and make sure the decisions that you make to build the restaurant or the restaurant portfolio are are in the interests of of long term success what was the  selection process I mean I I’m just kind of try to put myself in your shoes and imagine where this was but what was the selection process like okay I want to start business and food yeah and I want to pick the right brands and you know there’s so many burger brands and have so many good burger brand  Moses leisure process look like for you was it should get started  it started before we got into restaurants actually started the franchising level you know do you make the decision do I want to build a company on the back of another brand or do I want to build a brand in the built the company  we looked at me and graduating from university Chicago in two thousand and nine it was a tough market and we  you know we wanted to  make sure that when we looked at the investment it was in relation to what was going on the rest the market so we look to the public equities we look at the S. and P. 

we look at the Dow and of course those were going crazy so we said what is it what with the investment horizons like on in the public market going back ten fifteen years so we looked at the the volatility of the public markets and then we applied a layer of analysis against franchising overall whether it’s a franchising of a hotel or restaurant or gym or whatever it is and we looked at the stability the inherent stability and slower but still consistent growth with across the franchising market so we saw the S. and P. up and down and we saw consistent return and growth in the franchising market at about two to three to four percent a year if you look at the chart you can imagine a slow steady climb versus the ball to the public market so we said there’s something here with franchising now we need to figure out what type we do do we do restaurants to hotels where is our skill set what do we think we can hire the best talent and we worked our way into five guys  we like to fast casual restaurants  we thought the there’s if you can run really good restaurants the margins are really good we like to fast casual  speed at which is different from a quick service restaurant like a McDonald’s or subway and it’s different from a full service sit down restaurant we like to fast casual because he could command a pretty high ticket prices but didn’t have onerous labor requirements on the piano 

and there was a full service so we we took that when we look that  what are the growing segments of the market rate is a check in is at peace is it what are what a consumer is consuming the most of what they like and where where are some of the highest growth brands in the country actually playing  and workers burgers to your point burgers is very competitive  you know it’s a very saturated market  we found a great little family owned restaurants  chain called five guys they you know and started franchising in two thousand three they opened in nineteen eighty six for the first time it’s literally a father and his five sons five guys and  we love the family nature of that business is still owned  as a family today I think it’s I think it’s one of the top  that largest family owned businesses the United States still with over sixteen hundred restaurants out there now we love the faxing of the room of of of the portfolio is about about five hundred or owned by the family and about  eleven hundred or our franchise  and we love to be speaking of that we love to that that the brand was also a franchisee  not just the franchise or because they share a lot of the pain that the actual franchise he goes through in selecting a brand to work with having won the doesn’t just  Dave brown marketing up at a run marketing and brand it actually runs operations in actually touches the consumers are really important part southern owner of the original restaurant and the franchise to themselves franchise the rest of the country right they own most of the mid Atlantic and then the rest of the country globally so now it’s in  it’s been in about twelve different countries right now that’s interesting I wouldn’t a phone number in there and not just yourself but that’s exactly 

so there’s V. these are restaurant operators to the core they love restaurants they love consumers that in their restaurants there in our restaurants  they’re very supportive  and we that’s one of the reasons that we fell in love with the brand the way that we did it’s got a  it’s got a great product it’s  we can talk in detail about the sourcing that product in the sustainable organic nature of of where their products come from  we love the investment ratio  which I think is of is is very important in this business  it costs us a half a million dollars to build a restaurant and we do about a million half and top line sales costs us yet we compare ourselves back and we think about pay back periods a lot so we it’s it’s supposed to be really successful restaurants can pay back in about a year and otherwise it’s about eighteen months average by the time we you know put a five hundred in and get our five hundred out in terms of  of the day it’s really really we love that the quality product and and we love the investment  profile this where where’s the next five to ten years looks like for you guys so you can stay in restaurants you go to other types of franchises or what is hard part don’t cats of high park is  we’re growing  we love our thesis in the U. S. for five guys  but we we expect fully expect to be in that system long term  were not a private equity firm were an investor and operator hybrid combinations so we’re in for the long term  we we invest along side  some family offices in in some high net worth individuals who are who believe in in Hyde park’s vision long term within the park assist  we’ve recently acquired the rights to develop  five guys in the Scandinavian markets will be expanding out of a base in Stockholm Sweden  in the coming couple of years which is really exciting for for us to provide parking for for five guys it’s the last major  European country that’s been that’s that’s not I had a five guys yet so we’re very excited about the better the world 

we’re also bringing on a partner to help us with hospitality vestments hotel investment so you can see Hyde Park expected park to  to begin to invest more substantially into  hotels and resorts over the coming five to ten years so we’re really excited about building a platform that scales it’s focused on hospitality it’s focused on selecting the top partners that we believe in the top franchise ores we believe have the longest term value horizon for both our investors and for the ultimate the consumer that’s really cool so as you know our audience out there is looking to become a master founder themselves and and how do we do this how do we become successful how does this work and one thing we have never talked about as the franchise model of which I thought was really interesting that you guys just only do that and so when vice would you give to someone that’s just kind of like kicking the tires on a production of francesa build my own thing what what would the advice be  absolutely look at it  it can help you with with companies in franchise or as I have already build strong brands it takes a level of focus  off of that immediate need to create that bread and and to create that design motif right now then you can soak it allows you to really focus on your running of the restaurant and the quality of your product so it’s a partnership to give as a partnership  there’s tons of different companies out there that  that start as building up for five six restaurant portfolio and decided there they want to grow by franchising  

I think you deserve those are excellent to consider I think you have the experience can be bifurcated some extent between sort of law the larger in jurying lasting brands that have been around for a long time you know being at McDonald’s franchisee is much different than being a franchisee for it first started concept it it only has several units to a financial unit economics to to back itself up with  so I’d say there’s a franchising can can can can run the gamut  when you think about which one you want to get into think about  think about the branded with product do not forget about the product  do not use that’s the absolute key people will not come if the product is not good  and your ability to live for that product is not perfect and that in that level of service and cleanliness of the restaurant of the hotel where the experience for the consumer it is first and foremost so the very beep beep they’re very thoughtful as you think about the where that specific franchise or is in its it is this time like I think that’ll be very indicative of of the lasting nature of that business in your business I’m excellent since it sounds like you know if if how they’re done with their brand and how do you feel about the brand Hey at the rate at the very very core actually is this a brand that I would love to carry on 

and then I got a good have they done well with that if it’s a unknown brand Michael it may be a little more risk with it I’m sure the prices difference between them but it sounds like you know definitely if there’s a brand that’s already got doing a really good job and kind of see what that looks like instead of that just understanding the philosophy of the founder of that brand how do they think about growth how do they think about supporting the franchisee the the greatest brands out there are incredibly supportive of the franchisees and franchisees can recognize that the success of the franchise or is on the success of the franchisee to ask in Polk and then for a prod on questions around long term philosophy the way they think about support the types of support and really how they’re willing to put you first as they think about growth of their own organization that’s really interesting point because ET one of the things that you hear on the streets as well franchises they have all this controlled  so on so forth and it may not be the best but I think that select cases obviously you you were talking about your partnership is not that way because they they’re very open to listening to the franchisees yes yes it exactly that’s one of the reasons and you know it was hard I 

I would say we didn’t know that from the beginning right but we saw that as we develop the relationship as we build stores as we saw the impact that their teams would have literally in the stores with our employees and that was one of the reasons that we continue to invest in that brand is because of that level of support I’ll be quite Frank and we’ve looked at a lot of systems out there in restaurants and hotels and five guys does a remarkable job in the style of support so  make sure those are questions that you ask early on  and those are the those are very it is reflected in in what you pay you pay a royalty to the brands  and they vary from two to ten percent depending on the system in the in the asset class  but in some cases very very worth it if you’ve got a very strong brands very supportive well I think about traditional businesses and the businesses I’ve run you’re gonna spend  if you’re doing it right  if there’s a way to say right but if you are spending money in marketing and and  partnerships and things so you still have a twenty five percent of your money out doing that anyway so you’ve already got a brand’s establish this kind of help you 

I imagine they come in and kind of help you with employee count me it’s gonna give your guidelines on all that and what is that yeah this is it think of it as a massive booklet of how the best in practice restaurant groups do it and it’s everything from how to think about hiring it’s  how to think what sourcing in and one of the things the franchise groups do  the franchise or stew is to help you through that process right I don’t have to go out and figure out where I’m gonna get my meat from where I’m gonna get my potatoes from and then negotiate with one restaurant right I’m negotiating with sixteen hundred restaurants and the brand is actually doing it for me so that’s one less thing I have to think about I just need to make sure that I’ve signed up with the right vendors and that B. fitness potatoes are arriving at the right times on the right days and being unpacked and stored and taken care of as a prepared for customers so that’s those the things that we want to work about control that experience within the four walls will be caught and so there’s there’s lots of different things we’ve got five guys for example also sent twice a week will have a customer service of the will have representatives of five guys  secret shop or restaurants servers are always these little touch points of interactions to keep us on our toes to make sure that the cashier greeting is right to make sure the quality the food is right to make sure the cleanliness of the bathrooms is right there at that level of detail especially within food service is paramount to be successful what’s really interesting in in a lot of our shows we discuss the path of the founder and others ups downs there surprises there’s all sorts of things there sounds like through franchising at least some of those it’s almost like a head start you yet you have a lot of those questions answered for you 

yeah and then you can get to work and maybe making money quicker that sounds that’s exactly the way that we think about it so it it’s it’s some and just because you’re not tackling necessarily the creative  doesn’t mean you’re not involved in it  I said  as a voting member of the marketing task force of the money we did that the brand does collect I’m on the board that helps them determine where we spend it  so we said it and you know I go up  I go to headquarters twice a year and we sit and we review our marketing initiatives and a return on equity investments and how do we think collectively that brand positioning and who should we work with from an advertising agency perspective it so five years again does a really good job of bringing its franchisees into the fold taught using them a lot of which the franchisees are very experienced  by operators and investors from previous lives who’ve decided to come in and spend time with what the fuck I system and  and and then taking advantage of of those opportunities has been really forward thinking from five guys perspective in the good franchise was out there no sins and bring their franchisee groups into the fold and help them make decisions because they affect everybody it sounds like to me it sounds like you have a corporate board comes and with experienced people yeah that and 

because their owners if they bring experience from the previous lives and they’ve got really good valuable inputs absolutely that makes its partners and we we look at our fellow franchisees as partners to we help each other we help each other with lenders we help each other with  certain local store marketing community initiatives we’re doing some fun things up in New England with the red Sox and in this group all of not just our franchisee group but but but others as well so there’s lots to learn from the franchise or instant and lean on the franchise or there’s lots to learn from other sophisticated franchisees in your group so when you’re thinking about franchising think about the franchise  and then look sideways who else is involved in franchising the spread are they quality investors at the quality operators that’ll tell you a lot about about the system you could get yourself into that’s a good piece of advice when we talked last what is the person you you have some tools that people can go to as far as starting to research on franchises what are some of the trade publications or some of the places you into to kind of do your first initial yeah final we love the French the French has times provides are adequate I think it’s a monthly or quarterly periodical where they outlined top franchise wars in certain categories hotels and gyms and laundry services and anything you can imagine some of which I I did not even know we encourage us but but there are there lots of entrepreneurs out there car washes  that’s a great data breaks it down by size and he gives you some insight into  different types of groups and different types of requirements to be a franchisee  typically there’s a liquidity  

cash liquidity requirement because they’re going to expect that if you’re going to buy the rights to develop the state of Massachusetts you’re going to be able to develop and have the capital to develop and have the relationships with lenders to be able to leverage those assets to be able to grow on a specific timeline set a franchise times will outline that for you which is been really helpful for us there’s conferences and depending on if it’s a hotel or a restaurant conference I’m going to sit down with French has or doesn’t have that one on one dialogue before you get in there’s a restaurant finance conference in Las Vegas I’m thinking of every fall in November which would be you which is paramount in which what we did before we before we actually started on our our catalyst for growth as we went out to that conference and we listened and we sat down with with brands and we sat down with lenders and we really got a good feel for where five guys ended up  wanting to position and wanting to be and that was just what what align best with us but that those are two great resources they are FTC the restaurant finance conference in Las Vegas in November in franchise times that’s exactly where I would start very good thank you very much for being on the show it’s this is certainly in line me and  lets the audience at least get started what where to get started and also experience the pros and cons to doing some yourself versus going on with a good quality companies and a good brand  things very informative for people out there trying to look at the different ways of being a much from this multiplicity absolutely thanks for being on masters and founders thanks again Richard rainwater and flaunts and we see the pattern again as in many of our interviews making personal connections is key with entrepreneurship and as we now know key to creating successful franchises thank you Jody for chatting with us and making the journey to downtown during south by southwest the message that founders team includes me Dan Dillard producer Mariah gossip an audio engineer Jake Wallace thank you everyone of family media for your support to see the video interview another founding media podcast make sure to subscribe to our YouTube channel the link is in the show notes thank you for listening