Entreprenuer Magazine wrote an informative introduction to the kiosk and cart business a few years ago.  It a good place to start when deciding if a kiosk location is for you.  A Maui Wowi kiosk is picture to the left.

Panaderia Taza is a coffeehouse targeted specifically at Hispanics with Spanish music, pastries, churritos and Mexican newspapers.  They’ve been getting good press lately and I thought I’d give our readers a heads up on this soon-to-be franchise.

NPR did a short profile on them.  Listen to the MP3. 

I was surprised to learn from this article that Quiznos pays commissions to its Florida outside real estate firm, Kotis Properties, to sign up franchisees. Possible conflict of interest?

In addition to helping find sites, Kotis Properties will also be helping Quiznos sign up new franchisees.

It seems this sales practice, along with high pressure seminars, is becoming more common in the franchise industry.

A few months ago we reported that Lenny’s signed a deal to open 125 Lenny’s Sub Shops in South Florida. Now the company is working on 80 franchise restaurantsin Texas.

The 80 new stores will be developed in Texas’ Fort Bend, Harris and Montgomery counties.

Len Moore (the “Lenny’s” in “Lenny’s Subs”) and his wife Sheila opened the first Lenny’s Sub Shop in Bartlett in 1998. Since then the company has spread like wildfire, making the move to franchising in 2001. The company currently has 63 franchise restaurants, with more than 300 franchises in nine states on the way, hoping for 500 by 2008.

What were you doing in 1998? Going from 0 to 300 franchises in 4 years is quite an accomplishment. How many more sub franchises can the market handle? The founder has extensive franchise restaurant industry experience. He held management positions with a number of companies including Chick-Fil-A, TGI Friday’s, Olive Garden and Ruby Tuesday’s.

We’ve mentioned Lenny’s on Franchise Pundit a few times before.

According to this 10-Q filed with the SEC by Papa John’s, average franchised store sales are 705k annually.

Papa John’s franchisees did increase sales 3.9% last quarter (Jan-March) compared to the same quarter last year.

Average weekly sales of franchised units: $13,563 ($705,276 annually)
Average weekly sales of company-owned: $15,075 ($783,900 annually)
* Why are the company owned stores outperforming franchisees by 11.15%?

The 10-Q speaks of one franchisee who sold his 19 restaurants with total annual revenues approximating $12.0 million ($631,578 per store) to a 3rd party. The restaurant sales were lower than the average by 11% or $70K, enough to obtain a loan writeoff from Papa John’s.

This isn’t good:

Domestic commissary sales increased 6.7% to $100.9 million for the first quarter of 2005, from $94.5 million in the comparable period, primarily due to higher cheese prices that were partially offset by lower volumes resulting from decreased restaurant transactions.

and this:

the first quarter 2004 operating margin was negatively impacted by the increased sales of lower margin promotional products

and this:

One group of 4 franchisees owning 33 franchises generated a $25,000 loss on $5.2 million of revenue, $4.6 million in operating expenses and other expenses (including G&A, depreciation and interest) totaling $600,000. Papa John’s also provided them with a large loan.

I do love their garlic dipping sauce for the crust that is included with each pizza!

Update 6-18-2005: Thanks to “Accountant” who in the comments pointed out my miscalculations. The post has been updated, including the title.

Update 6-19-2005: Thanks to “Ken King” who in the comments pointed out another miscalculation on my part. The post has been updated.

I rarely deviate from franchise talk, because that is what people come here to read. But, I just watched this heart touching tribute to former President Ronald Reagan on the 1-year anniversary of his death. I recommend people watch it regardless of their own political affiliation. Sometimes we need step back from business and keep perspective about what is truly important in life. Reflecting on great Americans can sometimes help us in that personal journey.

There are some good Quiznos comments and debate about what are appropriate expenses.

CLICK HERE to see it.

read more Franchise Pundit posts on Quiznos…

According to this press release, Educational Outfitters is opening 6 new stores. We reviewed this franchise before on FranchisePundit.com, and we concluded it was one of the better franchise ideas, focusing on an often ignored and segmented market. We gave it an “I’d buy it” positive rating.

As a follow up my previous post, this article contains a relevant list.

10 MAJOR TASKS WHEN STARTING A NEW BUSINESS

1. Determine startup costs and find the money (e.g. savings, home-equity loan, business loan, etc.).

2. Find location (many startups begin in owner’s home).

3. Choose legal structure (sole proprietorship, partnership, corporation, limited liability corporation).

4. Apply for business license if city requires it and/or other required permits and licenses, depending on type of business.

5. Register a fictitious business name and/or apply for trademark (a franchiser will handle this issue).

6. Obtain seller’s permit if business will sell products subject to sales tax.

7. Apply for tax-identification number for IRS if business will have employees.

8. Set up business bank account to keep company revenue and spending separate from personal account.

9. Set up record-keeping system to track finances, deductible business spending, etc.

10. Write a business and marketing plan.

Of course, these are the most basic prerequisites and there are MANY more major tasks and gut checks, but this is a good start.

Have you been putting off the decisions that are important? Are you spending your short time on earth the way you want? What if you knew you were gong to die in 2 years, what would you do different? Attorney Carolyn Elefant from MyShingle.com legal blog wrote a touching reminder that life is sometimes unexpectedly short no matter how healthy our lifestyle, and the decisions you make TODAY are important and long lasting.

How you lead your life is your decision, and maybe the risk of buying a franchise is a risk worth taking.

I found this interesting – Wal-Mart Realty. This division of Wal-Mart has buildings for sale, land for lease, and in-store leasing on Wal-Mart and Sam’s Club properties. Wal-Mart and Sam’s Club already have the people traffic that many franchisees require.

I’ve read a little about the 1-800-WATER DAMAGE franchise. The company has 70 locations operating in the United States. Their service offering for homes and businesses services is water damage cleanup. The types of services most often are water extraction; basement, crawl space and structural drying; dehumidifying; removing odors; sanitizing; and disinfecting. They claim technicians respond to customers within 90 minutes. The cash requirements for opening up a new franchise are $46,000 and total about $200,000 total investment. I was not able to find out what other mandatory fees (royalty, advertising, etc.) must be paid to the franchisor.

The company opened a whopping 50 new franchises in a three month period in this $5 billion water restoration industry. Some sing their praises. I cannot give a good analysis of this business beyond the opportunty and what I know about the success of the 1-800 type business.

People have been pounded with 1-800 Flowers, 1-800 Mattress, 1-800 Contacts, 1-800 PetMeds and dozens of other well known 1-800 brands. The 1-800 number identification subconsciously sticks with people. If I was in a situation and had water damage, I wouldn’t know exactly what to do. If I looked in the phone book at 100 listings claiming fast water damage solutions, 1-800-WATER-DAMAGE would catch my eye and I’d probably call it. Why? I don’t know. Perhaps because it sounds national and the company must have been around a while and smart enough to get that number. It is a very smart marketing move to name your business after you phone number for obvious reasons.

I read an interesting article about Battery Plus. Their mainly in Canada but now expanding to the USA. I’ve heard of this franchise before but never really investigated the business. I have bought many after-market batteries for laptops and digital cameras before on eBay and Amazon and from miscellaneous stores I found on PriceGrabber for 75% under retail. It is true everyone uses batteries, and I think the store could work from a concept standpoint (I haven’t seen any financial numbers though). Most people don’t know where to go for batteries besides the limited selection at Best Buy and Circuit City. But, the biggest negatives I see are:

• high advertising costs to overcome the current zero brand recognition
• battery inventory turnover is probably quite low because there are such a wide array of electronics and computing devices
• mall kiosks seem a more appropriate cost effective way to sell these items and they will get free walk-by advertising
• storefronts can’t be dinky closest-like in size and feeling, so lease expenses will likely be higher than needed
• are batteries a commodity?
• Radio Shack seems in a much better position to capture this lucrative market

Ace Hardware evolves to stay competitive

We all know the competitive pressures The Home Depot and Lowes bring to the market. I see Ace Hardware as the Walgreens or CVS in the face of Wal-Mart or Kroger. I believe Ace Hardware renovating and re-engineering its stores is a smart and necessary move. Will the independent franchisees will come on board so all stores will have a similar layout and selection? I’ve read most those owners who are near retirement age don’t see the payoff for them of making the $150,000 investment, and their Franchise Agreement does not force them to upgrade.

I’ll write more on this another day