Sometimes even the most successful entrepreneurs need a helping hand to take their businesses to the next level.
It takes the involvement of an innovative team to help guide, support and develop strong business ideas. Multi-franchise development doesn’t happen overnight; it takes experts to help franchisees get off on the right foot.
That’s where KZ Companies comes in, a real estate development company that is there for franchisors in more ways than usual.
Mark Zimmerman and Charles Kavanaugh formed KZ Companies over twenty years ago. The company was founded on the principles of promoting formulaic retail development. “What that means is that there is a roll out process of taking a company that is expanding and working closely with them to help develop a program that has systems and procedures in place. Then, either building on their program or helping them create a program that would allow them to achieve their goals to open new units,” said Mr. Zimmerman. Historically, KZ Companies has worked primarily with corporate tenants; however, they have recently successfully arranged a $100M Quick Service Restaurant (QSR) Fund. The primary purpose of the fund is to focus on the QSR franchisee space. Loans from traditional lenders are hard to come by for franchisees wanting to develop new units. As a result, there is a need for capital within this sector for the development of new franchise units.
“It is fair to say that existing established units with proven sales are not as difficult to finance; however, the development of new, freestanding ground up units and the funding of them are much more challenging for franchisees,” explained Mr. Zimmerman. “Someone who is very knowledgeable in the operations of a QSR business may not be as familiar with the challenges of the real estate industry.”
A company like KZ offers a multidiscipline approached to help support franchisees in the real estate development, as well as the capital support.
The initial offering of the fund is intended for franchisors of larger concepts that have established track records and more than 200 units. Franchisees will be required to have two or more units with the same concept, open and operating successfully for at least one year.
“The pricing will be based upon the strength of the franchisor, the brand and the location within the United States,” explained Mr. Zimmerman. The fund is structured to provide the maximum flexibility in deploying the capital to franchisees. Through KZ’s multidisciplinary approach, it is capable of providing a full service, turnkey development program. The company will commit up front to assist the franchisee with the capital necessary to build their new stores. “This is the thing I am truly excited about. It’s something we have brought together, the capital source and the in-house ability, and we offer a proven track record of building hundreds of buildings on time and on budget over the years,” said the founder.
“We look at every transaction as a real estate investment, rather than like a traditional small business loan model as many lenders would do. We have been able to create a fund that will be exciting for us to deploy and where there is clearly a demonstrated need on the part of the QSR community,” said Zimmerman of the new funding program.
KZ has spent the past six years building 45 new drug stores for CVS pharmacy in California and Hawaii. Prior to that they have built units for numerous other national companies throughout the United States, exhibiting their expertise with building nationwide and their familiarity with most major markets.
“We would like to be the leading developer of free standing QSR’s throughout the country,” said Zimmerman. “We see this as a tremendous opportunity to fill a niche in the capital markets.”
Mark spent a number of years in the banking business before creating and founding KZ Companies and recognizes the capital constraints within the QSR industry.
“We created KZ Companies with the primary focus of working directly with tenants on their store development programs,” he explained. “Our business is very formulaic; we have been able to create a fund for people to monetize their dreams and be able to assist in their expansion plans.”
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