I’ve always thought that the best way to grow a franchisor is not to have the best product or service offering, but to offer the best franchising arrangements with flexibility.  It look like some hotel franchisors are taking that exact route and it is working.

 A spokesman for Wyndham, Richard Roberts, said that all of the company’s brands require franchisees to sign up for a minimum of 15 years, except for Knights Inn, which offers three-year agreements. Asked about Ms. Sanders’s properties, Mr. Roberts said: “We consider details of our relationships with individual franchisees to be a private business matter. Anyone who wants to affiliate with Wyndham does so at their own initiative. The fact is there are 6,500 hotels in our system for a very good reason: We deliver value to our franchisees.” The brands also include Days Inn, Ramada and Howard Johnson.

Ms. Sanders, though, has moved 17 of her 18 hotels to a new brand, Americas Best Value Inn. The company has broken ranks with its competitors by offering franchise agreements that are renewable each year.

Offering an alternative to the industry’s traditional 20-year contracts has helped make Americas Best Value one of the fastest-growing lodging chains. Nine years after it was founded, its name is on some 800 hotels — nearly all of which once waved other companies’ flags.

The company’s chief executive and president, Roger Bloss, sounds a populist message, calling Americas Best Value “a membership association” and allowing franchisees to vote on company policies, from what kind of shampoo to offer to how much they will pay in fees.

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• Franchise News Roundup - 11/26/2007
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• Cash Discount for Customers

This article from the United Kingdom highlights some of the positive aspects of franchising.

He said: “Choosing the right franchise is a big decision – it’s your own money on the line and you need to be sure that you are investing in a sound business model. McDonald’s employs some of the most talented professionals around and it helps to be able to draw on that knowledge and expertise.”

There are significant advantages to running a franchised business, as a new idea has already been tested to ensure it is successful. What’s more, larger franchises will have a well-established trading name and are likely to offer marketing support and comprehensive training programmes in a wide range of business skills. Good franchisors can also help secure initial funding.

Mr Thomas said: “McDonald’s has some fantastic training opportunities for staff at all levels, which means that when I identify talent I have the tools to help my staff develop their skills.”

“At the same time, I can operate on a local level too and I’m involved in a number of community initiatives. I am deputy chair of the Trust for Sick Children in Wales, and regularly give talks on business and entrepreneurship at local schools and offer work experience placements through Careers Wales.”

He added: “For entrepreneurial people owning a franchise is a great opportunity to take a fantastic brand and make your own mark.”

The only portion I have issues with his last statement. For truly energetic entrepreneurs, owning a single franchise provides limited entrepreneurial satisfaction because of the lack of flexibility and adaptability limits built into the franchise operating structure.

• McDonald’s chickens out on Boston Market
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• Wendy’s franchisee bids for company
• Transfer fee benchmarks
• Tom’s Foods vending franchises

Most of my friends order food online whenever possible, especially pizza like Domino’s and Papa John’s.  Online ordering is making up 20% this Papa John’s franchisee’s sales:

In fact, Chesley estimated, about 20 percent of her store’s sales arrive via the Internet.Customers can insert exactly what they want and it saves on labor costs since the staff doesn’t have to spend as much time on the telephone taking orders, Chesley said. “We do great with online ordering.”

Potential franchisees should make sure you are free to engage an online ordering network such as Order Network, CityWaiter, eHungry, Kudzu Interactive, or GrubHub.

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• New Englands own Papa Ginos wants a bigger slice of the national pie!
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This McAlister franchisee with 30+ years of restaurant experience from Oklahoma is doing well. The article has some good tidbits:

“Our business is actually up,” said Bothwell, attributing that to McAlister’s market positioning and lunch focus, which accounts for 65 percent of its revenue. “People seem to still be eating out for lunch.”Competing for the fast-casual market with such well-established companies as Panera Bread and Jason’s Deli, McAlister’s offers more than 100 menu items for lunch and supper, targeting health-conscious customers.

“We have to get more sales to cover our increased operating costs,” he said, noting his average per-person ticket runs $7.85.

His firm ended 2007 with revenue of $10 million, his stores averaging $1.5 million per year. With eateries to open this year in Shawnee; Lawrence, Kan., and Joplin, Mo., as well as at 21st and Yale in Tulsa, he projects 2007 revenue of $20 million.McAlister’s restaurants established in existing shopping centers, like his new midtown Tulsa deli, cost about $750,000 to open, said Bothwell. Stand-alone stores can run $1.5 million to get off the ground. Both employ an average staff of 50, now a greater challenge since Oklahoma’s new immigration law further drained the state’s tapped labor pool.

UPDATE: May 29, 2008 @ 5:34pm EST

UPDATE #2: June 4, 2008 @ 3:14pm EST

There was an interesting comment to this post about whether a stand alone location can realistically justify the $1.5 million build out costs, which is double the $750,000 cost for a strip mall location. The short answer is yes. You wouldn’t need twice the sales, but there would be an incremental increase in sales to have the free cash flow to service more debt.

Here’s the analysis: The monthly cost of borrowing an additional $750,000 @ 8% with 10-year repayment term is

To cover this $9,100 in additional monthly debt service not including the extra taxes and maintenance, the store would need to attract an extra 1,160 tickets monthly @ $7.85 average per ticket. A store with $1.5 million in sales is attracting 524 patrons per day. Can a standalone location attract at least 38.6 more people per day versus a strip mall front? Sure, it is possible with a significantly more prominent street exposure.

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I believe that self-service ordering kiosks will be a fixture at many big-name restaurants and fast food outlets in the next decade, much as the self-checkout in grocery stores have become common place.  It makes sense for customers and it makes sense for the restaurant owners.  These self-service kiosks are aimed at increasing the average transaction and speedier service.  At this point I’d be satisfied with a “refill my drink” button at my table.

The extreme evolution of this concept is the Baggers restaurant in Germany where guests choose their meals from a touch screen at their table and food is delivered by a “mini-railway” from the kitchen located on the floor above.   The inventor’s gravity feed rail system is patented in Germany and he is seeking protection for the invention internationally so that he can license it to restaurants abroad.  You have got to watch this quick BBC video showing how the restaurant works.

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Pinkberry Craze

Frozen yogurt is hot again? Well, sort of. Given the implosion of the last frozen yogurt phase, you are wise to be cautious. The last frozen yogurt craze in the 1980’s and early-1990’s was lead by TCBY. According to the International Council of Shopping Centers, TCBY’s same store sales fell 10%-15% annually between 1997 and 2004, particularly when the low-cal and low-fat versions were introduced. The International Dairy Foods Association reported frozen yogurt production in the U.S. went from 118 million gallons in 1990 to 65 million gallons in 2005, a 45 percent drop.This time Pinkberry sure seems to be all the buzz lately, even being features in a recent American Express ad and having their hip tart frozen yogurt dubbed “Crackberry” playfully implying an addiction is possible. Here are photos of a Pinkberry in Manhattan. Founded by Shelly Hwang (coming off several failed small restaurant ventures) and Young Lee (a solo designer), they effectively brought to Los Angeles the tart frozen yogurt now famous in South Korea.Pinkberry has apparently been stretching the healthiness of its yogurt, and in early April 2008 settled a law suit where it was accused of misrepresenting its product as “frozen yogurt” and making bogus health claims, including that the dessert was “all-natural.” Pinkberry admitted no wrongdoing but is paying $750,000 to a local food bank and $5,000 to the “victim”. The article implies that the recipe is not all natural and has higher calories than the founder claims.Nevertheless, sales of the tart frozen yogurt are impressive. Pinkberry has put forth in the media unit sales of $250,000/month and has generated a plethera of copycats across the country, including Berrie Good, Yogurberry, BerrySweet, Red Mango, and recently Berry Chill here in Chicago. Pinkberry has supposedly ceased selling franchises for now.

The Concept

The hip tart frozen yogurt concept is simple:

• a few basic flavors of tart all-natural frozen yogurt
• a variety of berry and exotic real fresh-cut fruit toppings in addition to cereal and cookies
• curvy counter and furniture; accented with colorful hip floors and wall coverings
• at least 4 plasma TVs showing something “cool” like music videos or Japanese game shows
• at least 4 plasma TVs above the counter with an animated menu
• charge about $4-$7 for a tart yogurt and 3 toppings of brand-name cereal, fresh fruit, candy, and pastries.

Should you buy a franchise or role your own?

You can easily roll your own. Here are some basic supplies you’ll need to get started:

• get your 2 ice cream machines from Taylor, ($36,000 each)
• tart frozen yogurt mix from YoCream,
• cups from Jas Wholesale (supplies price sheet ) (500 ct = $59)
• ultra modern flooring, counters, cabinets, and furniture from Ikea (~ $3,500)

I may be more biased to the “role your own” after seeing the success of a single-unit startup in Chicago called Berry Chill. It occupies a small storefront on State Street a few blocks of Michigan Avenue (the Magnificent Mile). The entrepreneurs got the location right, and executed the “feel” of the asian-inspired Pinkberry clones well enough. Berry Chill opened a few months ago during the middle of winter when the weather was below freezing.  However, while most of the frozen custard places close for the winter, there was almost always a line at Berry Chill.  I attribute most of their early success to copying a proven concept and selecting an excellent main street location with lots of tourists and local high-rise condo residents.   I’m sure the store will do well over $1 million in sales during the calendar year. Coincidentally, there is a Cold Stone Creamery (with Soup Man) 1.5 blocks away with a larger store but *probably less than a third of the street foot traffic and it rarely has a line except in the evenings of summer days…what a difference a few blocks and hip attitude make.Would I buy one of the aforementioned franchises? Probably not. I’m a strong believer in historic trends, and I would not want to be financially tied to a concept so easily copied or a category that tanked so quickly in the past few decades. I would be very hesitant to open a unit in a suburban outdoor strip mall, as heavy immediate foot traffic seems to be part of the successful formula.If I was to franchise, I would go with the brand with the high exposure and recognition, which at this time is Pinkberry, unless one of the franchise clones have extremely flexible terms in the Franchise Agreement, such as permitting me to essentially change my store brand if I choose not to renew, and permit me to transfer all assets to my new business without penalty or encumbrance, and if the Franchise Agreement did not require me to refrain from competing for any period of time after owning a franchise. If the concept doesn’t work, I want out of the franchise obligations but I want to still have the option to utilize the assets I paid for (either sell them or use them in a similar/renamed business).

Industry Developments

Forbes has a good article on the current status of the Frozen Yogurt industry. Reformulations of the frozen yogurt to a low-fat with fruit mix seem to be working:

MaggieMoo’s International also reformulated its smoothie line, changing it from non-fat to a low-fat, lactose-free ice cream or fruit smoothie called Zoomers. The company made the change after conducting blind taste tests with consumers, 67% of whom preferred a tasty, low-fat smoothie to a non-fat smoothie, says Debbie Benedek, senior vice president of brand marketing. Flavors include a Triple Berry Pomegranate that’s packed with antioxidants.

After changing its frozen yogurt production process, within six months Dreyer’s/Edy’s Slow Churned watched a double-digit decline in frozen yogurt business turn into double-digit growth, says Suzanne Ginestro, senior brand manager for Dreyer’s and Edy’s Slow Churned ice cream. (Dreyer’s is known as Edy’s east of the Rockies.) By using the slow churn method, fat is better dispersed throughout the product, making it feel richer and creamier. A similar change also boosted the brand’s light ice cream sales.

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USA Today, world reknowned for their franchise evaluation skills (note the sarcasm) as evidence by naming Quinoz #2 in 2006, has named 7-Eleven as their #1 franchise for 2008.

7-Eleven management is very systematic and generally organized.  With so many world-wide stores, it has invested heavily in automation and technology.   Marketing partnerships are big with 7-Eleven to get people in the stores, see the Simpsons movie promos and Citibank ATMs as examples.

7-Eleven does not allow absentee-ownership, and each location generally must be  a minimum of 1,400 square feet and must be at least 1/2 mile from another 7-Eleven franchise.  Franchise fees are at least $70,000 plus typical build out costs.

The article mentions a unique system that builds “equity” in their store, so if the franchisee wants to sell, the seller can ask for a premium “goodwill” payment representing built-up equity.

Single store ownership is a way to make a living, but not make a six-figure income.

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McDonald’s franchisees are being asked to invest at lease $100,000 per store to accommodate the new upscale variety in coffee drinks, creating the ability to sell caramel lattes and cappuccinos. While the franchisees generally do not doubt this new offering will increase sales, it’s still a big price to pay and dents the immediate cash flow.

The equipment alone will cost franchisees about $25,000 per restaurant. Plus, they are being asked to invest considerably more to retool their stores to better handle the specialty coffee and other new beverages, from sweet tea to smoothies to energy drinks.

Lesson

Can a franchisor require franchisees to investment capital to implement a new offering?  It all depends on the terms of the franchise agreement, but almost all franchise agreement require a franchise timely adaptation to reasonable requests to implement new services and products.  Worst case, you will be required to make the investment at time of renewal of your franchise agreement.  The renovation costs required for franchisees is often a reason for walking away from a franchise at renewal time.

As a franchisee, if you are able to pay yourself about $60,000/year, and your franchisor is requiring you to invest $50,000 at renewal for renovations that you forecast will take 5 years to recover, what do you do?  Do you have the equity or cash to borrow the funds?   A wise businessman will run the numbers, a foolish businessman will automatically pay up without figuring the impact.

• Relief to McDonald’s Franchisees for New Coffee
• It’s Official: McDonald’s to offer Specialty Coffee in all Stores
• The Hooters of Coffee
• McCafe = Coffee + Soups +Sandwiches + Pastries
• McDonald’s chickens out on Boston Market

Restaurants seem to have had a good year.

The largest Pizza Hut Franchisee in the U.S., NPC International, Inc., owned 874 Pizza Hut locations during the 3rd quarter of 2007. With $173.3 million in total 3rd quarter sales, the annualized sales per store was about $793k, which translates to a monthly revenue of just over $66k, and daily sales for a 30 day month of about $2,200.

Comparable sales, or sales in stores that have been open at least a year, increased 4.9 percent in the third quarter. That makes five consecutive quarters of comparable sales growth, pushing NPC’s positive comparable sales record to 35 of the last 37 quarters, Schwartz said in the release.

CKE Restaurants reported Wednesday that Hardee’s same-store sales rose 3.6 percent for the four-week period ended Nov. 5, and increased 2.7 percent for the third quarter ended on the same date.

In the U.S., McDonald’s same-store sales rose 5.4 percent in October, boosted by the ongoing popularity of the Monopoly game promotion, the company said.

RETAIL UP:

• Target +4.1%
• Wal-Mart +0.4%
• TJX (TJ Maxx, Marshall’s) +3%

RETAIL DOWN:

• Anne Taylor - 4.2%
• Chico’s -10.6%,
• Bon Ton, Cato -8%,
• Fred’s -0.6%,
• J.C. Penny -1.8%,
• DSW - 3%,
• Cache -3%,
• Pacific Sunwear -.08%
• Sharper Image -8%,
• Gap -8%,
• Nordstrom -2.4%,
• Macy’s -1.5%,
• Kohl’s -1.5%,
• Talbot’s -7.9%
• Shoe Carnival -5%,

• 2006 First Quarter - Yummy Same Store Sales Increase
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• Captain D’s Largest Franchisee Files Chapter 11 Bankruptcy

Since Tamarac-based Puroclean began franchising in 2001 it has sold more than 180 franchises, making it one of the 50 fastest-growing concepts in the nation. The company provides mitigation, restoration and reconstruction services for damage caused by fire, water or vandalism.

Part of the company’s success is that it’s a business-to-business model — working largely with insurance agents and adjusters. That draws franchisees who might shy away from traditional sales, said Puroclean President and COO Keith Gerson.

‘’We are one of those under-the-radar opportunities that most people don’t think about,’’ he said. “But when you align all the stars in terms of what makes a good business — growth opportunity, great margins and low cost of entry — it’s just one of those rare models that is firing on all cylinders.’’

Gerson, of Puroclean, said there’s a simple formula to keep fueling the growth of a franchise: Keep the franchisees happy. In fact, some of the company’s best marketers are owners who are eager to sell the concept — which is different than selling the business, said Gerson.

If you talk to a franchisee about buying in and they say, ‘ `Gee, you want to buy a business? I’ll sell you mine,’ ‘’ be leery, he said.

Cross Posted at: Let’s Talk Franchising

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Fantastic Sams, a full service hair salon brand with nearly 1,400 salons in the US and Canada, was recently ranked as one of the “50 Top Franchises for Minorities” and the “Top 25 Franchises for Hispanics” by the National Minority Franchising Initiative and Hispanic Enterprise Magazine. Fantastic Sams was the only hair salon franchise system selected by both surveys.

As published in the September 28 edition of the USA Today newspaper, The “50 Top Franchises for Minorities” award recognizes Fantastic Sams as one of the exceptional systems that has demonstrated a focus on recruiting and supporting minority franchisees into its system. Selection was based on many factors, including historical performance, brand identification, market dynamics, franchisee satisfaction the level of initial training, on-going support and financial stability.

The “Top 25 Franchises for Hispanics” was featured in the June/July issue of Hispanic Enterprise Magazine. Fantastic Sams was recognized as a franchise that has made a corporate commitment to recruit prospective franchisees from the Hispanic community over the past several years. According to Hispanic Enterprise Magazine, “This commitment is not based on altruism; it is based on sound economics. The companies noted here represent exceptional opportunities for prospective franchisees and have demonstrated a commitment to properly training and supporting you once you become a franchisee.”

Fantastic Sams is also a charter member of Minority Fran, a program that was recently launched by the International Franchise Association’s Diversity institute. Minority Fran was created to build awareness of franchising within minority communities and to increase the number of minority franchise owners.

“We are thrilled about our recent recognition by the minority business community,” said Scott Colabuono, CEO of Fantastic Sams. “We want to recruit franchisees who are interested in running a business and who also understand the culture of the clients they serve.”

Fantastic Sams is currently concentrating its efforts on attracting quality franchise partners who want to invest in a leading hair salon brand with a solid operating system and a strong corporate support structure. The average initial investment to open a Fantastic Sams Hair Salon (ranging between $100,000 to $225,000) and the company’s fixed fee royalties make it one of the most competitive opportunities in the industry. “With Fantastic Sams’ attractive economic model, experienced franchise partners find our brand a worthwhile investment,” added Colabuono.

“Prospective franchise owners for Fantastic Sams should have well developed people skills to be successful. Our best salon owners set a standard for guest service that translates into highly trained and motivated hair stylists. Our guests recognize the difference when they step into our salons,” according to Jeff Sturgis, VP Franchise Development. “We have become the leading full service hair salon brand by offering the best in salon services and products, and by creating a customer loyalty that sets us apart from our competition, “he added.

Cross Posted at: Let’s Talk Franchising 

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Homevestors garnered a positive article in the Washington Post yesterday.

HomeVestor franchisees pay a $49,000 fee upfront and must have net assets of $200,000 in cash or cash equivalents. They also pay the parent company $775 for every house they acquire, plus interest on credit lines the company extends to enable them to buy multiple properties. Some HomeVestor franchisees buy, fix, rent or resell 100 or more houses a year, thanks in part to high volumes of potential sellers — more than 200,000 this year, Hayes said — who are driven to them by the company’s advertising campaigns.

Subprime mortgage delinquencies and foreclosures are swelling those numbers significantly, he said, along with plunging prices in some local areas. Softening markets also are driving down the expected discounts on troubled houses. Whereas in past years, “we might offer 65 percent of a property’s expected value after repair, now in some places we’re looking at 50 percent,” Hayes said.

A $100,000 starter home with a seriously delinquent mortgage and in need of renovation, for instance, might draw an offer of $50,000 to $55,000 cash from a HomeVestor franchisee.

I was with a real estate broker the other day when he received a buy offer for his client’s residence that was 50% below asking. The broker scoffed and refused to take the offer to the seller (which is unethical unless the owner gave instructions not to accept anything below a certain price; I think part of it too was the broker wanted his commission to be higher). Nevertheless, companies like Homevestors provide liquidity to distressed properties. It’s hard to believe that a perfectly good property would drop in value 50% in a few years in popular part of the country (Miami in this article), but at the end of the day the condo’s fair maket value is only what someone else is willing to pay for it.

For those of you interested in the legal aspects of residential real estate, I recommend checking out Chicago attorney Pete Olson’s blog.

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I received an email from Source Book Publications regarding Earnings Claim in Item #19 of the UFOC, I agree with Sourcebook that all franchisors should be required to submit an earnings claim statement (Item 19) in their UFOC. Given that submission of an Item 19 is entirely voluntary, only 20% of franchisors choose to do so. The reasons for non-submission range from the ludicrous to vaguely plausible.

To myself and Sourcebook, it seems entirely one-sided to ask a prospective franchisee to invest in excess of $200,000 (on average) to “buy” a franchise without providing him or her with a clear understanding what he or she might earn from the investment. Although there are numerous variables that preclude franchisors from coming up with an exact projection of future Net Operating Income, the franchisors clearly have the ability to determine the historical sales and related expenses for operating units currently within their system.

At a minimum, they can work backwards from royalty payments to come up with a gross sales figure. To the extent that they closely monitor and support their franchisees, they should have a good sense of average operating costs as well. Given this information and the latitude they have to provide as much detail as they see fit, they can break out summary operating data for those franchisees or company-owned units that have been around for say 5 years, 10 years, etc.

My sense is that the FTC will ultimately acknowledge the need for a mandatory Item 19. Given the difficulty from industry to industry to provide a workable template for the submission of information, the FTC will continue to allow franchisors to provide as much or as little information as they deem necessary. Those franchisors that do in fact provide real, in-depth information will clearly enjoy a competitive advantage over those that do not. At any rate, those franchisors that go to the trouble of including an Item 19, even if only cursory, should be acknowledged and applauded.

As an on-going feature of future newsletters, World Franchising will publish an exemplary Item 19 each month. This month, they honor Papa Gino’s for the exceptional detail that they provide in their Item 19. My guess is that the rapid growth and success of their system has a great deal to do with the forthrightness with which they celebrate the success of their existing franchisees. To view their Item 19, please click here.

Those companies who feel they provide exceptional disclosure in their Item 19s are free to submit their Item 19 electronically for consideration in subsequent newsletters.

Cross Posted: Let’s Talk Franchising

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McDonald’s is planning to offer lattes, cappuccinos and other specialty drinks in all 14,000 by 2009. Internal projections estimate a $1 billion boost in sales.

What is the cost to franchisees to upgrade?

Costs will vary, depending on the size and configuration of each restaurant. Franchisees must buy equipment to make specialty coffees, and, eventually, smoothies, as well as wall-mounted refrigerators for bottled sodas and energy drinks, and would have to remodel the counter and drive-thru service areas to make room for the equipment.

A franchisee who installed the new beverage equipment as part of a company test pegged the cost at $100,000 per restaurant, according to notes from a meeting of restaurant owners in August.

McDonald’s hopes to equip 1,500 restaurants to sell the new drinks by the yearend, with the rest on board by late 2008, the planning documents indicate. It’s the biggest change for McDonald’s since it overhauled its cooking procedures in the late 1990s to make sandwiches to order, says Dennis Lombardi, a restaurant consultant with WD Partners in Ohio.

As it rolled out that plan — the Made for You campaign — McDonald’s agreed to pay half of the estimated $25,000 per restaurant in equipment expenses for franchisees. But when the costs for the program exceeded the estimates in some restaurants, it caused hard feelings among some franchisees.

The test market numbers looked good:

In test markets including California, Georgia, Michigan and Texas, specialty coffee has increased customer traffic by 44% a week, an August memo from a franchisee group shows. The initial tests show the new plan doesn’t require more employees or slow down service.

Specialty beverages such as lattes have much higher profit margins than sandwiches. Sales in this new beverage category could rise by 90% in the next five years, generating $125,000 in annual revenue per store, according to company documents. McDonald’s estimates that those sales could mean additional annual profit of between $15,000 and $60,000 per restaurant, the documents show.

• McDonald’s Franchisees, $100k+ in Costs for New Coffee Drinks
• Advice from a McDonald’s Franchisee in U.K.
• Relief to McDonald’s Franchisees for New Coffee
• McDonald’s chickens out on Boston Market
• Smoothies Competition from McDonald’s

The tech-savvy community at Slashdot.org in 2006 had an interesting post and comments on the viability of a Gaming Cafe and what branding, culture and services have shown to work.

Re:Yes we have one. (Score:5, Insightful)
by Orangejesus (898961) on Friday August 11, @11:56PM (#15893072)

you have to understand that most people don’t go to gaming cafes for the games perse, they go for the social interaction, they go to play with their friends and be able to yell at them, they go to hang out with people with similar intrests. I have a better PC than the local place I go to game at and so do most of my friends, but it’s easier to spend a few bucks and just go to the gaming place down the street than drag a bunch of computers around and fool with networking them and making sure everyone has the same version of what we want to play and working cd keys and ect. the gaming place I go to is open 24/7 and after 5 hours is free, (5 an hour) So it’s pretty common for us to just go and set up shop and do an overnight there playing till the wee hours of the morning. When I was on break from college one summer about 6 of us litterally lived up there for almost a week straight sleeping on the couches and ordering pizza. I mean we probably didn’t smell very good by the end of the week but it still ranks as one of the most fun times i’ve ever had. The key to a good gaming place is to make it somewhere that people just want to go to hang out and escape and not be bugged. I don’t know how long this place will last but it’s been open for over 5 years now and it’s just a small 10 computer place in a small town. the key is that the owner is a cool guy, he lets people play sometimes if they are a little short or he’ll let them owe him and ect. people like him people like the others who play there, people keep coming back and the place stays full all the time.

Re:Yes we have one. (Score:5, Informative)
by DarkMantle (784415) on Friday August 11, @11:57PM (#15893075)

There’s a place in town here (Cambridge Ontario Canada) That does fairly well (open for a year now) They use memberships for people that want to play regularly to make most of their rent. They also have food/drink there (pop and chips kind of stuff) and gamer and geek T-Shirts as well (similar to Think Geek [thinkgeek.com]). The WiFi is cool, secure it though so you can control who’s on it better. There’s another one in London Ontario that has a “Internet Cafe” in the front, so people can check email and surf the web. Then the back room is the gamer room. Combine the front Internet cafe style with a bit of a real cafe (watch out for the licensing if you’re selling food/drink you make there) with a few tables at it so people can grab a coffee and do a quick email check on their own laptop/PDA while there would be a neat idea as well. Best advice is to look at the area and ask what is needed. Maybe hang out near the local EB Games for a day or two and ask people as they’re leaving/entering if they’d fill out a 5 question survey about it. You may be able to avoid the mistakes the other places made.

wwtdd (Score:5, Informative)
by antiphoton (821735) on Friday August 11, @11:23PM (#15892941)

I live in Brisbane, Australia, and gaming cafe’s are quite popular in the major cities. I know of at least four around inner city brisbane that have been open for years and are quite successful. From my observations their main revenue intake is based around these key concepts: 1. Location 2. Word of mouth Location is imperical, and you need to strike deals/lan nights to get word of mouth generation. Setting up shop near a school (preferably private school) can sometimes make this type of business a success, as i’ve seen in Brisbane. If you start all nighters and events it will generate a decent amount of friends telling other friends and so on to bring in business and customers. Anyway, these are just a few suggestions i’m guessing you already know about, hope it helps. PS: If you have the room, get a pool table!

depends on how you do it (Score:4, Insightful)
by grapeape (137008) on Friday August 11, @11:33PM (#15892978)

I had entertained that idea myself for a while but after going to ones outside my immediate area but within driving distance one thing I observed was that while they all mostly started out great with good staff, top of the line machines, local advertising, a pleasant atmosphere and a good selection of games, within a year or so most are pits with low staffing, unkept facilities, outdated machines and poor selection of games. I dont know if their budgets run out, or if they just found that the majority didnt care about the latest and greatest so it wasnt worth the investment. One theory is that those that are hardcore games already have systems as good or better at home

I did find a few things I would do differently, for one I would like to see a bank of printers, scanners, etc so that during certain hours (maybe school hours and few after that, the machines could actually be used for study, business etc. I also thought of adding a gamestop type game exchange with maybe a points program for time rented and maybe tournaments and contests (monthly high score, etc). Another idea would be to have certain nights that are 18+ and special events on a monthly basis. For rental time I wanted to use a keycard system like gemstar to keep track of time and charges. I had also thought about working out an advertising/sales deal with a local vendor to help with equipment costs.

I wrote an entire business plan but then got a job offer I couldnt pass up and just kind of threw it aside for now. I belive “cyber cafe’s” are viable here but they need more of a hook than just “PC’s for rent”.

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Acquisition monster GameStop (they have merged with Software Etc., Babbages, Gamesworld, Funcoland, EB Games) looks like it is planning to begin franchising next year. Our forum mavens have heard the confirmed rumors and preparations at GameStop’s annual gobal manager’s conference in Vegas this weekend. From the forum:

Quote from: brem on August 27, 2007, 05:07:11 PM
GameStop Offering Franchises? I’ve been in the video game industry a while and thinking about a franchise and just heard from a well connected distributor contact of mine in the business that GameStop’s looking at starting to sell franchises for their stores in the near future. As the dominant game retailer, I wonder what that will do to other video game franchisors that have to deal with all GameStop’s aggressive competitive marketing and their volume cost advantages with game manufacturers. Need more info on pricing, etc, but this might be my way in — seems smart to join forces with the giant instead of trying to compete against it.

Well, here we go. I’m out at GameStop’s annual gobal manager’s conference in Vegas this weekend with several of the other distributors / industry players and heard other sources rumbling about GameStop’s plans to start franchising (prepresents new income opportunities for many in the business to set up franchise service networks to work with them). After the second source discussed it, I’m trying to find out where the sign-up list is.

The industry players are apparently a little dissapointed because it requires dealing with “onesie / twosies” versus one stop shopping for consolidated groups, but apparently GameStop’s not doing what a lot of the more sophisticated franchisors like Pizza Hut do and only sell franshises to massive, deep pocket franchise groups that can afford to buy up a whole cities worth of stores (although this would be good I suppose for the average franchisee wanting to get in).

Gamestop has the strongest reputation in the gaming business. If they can keep the customer experience and value add above the usually cheaper online retailers, they can avoid the same demise as Blockbuster.

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On Donnie Deutch I just saw an interview with the new CEO of Just Fresh Kitchen Café, Dana Sinkler, who previously was a chef at a four-star NY restaurant and coincidentally founded and sold for $25 million the Terra Vegetable Chip.  Dana was previously a franchisee and has spent the past year revamping the menu launching the Kitchen Cafe concept, characterizing it as an innovator in Fine Casual Dining.

The new Kitchen Cafe menu looks ideal for my increasingly healthy-focused palate (South Beach Diet / Body for Life style diet foods - salmon, shrimp filled omelettes, marinated chicken, veggies…you get the point).  And, it takes the focus off the cookie-bread centered menus.  Last I read there were 73 franchises under contract, mostly the Carolinas and Georgia.

The restaurant claims to provide a fresh, great-tasting food and the atmosphere of a table service restaurant with the speed and pricing of a quick service restaurant – all in a setting that’s friendly to the senses and the environment.

Why would I spend time writing about this place? Because it shows what can be done when the franchisor-owners are willing to take a risk and let a successful entrepreneur and chef take the lead.  This brand was suffering the past 10 years but now the new Kitchen Cafe concept extention seems to have the right menu, management and financial backing to expand at will, raising the bar above Panera Bread on gourmet fresh food and fine dining food in a fast casual atmosphere.  See below for examples of what the brand and food looks like.

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Looks like the R&D team (or their consultants) at Dunkin’ Brands (Dunkin’ Donuts, Baskin Robins, Togo’s) have been hard at work reworking their ingredients. Hopefully this won’t be too much of a burden on the franchisees and no new equipment or costlier ingredients will be required.

About 400 locations nationwide that took part in a four-month test already have made the switch to a new blend of palm, soybean and cottonseed oils. That includes all restaurants in New York City and Philadelphia, which are forcing restaurants to phase out their use of artery-clogging trans fat.

The ice cream chain Baskin-Robbins, another unit of Dunkin’ Brands Inc., plans to be zero grams trans fat by Jan. 1.

…

Dunkin’ isn’t positioning its namesake product as health food – a shift that would involve more disbelief suspension than might be possible for a treat synonymous with portly, doughnut-gobbling Homer from television’s “The Simpsons.”

“The goal was not to make a healthy doughnut, it was really to create a doughnut that was better,” said Joe Scafido, Dunkin’s chief creative and innovation officer. “Certainly, we did not create a healthy doughnut.”

…

This past spring, hundreds of restaurants began taking part in a test to gauge customer reaction to the blend that Dunkin’ ultimately selected. Managers at participating stores were split into two groups, with one receiving conventional cooking oil, the other receiving the experimental oil, and neither group knowing which type they received. Dunkin’ closely watched sales and customer response at restaurants with the experimental oil.

“We got no negative consumer feedback, and we sold 50 million doughnuts in that time,” Scafido said.

What are Dunkin’ Donuts’ competitors up to with the fat?

Dunkin’ is ahead of Krispy Kreme Doughnuts Inc., which has yet to roll out a zero gram trans fat doughnut but hopes to do so. Brian Little, a spokesman for the North Carolina-based chain, said, “We continue to work aggressively with outside supply partners, and our goal is to get to zero trans fatty acids while maintaining great Krispy Kreme taste.”

A call seeking comment from another chain, California-based Winchell’s Donut House, wasn’t immediately returned.

Starbucks Corp., Dunkin’s Seattle-based rival in the coffee shop niche, said in May that it would cut artificial trans fats out of its food and drink by year’s end in stores in the continental U.S., Alaska and Canada.

Dunkin’s announcement follows about four years of research of more than 28 alternative cooking oils and proprietary blends.

If nothing else, this will result in much FREE puclicity for Dunkin’ Donuts…being one of the first movers in a healthy trend does have its advantages.

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Pampered pets

This year, Americans will spend an estimated $40.8 billion on pets — almost double what they spent just a decade earlier, according to the American Pet Products Manufacturers Association.

With about 7.1 million U.S. pet-owning households, national brands such a