TheTruth writes:
Has Fawa@#$%^& ever accomplished anything? It sounds like the guy running Kona Ice has accomplished quite a bit. TheTruth hurts sometimes
Ad Hominem attacks seldom further the conversation and are usually desperate attempts intended to distract observers when the initiator of the attack cannot win on facts.
Responding to fawa@#$%^&. What was the guru doing before he started with this concept. His story says he was consulting a similar business for 3 years. He built 5 prototypes and then only sold 6 or 7 franchises his first year to test the business model. He says everyone was successful.
Here is one of the issues with what you wrote above. Perhaps this looks familiar to you.
Franchisee acknowledges that any statements, whether oral or written, by the Franchisor or its agents preceding the execution of this Agreement were for informational purposes only and do not constitute any representation or warranty. The only representations, warranties and obligations of Kona Ice, Inc. are those specifically ser forth in the Franchise Disclosure Document and this Agreement...
Cutting through the legal jargon above, what this means is that you, the would be franchisee can only rely on the information in the FDD and the FA. You are signing an agreement to the effect that ANY OTHER representations were not material in your decision to engage in franchising with you franchisor. Stated differently you are saying any comments like:
“He says everyone was successful.”
Was not a factor in your decision to engage in franchising with this zor.
And a similar statement if made by the zor, unless substantiated in the FDD could be construed as an ILLEGAL earnings claim. So if by any chance you happen to be the zor or an employee of Kona you could have just violated the law and subjugated you or employer to disciplinary action.
In addition you are now telling a story about the origin of Kona Ice that is not in accord with what is stated in the FDD. There is no mention of whatever you refer to as consulting not any mention of 5 prototypes etc. The FDD clearly denotes a singular prototype in existence from June 1st 2007 until Feb 12 2008 at which point Kona Ice started franchising. That is 8 months of operational experience(footnote #1) of a single mobile unit and incongruent with the representation you are making (which as we learn in the FA cannot be relied on for action).
Next, current and former franchisees are not always the best source of information. They CAN provide useful information, but the reality is many disreputable zors have calls placed to current zees pretending to be prospective franchisees in order look for leaks. Often they sanction what they consider rogue zees in various ways in order to protect the brand. Also, from an economic perspective the zee has every reason to promote and protect the brand. On the other hand ex-zees who have left the system are often under settlement restrictions which inhibit their ability to disclose relevant information.
Lastly, from a ethical standpoint, you should not validate your business model via franchisees, you validate your business models replication on your own dime, at your own build out expense not on the back of some franchisee who quite naturally believes they are buying into a proven system. This is a level of disingenuous behavior that is simply unethical in my opinion.
TheTruth also writes:
has grown to over 200 units in 3 years with less than a handful dropping out that sounds like "some" success.
I agree to the extent it sound like financial success for the franchisor. The rest of your argument is a non sequitur at best.
For one the zee is bound for the duration of the franchise agreement. Many zors have been successful in going after zees for the theoretical royalties they would receive if the zee had remained with the system for the duration of the concept. Hence, you will find franchisees actually operating unprofitable concepts. One of the generalized myths of franchising which often hurts prospective zees is assuming that because there are so many units of a franchise concept that it must be profitable. Nothing could be further from the truth. The reason to operate unprofitable concepts are legion in nature.
Additionally the real measure of a franchise is not the franchisees profitability it is the delta between what the generalized concept brings in net compared to what the franchised brand brings in net.
In other words the question becomes what is the franchise brand doing for me on a day to day basis that is worth paying an on going royalty for.
Many concepts claim to have proprietary system, or even a process, or one I can think of an actual patent on a machine. Often these are virtually worthless. The patent office issues a lot of worthless patents year after year. Often the only reason these are applied for is so a business can try and create a a goodwill asset for its balance sheet for the unsuspecting.
One Ice Cream concept at one time claimed their process was to scrape the container in a clockwise circular fashion before folding the ice cream down vertically to reduce ice crystal formation. This is a very valid technique, btw for reducing food cost and maintaining quality in a hard pack ice cream business. However the patent on the process is essentially worthless because you can accomplish the same thing for instance by going counterclockwise. Of course to a zor trying to desperately to create a USP where there was none, it was a goldmine.
Thank you for providing me with an opportunity to expand on my thoughts on Kona Ice and franchising in general.
I remain,
FuwaFuwaUsagi
Footnotes:
#1
The reality is, bringing a franchise into existence normally takes a great deal of time and forethought. Logic would dictate that the steps to franchising begin shortly before or after actual operation of the single unit began. I sincerely doubt that in month 7 of operation a franchise model was suddenly pulled together. So it seems logical, though speculative, to conclude that they initiated the franchise process before there was any indication of profitability or replicability with the model.
