Exclusive: Belong Gaming Restructures to a Franchised Model for Future Gaming Centers in U.S.
As a result of this new business model, 10 positions were eliminated in the first week of August.
The Fudge Retort has learned that Vindex-owned gaming center and competitive digital platform company Belong Gaming Arenas eliminated 10 positions in the first week of August as part of a company restructuring plan. That restructuring plan changes the company’s focus from owning gaming centers in the U.S. to a franchised model where Belong would partner with entrepreneurs and investors who want to open a center in their community.
Franchising is not a new concept for Belong; the majority of the gaming centers acquired by Vindex when it bought the company from UK games retailer GAME Digital in 2020 are not wholly owned, but licensed operations. As part of the acquisition deal, GAME holds an exclusive license to operate those gaming centers in the UK and Spain.
Staff Cuts
While we do not know which positions were eliminated, we do know that several executives including Belong Gaming Chief Operating Officer Pablo Arizmendi-Kalb were part of the staff cuts. We reached out to multiple employees at Belong Gaming (that we believe were affected by the restructuring), but none have responded as of this writing. Typically companies ask employees to sign non-disclosure agreements as part of severance packages and other benefits such as help with job placement programs, which would be one reason why affected employees might not want to speak publicly about the situation.
A Vindex spokesperson told us in an emailed statement Friday that the staff cuts—which represent 3% of its “employee base” (including subsidiaries such as Belong Gaming and its esports production company Esports Engine)—are part of the overall restructuring plan:
“We are shifting our Belong strategy away from an exclusively owned and operated location model to a franchise model and therefore some of the leadership and staff positions were no longer a fit,” a Vindex spokesperson told us. “Additionally, given the significantly smaller requirement for staffing in the new model, we decided to centralize HR across Vindex and have promoted an executive from another part of the company into a Vindex-wide leadership role. The total reduction was less than 3% of our employee base.”
Vindex declined to comment on the employment status of Pablo Arizmendi-Kalb, saying only that it “cannot discuss specific employee’s status.” On whether or not employees affected by the cuts had signed an NDA or were subject to any non-compete clauses in their contracts, the company said that “Due to employee confidentiality, we are not able to disclose those details.”
The Vindex spokesperson did confirm that the company is providing severance and other assistance to affected employees: “As a company policy, we provide severance packages as well as support with job placement to all affected employees.”
Gaming Center Changes
Belong Gaming will move away from its gaming centers being wholly-owned by the company to a franchise model. While we do not have specific details as of this writing, one would imagine that a franchise model might offer franchisees help with acquiring equipment, tools (software and other technology that connects Belong centers in the U.S. and U.K. for competitions), Belong branding, and education in exchange for some sort of fee and a share of the profits (the company declined to comment on these kinds of specific details, as it plans to make a formal announcement sometime in the future).
It is highly likely that this new model was heavily influenced by Keith Siegner, who joined Vindex in April of 2021 as its chief financial officer. Siegner has a lot of experience in franchising, having worked at Yum! Brands—the owner of KFC, Pizza Hut, and Taco Bell—for more than five years prior to joining the Vindex. When he left the company in 2021, Yum! Brands claimed to have more than 50,000 restaurant franchisees in 150 countries and territories around the world.
In an interview in April of 2021, Vindex CEO Mike Sepso told me that Siegner would play an integral role in the rollout of Belong-owned gaming centers in the U.S. post-pandemic. Sepso and Belong delivered on that promise by rolling out several gaming centers in the U.S.—Belong currently owns and operates gaming centers in King of Prussia, Pennsylvania; Columbus, Ohio; Schaumburg, Illinois; Franklin, Tennessee; Grapevine, Texas; and Pearland, Texas (These locations vary in scope and size, with an average range of 4,000 - 9,000 square feet).
As for what happens to those existing gaming centers, a Vindex spokesperson told us in subsequent email Tuesday that it has no plans to close any of them. As for why it is switching to this franchising model, the company said that it “sees an opportunity to drive faster growth through franchising than by owning and operating all locations on our own. Franchising is a proven and mature strategy for businesses like ours that combine a very strong brand, a premium experience and a unique offering.”
Vindex declined to comment further on how the new system will be structured, saying only that it would announce new franchise partnerships in the future: “We have tremendous incoming interest from a variety of endemic and non-endemic potential partners. Ultimately, we believe we have a strong brand and offering that franchising is the right way to grow.“
Finally, the company would not go into detail on Siegner’s involvement, noting only that he is an important part of the team and the decision making process:
“Keith serves as the chief financial officer and is a critical member of the Vindex executive team so he plays a role in the strategic decision making process for the company. His direct, global experience as a senior executive at one of the world’s most successful franchise businesses has been a huge value-add to our team.“
I briefly worked at a chain of VR arcades in Canada, and despite birthday parties being a big business mover for us, it was kind of a window into how people view this kind of entertainment. I'm not sure that the arcade/LAN center model works at scale, especially for the US; I could see that kids might have issues with getting their own powerful PCs at home (well, if they're not playing games on their phones) but it seems that industry just can't find anything that works "right".
Vindex’s whole female HR team resigned within the last few weeks. Is there a connection? Would be interesting to know the experience of female employees there