Sonic 2009 Annual Report Download - page 11

From its earliest years, Sonic has been a franchise-driven
organization. We quickly realized that nothing ignites passion
in an individual like true ownership – being fully invested in a
business and putting everything on the line. That kind of
passion leads to improved operational execution and typically
stronger sales, characteristics that continue to define our
franchisees. It drives them to excel, and it helps account for
the continued enthusiasm demonstrated by our franchisees in
maintaining a solid level of new drive-in openings in the face
of challenging conditions in the credit markets.
It's not surprising then that our franchise drive-ins typically
have outperformed our partner drive-ins, and this has been the
case especially since the middle of fiscal 2008. In response, we
have borrowed a few pages from our franchisees' playbook,
implementing several operational changes to help close that
gap, including the simplification of incentive compensation
plans to better mirror the sense of ownership seen on the
franchise side of our business. We also have restructured our
partner drive-in organization, bringing in new, seasoned
management to oversee its operations.
The most ambitious step we have taken to lay the
groundwork for improved performance was our decision a year
ago to slow the pace of partner drive-in development and
refranchise a number of drive-ins. By selling these units to new
and existing franchisees, we saw an opportunity to reduce
operational risk and allow for greater management focus on
the remaining partner drive-ins. Our goal was to increase the
mix of franchise drive-ins from 80% to at least 86% of the
chain, and we anticipated that this initiative would require two
or more years to complete.
In fact, it took only one year for us to reach our
objective. Because of strong interest among our franchisees
to participate in this program, we were able to raise the mix of
franchised drive-ins to approximately 87% of the chain as of
August 31, 2009.
The long-term success of our brand explains why
franchisees remain so enthusiastic about Sonic's future
prospects, and this passion is contagious. It propels the
prosperity of hundreds of small business owners, sustains a
solid level of drive-in development given current economic
conditions, draws increasingly experienced and qualified talent
to the brand, and inspires countless Carhops and cooks to
become the next generation of passionate Sonic owners.
Given the extraordinary success Sonic has
experienced in opening new markets, it's easy to
see why new and existing franchisees continue to
commit energy and capital to expansion, and to
develop the next generation of franchise leadership.