Risks and rewards of franchise business opportunities: name recognition and proven business models can reduce risk.

• Author: Strieker, Julie
• Position: SPECIAL SECTION: Franchise & Business Opportunities

Alaska has undergone a retail explosion over the past few years, and many of the new businesses are immediately familiar to those who travel Outside. But while the businesses may evoke the Lower 48, their owners are usually Alaskans via franchising agreements.

"The advantage of a franchise is that it is generally a proven business model," says Bill Popp, president and CEO of the Anchorage Economic Development Corporation. "It reduces your risk, if you choose wisely and find a business that fits the market needs and fills a consumer demand that isn't currently being met."

In Anchorage, new, expanded, and refurbished shopping centers such as Tikahtnu Commons, the Dimond Center, Northway, and Fifth Avenue malls have opened opportunities for new stores and restaurants to establish a hold.

"Restaurant franchises have been insanely successful," Popp says, noting the extremely long lines that greeted the opening of the corporate-owned Olive Garden restaurants--lines that persisted for months.

He starts ticking off other recent openings, such as BurgerFi, Buffalo Wild Wings, Hard Rock Cafe, Texas Roadhouse, and Pita Pit.

Billy St. Pierre, who has opened three Pita Pit restaurants in the past three years in Anchorage, says he has seen studies that show Anchorage residents eat out more per capita than anywhere in the United States. His three stores are always busy, and St. Pierre notes they rank first, second, and fourth among all Pita Pits nationally in revenue.

"We do about three times more revenue than the average Pita Pit does," he says.

It's not just new restaurants: the Tastee Freez in Jewel Lake has been a local favorite for decades and is one of the top revenue producers for the chain, says owner Rich Owens. The franchise itself dates back to 1956, and Owens has owned it for the past twenty-one years. That history is a definite advantage in a crowded marketplace, he says.

"The benefits of having the [Tastee Freez] franchise is obviously the name recognition because it's one of the original franchises," he says. "It's one of the oldest in the country."

Ray Kroc is generally credited with starting the franchise boom in the 1950s after walking into a small hamburger restaurant in San Bernardino, California, run by Dick and Mac McDonald. He was inspired by the restaurant's success and emphasis on efficiency and quality. By 1958, McDonald's had sold its 100 millionth hamburger, according to the corporate website, and the rest is franchising...