Vets Find Barbecue Franchises Suit Their Tastes

Monday, September 28, 2009

Mark Petersen grew up in eastern North Carolina, where the tangy vinegar sauce is legendary in barbecue lore.

Ed Totanes grew up in the Philippines eating barbecue as well, but although the dish had the same name, it was a world away from Petersen's pulled-pork delicacy. "The first real vinegar-based barbecue I had was in Florida, and it tasted so different," Totanes says.

News Ed Totanes and Mark Petersen (inset) both participated in the Veterans Transition Franchise Initiative.

Now both have turned their love for barbecue into business enterprises, thanks in large part to another common trait � military service.

Through a program called the Veterans Transition Franchise Initiative (VetFran), Petersen and Totanes each received a $5,000 discount on their fees to open Virginia Barbeque franchises. (The initial franchise fee is $25,000.) "You can really make a lot out of $5,000," says Totanes, who has opened barbecue franchises in Blackstone and Farmville.

Totanes served as a hospital corpsman and submariner during 20 years in the U.S. Navy. He attained U.S. citizenship while in the service, and by the time he retired in 2007 he was president and CEO of General Aviation Flying Co., a Virginia-based firm that acquires and sells previously owned aircraft.

He researched possible franchises and, given his taste for barbecue, discussed possibilities with Rick Ivey, the founder and CEO of Tappahannock-based Virginia Barbeque. The company participates in VetFran. Totanes, a Jetersville resident, took advantage of the initiative to open his first restaurant with his wife, Teena, on South Main Street in Blackstone.

Petersen, a major still on active duty in the Air Force, also has made a family affair of his restaurant in Carrollton in Isle of Wight County. His son, Eric, and daughter-in-law, Jennifer, help run the franchise with occasional help from Petersen's daughter Rebekah, 17.

Petersen and his wife, Julia, have options on opening four other Virginia Barbeque restaurants, but the economic landscape has changed so dramatically since the first location's opening in September 2008 that their main focus is the success of that restaurant. "We're still looking at the possibility of opening another store," Petersen says.

Virginia Barbeque restaurants sell both vinegar- and tomato-based barbecues.

Petersen, a veteran of military operations in Iraq and Kuwait, still uses the barbecue of his youth as a basis for judging what he now sells. "I think I like our vinegar-based barbecue better. But I do have a vested interest," he says. The franchise business According to the IFA, the investment required to open a franchise varies widely. Startup costs can range from less than $20,000 to more than $1 million. The initial franchise fee for most franchisers is $10,000 to $30,000. About 70 percent of franchisers charge an initial fee of $40,000 or less. The average total investment, excluding real estate costs, is $350,000 to $400,000.

A report prepared by PricewaterhouseCoopers for IFA in January estimated that the franchise business would see a 1.2 percent decline in the number of establishments in 2009. Franchise employment in 2008-09 was predicted to decline by 2.1 percent for a net loss of 207,000 jobs; economic output was forecast to decline 0.5 percent for a total net loss of $4.2 billion.

Relative bright spots were seen in two facets of restaurant franchises. The number of quick-service restaurants was forecast to increase 1.5 percent; table/full-service restaurants, 1.3 percent. Employment in those two sectors was estimated to increase 0.4 and 0.2 percent, respectively. Economic output also had positive signs with increases estimated at 2.4 and 2.2 percent, respectively.

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The Program More than 400 companies participate in the Veterans Transition Franchise Initiative, including Domino's Pizza and Molly Maid. As of early this year, veterans had acquired about 1,370 franchises with more than 200 in various stages of negotiation.

The concept is credited to the late Don Dwyer Sr., founder of The Dwyer Group, a holding company for six service-based franchise companies. He came up with the idea while the Gulf War was under way in 1991. It is offered through the International Franchise Association, which signed a memorandum of understanding in 2002 with the U.S. Department of Veterans Affairs to promote the program. Participating businesses have flexibility in the amount and type of discounts offered to honorably discharged veterans for the initial franchise fee.

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