HuHot to trot— Missoula franchiser looks to aggressively expand restaurant chain

2005-04-03T00:00:00Z HuHot to trot— Missoula franchiser looks to aggressively expand restaurant chainBy ROBERT STRUCKMAN of the Missoulian
April 03, 2005 12:00 am  • 

Her cell-phone service patchy, Molly Vap guessed where her brother, Andy - founder of HuHot Mongolian Grill - might be.

"I think he's in Appleton, Wisconsin. Actually, right now he's probably in the Minneapolis airport," she said, on the road herself in Denver.

Aside from the edible ingredients, quite a bit goes into the expansion of a restaurant franchise. And HuHot is at the stage where the travel and labor gets intense.

But the potential payoff is worth it. Franchising is a way to regional, even national, growth in a business environment some call stiflingly remote.

"It's not risk-free, but I think it's a good way to build up," said Phil Oliver, a Billings attorney with a long-term specialty in franchise law.

In a large state with a far-flung population and only a handful of homegrown, publicly-traded companies, a substantial number of entrepreneurs have grown wealthy by going the franchise route. Think of Godfather's Pizza, Great Harvest Bread Co., Kampgrounds of America and even the Corner Pocket Billiard Lounge.

The reason is simple, said local and national experts - Montana is a relatively cheap and easy place to refine an idea, streamline a business model and build a brand.

"We're going to escalate and grow. That's why I was brought on. We're thinking about what we're going to have to do to be prepared for all these new stores," Vap said.

Decades ago, the Vaps got their start with another Montana franchise - Godfather's Pizza of Billings. At one point, the family ran nine pizza joints. It was a great learning environment, a good place to grow up, Vap said. And while she and siblings (four total) did not gravitate immediately to restaurants or other franchises, the experience left a strong impression on them.

"Growing up in the restaurant in this entrepreneurial atmosphere, you kind of want to be your own boss," she said.

The Vap children were also steeped in franchise culture. They learned early about business models, manuals and other cornerstones of the trade.

"It was a natural idea" for her brother to operate the original restaurant, then named Mongo's, with an eye all the while on growth.

In 2001, Andy Vap began the background research and found that Mongo's was already trademarked. After some brainstorming, he settled on HuHot, the ancient capital of Inner Mongolia.

"That's a great touch. It's accessible but creates an intimacy, like a secret handshake," said Amy Bannon, a spokeswoman for the Washington, D.C.-based International Franchise Association.

Using contacts from the Godfather's days, HuHot sold its first few franchises in 2002 and 2003.Those stores have been successful for several years. Some wrinkles in the business model have been ironed out, and the Vaps are now pushing to double in size to about 30 restaurants over the next 18 months. Andy Vap hired his sister to help recruit and train franchisees.

"That's about the point where growing pains can occur," Bannon said.

Unlike most independent restaurants, franchise establishments can't operate on the strength of a dynamic leader, she said.

"You can't micromanage. You need to have a brand and a business system," Bannon said.

If the business model has faults, the franchisee may fail or otherwise damage the brand. And there can be trouble on other fronts, too. Locations are important as are supply costs.

"If done correctly, franchises can have the benefit of an economy of scale," Bannon said. Some franchisees form buying co-ops to keep their costs down.

And franchisers need an efficient communication system. A telephone can be useful to reach 15 or even 30 franchisees, but Subway has 22,000 franchises.

None of this is news to the Vaps and others central to the growing HuHot dynasty; it is all being addressed, Molly Vap said. The franchise has spread across the upper Great Plains; the paperwork is being done to expand to Texas.

The regulatory process for franchisers is roughly similar to that of publicly traded companies, but the amount of paperwork and oversight varies from state to state.

"It can get to be a headache," Oliver said.

And HuHot's training manual is growing thicker almost by the day. Vap spends a lot of time on it, she said. She also plays partners on the one-on-one training.

"It's pretty extensive. More intense than lengthy," she said.

So is the investment.

The franchise fee is $30,000; the royalty fee is 5 percent. Total initial investments are between $542,000 and $887,000, depending on the size of the store and the costs of construction.

"It starts at 8 a.m. and ends at midnight 10 days in a row. We need the new franchisee to learn everything so they can go to the new store and feel confident enough to do it on their own," she said.

There is a plan for follow-up, too. After the training, she spends about two weeks at the new store to help get it off the ground.

Later, if food costs are soaring, Vap's brother will step in to figure out why.

And she drops in on the stores as a customer.

"We call it shopping the store," Vap said.

She then critiques the store for the managers and owners.

"We're trying to make sure that everything runs right," she said.

It's all in service of a brand. It has got to sizzle if it's going to work.

Reporter Robert Struckman can be reached at 523-5262 or

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