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dickswingslogo2.jpg Dick’s Wings & Grill

Dick’s Wings tries stock as a franchisee incentive

Company gives shares to operators based on performance

The owner of Dick’s Wings & Grill is trying a new way to get franchisees to meet performance metrics: ownership.

ARC Group Inc., the Jacksonville, Fla.-based owner of the 23-unit chicken wing chain, has awarded shares of company stock to all of its current franchisees.

Current and future operators will receive additional shares of stock in January of each year if they satisfy certain performance and other criteria during the preceding year, the company said.

The idea is to “align the interests of the company’s franchisees with those of its shareholders” by providing the operators with stock. The company hopes the incentive program will attract new franchisees, while also building shareholder value.

“The long-term success of ARC Group is directly tied to the success of our franchisees,” Seenu G. Kasturi, president and CFO, said in a statement. “The better they do, the better we do. In light of this, we believe that if our franchisees perform well for us, they should share in our success.”

ARC Group is a small company, with $1.1 million in total revenue in the second quarter ended June 30, and a loss of $118,313. All but two of the company’s locations are franchisee owned.

The company had a working capital deficit of just below $1 million in the quarter which, along with annual losses “create an uncertainty about the company’s ability to continue as a going concern,” according to its latest earnings report.

ARC’s stock trades on the over-the-counter market at about $1.50 a share. Such stocks aren’t listed on exchanges, like Nasdaq or the New York Stock Exchange, because they don’t meet their requirements. Trading is done through dealers.

Still, giving franchisees stock would be a potentially innovative strategy that could get two frequently at-odds groups on the same page. Publicly traded franchisors often struggle to meet the needs of shareholders, who want the company to increase total sales (and therefore royalty payments), and franchisees, who want to generate profits on the sale of food to customers.

“This program provides our franchisees with the opportunity to obtain consistent and material ownership of stock in ARC Group based on their individual performance,” CEO Richard Akam said in a statement. “We are excited to express our gratitude to our franchisees by making them owners in our company.”

Dick’s Wings has locations in Florida and Georgia, and is looking to expand to other Southeast states. The company also operates two concession stands in Everbank Field, home of the Jacksonville Jaguars NFL team.

Contact Jonathan Maze at [email protected]

Follow him on Twitter: @jonathanmaze

TAGS: Franchising
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