Are You In this New Franchise Development Market?

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The world does not need another brand of sandwich shop, hamburger store, pizza parlor or other generic food concept. The surfeit of those, together with some really rough franchising tactics, is already causing them to fail to meet any reasonable standard of investment opportunity. The one store at a time franchisee investors are being fleeced by the score on these bozo deals, and much of the time it is already some over the hill or never ever was anyway offering by a garbage collector or bottom feeder franchisor.

Something that is not a washed up concept is still to be had and it is a wonder that established respectable franchisors are not out there finding the gems hidden in the bushes. If I were an established franchisor that has not yet run out of development energy, I would today, in this fast improving economy, be beating those bushes for the early stage gems and using these very scalable models to refresh my capabilities in a new medium.

My inspiration for this is that recently I have been seeing a few of these newer, fresher, different concepts that are not a "me too" of anybody. They have just a few stores and good volume.

They are the originators who need to be teamed with the respectable franchisors who can take them to their destinies faster.

Development speed is a much more critical factor now than it was twenty years ago. One store at a time scaling has more risk of simply showing a duplicator how to take your plum and squeeze a lot of the juice out of it by following you around.

We know from some of the nightmares of late that there is a lot of money out there dying to invest in a good concept. The trouble has been that so much of that money was stolen by FranWhacks selling stupid deals to wealthy suckers who didn't know how to vet the deal - think Dagwood Sandwiches, or Soup Man for example. There have been several others of similar ilk. The world doesn't have to operate like that. Their victims will never find the money they invested, as that left the building right after the checks cleared.

Several of the Soup Man victims later explained their investment decisions to have been based upon how good the soup was, as confirmed by some Zagat rating, and then were offended when I suggested they should just have invested in a bowl of the soup.

After 50 years working in franchising, I am now recognizing several really worthwhile opportunities that are fresh and well thought out and well executed.

The good franchisors who could pair up with these new concepts already have all the know how and the capital. The wave of this burgeoning economic recovery will continue to provide the right degree of incentive. There really are people out there who will pay more than a dollar for lunch now.

Breaking out in the most fertile markets and making our bones where the sun is shining brightest; being really revenue credible at the earliest possible moment; and competently profiling franchisee prospects to be people who already have track records - not taking checks from people who have only checks and little else - will make this the way to establish new franchise concepts for others in this new growth era.

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3 Comments

Richard,
What fresh concepts have you seen that sparked your enthusiasm? I have also recently seen several unique and promising concepts. The Miami Beach Franchise Expo was great for that!

As you mention, these soon-to-emerge concepts should partner with experienced/established franchisors to ramp up quickly before their space becomes crowded with copycats.

I have also seen ideas that haven't been proven in the marketplace and don't seem financially viable, but they will probably launch and sell some short-lived units.

Richard (and Ron),

I have a 'unique and emerging' concept (yes, really) that could both benefit, and benefit from, an established franchisor who wanted to help us grow.

We are a Indoor Zipline and Rock Climbing Adventure Center for Kids 5 to 12 years. We've been in business 18 years, and have our FDD and Ops Manual ready to go. www.JungleQuest.com.

We have a stand-alone 5,000 sq ft, but we would be perfect as an add on for an existing family entertainment center, or other 'kids amusement concept'.

What's my next move? Any advice?

Doug Root
JungleQuest

Doug, what does your item 19 say? What is the pitch for the business model? Thanks.

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This page contains a single entry by Richard Solomon published on February 25, 2013 10:38 AM.

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