10 Tips for Investing in a Franchise
July 26, 2007
10 tips for investing in a franchise
By Joel Libava
With 3,000+ different options in the world of franchising, the following tips are a good starting point for those starting the process. Remember, knowledge is power!
1. Start your exploratory process by looking at what your business skills are. Are you great at sales and marketing, or operations? Are you a manager of people, or would you prefer having no employees?
2. Are you comfortable using someone else’s systems and procedures? Remember that franchising is a license that you purchase to have the right to use the system. Don’t invest in a franchise, if you won’t use the system. Start an independent business instead.
3. Do you have family support? Starting any business is a family decision. Family members must understand that there will be demands on your time, and that they will need to be supportive of your decision.
4. Do a net worth statement. Subtract all your liabilities from your assets. The difference is your net worth. In addition to the down payment required by lenders, do not forget about your living expenses during the start up period. You should have funds set aside for 6-12 months, while your business ramps up.
5. When you find some franchises that interest you, visit and talk to as many franchise owners as possible in those systems. Are you like them? Are they happy with their decision? Would they do it again?
6. Don’t rush the research process. Be thorough, and talk to both happy and UNHAPPY franchise owners. Be willing to discuss what you are hearing with the franchise company’s representative. See how they react to your questions.
7. Read through the Uniform Franchise Offering Circular {UFOC}. This is the required legal document that will be sent to you by the franchise company. Write questions down as you go, and be prepared to ask them to the franchise company representative.
8. When you have narrowed your search down to one opportunity, visit the franchise company’s headquarters. Meet the executive and support teams in person. These are your business partners.
A good franchise company is also checking you out. They want the right people for their franchise.
9. When you get back from your visit, go back through your notes, and see if you have missed something. If not, now is the time to have an attorney familiar with franchise law look over the franchise documents. The attorney should point out things you may have missed, and explain both party’s legal obligations. You should also have a CPA help you decide on a business structure for your company, if you decide to move forward, and go over financial information.
10. Gut check time. You have done the data collecting. You have met franchise owners. You have visited company headquarters. Does the opportunity “feel” right? If so, move forward. If it does not feel right, don’t do it. There will be other opportunities. Really.
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ABOUT THE AUTHOR: Joel Libava, Franchise Selection Specialists Inc. 2nd generation President, brings real world franchise industry experience to his clients, coming from a franchise management background in the automobile and restaurant/hospitality industries.
Website www.Statefranchisecenters.com
Blog http://www.Thefranchiseking.com
© Copyright Joel Libava. Used by Permission.
Contact Joel at franpro@sbcglobal.net or by calling 216-831-2610
USA Subs Preparing to Franchise Nationally
July 24, 2007
USA Subs, plans to do for Derry, New Hampshire what Subway did for Milford, Conn.: make it home to a franchise company with sandwich shops from coast to coast… and beyond.
Despite having only a single shop, Karl Kuceris, co-founder and chief executive officer of USA Subs, his partner Russell Hertrich, the chief financial officer, and Kuceris’ son, Keith Kuceris, chief operating officer, plan to offer franchises in all fifty states by the first of 2008.
The three formed American Dream Franchising LLC to franchise USA Subs, which is known for its “Steak Bomb” sandwich.
USA Subs has an extensive menu of sandwiches, wraps and salads, offering items that are similar to those found at Subway, Quiznos and D’Angelos. USA Subs also offers a 6-foot party sub.
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Amazing Kabob House Franchises Mediterranean Cuisine
July 24, 2007
Looks like a brand new franchise. The demand for Mediterranean cuisine is good and an uncrowded market niche.
Enthusiastic reception of the Amazing Kabob House’s exceptional Mediterranean cuisine has propelled the successful brother and sister team of Kochai and Omar Farhad to a decision to franchise their popular restaurant. Originally established to offer traditional Mediterranean food to the mainstream American market, this team rapidly discovered the wide-appeal of a healthy Afghan-influenced menu.
What began as a healthy alternative to fast food in the city of Orange in March 2003, and opened in Brea, CA in November 2005, has quickly become the popular place to enjoy this delicious selection of Afghan/Persian-influenced Mediterranean fare. Patrons travel from Riverside, Los Angeles, and San Bernardino counties, as well as the local area, to enjoy this cuisine, which is offered at a very reasonable price.
Besides being delicious, Amazing Kabob entrees cater to the growing trend of smart dining. With the increasing demand for nutritious, delicious, and calorie conscious food, along with the growing awareness of the health-value of a Mediterranean diet, dining out can be now be healthy without sacrificing taste. With no added cheese or sugar, tasty menu items are satisfying for everyone - vegetarians and meat lovers alike! Low-carb choices are available, as well.
Appetizers are just the starting point of each feast, with fresh-baked naan (bread cooked in a clay oven) served with garlic, hummas, sarma, or baba ghannouj, kabobs (filet mignon, chicken, ground beef, seafood, and vegetable) and sandwiches served as wraps and stuffed pitas; soup and salads - all offered in lunch or dinner-sized portions - are guaranteed to satisfy the largest appetite. Child portions are also available. Best of all, the prices are very reasonable.
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Meal Preparation Franchises: How They Work, Why They’re Hot
July 24, 2007
Have you ever hear of Super Suppers, Dream Dinners, or Dinner’s Ready?
What about My Girlfriend’s Kitchen, Supper Thyme USA, or Pass your Plate?
They’re called Meal Prep or Meal Assembly franchises, and here’s how they work.
According to the Wall Street Journal :
The meal-preparation business combines old-fashioned cooking with contemporary socializing. Groups of customers gather at workstations where they measure precut meats, fish and vegetables into freezer containers according to the company’s recipes posted nearby… Apron-clad workers answer the questions from cooks like ‘What can I use instead of soy sauce?’ and wipe down counters and wash dishes.
The Buffalo Biz Journal explains that busy professionals can assemble gourmet meals in bulk and bring them home in pans to be frozen until meal time:
…their premise is the same: Customers sign up for a session and order their meals online; come in and prepare them; and take the meals home in freezer-friendly containers. Workers clean up when the customers are finished.
It’s a new idea that hundreds of entrepreneurs and franchisees are betting their savings will be the next big thing. The WSJ article estimated that there’d be more than 1,100 meal-preparation kitchens in the U.S. by the end of 2006, doing about $270 million in sales.
About 40% of those stores are independent businesses, while the rest are franchised. Meal Prep franchisors generally charge a franchise fee of about $35,000, plus a royalty of 4% to 6% of gross sales and a 1% or 2% ad fee. The total cost of opening a meal preparation franchise ranges from $120,000 to $300,000, depending on size and location.
Here are some of the largest of the meal assembly franchise chains, according to the Easy Meal Prep Association:
Super Suppers. Fort Worth, Texas. (212 stores),
Dream Dinners. Snohomish, Washington. (210 stores),
Dinners Ready. Mountlake Terrace, Washington. (41 stores),
My Girlfriends Kitchen Salt Lake City (Fort Union), Utah. (40 stores),
Supper Thyme USA Omaha (NW), Nebraska (35 stores),
Lets Dish!. Eden Prarie, Minnesota. (31 stores),
Meal Makers. Saint Peters, Missouri. (31 stores),
Dinner MyWay. Sacramento, California. (25 stores),
Entree Vous. Lexington, Kentucky. (23 stores),
Supper Solutions. Westminster, Colorado. (22 stores),
Entrees Made Easy. Mesa, Arizona. (18 stores),
Pass Your Plate. Edmond, Oklahoma. (17 stores),
Lets Eat!. Tampa (South), Florida. (15 stores),
Dinners Done Right. Federal Way, Washington. (13 stores),
Main Dish Kitchen. Grand Rapids, Michigan. (10 stores),
Simply Done Dinners. Parma, Ohio. (4 stores),
Social Suppers. Kansas City / North, Missouri. (15 stores),
Sociale Gourmet. Eagan, Minnesota. (10 stores).
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HuHot Mongolian BBQ is a Hot Franchise
July 17, 2007
Missoulian.com featured a story on the HuHot franchise concept which is on the franchise fast track. Here are some choice bits from the story, which you can read here.
HuHot one of the fastest growing small chains in the nation
By TYLER CHRISTENSEN of the Missoulian
HuHot Mongolian Grill is living up to its Genghis Khan-inspired concept.
The Montana-based restaurant chain is expanding rapidly, and, in fact, is now the second-fastest-growing small chain in the nation, according to Restaurant Business magazine. The magazine contracted with Technomic, a food industry research and consulting firm in Chicago, to produce a list of the 50 fastest-growing restaurant franchises with total sales between $25 million and $50 million.
HuHot, which has corporate offices in Missoula, was the only company from Montana to make the list. Clocking systemwide sales of $27.5 million and average per-store sales of $1.7 million, it was outpaced only by Salsarita’s Fresh Cantina of Charlotte, N.C.
HuHot began franchising just five years ago, and has already exploded into 24 locations in 13 states, including a new restaurant that opened in Kalispell last month. Three more locations are currently under construction, says Andy Vap, who founded HuHot and now runs it with a number of other family members.
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The first HuHot restaurant in Missoula was launched in 1999 under the name Mongo’s Mongolian Grill. A few years later, when Vap began considering franchising, he researched trademarks and discovered the name was already registered in other states. So he did some more research and eventually settled on HuHot, the ancient capital of Inner Mongolia.
The Mongolian grill concept has been around for a long time, Vap said, but it has typically been offered as a side attraction. Vap and his family thought it could stand on its own.
The idea is to let patrons choose from a buffet-style array of ingredients and sauces, then hand their dishes over to a chef to cook up as they watch.
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Vap’s new restaurant chain is still a family-run affair. Andy’s sister, Molly Vap, is the director of franchise development, he pointed out.
“My aunt and uncle work with us, my mom and dad are still involved,” he added.
Growing up in the business gave Andy Vap a good sense of what it takes to make it in the food and beverage industry, as well as valuable experience with franchising.
“It’s a crazy industry,” he said. “You have to put everything up front and open a store and then hold your breath. In the restaurant industry you can’t ever avoid competition - all you can do is pick a niche. The hard part is opening that first store, proving that the concept works.”
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Franchising is a common growth engine, explained editor-in-chief Sam Smith.
“It’s got its positives and negatives,” he said via telephone from the magazine’s headquarters in New York. “The positives, of course, is that you’ve got a larger pool of people helping you grow, you’ve got a flush of cash when franchises come on board. But you’ve got to be very smart about it.”
After all, many chains have tried to franchise and failed. Most of them either expanded too quickly or didn’t do enough vetting of franchisees, Smith said. Franchisers need to make sure they’re signing on the right people, he said.
It’s also important, he said, to make sure franchises stick to the original concept. It’s tempting for franchisees to want to bring in their own ideas, but that’s dangerous for a growing chain.
“The concept has to stay pure,” Smith said.
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…things are going smoothly for the folks at HuHot, he said, and they continue to field a lot of franchising offers despite the fact they do almost no advertising for them.
“What really drives the interest in opening more stores is just really seeing more busy stores out there,” Vap said.
What seems to sell the idea, he said, is walking into one of the restaurants and soaking up the atmosphere - and seeing it packed full with customers.
“Every year,” Vap said, “has just been a busier year than the last.”
