Pizza chain sales are down: Pappa Johns: -5.7% Pizza Hut: -12.9% Dominos: -6.5% Sbarro: -6% domestic, -13% internationally (taking into account increase in US dollar) Sbarro’s attributes a drop in sales to a drop in mall traffic. What is up?  Frozen pizza sales. Frozen pizza sales rocketed to $4.4 billion in America last year from $3.1 billion in 2000, the Minneapolis Star Tribune reported this week, citing market research by Datamonitor Inc.  Sales of private-label brands (produced by chains such as Walmart, Jewel, Dominick’s and Target) have risen more than 20 percent in the past year.  Clearly, cost and an acceptable level of quality is at play here. In related news, Kraft Foods Inc., maker of DiGiorno, Tombstone and Jack’s, said it selling their brands to Nestle so it can fund an acquisition of Cadbury.

Business are bought and sold with more frequency today than ever. Franchisors tend to receive high valuation based on untapped global growth opportunities, making them more likely to be acquired by other franchisors or private equity firms looking to leverage the brand and generate cash flow. Case in point: Dunkin’ Donuts. Last year, Dunkin’ Donuts was acquired by a group of private equity firms. Their strategy is to position Dunkin’ Donuts as a higher end brand to compete with Starbucks head-to-head, including in the grocery aisles. The primary focus is to increase their return on investment, which doesn’t necessarily align the interests with their franchisees. Grocers to Sell Dunkin’ Donuts Coffee In addition to many small retailers, big-box retailers that will sell the coffee include Wal-Mart Stores Inc., Target Corp., Costco Wholesale Corp. and BJ’s Wholesale Club Inc. Also on board are drug chains CVS Caremark Corp., Rite Aid Corp. and Walgreen Co. But most of the retailers are supermarkets. The list includes Kroger Co., Pathmark Stores Inc., Albertson’s LLC, Shaw’s Supermarkets Inc., Acme Fresh Market Inc., Publix Super Markets Inc., Shop-Rite, Stop & Shop Inc., Giant Brands Inc., Roche Bros., Safeway Inc.’s Safeway and Dominick’s stores, and The Great Atlantic & Pacific Tea Co.’s A&P chain. How much of the franchisee’s sales were derived from in-unit packaged coffee sales? Probably a small portion, and the profit margins on packaged coffee beans are nowhere near the cup of coffee margin of 95%, but with the consumers bypassing the visit for a “cup of coffee” and a “pound of medium-roast beans”, same-store sales will be negatively impacted as a small portion sales shift from the franchisee to grocery. Obviously, the new owners ran the numbers and any slowdown in franchisee’s sales will be more than made up for by the …

So, you bought a franchise and it’s been successful for a few years and now you want to sell it.  The franchisor reserves some influence and financial discouragement.  The two biggest considerations given to the franchisor are: Right of first refusal – the franchisor can match your highest legitimate offer and buy your franchise Transfer fee – a fee you must pay to the franchisor for the privilege of transferring your licensing rights and obligations to another party Sample Transfer fees: FOOD: Pizza Factory: $12,000 Quizno’s: $5,000 Dominic’s of New York: $1,000 + 6% of sales price Submarina: $1,000 Cheeburger Cheeburger: $12,250 Pizza Patron: $5,000 The Dugout: $5,000 Arby’s: $13,500 Doc Green’s Gourmet Salad: negotiated at time of sale Jerq’zine:  $10,000 Original Hamburger Stand: $250 Sub Station II: $5,000 Steak-Out: $18,750 Fazoli’s: Reaonable attorney, accounting, training and other related costs OTHER: Bartercard: 10% of sales price Herman’s World of Sports: $12,500 Sears Carpet and Upholstery: $3,000 – $6,000 (depends on market size) Stone Mountain Carpet Mill Outlet: $2,500 Screenz:  $5,000 Tax Centers of America: $1,000 Sports Clips: $25,000 Fantastic Sams: $20,000 or 10% of sales price (whichever is greater) Hair Cuttery: $5,000 ($0 if franchisee for 5+ years) Fastframe: 5-10% of purchase price  

VERY OUT OF DATE.  Do a search instead.  This was manually updated March 21, 2006 Companies Mentioned in Posts (likely incomplete):Automotive 1-800 RADIATORS Oil Butler Lube N’ Go On-Site-Lube Business & Home Services 1-800-WATER-DAMAGE Bartercard Garagetek Help-U-Sell Home Instead Homewatch Caregivers My Girl Friday PropertyGuys.com Sears Carpet & Upholstery Tax Centers of America Cleaning & Maintenance none Computer & Internet (some are listed in “Retail”) Screenz Food and Restaurant Arby’s Auntie Anne’s Blimpies Cheeburger Cheeburger Chipotle Dippin’ Dots Dream Dinners Doc Green’s Gourmet Salad Dominic’s of New York The Dugout Durango Grill Fazoli’s Fire of Brazil Fogo de Chao Goldstar Chili Jamba Juice Jerq’zine Krispy Kream Lenny’s Sub Shops Mauwi Wauwi Original Hamburger Stand Panaderia Taza Papa John’s Pizza Factory Pizza Patron Pretzel Time Quiznos Red Rock Chili San Francisco Soup Co Shane’s Rib Shack Skyline Chili Smoothie King Smotthie Planet Soup Nazi Steak-out Subway Submarina Sub Station II Super Suppers The Soup Box Supercuts Suzanne’s Kitchen We’re Rolling Pretzel Company Wetzel’s Pretzels Z Pizza Zoup! Fresh Soup Co (List all sub franchises) Health & Fitness Curves Liberty Fitness Home Building & Repair Services See “Business and Home Services” above Personnel & Staffing none Pet Retail and Services Camp Bow Wow Doody Calls The Pet Pantry Wag My Tail Interquest Detection Canines Pets Are Inn Retail Franchises Ace Hardware AuctionDrop Battery Plus Best Cuts GNC Educational Outfitters Fantastic Sams Fastframe Foot Solutions Friendly Computers Geeks on Call GNC Hair Cuttery Herman’s World of Sports Imagine This Sold Orbit Drop Play It Again Sports QuikDrop Roosters Men’s Grooming Centers Screenz Snips Its Sports Clips Stone Mountain Carpet Mill Tom’s Foods We the People Categories: eBay drop offs (generally) Hair Travel & Hotel none Industry Lists & Research 2004 Same Store Sales Growth of QSRs (quick service restaurants) Royalty and Advertising …