Incredible Pizza Co. reaches 30-store franchise deal

|tab|

by Eric Olson |ret||ret||tab|

SBJ Reporter |ret||ret||tab|

eolson@sbj.net |ret||ret||tab|

|ret||ret||tab|

Rick Barsness knew he had an incredible idea when he opened Springfield's Incredible Pizza Company in August 2002. The company's $5.3 million in first-year sales prove it.|ret||ret||tab|

Now his family entertainment concept is rising to new heights with a deal to franchise 30 new stores by 2018, with royalty fees estimated to bring $7.5 million annually. The Springfield-based company announced Dec. 4 a franchise agreement with French Interests Inc. of Houston for 30 stores, beginning with two Oklahoma City and Houston next year. The build-out, spread over 15 years and covering markets from Arizona to Florida, is estimated to have a $130 million value, according to franchisee Robin French. French is president of French Interests, a Houston-based business investment firm.|ret||ret||tab|

Barsness created a $6 million pizza, video game, go-kart, bumper car and miniature golf emporium at 2850 S. Campbell Ave., the former location of Hastings Books, Music & Video. Company estimates show more than 1 million visitors came through its doors the first year, generating $5.3 million in sales $1.6 million above projections, Barsness said.|ret||ret||tab|

"This thing is doing well for us," Barsness said.|ret||ret||tab|

|ret||ret||tab|

Bump in the road|ret||ret||tab|

While Barsness is reaching his goal of franchising, Incredible Pizza Company's success has not been without interruption. A lawsuit filed by Kerrville, Texas-based Mr. Gatti's pizza claimed Barsness' pizza and games idea was not solely his. |ret||ret||tab|

Barsness was a franchisee of seven Mr. Gatti's restaurants in Texas before moving his family to Springfield in 1999. The complaint charged Barsness used proprietary company information in creating Springfield's Incredible Pizza Company. The information, the company said, was learned over the 25-year period that Barsness was connected with Mr. Gatti's.|ret||ret||tab|

A $1 million settlement was reached in August, Barsness said. He must pay Mr. Gatti's $1 million in installments through January 2005 and also is required to pay 1 percent of net sales for 10 years. The payout includes 1 percent of sales on each of the franchised stores, Barsness said.|ret||ret||tab|

Calls to Mr. Gatti's corporate headquarters and the offices of Barsness' attorneys were not returned by press time.|ret||ret||tab|

While Barsness didn't want to settle, the suit was holding up his franchise plans. |ret||ret||tab|

"It could have gone two or three more (years), and it was continuing to hold up the process on us franchising," Barsness said. "We did not want to settle. On the other hand, we had a $150 million (franchise) project. They aren't going to wait around forever. So we had a choice to make. We settled for $1 million, plus the 1 percent. It was a business decision." |ret||ret||tab|

Moving on |ret||ret||tab|

Under the franchise agreement with French Interests, Incredible Pizza Co. Inc. will receive annual royalties of 5.5 percent of gross sales, a one-time $50,000 franchise fee for each store and a negotiated area development fee. Barsness said the area development fee is kept confidential.|ret||ret||tab|

Franchisees also may contract with Incredible Pizza Company for management services for 5 percent of sales. Incredible Pizza Company is slated to manage French Interests' first two stores in Oklahoma City and Houston. Barsness estimates royalties to generate $2 million in 2004, including a Tulsa store, which is under negotiation with franchisee James Olson of Tulsa-based Jamar Investments, a land development and investment firm.|ret||ret||tab|

Olson said he expects to finalize the deal, which would create Tulsa Incredible Pizza LLC, within a month.|ret||ret||tab|

Barsness said a third franchise agreement is in the works with a Colorado company, which plans to open three stores there. Barsness said talks aren't far enough along to disclose the party.|ret||ret||tab|

French said his interest in Incredible Pizza Company stems from meeting Barsness through a mutual friend a couple years ago.|ret||ret||tab|

"I've looked at a lot of other concepts of family entertainment type centers," French said via telephone, while traveling on business in Oklahoma. "Incredible Pizza Company is a great venue for family entertainment."|ret||ret||tab|

He said the benefits of franchising include management systems, construction design services and marketing support. Of the 5.5 percent royalty fee, the 0.5 percent goes into a company-wide marketing fund, French said.|ret||ret||tab|

"I don't have to reinvent the wheel as a franchisee," he said.|ret||ret||tab|

French's area development rights include parts of Texas; Oklahoma, excluding Tulsa; Kansas, excluding Kansas City; Louisiana; Florida; New Mexico; and Arizona. He is seeking vacant, large-box retail spaces between 35,000 square feet and 60,000 square feet in which to develop the $3 million to $5 million stores. |ret||ret||tab|

That aspect excites Scott Axon of Sunbelt Business Advisors, who served as consultant to Barsness, though not as a Sunbelt broker.|ret||ret||tab|

"The exciting thing that makes this concept work so well is (that) we are filling a need in the marketplace for big boxes left vacant by Wal-Mart and Kmart stores," said Axon.|ret||ret||tab|

Axon is on the Incredible Pizza Company advisory board that comprises Axon, Barsness and Barsness' wife, Cheryl.|ret||ret||tab|

|ret||ret||tab|

Bigger is better |ret||ret||tab|

The new Incredible Pizza Company venues are planned to be larger than the original, with bowling alleys, laser tag and skating rinks as new elements. The Springfield store is 42,000 square feet; the new concepts can go up to 90,000 square feet, Barsness said.|ret||ret||tab|

Barsness plans to open a second company-owned Incredible Pizza Company in the Kansas City area.|ret||ret||tab|

"We're looking on Metcalf (Avenue) in the Overland Park area," Barsness said. The company does not have a site yet, though Barsness is working with Realtors and banks in the area. He hopes to occupy a vacant structure as he did with the Hastings site in Springfield, and he expects to invest nearly $9 million for the Kansas City store.|ret||ret||tab|

Eventually, he would like to add a bowling alley to the Springfield locale in the space occupied by Party City, 2840 S. Campbell Ave. He said two years remain on Party City's lease.|ret||ret||tab|

[[In-content Ad]]