North Vancouver-based A&W Food Services of Canada has signed its first multi-site franchise agreement as part of its plans for aggressive growth in Ontario.
Existing franchisees Upinder Dhanoa and Sandy Gill won the right to develop a dozen new A&W restaurants in the Hamilton, Burlington and Milton regions of Ontario over the next five years.
It's the company's first multi-site franchise agreement in the company's 50-year history as a franchisor. Until this year, A&W only offered single-site franchises.
Graham Cooke, A&W's vice-president of new restaurant expansion said that several more multi-site agreements are in the works in other parts of Ontario.
Each agreement generally calls for a commitment by franchisees to build and operate four to six restaurants over a fixed period of time within a geographic area. So far, all the new agreements under consideration have been offered to existing franchisees, but the company plans to open the opportunity to new franchisees over the next month.
Offering franchisees multi-site agreements is part of A&W's aggressive growth strategy for Eastern Canada. It plans to make about 25 such agreements in Ontario and a handful in Quebec and Atlantic Canada. The company plans to launch the multi-site franchise concept in Quebec later this year.
The new agreements should greatly increase the number of new stores over the next few years. It opened 20 new restaurants last year, nine in Ontario and the rest in Quebec, Atlantic Canada and a few in Western Canada. It opened 16 new restaurants in 2007.
The company has continued to grow revenue despite poor economic conditions and rising unemployment. In its second quarter, the 685 restaurants in A&W Revenue Royalties Income Fund (TSX:AW.UN) reported a 1.3% increase in same-store sales. Second quarter sales rose to $170.5 million from $163.7 million.
A&W Revenue Royalties Income Fund unit price over the past week: between $13.85 and $13.95; 52-week high: $14.10; 52-week low: $8.40.