Creating Brands to Sell Franchises

Recently Peter Yesawich, Chairman and CEO of Y partnership answered, “The concept of “need” can be subjective. Yes, evolving market demands often require new products to satisfy them, but let’s not confuse market influence with the pressure to drive profit to the bottom line.”

"Brands are created in this business principally as a means to sell franchises,” Yesawich said.  “They’re not necessarily created to reflect market conditions.  You will see that primary motivation for their introduction is to carve up the space in a more finite manner to hopefully sell franchises.  That’s the bottom line answer."

As Stefani C. O’Connor, Executive News Editor, Hotel Business Green Book (2011 Almanac & Market Guide) writes:

If you bring a literal interpretation to lodging’s field of brands, the look of the landscape heading into 2011 is more a hodge podge of entities that have sprouted up rather than a totally cultivated, well-laid out assemblage of choices for potential licensees to stroll among and pluck at will for their portfolios…

In many fields, a 'more-the-merrier' approach is welcome; in lodging, not so much.  More brands means more competition, greater dilution of the discretionary dollars travelers could spend and, in some cases, more confusion for consumers who are being overwhelmed with options, a situation that also exists for potential developers and licensees.


About the author: Stanley Turkel, MHS, ISHC operates his hotel consulting office as a sole practitioner specializing in franchising issues, asset management and litigation support services. Turkel’s clients are hotel owners and franchisees, investors and lending institutions. Turkel serves on the Board of Advisors and lectures at the NYU Tisch Center for Hospitality, Tourism and Sports Management. My new book is available at reduced rates. Vist GreatAmericaHoteliers.com.

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Comments

The emporer has no clothes!

"Brands are created in this business principally as a means to sell franchises,”

Wow, somebody ACTUALLY SAID IT OUT LOUD!?!

sceret motivation

And using franchisee capital was a secret

primary motivation for their introduction is to carve up the space in a more finite manner

Although I wondered if he meant ‘infinite’? I was shocked to hear that one major investment firm wasn’t actually in the franchising business for the love of burgers.  Marrying for money.

Cold Stone & Quiznos

I remember visiting a Cold Stone back in 2003. They were just getting rolled out in our market. At the time, there was no other franchised ice creamery with a sustainable presence left. Carvel had faded away. Baskin Robbins was being combo'd up with Dunkin' and did not offer a "real" ice cream shop experience. So, my wife and I decided to check out the new CS. The lines were long with families waiting endlessly. We were delighted to see our ice cream concoctions being created. However, I was pissed off that my check came in at almost $12. As I was observing the other families enjoying their ice cream treats, I overheard one of the mothers saying to another mother, "this the last time we're spending 30 bucks on ice cream!"

My friend invited me to the opening of his new Quiznos which I was excited to check out. That day, I scoped out the entire place to see what this "fast casual" Panera type of joint was all about. Looking around, I realized the construction material was nothing compared to the ceramic tile and wood finishings delivered with the Panera experience. I told my buddy to ramp up the sales and get the f*ck out. He took my recommendation and sold it to the next sucker 1.5 years after opening his Quiznos. He's happy today; however, the guy he sold it to is crying.

Some Brands rise and some Brands fall. On Wall Street we look for the First Mover advantage. Great Brands are nutured and "slowly" expanded. Brands like CS, Quiznos, et al, were looking for "rapid" expansion. Those Brands found themselves in a "rapid" demise by hurting so many hard working Americans.

In the shadows of the moon, which Brand will be the next to roll into Terrapin' Station?

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