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Franchising

Discussion in 'Other Off Topic Forum' started by Jason W, Feb 3, 2004.

  1. Jason W

    Jason W Formula Junior
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    Oct 31, 2003
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    Jason W
    Few quick questions. Friend of mine owns a small drink shop here and it's going pretty well and I suggested that he start opening other shops.

    Anyone know what all is involved with starting a franchise or where to get started?
     
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  3. Juice It

    Juice It F1 Rookie

    Sep 22, 2002
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    Jeff
    Been there, done it! My advice would be get a few corporate units going, find out if the public will support them(do they make money) figure out what you can offer people to make them want to become a franchisee(can you get them awesome locations,name recognition,advertising, save them big dollars on product cost, give them operations manuals that cover everything from hiring to making the products to ordering to doing p&l's etc.) After all this and you feel like you really have something, consult with a company that specializes in bringing new franchisors to the marketplace.You can count on spending around 125k to do this plus individual state registrations at around 1k each where needed.
     
  4. Jason W

    Jason W Formula Junior
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    Ok, so from your experience, you recommend, I guess this is how to explain it, selling the rights to open a store?

    What about opening any given store under the same corporate ownership; so basically not selling the stores, but opening them w/ profits/loans?

    I'm pretty sure this isn't the same as "franchising," but I'm not sure of the particular adjective.

    Thanks,

    Jason-
     
  5. Juice It

    Juice It F1 Rookie

    Sep 22, 2002
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    I am not sure what you mean by opening them w/profits/loans but my advice would be open 2 or 3 stores in Prime locations and stick with them. I have had smoothie only stores that can gross over 500k per year and if you owner operate 3 stores that do anywhere near that you are making a great living. An owner operator that has a typical smoothie/drink type of a store that grosses 400k can take home 150 easy. The overhead is one of the lowest in the food industry.
     
  6. Jason W

    Jason W Formula Junior
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    The difference I was trying to make was like Olive Garden, where they are all owned and operated by 1 company, as opposed to McDonald's where anyone with $750k can own their own branch.

    The start up for this company is relatively small. The family that owns it now used about $50k to get it going and it's been profitable since it's opening more than 2 years ago.
     
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  8. Juice It

    Juice It F1 Rookie

    Sep 22, 2002
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    You can go either way. Most franchises start out as all corporate stores and for one reason or another they become franchises. In our case, after about 15 stores things started getting out of my control and quality and operations suffered and our growth had to stop. Since we became a franchise, we typically have all owners run there own location and now, I own a couple of my own stores and can expand much faster and don't need to worry about each store operating correctly day to day. I collect royalties from each location and build new stores with the new franchisees money. You are only as good as your employees and in my business most of your employees are young part time people so owner operated stores make much more sense for us. In an Olive Garden type of situation they have much more money to spend on getting good management in each location so they can make it work. If we were willing to spend 100k per year for a good manager things might be a little different but then your numbers wouldn't work.
     
  9. Jason W

    Jason W Formula Junior
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    Oct 31, 2003
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    Jeff, thank you much. Sent you a PM.
     
  10. TexasF355F1

    TexasF355F1 Five Time F1 World Champ
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    Feb 2, 2004
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    I agree 100% with what jeff said.
     

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