Ryan is an attorney and valuation specialist residing in Chicago. He chronicles his thoughts and research on FranchisePundit.com. You may reach him by email ryanknoll@gmail.com or mobile telephone 312-212-3423.
I came across a few franchsies that I would not want to own:
- Snack-In-The-Box: UK based firm that delivers candy to the workplace (difficult to work and sell)
- Nick-N-Willy (founded by former Quiznos exec)/Take-and-Bake: this take-and-bake pizza idea where cusotmer get the raw dough with toppings didn’t catch on 10 years ago, and won’t catch on despite some short-term success driven by PR and unique gourmet toppings. Gourmet pizza that is already baked is where I’d make my bet if I had to enter the pizza business.
- The Dinner Station/Meal Assembly (check out the nice store pics): The industry is already seeing a high number of closures; I’d do this perhaps without a franchise
- MRI/recruiting franchise: I knew several smart people that tried to make the MRI recruiting franchise work, but had a very tough time generating any placements, and placements from MRI corporate contracts were nil (operating profits and same store sales were down from last year)
- It’s Just Lunch: Some locations have been turning over several times each year, with franchisees literally giving them away to escape the cash drain.
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I am certainly not wild about the principals behind the Nick-N-Willy franchise system.
I questions the whole “Meal-Assembly Centers†business model. The cynic in me says “I don’t get itâ€, why would people choose to cook a meal at someone else’s kitchen and pay for that opportunity? It maybe fun to give it a try once or twice, but you are expecting a lot from people to change behavior and lifestyle in order to create a loyal customer.
The key to success in any business is repeat customers. If the business model constantly requires new customers to be generated, that business will always have a challenge being profitable. New customers are expensive! Repeat customers are a profitable business’ bread and butter.
In the “Meals-Assembly Centers†segment there are many franchisors; Super Suppers, Dream Dinners, Entrée’s Made Easy, Dinner by Design, Cena Entrees to go, Dinner A’fare, Let’s Eat, Supper Thyme, Dinners Ready, etc. etc. Since none of these companies make an earnings claim in their UFOC’s, it’s hard to determine profitability, and since the segment is so new many of the franchisees have yet to earn a profit.
How many competitors, if any, can enter the market and you still survive? What if they have slightly lower prices and a nicer, larger facility and more creative menu? What is the competitive advantage?
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