Since we''re new...why not franchise?

[chocoholic]

Just wondering what everyone''s thoughts are on franchising/licensing? I know that these are mostly privately owned shops, but if someone is new to the coffee biz....what are your thoughts on this? I''m new to the forum and am looking for anything and everything I can learn! Thanks! :?

 

[Coffee Guy]

The sit down and drive thru are two different markets, however you can blend the two and do it successfully. Independants have been doing it for years. If you notice Starbucks just started doing this concept no more than 5 years ago. They saw that this combo was working for the independants and they jumped on board. Now with that being said, you have to decide which direction to take. In my opinion if you wish to build profit I would start with a drive thru. Much lower overhead, less employees, and usually more favorable leases. Once you've made back your initial investment and begin to make profit, then you can focus on the larger picture. I'm a big fan of drive thrus, and keep in mind that this is a good training ground for learning under pressure. I've had the pleasure of assisting a number of people in this industry both sit down and drive thrus. However, like I said you have to make the decision 8)

 

[John P]

Franchise or not?
The short answer would be "not".

The main reason you will be given to join a franchise is:
* Experienced national franchisor, 'Turnkey' operation!!!
and they will break down how this benefits you.
- Equipment, supplies, training, etc. all laid out for you, it's as simple as 1, 2, 3. blah, blah, blah. Over 200 successful franchisors... be the first in your area to capitalize on this wonderful opportunity.

What they really mean:
"We have a name, but since no one in your area has ever heard of us until you read this ad, you really won't benefit, but hey, if you do, please cut us a check for 5% of GROSS sales each month, plus whatever up front fees we charged you for our valuable information. We have found the most profitable way (for us) in choosing equipment, suppliers, and the like. And if you decide you wish to improve our product by using something else--you can't! Yes, you are stuck with the crap we give you, to our lame ideas, and in fact, you're really not running a business at all, you've actually invested your life's savings and mortgaged your house and sold your wife's engagement ring so you can be OUR spokesperson/manager..." :roll:

Suffice to say, you will work the same 100+ hours per week whether you franchise or not. Why cut them a check and be forced to do things their way? Isn't the reason for having a business is that it is YOUR business? And if you need someone else to tell you how to do everthing from A to Z, then you're really not ready to have your own business yet.

Attend great coffee shops and see what they are and are not doing. Attend Trade Shows, seminars, workshops, etc. Ask hundreds of questions, read hundreds of books, invest your time into doing it right, and if you are still passionatte enough about it, then DO it.

If you don't think your way of doing things can be better than the next guy's, then do something less challenging.

My 2 cents.

 

[chocoholic]

The replies are interesting...

Wondering now...why YOU all do it?? It seems that the posted answers I get, and the emailed replies are all against franchises, which I understand. On the other hand, it also seems like it's almost not worth any time and effort to open a shop at all? I am very passionate about owning and operating my own business, especially since I have been an independent consultant for a direct sales company for the last six years. I just thought it would be easier to have clients come to me for a change instead of having to be "on" all the time, while marketing my business at every ball game, church event, and cashier line. Not to mention, in multi-level marketing, you depend on everyone else to get you up the "proverbial ladder". Just thought that my passion for coffee and the lack of one in this area might be something to look in to?

 

[cafemakers]

This forum is kind of like the Greyhound bus terminal in Hollywood - every day, a handful of new wide-eyed hopefuls arrive with a shoebox of cash and a dream to be a (coffee) star. The regulars just chuckle and make their bets on how long you'll last - we know what's around the corner waiting for you.

I suspect from the tone of your message that you received a fair amount of skepticism in your emailed comments; don't let that deter you, learn from it. Like others that have been "in the business" for some amount of time, I too can be a little jaded (you, Andrew? I don't believe it) regarding the prospects for the next "passionate" coffee shop owner. There is so much interest surrounding this high-growth industry that people tend to be blinded by reality and charge ahead without thinking things through.

Treat your venture like a business, create a plan to decide if the investment is worth the projected return and determine if that's a risk that you want to take. Each business owner has (in theory) made this calculation and determined that the appeal of self-dependence and earning potential meets or exceeds the cost of investment (both time and money). The factors contributing to an owner's decision to start a business and what he or she considers an acceptable risk is not relevant to anyone except him or her.

Your passion for coffee is a fine motivator and will hopefully make the process of starting your new business, but remember, passion does not cover payroll. Don't get caught up in the reasons why others do things - just determine if it's right for you.

 

[chocoholic]

Thanks!

Thanks again for the talk. I do understand that this forum must be full of "hopefuls" with cash and a dream. Me, I'm just a mom of three, graduated in Business Management, husband who's an Accountant (ha, ha) trying to get some information on the "latest craze". I will be researching a lot more before I invest a dime!! Especially with a (excuse the pun) bean counter looking over my shoulder! :wink:

 

[ElPugDiablo]

"100+ hours per week"

Think is part of the deal through carefully. We are talking about 14+ hours a day, 7 days a week, no personal day, no sick day; meaning you have to smile and greet your customers even though you have the worst PMS. You make coffee and put away delivered items; you clean counter, mop floor and wipe toilets; you change light bulbs and wash windows. This is your commitment to the business until you are profitable enough to hire a responsible and capable person (good luck) to take some hours and share some duties from you.

I am not trying to be crass or trying to be negative, Just thought I give you some of the details that franchising literatures usually don't cover.

 

[chocoholic]

Question...ElPugDiablo

Why do you do it then? I'm sure you're not in a franchise situation...but why are you in the business? It seems that every post I've read about someone new trying to get information about getting "in" to the business, only gets negative responses. I haven't seen anything positive at all, so if that's the case....why are YOU in the business, if it is so terrible?? Just wondering??

 

[Alun_evans]

I think basically everyone is trying to give you a balanced view of what opperating a cafe is like for an owner opperator. I think the "balance" being we all know what the perceived positives are in this business, but only those who have been through the trials and errors of starting, running and (hopefully) successfully building a business can also pitch in with what would be percieved negatives. For me I work the 100hrs a week+ that E.P.D mentioned. I think nothing of it, mainly because I have been in hositality most of my working life. However I was talking to a lawyer friend the other day who works 70 hour weeks, and he was moaning to high heaven about the workload.

I guess a good proportion of posters on this forum are in the business primarily because they love what they do- be it running a cafe, being a barista, roasting etc. They may love coffee, or then again they may love the hospitality aspect of what they are doing. I dont think you would find many people complaining or truly being negative...just trying to give sound "eyes wide open" advice.

Much of the franchise literature you see is not directed necessarily at people who have experience in cafes or the coffee business...on the contrary it is aimed at people who are looking at owning their own business- ie competing aganst franchise systems as diverse as lawnmowing, drycleaning, pet grooming etc. Therefore franchise systems by nature tend to focus on the financials, not on the short list of points EPD noted.

I think there is nothing wrong with franchise system- however if you have a true passion and can spend time learning the business from the ground up, I am sure you can build a very successful cafe of your own.

 

[ElPugDiablo]

Re: Question...ElPugDiablo

Why do you do it then? I'm sure you're not in a franchise situation...but why are you in the business? It seems that every post I've read about someone new trying to get information about getting "in" to the business, only gets negative responses. I haven't seen anything positive at all, so if that's the case....why are YOU in the business, if it is so terrible?? Just wondering??

No it is not so terrible. It is actually wonderful. A lot people want to open a shop because they love coffee and coffeehouse or they think there is a lot money in it. Either way it is fine. I just want to make sure they know all the details that they may have over looked. Food business is very tough, new eateries failure rate is something like 75% and up. If you go to the B2B link in this forum you will see plenty of people selling their drive thru, Kiosk, shop, I am not going to say all of them are failing and bailing out, but certainly a good percentage of them are shattered dreams. You have to be good, luck and a little sick to want to be in it.

Why do I do it? I am more than a little sick . Seriously, every once in awhile a new customer will come in, order a coffee, on the way out he/she will take a sip and stop and turn back and say "that is the best coffee I ever have!" Isn't it silly? To get so excited about some hot brown water that cost a buck fifty. Yet in freezing temperature or in rain storm some will walk two extra blocks just to get that momentary pleasure. That is why.

 

[ElPugDiablo]

Oh, if before your research you have never heard of the name of the franchising coffee shop, then chances are the name will also mean nothing to your potential customers.

 

[chocoholic]

Completely agree!

I do agree, that if I've never heard of the franchising name, neither will our customers....
And I, too, must be a little sick, to continue to be in the direct selling business for 6 years, so I know what you mean! I also appreciate how I will have to weigh out the time, effort, and money it will take over the "long haul" to work up a clientelle and the marketing it will take to do that.

However, if everyone is in favor of doing it myself, as opposed to the franchise. Any ideas besides "working in a coffee shop" that I could gain some knowledge and training?? The only coffee shop we have is Starbucks! From what I'm reading...that's not the place to learn??

 

[equus007]

where to start

Starbucks is actualy a perfect place to start. Its not a great place to learn about great coffee but if you are lacking in experience such as how to motivate young employees, quality control, payroll etc they are great. Their places are usually run more efficiently than the military, its one of the reasons they make the bucks. The fact of the matter is that many shops could benefit from taking on a few of SB's practices but most of us rile at the idea and have enough to keep ourselves busy as it is. Its also good to go see what to do differently.

 

[equus007]

also

Also I think one of the reasons we always stress the 100hr week, which is literal by the way, is that this is what kills alot of shops. I've done both franchise and independant and I can tell you that both require very long work hours. With an indepedant shop you are surrounded by the familiar. It is much easier to put in those hours when your are surrounded by your stuff if for no other reason than it reminds you that it really is all on you. It is your second home. With the franchise its just like going to work for someone else and eventualy you start to blame the franchiser for anything and everything that goes wrong.

A franchise is not "your" business. It is no different than say managing a Wal-Mart with profit sharing benefits except in the franchise case the Corporate Office(franchiser)has their(your) money in pocket whether you sink or swim.
((I have made a new-years resolution to use less parantheses)))
))

 

[John P]

Experience isn't all its cracked up to be. In fact, in can often lead to bad habits. The main reason for finding a coffeeshop to work at is to know that THIS is what I want to do for a good portion of my life. Sometimes the idea of owning a business is what many fall in love with--the romance of it all, but they forget the hard work that is necessary before you open and the continued work that is necessary after.
I used to work about 50 hours a week at my regular job before we opened our caffe. Once we opened, for the first year and a half I was at the caffe about 120 hours a week, this past year we changed our hours, and I am here about 100 hours per week. But in all that time it has never felt like "work" to me.
Have Passion.
Know quality.
Promote quality.
Have a good business head.
Understand the dynamics of location.
Understand marketing and market positioning.
Define your business and have every element, from color, to price, to menu, to quality. reflect who YOU are.
Understand the emotional context of design and color.
Always be open to learn.
Continue to improve daily in at least one area of your business.
with mastering these elements as a starting point, you will do well.