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.
This is one of the better articles I’ve read recently giving readers an “inside look” at the franchising experience – what can go wrong, the competing dynamics and interests in the franchising business model, and financial and legal realities.
And that was just the beginning of Ross’s troubles. It seemed like her email account logged a new message almost every day, welcoming another Super Suppers franchisee to her region of the state while she was still struggling to attract new business. With neither the money nor the energy to advertise locally, she again turned to Super Suppers corporate headquarters for help.
While I’m sure the new franchises weren’t technically encroaching on her protected territory, it still has significant impact on sales.
Even if no more new Texas franchises were sold, she would still see many new locations pop up in the near future. Not to mention the “other guys†— Dream Dinners and Dinners Ready!, among others, were beginning to make multiple appearances around town. Unlike franchises that can thrive in heavily saturated markets (Starbucks, McDonald’s), a meal-assembly center needs a large number of households in any given territory to be successful. According to Bill Byrd, it takes 500-700 households to support a Super Suppers, but he concedes the divvying up of territories is “not an exact science.â€
Whenever there is a “hot” segment, copycats franchisors are only months behind. Success breeds competition, and the competition can ride your wave and simultaneously learn from your mistakes without experiencing the costs. Potential franchisess must evaluate whether their soon-to-be franchisor will constantly innovate and improve to stay ahead of the competition.
For example, a less-experienced franchise owner wouldn’t know that regional and national advertising in a franchise-based business plan is usually rolled out well after a significant number of stores have been opened. “They usually try to pack a lot of franchise locations into an area before advertising so that they get some value,†says Letier. Bill Byrd says Super Suppers will begin advertising nationally at “around 1,000 franchises.†By this projection, franchisees have a long wait ahead of them. For the time being, Byrd says, “A lot of our [marketing] is to go in and talk to moms’ groups, PTAs, and church groups and tell them the story about Super Suppers.â€
The franchise sales team or “independant consultant” didn’t highlight this for you? Oh yeah, they want to close the sale so they earn their commission.
Hat tip: Anonymous in the forum
Similar Posts:
- Pet Care Franchises and New Competition
- Restaurant Franchise Profitability
- Prices on Required Purchases
- Another Entree into the Meal Assembly
- Geeks “Off” Call
What a lame logo for Super Suppers.
Anyone know if the location mentioned in this entry is still open? I look at the supersuppers web page but since there are three listed for San Antonio, I can’t tell.
The MealBlogger
Dream Dinners has been sued for 30 million in New York by 15 franchisees…..more trouble for the Meal Dissasembly Business.
I am into purchasing a Dream Dinners in southern CA. Is it true that Dream Dinners is being sued for $30 million by Owners? When I received the UFOC it was not disclosed. When I questioned Dream Dinners, Inc. they said that it was not a big deal. Where can I find accurate information on the internet. Is this common for Corps. not to disclosed this information, Should I be concerned?
FYI-Most large franchisors suggest that you buy certain equipment packages because they get a “cut” of it.
So if you have an opportunity to buy used TAKE IT!. The equipment is going to lose 50% of it’s value almost immediately.
Save money where ever you can for build-out. It makes sense to save money on build-out to save capitol for operating especially in the lean months.
IF the closures were not in the FDD, I would ask your HQ BEFORE you go any further in the process.
Good Luck
TO ATIRSTEP – DO NOT PURCHASE ANY MEAL ASSEMBLY BUSINESS!!!
Why, the economoy is in the tank and the first place some looks to cut is the luxury items. And while it is cheaper to buy meals at a MA it is still considered by most to be a MA. You maybe able to get into one of those areas where Mom is home all day and the kids are more of a fashion statement than anything else but more than likely they have someone at home doing the cooking for them. A MA can be successful just not a franchised one that is founded under a BAD MODEL from either DD or SS. How do I know, I just closed one.
Do yourself and your credit a favor and RUN do not walk away from this!
AIRSTEP, anonymous,
I second run do not walk away from MA business. I respectfully disagree with Anonymous that MA’s can be successful. Define “sucessful”. Even indies pretty much use the model that the shysters who started this mess. Then when that doesn;t pan out they go peruse the competition (i.e franchises) and then do what they do, again a loser stategy. Let me say this loudly and clearly, this is a niche market idea. In this economy even the Indies are going to suffer. When you see that people in upscale Chicago neighborhoods are seeing an upswing in foreclosures the only places that are going to benefit are Mickey D’s, Aldi’s and Dollar Market and Odd Lots. How do I know? Because I closed one of these dogs almost 2 years ago. My life while not a nighmare, is not where I thought I would be at this point in my life.
The only ones who have made money here? Lawyers, Franchisors and vendors. We the franchisees have gotten bilked out of millions of dollars en masse. I want to know where the bailout was when I went belly-up because of Franchisor mismanagment and a concept that sucks??
Did the Gov’t step up to the plate for me? Hell no, I had to go through bankruptcy and go back to square one.
Do yourself a favor, don’t open a MA business or anything that smells like it, you’ll lose your ass-ets.