Healthy Push for Tasti D-Lite?
Ah, the dream of buying a franchise, of business ownership. This summer troubled New York chain Tasti D-Lite, which has now undergone new ownership, is pulling out all the stops in its sales and marketing efforts to quench the taste of frozen dessert franchise buyers. The new chain has been appearing in news stories from Forbes to Nation’s Restaurant News in the past few weeks.
The largely New York City based chain, founded in 1987, was bought in 2007 by New York-based private-equity firm Snow Phipps Group LLC for $21 million.
James H. Amos Jr., an operating partner in Snow Phipps, was tapped as Tasti D-Lite’s chief executive. A resident of the Nashville, Tenn., area, Amos established the chain’s headquarters in Franklin. Officials noted that the locale is more centralized geographically and less costly than New York, making it easier for franchisees to spend time there. – NRN
The head office is located far from its 50 or so New York and New Jersey franchised shops. But they are now beginning to spread elsewhere. Tasti D-Lite converted to a franchising model in February 2008. That's when the concept’s existing licensed wholesalers were invited to become franchisees. “There are currently about five licensed wholesalers left in the Tasti D-Lite system,” Sells said, “and as their contracts expire they will not be renewed.”
Amos and his gang are obviously trying to quickly develop brand recognition in regional clusters around the country. No, make that around the world. The firm was represented in Franchising Middle East, an international exhibition in Dubai and the Middle East. Domestically, The Arizona Republic reported two weeks ago that the first of 40 Arizona stores sold is up and running. On July 2, the first of roughly 16 committed stores was opened in Middle Tennessee. Houston’s first three stores of many were opened in June.
One problem with stretching units thinly across the country is that the head office's support efforts can be too stretched to properly give support to the franchised shops.
It should be noted that Jim Amos himself has a colorful, some might say troubled, franchise background among franchise owners. It is colorful because of the many lawsuits that have accompanied him. A multitude of lawsuits against Jim Amos (pdf) has been compiled through law research service Pacer. Although it shows other James Amos litigation listings in its four pages, James H. Amos particularly has a litany of lawsuits from Brice Foods (I Can't Believe It's Yogurt) to Mail Boxes Etc's class action suit. Most recently, Amos was found guilty of negligent misrepresentation in presenting Sona Medspa to franchise buyers, a company that he was chief executive over. Shortly afterwards, franchise owners put together a private equity firm to take over the troubled small chain.
The company owns no frozen dessert shops itself. It focuses on selling franchises, marketing the brand and passing on the operation know-how from one franchisee to another.
McDonald’s Corp disagrees with such a strategy. In February, it told shareholders that one of the secrets behind its success is that it has company-owned restaurants to help it better understand the quick service restaurant business. “In our Company-operated restaurants, and in collaboration with our franchisees, we further develop and refine operating standards, marketing concepts and product and pricing strategies, so that only those that we believe are most beneficial are introduced Systemwide. In addition, we firmly believe that owning restaurants is paramount to being a credible franchisor…,” the firm declared in its annual 10-K report (Item 7).
Craig Slavin, president of Franchise Architects and a well-known developer of franchise systems, agrees with McDonald’s. He has emphasized that a franchisor chain has no business selling franchises to would-be owner-operators unless the firm owns operating units. He stated, “I believe the company-owned locations must be in business for a couple of years so the company can see how the business trends and to ensure it is a sustainable business.” He went on to say, “Franchising is serious business and if there is no validation at the consumer level, where you are providing a product or service for usage or consumption, there is nothing to franchise.”
To achieve consistency and refresh Tasti D-Lite’s brand identity, “we developed a new logo to make it more contemporary and added the tagline that was ‘Dessert your guilt’ because our product is so healthful, with only 80 calories per small serving,” said Zinke [Chief Marketing Officer]. “We also in that process developed a whole new store design.”
Is Tasti D-Lite low calorie ice cream?
The company affirms on its webpage, "some think it's all too good to be true. But they're wrong." It goes on to say that there is between 70 and 100 calories per 4 fluid ounce serving (most flavors have 80 calories or less per 4 fluid ounce serving). "That’s about the same as in two rice cakes—with a heck of a lot more flavor," the page says. "It’s downright skinny. Most flavors contain 1.5 grams of fat per 4 fluid ounce serving; none have more than 3 grams per 4 fluid ounce serving."
In the past, the old Tasti D-Lite chain in New York met with legal problems, where New York took the firm to task for falsely claiming to be “low calorie.”
In September 2005, then-owners A Matter of Taste reached an agreement with the New York Department of Consumer Affairs, which had been investigating the chain after hearing that vanilla-flavored Tasti D-Lite contained 22% more calories than the Food & Drug Administration allows for food labeled "low calorie." As part of the agreement, Tasti D-Lite's then-owners agreed to provide nutritional information for all of the company's flavors. They also paid $100,000 to reimburse the city for its investigation. - Forbes
Tasti D-Lite isn’t frozen yogurt and it apparently isn't ice cream. Forbes asks if a marketing challenge will be that consumers will want to know exactly what it is. The magazine reports, “The owners seem to hope that customers in its new markets, including Sarasota, Fla., and Nashville, Tenn., will see employees in their spiffy lab coats--the new uniform for employee "tastiologists"--and think that Tasti D-Lite is more than just dessert.”
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Related Reading:
- Tasti D-Lite Frozen Yogurt at the Tents
- Tasti D-Lite Expands Beyond NYC
- Tasti D-Lite Licensees Need HELP to Protect us from JIM AMOS
- Can Proctor & Gamble Succeed with Jim Amos at the Helm? by attorney Michael Garner
- James H. Amos, Jr., Franchipedia entry
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