August 16, 2004
The burger baron | Jack Crawford of Maine Course Hospitality takes the reins at Ground Round
By Sean Donahue
In 1991, Jack Crawford left his position as national director of franchising for the Ground Round Inc. restaurant chain to become a franchisee himself and experience what it's like to run his own business. He spent the next 13 years helping build a successful Freeport-based hotel and restaurant franchise holding company called Maine Course Hospitality Group, which owns three Ground Rounds in Maine and New Hampshire. But now, Crawford is back within Ground Round's corporate management ˆ this time as CEO and a part owner of the brand.
In late July, Crawford and 58 other Ground Round franchisees closed a $4.85 million deal to buy the assets of Ground Round Inc., which abruptly filed for bankruptcy in February. The deal gives the franchisee group, known as Independent Owners Cooperative LLC, control of the Ground Round's trademarks, existing franchise agreements and development rights to expand the chain, which helped pioneer the popular fast-casual restaurant format.
With Crawford as CEO, the franchise moved its headquarters to Freeport, where he will oversee existing franchises, supplier relationships, brand marketing and franchise expansion. But the new, collective ownership structure means Crawford won't be dictating the company's future on his own. "Every franchisee is now an owner in a new partnership, and as partners they have the incentive to grow the entity and expand the brand," says Crawford.
The July sale capped a five-month process that began with a February announcement from Ground Round Inc.'s management that the company was filing for bankruptcy and immediately shutting down its 59 company-owned restaurants. In April, those restaurants were sold at auction, while Ground Round Inc. tried to find buyers for the brand and its agreements with existing franchisee-owned restaurants, which had continued to operate.
During that process, franchisees pulled together to watch over their collective interests in the bankruptcy process and assess potential bidders for the chain. But as the months went on and the group began negotiating with existing suppliers and launching new marketing campaigns in order to keep their restaurants thriving, the franchisees realized they essentially were acting as their own parent company, according to Crawford.
Inspired, each restaurant put up $40,000 to raise a total of $1.9 million, and as a group secured an additional $2.9 million loan from Banknorth to submit its bid. The group asked Crawford and Maine Course's Gary Serino to serve as CEO and CFO, respectively, since both men had longtime experience with Ground Round Inc. The franchisees offered additional incentive by suggesting that the chain's headquarters move to Freeport. "We weren't necessarily looking to uproot ourselves from our lives here and our success with Maine Course Hospitality," says Crawford.
Crawford says the new parent company will be a small, decentralized organization that gives its franchisee/partners a vote in major strategic decisions. The company's first goal is to begin growing the chain again. Despite Ground Round Inc.'s financial problems, franchise restaurants remain strong, says Crawford, posting average annual per-unit revenues of $1.75 million. The group already has under development seven new franchise locations previously planned as company-owned stores, which Crawford expects to open by the end of the year. (Crawford and Serino also will continue in their roles with Maine Course Hospitality.)
For all his excitement over the expansion potential, Crawford also admits to being relieved that the deal has finally closed, knowing it means he and other franchisees can get back to day-to-day business. "I felt like we were celebrating two things [at the July closing]: the creation of a new entity and the end of the bankruptcy case," says Crawford. "It was an intense five-month processˆ Now we can get back to running restaurants."
In late July, Crawford and 58 other Ground Round franchisees closed a $4.85 million deal to buy the assets of Ground Round Inc., which abruptly filed for bankruptcy in February. The deal gives the franchisee group, known as Independent Owners Cooperative LLC, control of the Ground Round's trademarks, existing franchise agreements and development rights to expand the chain, which helped pioneer the popular fast-casual restaurant format.
With Crawford as CEO, the franchise moved its headquarters to Freeport, where he will oversee existing franchises, supplier relationships, brand marketing and franchise expansion. But the new, collective ownership structure means Crawford won't be dictating the company's future on his own. "Every franchisee is now an owner in a new partnership, and as partners they have the incentive to grow the entity and expand the brand," says Crawford.
The July sale capped a five-month process that began with a February announcement from Ground Round Inc.'s management that the company was filing for bankruptcy and immediately shutting down its 59 company-owned restaurants. In April, those restaurants were sold at auction, while Ground Round Inc. tried to find buyers for the brand and its agreements with existing franchisee-owned restaurants, which had continued to operate.
During that process, franchisees pulled together to watch over their collective interests in the bankruptcy process and assess potential bidders for the chain. But as the months went on and the group began negotiating with existing suppliers and launching new marketing campaigns in order to keep their restaurants thriving, the franchisees realized they essentially were acting as their own parent company, according to Crawford.
Inspired, each restaurant put up $40,000 to raise a total of $1.9 million, and as a group secured an additional $2.9 million loan from Banknorth to submit its bid. The group asked Crawford and Maine Course's Gary Serino to serve as CEO and CFO, respectively, since both men had longtime experience with Ground Round Inc. The franchisees offered additional incentive by suggesting that the chain's headquarters move to Freeport. "We weren't necessarily looking to uproot ourselves from our lives here and our success with Maine Course Hospitality," says Crawford.
Crawford says the new parent company will be a small, decentralized organization that gives its franchisee/partners a vote in major strategic decisions. The company's first goal is to begin growing the chain again. Despite Ground Round Inc.'s financial problems, franchise restaurants remain strong, says Crawford, posting average annual per-unit revenues of $1.75 million. The group already has under development seven new franchise locations previously planned as company-owned stores, which Crawford expects to open by the end of the year. (Crawford and Serino also will continue in their roles with Maine Course Hospitality.)
For all his excitement over the expansion potential, Crawford also admits to being relieved that the deal has finally closed, knowing it means he and other franchisees can get back to day-to-day business. "I felt like we were celebrating two things [at the July closing]: the creation of a new entity and the end of the bankruptcy case," says Crawford. "It was an intense five-month processˆ Now we can get back to running restaurants."
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