CEO Michael Browning, co-founder of Urban Air Adventure Parks, can pinpoint his franchise’s turning point: March 2018, when MPK Equity Partners invested in the brand. It had 45 parks at the time, and was about to go on an expansion spree.
Dallas-based Urban Air grew systemwide sales by nearly 293 percent over three years, to $216 million in 2019. Units grew to 120 over the same period, putting the brand No. 2 on the Franchise Times Fast & Serious list.
It also left its two main competitors in the dust. Altitude Trampoline Park posted sales of $112 million in 2019, up 17.6 percent. And Sky Zone, the granddaddy in the family entertainment space, saw a 7.4 percent sales decline in 2019, to $324 million, according to the Franchise Times Top 200+ that ranks 500 franchise concepts by systemwide sales.
“They’ve been great partners,” Browning said about MPK, where the “P” stands for Ross Perot Jr., the Texas family with holdings in real estate, oil and gas and much more. Their backing allowed Browning to lure top-level talent from other major entertainment brands.
“I went out and hired what I thought was the best team in franchising, hospitality, entertainment, and those highly talented people wanted to see a partner like MPK backing the business, in order to leave Top Golf or Six Flags,” he said.
“I’m the type of person that seeks wisdom, seeks mentors,” he added about MPK. “I love being able to talk to them” about “vision and strategy and problems.”
Those problems include a lawsuit from a group of franchisees filed in April 2020 who claim changes to the brand are adding untenable costs to their operations that were not disclosed in the financial disclosure documents when they signed. One complaint focuses on a membership program launched in April 2019 that carries a 2.5 percent fee, on top of a national advertising fund fee that costs 5 percent.
In his first comments about the lawsuit, Browning said it “was brought forth by a small group, and it’s without merit. We’re confident in how we run our business. We’re confident in how we interact with our franchisees. We’re confident in our business model, and we’ll let the lawsuit work its way through.”
The membership program in particular, he said, is “revolutionary” in the industry, and Urban Air beta-tested the program with volunteer franchisees in early 2019 at its 15 Dallas/Fort Worth locations. It was “wildly successful,” so a national rollout followed. “The consumers sign a contract, and they pay us every month. It creates affinity, and it drives additional food and beverage sales,” he said.
Other brands are “trying” to copy the program, he said. “There’s a couple of reasons why I believe they’re not having much success. At Urban Air, we believe in platform and infrastructure. To try to chase down the credit cards that bounce, it’s very, very difficult,” he said. “We invested in a technology platform and infrastructure and a call center, to help our franchisees on the administrative side of this.”
Browning goes back to the beginning when describing another important factor in his concept’s growth. “The first thing that was most important for us was that we perfected the business, or got the business into a format where it was franchisable, first as a family-owned business. I personally worked every position…in our first location, and then we opened up four additional locations, and we understood the cogs of the business, what made it work,” he said.
“This is not a franchise where I’m sitting back at my desk in some ivory tower, and collecting royalties and teaching you a theory. I’m in the trenches, experiencing what the franchisees are experiencing. That is huge for our core and our motto.”
Urban Air was founded in 2011 and began franchising in 2015/2016, he said. Franchises cost $2.5 million for a “regular” park, and then with digital attractions that number reaches $3 million. In 2019, he said 80 percent of locations opened were owned by existing franchisees wanting to add a park. A cap on SBA loans of $5 million, he said, is now constraining some of those additions and operators need to seek conventional financing.
Last year brought the first glimmers of interest from private equity-backed franchisees from other industries, and Browning expects more. “What we’re seeing now is a lot of franchise owners who own other concepts: swim services, day care, dry cleaners,” he said.
His philosophy for driving growth that lasts at Urban Air is incremental. “That’s another part of the sustainable growth. You always have to be trying new things; however, don’t bet the farm on just one idea. If you’re trying to always get better,” bit by bit, well, you might find yourself second on the Fast & Serious list, and maybe No. 1 someday.