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Help the new guy!!!
I'm looking at Marble Slab, Cinnabon, and Dunkin Doughnuts. BUt, I do not know what to do next. I can't find any earnings information, and I"m not sure I should be sending my personal information including my SSN to all these companies when I may or may not work with them. What should I do?
Someone told me to look for Franchisee Associations for each company, but, I have not been able to locate them.
I hate Corporate America and I need to do something else IMMEDIATELY
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My first bit of advise is to
My first bit of advise is to put everything that's been said by people trying to sell you a franchise or those promoting the entire franchise industry aside and just use it as a starting point. Second, I wouldn't touch a franchise that doesn't already have a franchisee association. Third, ask the franchisee association every question you can think of and be wary of anything they say if they don't ask YOU questions as well. And last but not least...........request actual franchisees that can be contacted but be specific; ask for 3 they recommend and three that have expressed complaints or problems and three that have left the system. If they can't or won't provide you anything but positive endorsements than you can bet, you're not getting the whole story. Be prepared to walk away and start again with another.
Also, keep in mind that starting a franchise isn't you're only option. There are some great deals out there on existing businesses, both independent and franchised, which have already proven themselves or at least are breaking even. Don't limit yourself.
Welcoming Bigger with what I hope to be Welcomed Help!
Bigger:
Welcome to Blue MauMau.
You’ve identified 3 very good franchise concepts. You indicate that you are looking at these concepts, but I’m not exactly sure what you mean by that. Have you actually spoken with a Franchise Development Representative with each or simply visited their websites? If you haven’t actually contacted them I’d encourage you to pick up the phone and call them. Tell whoever answers that you’d like to speak with someone about acquiring a franchise and tell them the territory that you’re interested in.
Each franchisor will have their proprietary way of walking you through the “Mutual Evaluation” process. The person you speak with will explain their unique process. However, it will typically go along the lines of:
Notice I previously said “Mutual Evaluation” process. The franchisor will be evaluating you and your knowledge, skills and abilities just like you’ll be evaluating them. The CQS/RFC is simply a document that provides the Franchisor with its first glimpse of you and what you bring to the table. I always tell prospective franchisees to complete the document to their level of comfort. If there’s something that you’re uncomfortable sharing at this stage of the relationship simply skip over it for now, we can always come back to it. One of the pieces that you may be inclined to skip over is the Net Worth Statement. I’d encourage you to go ahead and complete it. The franchisor needs to understand where you’re at relative to the required investment so that they can provide you with guidance in securing the needed operating capital. If you do not meet or exceed the Net Worth requirements, you’ll save yourself a lot of time. So if the SSN is the big issue, simply leave it blank for now.
You may find the following information helpful:
Marble Slab provides an Item 19 Earnings Claim in their UFOC,
Visit their FAQ Page at http://www.marbleslab.com/franchise/faq.html
Total Initial Cost estimated at around $300,000
Cinnabon does not provide an Item 19 Earnings Claim in their UFOC
You’ll find their FAQ Page at http://www.cinnabon.com/franchise/faq/index.html
Total Initial Investment estimated around $250,000
Dunkin Doughnuts does not provide an Item 19 Earnings Claim in their UFOC
You’ll find their FAQ Page at http://www.dunkin-baskin-togos.com/html/q_a.asp
Total Initial Investment estimated around $300K
If you decide to work with Dunkin Doughnuts ask for James Franks tell him that I referred you.
If I can be of any further assistance just post your question here in this discussion string at Dear Franny.
Believe & Succeed,
Franny
Serving Up Some Pseudo-Revenue Numbers
Bigger:
Allow me to serve up a little more data for your review. Franchise Times publishes a Top 200 Franchise concepts based on System Wide Sales. I’ve listed the data regarding the relevant franchise concepts below.#22 Dunkin Donuts (Down from #21)
World Wide Sales $4,143,000,000
Domestic Units 5,145
Total Units 7,021
Percent Franchised 100%
#136 Cold Stone Creamery (Up from #162)
World Wide Sales $408,000,000
Domestic Units 1,223
Total Units 1,224
Percent Franchised 97%
#194 Cinnabon, Inc. (Up from #195)
World Wide Sales $216,000,000
Domestic Units 402
Total Units 617
Percent Franchised 100%
#290 Marble Slab (Down from #279)
If you divide the World Wide Sales by the Total Number of units, you derive “a number”. Which I’ve calculated for you below:World Wide Sales $62,000,000
Domestic Units 534
Total Units 559
Percent Franchised 100%
Dunkin Donuts = $590,086.88
Cold Stone = $333,333.33
Cinnabon = $350,081.04
Marble Slab = $110,912.34
Notice I said, you derive “a number” although at first glance it may seem that this is an “Average”, and it is. However, to have a truly meaningful average we would need to know the number of operational months associated with the sales or units. There are also many other sub-category averages that would be helpful like by geography, age of unit, market population etc…
Bottom line it’s additional information to add to your file. Perhaps a really good question to ask Marble Slab would be why their store average is so much lower than that of the others.
Believe & Succeed,
Franny
ISSUING OF A NEW UFOC TO INCREASE FRANCHISE FEES
I am in the process of bank funding to open two stores under a UFOC whose franchise fee is $29900 -- The company is telling me a new UFOC is coming out May 1st increasing fees to $34900. I am already approved and heavily into financing but my loan won't be completely done until May 1st and then I am told I can't have access to the funds for an additional four days. The company is trying to tell me that there is nothing they can do about it...is this true or can they approve me under the old UFOC since we are already in the works? HELP! Thanks.I listened to your advice, but....
Hi Franny,
I listened to your advice. Although I did not contact any of the three franchises I originally indicated (because I thought I located another with a better fit), I did reach out to Huddle House. I called them, filled out the application, and now....I'm not happy. I'm lonely in DC.
Everytime I speak to these people, it is because I have reached out and called them. They are just as nice as they can be, with their deep southern accents. But, I really expected that after I shared all my personal business with them, they would return the call or write a letter and say, "hey, we got your information, and will get back to you in a day, week or month". Instead, I had to call and verify they recieved our packet, and check to see if there were any questions. The only thing I held back on was SSNs. Instead, I ran my own credit reports and attached to application.
They have told me that they would like to secure a location for my franchise--that would be the first step. They asked me to send over some locations I was interested in and they would run them through this "system" they have that checks demographics, etc. I sent a list of about 5 locations I am interested in. They never responded. I eventually called my POC who, only then, went to his email box, and eventually located my email. Then he told me he would pass the info through this "system" and get back to me in 24 hours. The next day, I sent over another list of 9 or 10 locations I would be interested in. Now, it's about 2 days later, and I still have not heard anything from them.
I already called them before all of this, and said I was not happy about the response (or lack there of) I was recieving from them. I told them I had expected some acknowledgement of my packet, and that I needed them to help level set my expectations as to what would happen when, and when I should expect to hear from them. I also, point blank asked them if they felt my package was strong enough to pursue a franchise with them, and if they were interested in me. They told me that based on the info I provided they were very interested in me--again very helpful and nice on the phone.
But, I still am not hearing from them to meet my expectations. Every other Franchise I have indicated the least bit of interest in is wearing me out with phone calls, emails, etc. But, Huddle House is giving me the cold shoulder!!!!
What do you think? Am I expecting too much too fast? Should they acknowledge my existence--after all, I am going to turn over what I consider to be a very large sum of money to them. Do you know anything about them? Are they worth pursuing? I think if I do not hear something by tomorrow, I might just cut bait and keep looking.
Please advise. I am very dissappointed and frustrated. I did exactly what you suggested, and now this! (I do not balme your advice at all, by the way).
bigger32
How do you locate Franchisee Associations?
Although I have heard of them, I have not been able to locate any franchisee associations, and no one is volunteering this information. Can you tell me how I would go about finding these folks?Boyeeee!!!!This is great.ÂÂ
Boyeeee!!!!
This is great. I am so glad I found you and this site. I was just spinning my wheels--which I did not like.
The SSN is a VERY big deal with me...I have worked very hard to get my credit score over 810, and I'm not going to let anyone mess that up!!! I also do not know when I need to invoke the professionals in this mix? (lawyers, accountants) If I could get any indication of earnings potential, I think I would be nearly ready to sign up with Marble Slab today (figuratively). I really love the concept, and I went to visit one a couple of weeks ago. It's kind of far away, but, we have Cold Stone here which is what I started out on. Cold Stone told me they are not accepting anymore franchisees in my area--so I found Marble Slab. However, I am concerned about the obvious seasonality of the premium ice cream franchises--I don't llike the thought of feast of famin.
A strong consideration is Dunkin Donuts, although I was looking at their site last night, and could have sworn their cash on hand requirements for a DD brand was in the 7 figure range. If that's true, I would need to grow into that, because I'm not there now!!!
I"m going to call Marble Slab right now.
CALLING FRANCHISE LEGAL EAGLES AND MORE
I'm not a lawyer but the UFOC is more informational than anything else. If there is a difference in franchise fees between the UFOC and franchise agreement, the contract wins out.
Have you signed a franchise agreement to set the franchise fee in stone? I take it that you are waiting to have access to funds sometime around May 5 before signing the agreement.
Any of you legal eagles have ideas?
Frankman
New stores under UFOC
It appears from your Post that you are in the process of funding two new stores for a franchisor but evidently you aren't using an attorney or a franchise advisor or an accountant to look at the UFOC's or you wouldn't be writing to Blue Mau Mau for advice. One of the first thing all Blue Mau Mau posters advise is to get expert advice concerning the UFOC and the Contract you will sign. The Bank doesn't demand that you do this but it is certainly in your best interests to spend the money up front to protect yourself before you sign a contract and loan documents, etc.. It may be that you are buying into a network that is visible and that you believe is viable and that you think requires no extensive and deep due diligence but take a LET THE BUYER BEWARE STANCE with this investment that can change your life. If you don't have an attorney or a CPA look at your UFOC, then, when you look at the UFOC, remember that all transfers are probably business failures and be sure to look up through GOOGLE SEARCH on the Internet under Franchise Failure and Regulation, Franchise Churning, and Franchise Due Diligence. Everyone on Blue Mau Mau will warn you not to continue this project until you get expert help with your due diligence. I'm sure the company is telling you the truth. If you haven't yet signed a contract and a new UFOC is coming out, there are provisions under the law that would make it impossible to sell you these franchises under the old UFOC. But, I'm not an attorney. Get yourself one right away!Hey New Guy...Take a breath and...
First and foremost, the transaction must take place under the UFOC which you've been disclosed under. If a material change like this is taking place they'll have to re-disclose you and the whole process, time tables etc...will be re-triggered.
There are lots of questions to be answered, like where are you relative to the 10-Day rule?
If you've been approved, and if the 14/10/5 Day rules have all been met, you could sign an agreement CONTINGENT upon receipt of funding....and place 500 or 1,000 dollars down until funding is received.
It sounds to me like you've got a Franchise Rep under the end of the month quota needing a deal. I'd contact the VP of Franchise Sales, explain the situation and get their commitment that your deal is GOOD!
If they are not willing to work with you in this way during the COURTSHIP, the marriage will be worse!
Believe & Succeed,
Dale
FranSynergy, Inc.
Synergizing Franchising!
The franchisor may sell you at the old fee...
It is the franchisor's choice to sell you at the old fee or not. The franchisor is obligated to disclose that a lower fee was accepted in the following year's UFOC.HUDDLE HOUSE!
Hey Bigger—
It’s great to hear from you. I had been wondering what had happened to you. I’m glad to hear that you followed my advice, I believe it was sound. I’m also sorry to hear of your frustrations, they are warranted.
As for Huddle House. It’s a great concept with very good food. I’m not sure how strong they are in DC, but here in the south they’re popular and do very well. As I’m sure you have learned they’ve been in business for 40 years and have about 400 locations; obviously not growing too fast or too slow. There rather methodical approach may play a minor role in your frustrations but we’ll get to that. As for the franchise itself, the terms are very fair and reasonable when compared to many other food concepts i.e. 4.75% royalty and 1% ad fee, each exclusive of sales tax; $25,000 franchise fee; 15 year initial term followed by three (3) 5-Year renewals.
Okay, now for frustrations. I would not automatically consider this to be representative of Huddle House as a whole. Most Franchisors are very anxious to work with candidates like yourself who have both the ‘how to’ and the ‘want to’. Nevertheless, I’m reminded of advice which my father once, provided to me and which I’ve previously written about here at Blue Maumau. That advice was simply this “if the first date ain’t no good, it probably ain’t gonna get no better”. With that said I think you may have simply gotten stuck with a Franchise Sales Director who either lacks motivation, has call reluctance or has simply exceeded his or her monthly quota and is rich-fat-and Happy!
So I took the liberty to contact Mr. Mike Weimers, VP of Operations for Huddle House and explained the dilemma. Unfortunately, I had to do this via voice mail. I asked Mr. Weimers to read your post here at Blue MauMau and to respond directly to you via Blue MauMau or to contact me if he had any questions or insight into this situation. Let’s see what happens. If, after a day or three you’ve received no assistance, I’d suggest that you contact him at 1-800-868-5700.
Keep me posted, until then….
Franny!
Locating Franchisee Associations
Bigger....
Good to hear from you. I figured by now you were pouring coffee in your new Huddle House or mixing Ice Cream with Marble Slab.
First, there's not a franchisee association for every franchise concept. I do not know of an all inclusive list. The most complete list I've seen is on the AAFD website.
I hope that this helps, if you're looking for an association not included on the AAFD site let us know who and perhaps one of us will have JUST WHAT YOU'RE LOOKING FOR. Of course you can always ask franchisees when contacting them.
Ask and You'll Receive Here at Blue MauMau!
Bigger32:
We are also glad you found Blue MauMau.
I understand how you feel about your SSN and corresponding Credit Score. Ultimately the franchisor will need it, and will most likely run a credit report. But feel easy about holding back on that until such time that it makes sense to provide it.
Introduce your accountant when developing your business plan, and you attorney before signing any binding documents. I would encourage you not to use your local attorney but someone who works with lot's of franchisees and franchisors. They may charge a little more per hour but will save you lot's in the long run.
Excluding Marble Slab which provides an earnings claim you are going to have to calculate that on your own based on your research and interviews with other franchisees. Even with the Earnings claim provided by Marble Slab you still need to validate it with on your own.
I started to ask why Cold Stone was not on your list. It is also a very good concept and was the obvious ommission.
Your concerns over seasonality are ligitmate concerns and should be addressed with the franchisor and other franchisees. To a large part the severity of the effect will be based on what part of the country you're located in and where you locate your franchise.
As for the investment in Dunkin Dounuts, I believe you may have been looking at the net worth requirement instead of the actual investment.
Again, If I can be of any assistance just post your questions here at Dear Franny on BlueMauMau. We all look forward to following your progress and assisting you in your endeavours.
Believe & Succeed,
Franny
I have had legal council on
I have had legal council on the franchise contract. I just received this information about a Monday deadline and my lawyer isn't available. My lawyer also led me to believe that all things are negotiable. I just didn't know if legally the broker was telling me the truth or not about having it in by Monday or there was nothing they could do but raise the rate. Thank you so much for your help.Huddle House Update!
Bigger:
Just thought I'd give you a quick update, I also reached out to Greg (Vornavich) who I believe heads up franchise sales, I also got his voice mail, I left a him a similiar message as that left for Mr. Weimers.
Greg called me back, he read your post here at BlueMaumau. He thanked me for bringing this to their attention, and we had a good laugh about Franchise sales people who fail to follow up with good prospects in a timely manner. Of course he was unable to pull you up in his database based on 'Bigger32'. I suggested that he reach out to you via Blue Maumau. I hope he does, but of course there are no gaurantees. If not you might try reaching out to him at 770-325-1300 or by emailing the Franchise coordinator at clemmon@huddlehouse.com.
Best of luck, and stay in touch here at www.bluemaumau.com
Franny!
Forget the broker call the franchisor...
This is just another reason to stay away from franchise brokers. You cannot rely on their utterances.Call VP Franchise Development
Buying 2 franchise units?? Call the VP of Franchise Development and resolve it directly with him. Most likely he will be delighted to hear from you.
Brokers can be quite useful. But for all we know, your broker could be discontinued with the franchisor at the end of this month so he wants to pressue you to sign NOW.
If I were you, I'd make sure your lawyer is there and advising you before you sign ANYTHING.
Frankman
Re: New Guy with Franchise Fee
When did they tell you about the change? Just this week? Not to discourage you, but if they just told you this week, that might tell you what their communications with franchisees are like. I would think this would have been something that they would have told you from the beginning.
Huddle House Update: The Pains of Technology
Bigger32 & Other Interested Parties:
I received a follow up call this morning from the good folks at Huddle House. They informed me that after some additional digging they were able to reach out to you, and that together you've discovered that your SPAM FILTER was working overtime. A problem many of us here at Blue MauMau have experienced on more than one occassion.
I'm glad to hear that you're back on track to move forward in the evaluation process. It is my understanding that you are working with an Senior member of the Huddle House team, who has been with the organization for more than 20 years. I even got the impression that they may be planning a visit up your way in the near future. You'll have to show them that 'Hospitality' is not something unique to the south, although as a southerner there's nothing quite like Southern Hospitality!
I hope that you and Huddle House prove to be a good match, and that together you are able to meet and exceed your personal and professional goals and aspirations. Best of luck and keep us posted!
Franny
Bob is right...
No reason to panic, slow down and do this thing right!Follow-Up
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