Home | General

General

2013 Papa Johns Franchise Incentives, similar to last year

Papa Johns is again offering incentives to new franchisees this year. This looks to be the same as last year. There are tight timing issues with opening to hit the incentives qualificaitons. No franchise fee ($25,000 value); $50,000 in equipment, including two Middleby-Marshall ovens, which may be purchased by the franchisee for $50 after operating for three years; A royalty waiver for up to 18 months; and A $3,000 food credit with PJ Food Service, which operates Papa John’s fresh dough and food distribution quality control centers, for each restaurant that opens at least 30 days prior to the scheduled opening date.

Read More »

Advice for Franchisees Saving for their Kid’s College; Education Bubble

Are you a franchisee thinking about how to best fund college for your children? Your research will quickly lead you to 529 plans, and in my opinion and experience as a purchaser it is probably the best option for college savings. You will also hear about Coverdale Education Savings Accounts but for tax complications and low investment levels it is probably more trouble than it is worth. 529 Plans are sponsored by states and enable USA-citizens to save after-tax money in an investment account that will accumulate earnings tax free and withdrawals are tax free if used to pay defined educational expenses. Some states offer small income tax breaks for investing in a 529 plan. For example, in Illinois: Individuals subject to Illinois state income tax can deduct from their taxable income up to a maximum of $10,000 per year for contributions made toward the purchase of any College Illinois! Prepaid Tuition Program contract.* Married couples filing jointly can deduct up to $20,000 per year.** This state tax deduction reduces the individuals’ adjusted gross income (AGI) by the amount contributed up to $10,000 (or $20,000 for those filing jointly). Contribution Limits Contributions are included in the annual $13,000 exclusion from federal gift taxes for gifts made to any one person. But, unique to 529 plans, a contributor can give up to five times that amount ($65,000) in one year and treat that contribution as if it were made over five years for gift-tax purposes. Fees; NY direct sold @ .17% is lowest in USA You’ll have to do the math to see if the tax savings in the long run outweighs the higher fees of your state’s 529 plan. A benchmark to use is New York’s direct sold 529 plan which imposes a combined annual fee of .17% starting …

Read More »

GE Capital, Franchise Finance Provides $4.1 Million to Jimmy John’s Franchisee

I was told at the National Restaurant Association show in Chiacgo a few weeks ago that GE was no longer underwriting franchisee loans. I guess the speaker in that breakout session was wrong as they just provided $4.1 million in debt and line of credit to a 14-unit Jimmy Johns franchisee in Kansas. http://www.marketwatch.com/story/ge-capital-franchise-finance-provides-41-million-to-jimmy-johns-franchisee-hinz-jj-llc-2012-05-16

Read More »

Franchisors at or near Bankruptcy

Here is a partial list of franchisors that have filed bankruptcy, or are reported near filing bankruptcy recently. Perkins Marie Callender’s Old Country Buffet Real Mex Restaurants Giordano’s Cork and Olive Dial-a-Mattress Bally Total Fitness Friendly’s Souper Salad Sbarro Dippin’ Dots The Little Gym Fatburger (A little controversial -Fatburger parent company not part of bankruptcy, but the two subsidiaries accounted for 72% its total revenue in 2008. The bankruptcy came under pressure from G.E. Capital Business Asset Funding, which Fatburger owed $3.9 million for defaulted loans.) Mrs. Fields / TCBY A bit older bankruptcies.  It shows that some brands can recover quite well, especially Denny’s, Day’s Inn, 7-Eleven and Church’s Chicken: Bennigan’s – 2008 Baker’s Square – 2008 Roadhouse Grill – 2007 Ground Round -2004 Boston Market – 1998 Denny’s – 1997 Church’s Chicken – 1991 Sizzler’s – 1996 Krystal – 1995 Day’s Inn – 1990 7-Eleven – 1990

Read More »

Forums down for two days

I’m upgrading the forum software to deal with the recent influx of spam postings. Sorry for the inconvenience. Feel free to email me using the “contact” page to ask me any questions that you may want me to discuss, or open up for discussion, on the main blog here. — Ryan Knoll FranchisePundit.com

Read More »

Fitness Clubs See Drop in Memberships

Larger fitness clubs are seeing a drop in membership, and former fast growth clubs are turning flat to negative. This is not just happening in the USA, but also in Australia where giant Fitness First is seeing a decline in membership. Fitness First has turned flat to negative, with increased competition from Anytime Fitness, personal trainers and low cost rivals. It’s a tough industry where you have franchises like Planet Fitness offering a no-frills membership for $10/month.

Read More »

Forums are back up

The discussion forums are back up for people to ask questions and get responses from me and the community. I had to restore with a copy from earlier in the year, so I apologize if I lost your post. Thanks for your patience!

Read More »

Forum Will Be Back Soon; Blog Posting Will Resume

I apologize for the forum being down for so long. I will install a backup and get it functioning again. There is a lot of great content in there. On a similar note, I had a new son born a few months ago which has absorbed most of my spare time. I will resume regular posting in mid-August. Thank you for your patience and loyalty.

Read More »

Back up!

Dear Franchise Pundit readers, Sorry for the sudden downtime for the past few weeks.  I had a problem with my web host and had to make a sudden switch, and I had a new baby boy born!  My head is back in the game and I’ll work to get things updated.   I had to use a backup of the web site to get things back up with my new web host, so I lost two months of blog and forum posts.  I’m sorry to all those who contributed and lost their content. Thank you for you patience and I look forward to reading more of everyone’s contributions, Ryan Knoll

Read More »

Starbucks New Logo

Starbucks changed its iconic logo. The most noticeable change is removing the Starbucks name and making it a bit more simple. It’s a bold move. I’m not sure how many people know that female image is actually the Starbuck’s logo. I’m sure it will work just fine and they have the research to back up this decision. What do you think?

Read More »

Oops – franchisee didn’t pay sales taxes

An Indianapolis, IN area Dominos pizza franchisee had sales of $6 million across three units but kept the 7% sales tax for himself. Eventually the state of Indiana found out about it and shut him down. I know it’s tempting to keep the sales tax, but how could you expect not to get caught?

Read More »

How to Make Money as a Franchisee

Leveraging people and assets across multiple operating businesses is what enables most companies to make money, including franchisees.    The leveraging action turns what would otherwise be an individual, high-overhead and high-risk investment into a portfolio of lower-overhead and risk-managed investments. In a previous job I worked for a commercial real estate investment and management company.   The company made money because they were able to use the same employees to manage dozens of leased properties, and leveraging one employee across dozens of properties increased the profit margins. In franchising, a multi-unit operator can leverage skilled managers across multiple units.  And, the $25,000 saved across 50 restaurants adds up quickly to a nice income. A great example of leverage in franchising is Frank Heath and David Paradise of Mississippi-based Mid River Restaurants.   Between them they own: 12 Applebee’s in Louisiana, 26 Hardee’s in West Virginia, North Carolina and Kentucky, 10 Taco Bell restaurants in Louisiana and Mississippi, and 12 IHOP restaurants in Ohio, Indiana, and Kentucky. And, they are in the process of acquiring 33 St. Louis area Applebee’s for the rock-bottom price of $25 million ($757k each, below build out cost).  The seller is DineEquity Inc., the parent company of Applebee’s Neighborhood Bar & Grill and IHOP restaurants. Mid River Restaurants has several advantages over other small and individual franchisees: profit per restaurant is higher than most because of their controllable costs are lower with centralized management, accounting and service teams cash flow is large enough to finance large, well priced acquisitions the greater cash flow also enables them to hire and retain smarter employees who are likely to further enhance the profitability the whole enterprise learns from four very well developed franchise systems, exposing employees to “best of breed” methods Individual franchisees as a group tend to be …

Read More »

Franchising Family

Nick Lanni, the founder of Great Steak & Potato Co. (founded in 1982, sold in 2004 with 260 locations), is starting a new sandwich concept at my alma mater, Miami University in Oxford, OH. The concept is called “SoHi Grilled Sandwiches” and is supposed to be a fresh grilled build-your-own cheese steak and burger place. Coincidentally, his sons started the 25 locations Currito: Burritos Without Borders.

Read More »