Well, you have to go to Australia to buy these Pizza Hell franchises.
Hell has been torture for Matt Blomfield – so he’s auctioning his $830,000 Auckland store for a $1 reserve.
Mr Blomfield, a Hell Pizza franchisee, is so fed up with the New Zealand owner TPF Group’s handling of the business that he’s willing to take a loss selling up his five stores.
“I just want to get the business sold, pay all the bills and move on with my life.”
Why is this business model not making money? Here are potential reasons from the article:
The Herald has also sighted emails from franchisees complaining of the lack of support from TPF, the high cost of ingredients – which they can only purchase from TPF’s own supply and distribution operation – and what they say is unsatisfactory marketing.
Source
Chris Toman’s plan to go green could have put him in the red.
The owner of a local pizza franchise plans to apply for LEED certification for his 2,600-square-foot restaurant space on the back burner because it was going to cost too much.
Toman said he would have to pay between $30,000 and $40,000 to become certified by the U.S. Green Building Council under its Leadership in Energy and Environmental Design program, which awards points to structures that are energy efficient and otherwise good for the environment.
$40,000 for a small restaurant to get green certified is proportionally a huge expense., plus the cost of the alternative materials such as insulation made of old jeans and coke bottles for a countertop. Would that $40,000 be more profitably spent on advertising?
While going green can sometimes attract additional customers in certain markets, the increase in price compared to the market will divert others to your competitors.
Toman is opening a Pizza Fusion franchise, which requires all of its restaurants to be built to LEED standards, as part of its self-described mission to “Save the Earth one Pizza at a Time.”
Not only are the buildings green, the chain delivers pizzas in hybrid vehicles.
The cost of going green for Pizza Fusions in other markets is less than half of what Toman was told he’d have to pay here.
Much of the cost goes to consulting companies that develop energy-efficiency plans for buildings seeking certification. These firms also make sure the buildings ultimately perform the way they were designed and file reams of paperwork required on all projects regardless of their size.
“It seems like they’re overcharging,” he said. “I’m trying to do the right thing, but someone’s taking advantage of it and charging high rates.”
If you were looking for a location for your new coffee & bakery business, would you commit to a location that had a Homer’s restaurant and Erbert & Gerbert’ both fail there within the past year? And, direct coffee competition from Starbucks, Kopeli and The Coffee House are all within two blocks? I would be extremely hesitant.
Nevertheless, aspiring franchisor Natalie Bubak of Lincoln, Nebraska will open a nuVibe Juice & Java in the serial failed location. Gutsy.
After Homer’s closed last May, Erbert & Gerbert’s lasted only a few months, apparently a victim of competition from downtown’s plethora of sandwich shops.
There’s also a great deal of coffee shop competition in the area — Starbucks, Kopeli and The Coffee House are all within two blocks — but Bubak said she thinks nuVibe is different enough that it will complement, rather than take from, the existing coffee businesses.
“I think we’re going to help each other, really,” she said.
Besides coffee, nuVibe also serves all-natural fruit smoothies and gelato.
And Bubak said she’s planning on adding some breakfast and lunch items to the menu, including hot cereal and soups.
She said the new breakfast items will help fill what people have told her is a void in downtown.
Bubak said she has the opportunity to have expanded offerings at the downtown nuVibe because the space is so much larger — 4,500 square feet compared with the 1,500 square feet she has at her Pioneer Woods location.
As if the sub sandwich category wasn’t crowded enough, Domino’s Pizza is adding sub sandwiches to its menu and delivery service. The $4.99 oven-baked sub sandwiches will include classic favorites like Philly Cheese Steak and Chicken Bacon Ranch.
The move comes five months after Pizza Hut began delivering baked pasta dishes as well as pizzas. And it will be a wake-up call for sub shops Subway and Quiznos, which find themselves competing with pizza chains.
For the pizza giants, the message is clear: If pizza sales aren’t growing in a sour economy, maybe something else will. Besides the hot subs and baked pasta, some pizza chains also deliver chicken wings.
“It’s an attempt by the pizza players to try to get back into being a growth industry,” says Ron Paul, president of Technomic, a restaurant research firm. “They’ve all lost their mojo.”
They also are further conflating a fast-food world that’s grown jumbled. McDonald’s (MCD), Burger King (BKC) and Wendy’s sell salads and chicken. Subway and Dunkin’ Donuts have tried pizza. Arby’s, once roast-beef-only, now makes a killing on Market Fresh deli sandwiches and sells toasted subs.
Domino’s U.S. same-store sales fell 5.4% in the second quarter after a 5.2% decline in the first quarter.
Brandon says the move should boost Domino’s lunch business and expects lots of calls from groups of office workers. (The minimum delivery order is $8 to $10, depending on location, and delivery fees are $1 to $2.)
Rivals are unimpressed.
Pizza Hut delivers hot sandwiches regionally but is focused on growing its national pasta delivery sales, says Brian Niccol, marketing chief.
Tony Pace, marketing chief of the Subway Franchisee Advertising Fund Trust, says, “Domino’s is watching our success and wondering how to get a piece of the action.”
Half of Quiznos’ locations deliver, and two-thirds will by year’s end, says Rebecca Steinfort, senior vice president.
The trend is clearly delivery to prevent a loss of sales, and online ordering.
Starbucks’ Standards of Business Conduct manual (pdf) is an interesting read for those of us with too much time on our hands. For those in franchises without much guidance on how to interact with employees and customers, this will provide you with a proven set of guidelines.
The American Association of Franchise Dealers (AAFD), who previously awarded Cuppy’s Coffee a Fair Franchising Seal, has suspended Cuppy’s accreditation pending a determination of the Association’s Board of Directors at a scheduled meeting on September 24, 2008. This comes after many obvious shameful contracts breeches by Cuppy’s old and new management over the past year. Below the fold you can read the entire statement released by the AAFD. Here’s a link to the email sent by Robert Purvin, AAFD’s chair, to Cuppy’s owner Dale Nabors informing him of the suspension.
(more…)
I know a man who became quite wealthy owning one of these.
Franchisee’s Argument (Defendant):
Allison’s FBO network responded with its own lawsuit, filed June 19, “for declaratory judgment and breach of contract.” The lawsuit claims that franchise agreements for the FBOs in Cincinnati, Columbus, Chicago Midway and New Orleans have “expired, been terminated or that the franchisees are entitled to terminate their franchise agreements,” and that agreements for Asheville, Charleston and Lafayette were never executed and that material terms had not been agreed on. The Jason III lawsuit also accuses MAI of “diversion of promotional funds and the dilution of the franchise brand resulting from unstable and deteriorating financial condition of the franchisor.”
Franchisor’s Argument (Plaintiff):
Million Air Interlink (MAI), the franchising company based in Houston, filed suit against Allison’s FBOs in April, claiming that they “have taken steps to stop making payments required under the franchise agreements. Defendants are also terminating, or attempting to terminate, the franchise agreements and their obligations as franchisees without the contractual right to do so. Under the agreements, defendants are obligated to participate in an insurance program designated for the benefit of the franchisor and all the franchisees. However, defendants have terminated their participation in the insurance program in breach of their contractual obligations. Furthermore… defendants are also executing a plan to compete with MAI in breach of the franchise agreements.” MAI is seeking payment for damages exceeding $5 million plus payment for other costs, such aslegal expenses.
Source: AINonline.com
Blog MOST Comments