This British franchisor developed a vending style golf club cleaning machine. My initial reaction was that it was terrible concept for myriad of reasons, but I can see it possibly working as long as competitive pricing pressure is nearly nonexistent. It could provide low-end golf courses with a small but riskless alternative revenue stream.

The Sonic Golf Club Cleaning Machine cleans a full set of golf clubs in just two minutes. The Sonic can clean both the heads and grips of the club to an original condition. The grips are restored to a tacky finish and the grooves on the clubs face are clean thus improving the amount of ball control.

A franchisee explaining why his wing joint is doing well:

“Everybody loves wings,” he said. “I think of the attributes that contributed to our success is the clean environment, good food, 14 different sauces, sports environment and casual atmosphere. I think a while back that what had a lot to do with it was the Atkins Diet. Chicken is very healthy.”

And another explanation:

He said wing-based eateries have thrived in the U.S. restaurant market because they provide an affordable product and operate at low cost.

“Obviously, it has a lot to do with the bottom line,” Wilkerson said. “They’re able to serve at a place with a small dining room and serve carry-out. They keep the menus limited, keep costs way down with little overhead and don’t have lots of waste like some restaurants do.”

Said Nicoloff: “It’s easy to inventory. You don’t have to have the equipment or time to train someone. It’s pretty simple to run.”

….”We have a full range of menu items other than chicken,” Tieber said, “but it’s 30 percent of our business.”

“I really don’t know how the wings took off,” Weisbrodt said. “It just seemed like one day we were doing some here and there, and now we’re doing them like you wouldn’t believe. Today, we can’t keep enough.”
…

“I think it’s reasonably priced meal,” he said. “Wings are good. They’re meaty. They can get just about any flavor. They come up with some original flavors. Our customers mix our flavors, and we have almost 60 different flavors right now. You can get in about any flavor. If you don’t like wings, we have many other things like hamburgers, hotdogs, pizza, sirloin steak sandwiches and fish, like walleye and cod.”

Smith has also noticed increased competition, especially from the larger franchises. Although franchises can get a better price for the product and buy in larger qualities, he believe small owners like him give consumers quality.

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.”

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.”

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

for those interested in Quiznos….

It’s worth reading the comments from the Quiznos blog posting last year. The comments keep coming.

It’s also worth reading the forum posts regarding Quiznos.

Finding complimentary businesses and locating next door is an obviously smart move for a budding franchisee. For example, if you are starting a coffee franchise, locating next to an Ace Hardware (caffeine hungry contractors) or CVS (heavy foot traffic) can double your sales over a generic strip mall.

In this instance, an Advance Realty locates next to a Daily Grind coffee house in an old firehouse.

In case you are curious….Daily Grind: $300K estimated initial investment, 5% royalty fee, 1% advertising fee, $30K franchise fee…about average

Radio Shack and Duckwall-ALCO in a co-branding deal.

The company said that the agreement will enable those ALCO stores to sell RadioShack’s product line and enable RadioShack to further grow its franchise retail presence in the area.

Paul Rickels, RadioShack’s vice president-dealer franchise said, “This enables us to offer our broad line of consumer electronics to customers who otherwise might not have access to the latest products and technologies. Convenient store locations in neighborhoods across the country are a part of our heritage, and Duckwall-ALCO enables us to cost-effectively build on that tradition.”

Many franchises that require frequent travel or rely on a gas-intensive system (delivery drivers, UPS Store, etc.) may want to consider the impact higher commodity prices will have on their business, and whether they could survive a double-digit percent swings.

I didn’t realize the Million Air fixed-base operator (FBO) was a franchise. With the small jet sales and small airport demand rising, servicing that industry seems like sensible option.

Million Air is indeed a clever name.

Interesting background read on franchise shows. It discusses things mostly from a franchisor’s perspective.

I frequently use online ordering for food delivery purchases, and so do many other people I know. I know my purchases are signifcantly more than it would be if walked in and I order online from restaurants I wouldn’t otherwise visit.
Regardless of my positive personal experience with online ordering, it is a cheap way to increase sales and introduce your product to new customers. I would favor a restaurant franchisor who offers an online ordering system.

Take this recent example from Pizza Pan:

Pizza Pan launched eOrderManager, a new software package that lets customers place food orders online. The ordering system, which was created by Cleveland-based O-Web Technologies, is designed specifically for the quick-service and casual dine-in restaurant industry. Without yet promoting the online ordering option in-store, Pizza Pan has already attracted 327 new members within the first month. The average online ticket is $22.32, which is significantly more than the average in-store check. The system runs off the franchisor’s Web site, yet it was designed for individual franchise owners. “Our online ordering system increases order accuracy and improves productivity by keeping our employees off the phone,” said Mike DeGirolamo, director of franchise development and a franchisee. Pizza Pan currently uses eOrderManager in 15 of its 96 locations and plans to expand online ordering to the majority of its locations by the end of the year.

Texas Roadhouse: Sales at restaurants open at least a year increased 1.2 percent at company restaurants and 0.5 percent at franchise restaurants during the quarter.

Panera: The company said that during the second quarter, systemwide same-store sales, for stores open at least one year, grew 3.2 percent: 3.7 percent in company-owned locations and 3 percent in franchise operated units.

Same store revenues (revenues earned in Company-operated stores open for the entirety of both periods) in the Aaron’s Sales & Lease Ownership division increased 9.1% during the second quarter of 2006 compared to the second quarter of 2005. Same store revenues also increased 6.0% for Aaron’s Sales & Lease Ownership stores open over two years at the end of June 2006.

IHOP: Year-over-year same-store sales growth was a respectable 3.1% for the quarter, driven by increased traffic. Promotions such as the Cinn-A-Stack definitely appear to be working for IHOP, and the company has three more planned for the year, including the current funnel cake-related campaign.

Dominos: The same-store sales slide was made up of a 3.2 percent decline at U.S. company-owned stores and 5.2 percent drop at franchised stores. According to a regulatory filing, domestic comps rose 6.9 percent in the same period last year.

International second-quarter comps rose 5.7 percent compared to an increase of 7.8 percent last year. The increase marks the fiftieth-consecutive quarter Domino’s has enjoyed international comps growth.

Overall revenue for the period declined 5.5 percent, a decline that Domino’s attributed to lower domestic distribution revenues tied to lower food prices and volumes at domestic franchise stores.

Lone Star Steakhouse: The company’s sales at the same stores fell .3 percent and the average check decreased 3.1 percent, while the number of customers increased 2.8 percent. The company has closed 33 underperforming Lone Star restaurants in the first six months of 2006.

McDonald’s: Comparable or same-store sales, a widely used industry gauge of performance, rose 5.5 percent over a year ago, led by a 6.3 percent increase in Europe. U.S. comparable sales gained 4.2 percent despite the flop of its new spicy chicken sandwich, which is being pulled from the menu.

Frisch’s Restaurants: During the year, the company’s Big Boy restaurants had an unspecified same-store sales increase, while the company’s Golden Corral buffet-style restaurants saw a 6.5 percent same-store sales decline.

Yum: For the quarter, Taco Bell posted U.S. same-store sales growth of 5 percent and KFC was up 2 percent. Pizza Hut was down 7 percent.

Maybe it’s a guy thing, but I wouldn’t want to stare at someone for 30 minutes while working out.  (Curves) (Ladies Workout Express)

 

 

 

 

 

 

Interesting nuggests of information about the UPS Store outlets…

Since the acquisition, a UPS spokesman says, overall sales have grown “impressively.” The company doesn’t break out results for its retailing chain. But sales data reviewed by The Wall Street Journal show that domestic UPS Store outlets averaged about $295,000 in revenue last year. Five of the stores had more than $1 million in sales subject to royalty. That number excludes the sale of stamps and other postage and some weekend delivery charges. Mr. Mathis adds that same-store sales, a key indicator, rose last year.

As for capping prices franchisees can charge, the company says it did so because “our research showed that the high rates franchisees were charging simply didn’t sync with what customers were willing to pay.” Customers also found differences from store to store confusing.

Hat Tip, as usual: Paul Steinberg in the forum

While I can understand that pricing consistency is an important marketing tool, it hasn’t hurt McDonald’s or other fast food franchsies that drift from the menu and $.99 specials often. It would be clever for the UPS stores to try and open up “eBay drop off” concept and co-brand it….similar to Dunkin’ Donuts, Baskin Robbins, and Dunkin’ Deli. It would generate a lot of PR, drive business, and reposition the brand as a high-tech, small business friendly store.

Winmark Corp (formerly Grow Biz), franchisor of the retail stores Play It Again Sports, Once Upon a Child, Plato’s Closet and Music Go Round, has a new franchise concept called Wirth Business Credit. It’s mission is to help small businesses lease equipment.

Leasing can have many advantages for a small business owner: preservation of capital and credit for other expenses and investment in growth, simpler bookkeeping and tax reporting, tax advantages, improves financial ratios, etc.

Why would someone choose to lease from Wirth Business Credit over any of the other many leasing companies? I don’t know, unless their rates are cheaper and terms are more attractive. However, I doubt whether the tight structural constaints of a franchise is the best means to compete in a business where most sales comes down to price and, to a somewhat lesser extent, customer service.

Wirth charges around 9 percent to 14 percent today compared to a bank prime-lending rate of 8.25 percent, Morgan said. Winmark and its franchise owners earn a profit by building fees into the interest rate, much like points that are added to a home mortgage loan…..

Wirth President Mark Hooley said the company stands out from rivals because of its local presence, its automated leasing system that provides approvals in four hours or less, and the ability to finance up to 100 percent of equipment value…..

Wirth franchise owners pay an average of $60,000 to do business in a certain geographic area, including franchise, computer and marketing fees. In exchange, the company provides the brand, the business model, cash for leases, training, marketing and the collection of overdue leases.

I especially agree with the final comment in the article:

“Financing can be complicated and challenging,” Faras said. “But my part of the business is really about sales. You have to already understand sales.”

It often comes down to sales in a franchised or startup business.

There seems to be a constant flow of articles on discount broker franchises lately. Having recently gone through process of purchasing property using a friend who happens to be an excellent broker, I can recognize the value of paying 5-6% commission for that diamond-in-the-rough selling broker (or using a buyer’s broker who will split their commission with the seller’s broker) who is unconditionally looking out for your interests and not their personal wallet. Without that exteme level of certain dedication and loyalty, I would balk at paying the full commission to a selling broker and I would likely seek the services of a discount broker. As competition from discount brokers increase, more buyers and sellers will be able to command a commission rebate from their broker as well.

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Great advice from Paul Steinberg in the forum:

March 20 ’06 issue of NRN cover story states that KFC franchisor-mandated remodels ($250-500K per unit) may force smaller franchisees to sell; www.nrn.com

When buying a franchise, remember to ask about any upcoming mandated capital improvements. Particularly in the hospitality industry, many franchisors have a schedule for upgrades/remodels; this is necessary to keep the brand image fresh.

What appears to be a “bargain” price from a selling franchisee may cost more than an “expensive” alternative outlet if the higher-priced outlet has the current decor and the cheaper outlet will be needing a facelift.