Pizza, Creationism and Evolution

Pizza franchising is an icon of franchise history. It is more appropriate in the context of evolutionary tendencies than McDonalds because the history of pizza franchising more closely reflects the vicissitudes of franchising history than does McDonalds. Illustratively, even though our economy is in the ditch, McDonalds has the skills to ride it through its worst fluctuations with apparent immunity. I eat at McDonalds a lot – in my car from the drive through. My car smells like French fries. During my recent frenzy of trial prep and trial, I think I probably lived on Texas Double Home style burgers with bacon, cheese and large fries. YUM! Don’t knock it if you haven’t tried it.

Sean Kelly just presented excellent cynical satire on a concept he calls ColdStone Pizza. It’s funny as hell, and it prompted in my mind the thought of how pizza franchising has developed and where it is now. Pizza franchising has gone from boom to bust over the almost 40 years that I have been involved in pizza franchising, whether as lawyer or customer.

I had the good fortune to know and to represent one of the early good guy franchisors in pizza, Little Caesars Pizza. Mike Illitch’s family put together a positive plan for franchisees to make money in the pizza business. They also treated people fairly. I personally know of accommodations made by them that no one would ever even ask for today.

Pizza Hut and Dominos also gave franchisees opportunities to make good money. Those three represent in my mind, the grand family of pizza franchising. Were there others? Of course. That is beside the point of this article.

Like hamburgers and ice cream and sandwiches, if you want to go into the pizza business today, you certainly don’t need to buy a franchise and take on all the high risks of franchise agreements, with initial fees, continuing royalties, advert fund requirements, liquidated damages provisions and covenants not to compete.

Instead, you can work in a pizzeria for three months – by which time you will know how to do it – and then do it yourself. Your reputation within 4 miles of your location is your trade identity. 800 numbers and international web sites mean little when your market is 4 miles around your store. You can have your own web site for very little money. There is POS equipment and software that will work in your shop just fine. There are tens of thousands of pizza store managers floating around in every city’s job market, all of them free and clear of any non disclosure agreement obligations or covenants not to compete.

If you have capital sufficient to buy a pizza franchise, you have more than enough to do it as an independent. If you get word out in your area through couponing; make great tasting pizza; and price competitively, you have a decided financial advantage over any pizza franchisee, and it doesn’t make a bit of difference what you call it – you might not want Muqtada Al Sadr’s pizza as your name, but aside from that- well…

In the history of the great pizza franchises, most have made money, while some have not. That is the normal pattern. Many who made money wanted to make more money. That spawned conflicts, but it didn’t detract from the fact that most franchisees were not missing either meals or vacations. The pattern is exactly the same with burgers, ice cream and sandwiches. You don’t need a franchise any more.

To me, that is the real message of Sean’s Article. Thanks, Sean. It’s a good piece. Now I’m dying for a pizza.

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Comments

Independent pizza restaurants disappearing

Richard,

Any thoughts on how the small independent pizzerias are faring? It seems that I see less and less of them, while more big brand pizza restaurants pop up.

Do you have anything on this? If this is happening, any thoughts on why?

Re: Independent pizza restaurants disappearing

I am still a partner in one of the ones I started in the early 90s.

Here is a reality about Mom & Pops. Many Mon & Pops do real well, it is hard work, but enjoyable work. Yet Mom & Pop often have designs for their children that involves them moving up the social ladder and having the trappings of wealth, but often not the actual wealth.

You will often find the successful small business owner in the food business simply retires and is unable to sell the business. Often Mom & Pop coincided lease agreements with retirement age or other exits strategies and up until recently Landlords had rent goals that turned once profitable businesses into sure losers. In essence many of these enterprises are buying yourself a job, though it may be a good paying job.

In my case the reason I am a mere partner instead of an owner operator is I could not pull enough out of this or other concepts to meet my individual income needs. So I brought in a partner fro who this represented opportunity as well as income enhancement.

Over the years I have seen many Mom & Pops simply go quietly in the night, the kids have no interest in getting their hands dirty, Mom and Dad aspired to have their children do more than them, and investors see it is an owner operator business that does not necessarily throw off enough for the risk to make it investment grade.

FuwaFuwaUsagi

"Never underestimate the power of stupid people in large numbers." 

Apologies in advance

If you think I'm wierd now, wait until tomorrow/next week.

Tomorrow I get my new titanium right shoulder, to replace the one I wore out pulling corks. I hear tell I'll be on a lot of exotic pain meds for a few weeks.

When on pain meds, I sometimes think outside the box. Disregard almost everything I say for the next few weeks, please.

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Richard Solomon, FranchiseRemedies.com,  has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School

There aren't a lot of independents, but what's out there

usually does well. They sometimes get up to five or so units - like Collina's in Houston, for example. Collina's is a byob restaurant with really good food - sit down - beyond just pizza. Folks love the byob option and can have a much more enjoyable meal out experience at a more affordable cost with wine that you bring yourself.

If the food is good and the deal is good, then there is a much better prospect for success than and franchise deal. There are more franchises because of the nature of the beast, but today a new franchise investor would have to be very unwise to buy a pizza franchise.

There is one pizza place out west of here that is trying to be like the famous Neopolitan pizza joint that is credited with being "classic" pizza - HAH! The dough has to rise all day long - total BS. Pizza is only available at dinner time.

You can't get in the place at night. I have tried 5 times and never made it inside.

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Richard Solomon, FranchiseRemedies.com,  has over 45 years experience with franchise litigation and crisis management. He is a graduate of The Citadel and The University of Michigan Law School