Evaluating a Franchise

mhleslie

 I am looking to leave the cubicle world and possibly purchase a franchise in a 100 unit coffee shop chain. I have spoken to the franchiser a number of times and have received their UFOC. The franchiser will not give me any information on possible unit sales or profits. They say that they are not allowed to give this information to possible franchisees and as part of my research I should contact the franchisees which are listed in the UFOC.
Two questions:


Is what they are saying about their franchise units sales/profit information and prospective franchisees correct?

If this is correct can someone give me some pointers as to a base set of questions to ask this companies franchisees when I contact them?
Thanks in advance.
Mark

mhleslie

Thanks for your reply I really appreciate it.  These are just the type of questions I`ve been looking for.

canadaEH

hey; i`ve got lotsa tips for ewe. some of the worst mistakes i made, will be some of the best tips i can offer for you.but the one big question i have for you is, do you absolutely have to go with a franchise?  they are nice for the start up costs etc. but then you are under their thumb forever and ever, not something i could have done being the crazy creative type. if i want to have a coconut mocha freeze on my menu (which by the way sells awesome) then i can do so; if i want to paint walls orange(good feng shui colour) then i do it.   anyhow, i used to work at a desk job, then started my own coffee bar, now have 1/2 doz or more staff and i love it. let me know if you have option of going it on your own.

mhleslie

Tips from real world experience...just what I`m looking for!
Going with a franchise is not a requirement. I`ve been in various parts of the food service business for about 29 years, but the only experience I have with coffee is pouring it. I thought going with a franchise would be the best way to obtain the knowledge I need all at once.
Thanks in advance for any info you can pas along. 

RedRockChili

Outside of the good advice you got what would be a good idea is sit in front of the franchise for several hours at differant times of the day (during the week and weekend).Anyone can tell you anything but crowds dont lie and if there not busy then chances are you might want to go with a differant franchise.

canadaEH

sorry i took sooo long to reply; trying to do letter of reference for staff trying to get a scholarship(yeah- lesson number one - make it clear to your interviewees that their term with you a simple coffee bar, albeit 3 months or 3 years can make a huge difference in their career path; this month alone 3 of my former staff (university students) have asked for letters of ref for a) 5 star hotel in whistler resort  b)i was intervieweed by police recruiter for a character reference for my former staff c) staff needed strong letter to prove her experience to challenge a university tourism course to save her big bucks and then today staff needs character ref letter to apply for scholarship.....so here in canada it is a huge challenge for me and other food service establishments to keep staff for any length of time and if so, they have good work ethics(can you trust them to run the joint when you`re at home after your 12 hour shift!)...the best book i can recommend to you to start out with that was an incredible help was TOM MATTSON(spelling?) HOW TO START AND RUN A COFFEE BAR.  I met the guy in person in vancouver, bc, at a seminar...his number one advertising suggestion then was "PEOPLE"; the number of people you see sitting at an establishment will speak volumes of what that place is about. check out the chains and even ones that aren`t for sale...eg. a funky coffee bar that you like in town??  ask to speak with owner..."if you ever decide to sell, here`s my number.." so  lots more to tell you, but gotta catch my canucks hockey game, playoffs continue...go vancouver!  

canadaEH

..sigh i got my hockey night mixed up..it`s tomorrow. so a bit more time for coffee gab. i have 2 gal friends who are also my age 40+, that decided to do a coffee bar with no previous experience and we`ve all done just fine..so will you. you can always ask the seller of a private business, as part of the purchase to stay on for an extra 2 weeks or a month, until you get the hang of it.  i can train a high school kid on a manual espresso machine, not the push button kind, but the kind where you use a grinder and then pack the espresso and you turn machine on for shots and off when done...by the way i also "time" every shot with a timer to ensure "quality"  yes i get the high school kids to do the same as the rest of us shots approx 21-23 seconds for one ounce...you`ll hear various takes on how long to run a shot...  most people gasp how in the world can you ever get a shot to go to one ounce in not under and not over 21-23 seconds..but it really is easier than it looks...trust me any good barista would be able to train most any person off the street in a solid day or two if the person had the interest in the business.  so don`t get intimidated by the "coffee snoots" out there; besides if you`ve been in food service/customer service for that many years; you`ll know the ins and outs of how to deal with customers when you`re on the learning curve. i started out with used equipment, easier on the wallet, and i purchased coffee equipment outright..some coffee suppliers say "brew equipment free! when you order beans regularily...guess what they are full of beans!! i got ripped off a few thousand dollars. i finally challenged my supplier and said, if i bought my own equip would my monthly bean bill do down?? he says...just a bit..i say wha`ts a bit?...he says well only 3 or 4 hundred a month..sorry buddy but to me and my lifestyle 3 or 4 hundred a month equals about 4 grand a year that would easily buy a complete set of brand new brew equipment!!  hey,, im new to this site, let me know if i`m taking up too much room with my comments, sorry about that. i just get passionate about the biz and compassionate for my fellow new owners and maybe i can save them some big cash  eg. same thing with smoothie products..get your own equipment as soon as possible, then you won`t be obligated to buy their high priced product! i started my coffee bar from a bare cement floor, i got input for design from the dealer that sold me espresso machine and another fellow that sold me grinders and lastly in tom mattson`s book he talks about layout. location, location, look for location then see if that space/bldg has coffee bar written on it. talk to ewe soon.
 

canadaEH

yeah, the info as posted in the article is true enough; but don`t let the info get you too overwhelmed..  i did a business plan and had a local coffee bar owner review my numbers/projections and then went to several banks until i got what i needed.  i leased a couple of pieces of equipment and then went with used on the bigger coolers, etc. and was able to work out a payment plan with equipment supplier.  so it wasn`t as complicated as i thought, but do be prepared to ask for help from friends and family if you don`t have a good pot o`cash to start up with.
let me know if i can give you any specific info, or i tend to get blabby about any part of this biz

mhleslie

 Hello canadaEH,
Sorry it`s taken so long to get back to you.
One of the problems I`m having is sales projections.  When you were first deciding whether you were going to get in the business or not where did you get your sales numbers? I can work out a lot of the other costs once I have a top line number to start with.
Thanks,
mhleslie

RedRockChili

I understand what you are trying to do with sales projections but heres the problem.
1. Are you basing it on a food court or in-line store?Red Rock Chili Company offers both and this can alter projections.
2. Would you base these numbers on a (A) location with a high demographic average income area or middle of the pack?
3. How large would your restaurant be?Red Rock Chili Company restauants can be as small as 600 square feet up (food court) to 1600 (in-line).This can alter sales projections a lot.
4. There are other small factors to but the point is you have to look at it from all angles before you can put a hard cap.As for me I visited several Red Rocks until I found one in a city that was close to the same demographics as the city I planned on putting one in.Then I counted how many customers a day they had for several days.When I personally felt like the numbers would be similar I made the decision to buy.If your rent is reasonable it really helps to not have to have a huge volume.I hope this helps.
 
Thanks Todd
 

SJTy

I have not read all the replies - due to timing.  It looks like you got much feedback.  I spent 15 years in franchising - from the franchisor side.  True - you cannot elude to potential profits - it is against federal law.
Talking to existing owners - AND - owners who have recently left the system is a good route.  I have tested this by many pursuits of franchises.






How Do You Like Being a XYZ Franchisee?

 

What Is the Biggest Benefit in Working with XYZ?

 

What Do You Feel XYZ Could Be Providing Better?

 

What was Your Background Prior Starting Up an XYZ Franchise?

 

How Many Employees Did You Start With?

 

What is the Biggest Challenge with this Type of Business?

 

How Fast Was Your Ramp Up Period?

How Long Did It take you to re-coop Your Initial Investment?

 

How Many Employees Do You Have Now?

 

What is the Average Age of Your Client?

 

Do You know how many target consumers are in your territory?

 

Who is Your Biggest Competitor in Your Area?

 

Does XYZ Offer Anything Above and Beyond It`s Competition?

 

 

 

 

What Are Your Average Monthly Expenses?

 

Royalties?

 

You Have Found HI to be a Profitable Venture For You?

 

Do You See a Bright Future for the XYZ Business?

 

 Best of Luck.