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Anyone ever hit it big with a Franchise??

Discussion in 'Other Off Topic Forum' started by warrenn, Apr 1, 2004.

  1. warrenn

    warrenn Formula Junior

    Mar 12, 2004
    376
    LA for now,NJ really
    Have any of you guys ever bought a franchise like Subways or 7 eleven or KRISPY KREME and made a lot of money off it, or know of anyone that did?

    I believe one of the members here bought a couple Cingular stores. I used to pass the one in Fort lee all the time on my way to Borders. Can I ask how you are doing with those?

    It's my understanding that with most franchises, you need to own a few in order to turn a profit, and even then you are breaking even or at a loss the first couple of years.

    The krispy kreme craze has died down a little, but I heard of some SICK sales in NYC the first week they would open up. People were lining up by the hundreds to purchase those franchises.
     
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  3. Tyler

    Tyler F1 Rookie

    Dec 19, 2001
    4,274
    dusty old farm town
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    Tyler
    I know a lot of people who own various franchises. I've owned franchise restaurants myself and found it to not be the business for me. You DO need multiple locations to make good income, otherwise you've just bought yourself a job.


    Not sure what the good ones are these days. I've got a good friend with 7 McDonalds stores. He's been a franchisee for more than 30 years. It's been good to him, but now days he doesn't invest his money in new stores. He says they are too expensive relative to the return.

    My family did well with Pizza Hut, but that was years ago, they're no longer involved. I still know several guys with 100+ Pizza Hut stores and to this day they are still cash cows. Interesting story: one of them was among the first franchisees and likes to laugh about how when he bought his first Pizza Hut the franchisee contract was 3 pages long and the franchise fee was $300. Many years later as he closed on his 200th store the contract had increased to 30 pages and the fee was $40,000.

    While the franchise restaurant business was not for me, I have made large sums of money in it and also lost large sums. If you are interested in specifics please PM.
     
  4. rob

    rob F1 Rookie

    May 22, 2002
    3,616
    Vt
    I worked for Domino's for quite awhile in my younger days and watched some franchisee's make it and some fizzle out. If you use common sense you can do well, for instance I worked with a manager who bought a store that had received some bad press which caused it's sales to drop like a stone, (they weren't just delivering pizza!) so this manager picked up the store very cheaply and we set to work to rebuild it. We worked our buts off and used our heads in within about a year we had sales up from 2500 a week to over 9k a week. Like anything else in life its not easy and make sure you do your homework before you get into anything.
     
  5. davem

    davem F1 Veteran
    Silver Subscribed

    Jan 21, 2002
    6,052
    Stepford, Connecticut
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    dave m
    Warrenn. Im a Subway franchisee with 9 stores. Great recession proof biz.
    Everyone has to eat! No account recievables. Anyways what Tyler talks about is all true, especially about your first store. Your simply buying a job. So 2 questions? Are you willing to be a multiple store owner. If not can you make more money in your current profession?
    Krispy Kreme has actually closed a few stores in NYC allready.
    There has been a lot of discussion on this topic allready in F-Chat.
    Search "franchise".
     
  6. ctk

    ctk Karting

    Jul 2, 2001
    238
    Singapore
    Why is a one store franchise a job? Is there a critical mass required for it to make decent returns? Just wondering.
     
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  8. Modificata

    Modificata F1 Rookie
    Silver Subscribed

    Apr 27, 2003
    2,654
    Hampton, England
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    Andy Rasool
    Hey Dave and all. Im opening up Subway stores in the UK. The brand is really starting to take off here so hopefully getting into the right thing at the right time. We've just secured our first location, and are looking into buying an existing store in April/May.

    I think Dave is right though. You need to look at the big picture and try to open up multiple stores. That way you are not reliant on one or two stores doing well to bring in your money. I learnt the hard way: Dont put all your eggs in one basket!

    I think that goes with any business in general too. Im investing in Subway, but i'd never put all my money into it. You never know how things turn out.
     
  9. davem

    davem F1 Veteran
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    Jan 21, 2002
    6,052
    Stepford, Connecticut
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    dave m
    Running one store is easy. You, the owner will be there most of the workday.
    You will take out the trash, clean the tables, everything a normal employee does. Luck plays a part in this too. Some stores gross a million a year, but i would not count on it.
    Your also very vulnerable with just 1 store. Wake up one day and the road is closed in front for construction, competition, the big factory across the street thats 40% of your lunch closes due to outsourcing.........

    Running more stores than owners is when it gets tricky. Whole new set of management skills are needed. With one store you see the symptoms of a problem brewing and nip it in the bud. (i.e leaking pipe)
    Now your busy in the other store when the phone rings telling you the store is flooded.
     
  10. ctk

    ctk Karting

    Jul 2, 2001
    238
    Singapore
     
  11. ctk

    ctk Karting

    Jul 2, 2001
    238
    Singapore
    oops! Sorry about the mis-post. Thanks DaveM for your comments.
     
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  13. ryalex

    ryalex Two Time F1 World Champ
    Consultant Owner

    Aug 6, 2003
    22,224
    Las Vegas, NV
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    Ryan Alexander
    I looked into it briefly. Krispy Kreme has pretty much sold off all the licensing rights in the US, from what I could gather.

    Many companies wanted a multiple location commitment right off the bat. For example, I think it was Jamba Juice that says to be a franchisee you have to pony up capital for something like 40 stores!

    My friend's cousin got on with an all-you-can eat pizza place in WA (apparently based on the concept of CC's Pizza in TX), and I think is up to 3-4 stores now. Said he was shooting for 18. I think each store was already pulling in $90k annual profit, but it's been a while since I talked with him. My friend tried managing one for 6 mos, w/expectation of buying into several new stores with his cousin, but ended up hating it and went back to school for a Master's.
     
  14. KMS

    KMS Formula Junior
    BANNED

    Dec 22, 2003
    257
    Krispy Kreme does not franchise. Neither does Starbucks.
     
  15. Juice It

    Juice It F1 Rookie

    Sep 22, 2002
    3,233
    Maryland (DC Suburb)
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    Jeff


    Correct about Starbucks but Krispy Kreme does. Jimmy Buffet is a franchisee.
     
  16. Jason W

    Jason W Formula Junior
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    Oct 31, 2003
    872
    Singapore
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    Jason W
    www.bubble-island.com offers franchises.

    It's a local Asian drink (tapioca) shop here in Houston. Becoming increasingly popular.
     
  17. tifosi69

    tifosi69 Formula 3

    Dec 23, 2003
    1,671
    Atlanta, Ga.
    Full Name:
    Al-Al Cool J
    In 1996 I approached Heidi Fleiss about franchising but she said she wasn't interested. Guess she made the wrong call.
     
  18. Modena 360

    Modena 360 Rookie

    Feb 12, 2004
    28
    Central Pa
    Full Name:
    Tom
    I own 5 Subways in cetral Pa, I bought them as an investment for I have a Precast business as my primary source of income. Subway is a good company and has a descent product that they advertise. One problem with a franchise you are compelled to buy into everthing that they do ie: additional advertising, redecorating and new products, which can all be costly. As davem said it is easier with multiple locations because if 1 store is slow you have another to fall back on.
    Since I don't operate my Subways personally, you have to make sure you have a good manager that you can trust.
    Tom
     
  19. JimSchad

    JimSchad Guest

    all this talk of business I always wonder HOW you got started. Example: your precast biz. I know nothing about that so would never even think of starting or buying into that biz. Why did you? Previous job or your father before you did it etc? Did you have a job and quit or always done your own thing?

    I am trying to make the transition from empoyee to investor/biz owner, but find it hard to just bail on my job as I do enjoy the "steady" paycheck.
     
  20. ctk

    ctk Karting

    Jul 2, 2001
    238
    Singapore
    What kind of gross and net profit returns do you get from a franchise type operation?
     
  21. warrenn

    warrenn Formula Junior

    Mar 12, 2004
    376
    LA for now,NJ really
    i know someone that was in on the sting operation.. he was undercover... he said those chicks were SMOKING HOT.
     
  22. ralessi

    ralessi Formula 3

    May 26, 2002
    1,093
    Houston, TX
    Full Name:
    Rikk
    Precast biz? Just curious...
     
  23. SkizoACE

    SkizoACE Formula Junior

    Mar 24, 2004
    884
    Houston
    Full Name:
    Thomas
    My moms looking into a Waffle House franchise. GO HICKS AND 18-WHEELER DRIVERS!!

    Over by that yellr sign next to tha big oak tree over yonder. Man I love Texas.
     
  24. Modena 360

    Modena 360 Rookie

    Feb 12, 2004
    28
    Central Pa
    Full Name:
    Tom
    Architechural Precast Concrete, I manufacture Wall panels for buildings and cast stone products ie: window sills, coping etc. I went to work for some one after school for about 8 years then their buisness closed so I had the oppurtunity to move and take a job out of state or try my luck at running my own business. I've been fortunate and have been in business for ove 12 years now.
    Thanks
    Tom
     
  25. Uberpower

    Uberpower Formula Junior

    Feb 6, 2004
    902
    Anyone have a clue as to what it costs to franchise a company? What legal entity must it be to franchise?

    Again- not talking about buying a franchise... talking about franchising a personal company... like a mailbox store or smoothie store, etc. I suspect it's all legal fees/CPA fees?

    Nick
     
  26. Texas Forever

    Texas Forever Four Time F1 World Champ
    Rossa Subscribed

    Apr 28, 2003
    44,458
    Texas!
    Nick, the bar has gone up a lot in recent years due to all the lawsuits by franchisees. It has turned into a highly regulated business. I'm not sure, but I'd guess somewhere between $50k to $150k for a small offerring in just one state. Each additional state costs more.

    Moreover, you cannot show any numbers, unless you want to have your head handed to you later. This is why many startups go the private equity route until they reach a crictical mass where franchising is a cheaper way to expand than, say, going public.

    Hope this helps, Dale

    ps Check your email

     

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