Franchise Article, 1988

Your Money; Franchises Offer Profits and Risks
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By LEONARD SLOANE
Published: January 16, 1988
LEAD: JAMES Goodman, executive vice president of the Morehouse School of Medicine in Atlanta, recently decided to leave his position and go into franchising. So he bought the Seattle-area rights to open franchises of Jiffy Lube International Inc., a fast oil-change and lubrication system for automobiles.
JAMES Goodman, executive vice president of the Morehouse School of Medicine in Atlanta, recently decided to leave his position and go into franchising. So he bought the Seattle-area rights to open franchises of Jiffy Lube International Inc., a fast oil-change and lubrication system for automobiles.
''I've put in a lot of effort and energy for other people,'' Mr. Goodman said. ''I'm at a stage now where I want control over my own destiny.''
Rocky Paolini bought a franchise three years ago and now has a thriving printing and copying center under the Sir Speedy name in Wakefield, Mass. Before going into business on his own, he had worked at the Monsanto Company in sales and marketing for 14 years.
''I love it,'' he said. ''You'll never see me going back to corporate life.''
Mr. Goodman and Mr. Paolini are among the hundreds of thousands of Americans who have started their own businesses through franchising. Government statistics indicate that franchises stand a better chance of success than other independently owned small businesses. Nevertheless, prospective franchisees should understand the many pitfalls - indeed, some people have lost their entire investment rather quickly. Before opening an establishment and paying $1,000 to $500,000 for the franchise, investors should carefully study the business.
''Treat this as an extremely serious business investment,'' said Stanley L. Williams, director of education at the International Franchise Association. He urged investors to examine the entire situation carefully before they put up any money.
Franchising is a method of distributing brand-name products or services under license. A franchiser provides the business system and trademark and a franchisee operates the business under the franchiser's name.
There are two major franchising arrangements. In the business format, the franchiser establishes a fully integrated, continuing relationship with the franchise owner. In a product trade-name arrangement, the supplier and dealer establish an independent sales relationship, like those found in such industries as automobiles, soft drinks and petroleum products.
The business format has been responsible for much of the franchising growth in the last three decades.
Total sales of franchising companies amounted to approximately $591 billion in 1987, up about 6 percent over the previous year and representing one-third of all retail sales in the United States. Approximately a half-million franchised establishments exist, with business-format arrangements proliferating in such industries as real estate, rental service, cleaning and maintenance and, of course, the ubiquitous fast-food restaurant.
''You're buying someone else's experience,'' said Ray Bard, an Austin, Tex., management consultant and co-author of the book ''Own Your Own Franchise.'' ''You're getting their systems, their product development, their image in the marketplace and their supportive services.''
In addition to having the opportunity to participate in a tried-and-true business model and to receive both start-up assistance and follow-up support, franchisees may obtain other benefits. These potential advantages include sharing in the good will built up by other outlets bearing the same name, obtaining location analysis, getting continuing advice and training from the franchiser and receiving counsel in organizing, leasing, merchandising and advertising.
But franchising does have its drawbacks. A franchisee must comply with the franchiser's controls, standards and procedures or risk losing a valuable franchise. Also, a franchisee must usually spend more money to go into business than would be required without the trade name.
''The relationship between franchiser and franchisee is the key element to the present and future success,'' said Andrew Kostecka, a franchise specialist for the Commerce Department. ''A franchiser can develop superior procedures and programs, but they are meaningless unless franchisees put them into operation in the marketplace.''

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Francorp Client - Soul De Cuba

The Soul of Crown Street
Nicole D'Andrea, Senior Writer
08/06/2008
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If you go... Soul de Cuba 283 Crown St., New Haven; 203-498-cuba; souldecuba.com What makes a city a city isn't something you can exactly put your finger on but when you feel it, you know it.
That's sort of the best way to explain the vibe of Soul de Cuba, tucked away on the corner of Crown and High streets.
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Just 40 seats for dining and only a handful of stools at the bar, Soul de Cuba embodies everything that is the lifeblood of New Haven. Think diversity in culture, historically accurate native cuisine and of course, authenticity of ownership.
Birthed by New Haven staple Yoon Kim, son of Sung Kim who has operated Seoul Restaurant on Crown Street for many years and brothers Jesus and Robert Puerto, Soul de Cuba has solidified itself as a New Haven necessity since its doors opened in January 2005.
Shortly after opening the first location- about one year- Jesus revisited his past, traveling to the South Pacific where he used to do work for the Peace Corps and launched a second Soul de Cuba in Honolulu, Hawaii across the street from the Hawaii Theater.
Hailing from an international relations background, Jesus shares that he and his partners are now finalizing the details for a global franchise expansion of Soul de Cuba which coincides with the debut of the restaurant's new line of homemade mango salsa, honey balsamic vinaigrette dressing and mojo marinade which are sold in store and are coming soon to participating supermarket shelves.
Phoning in from Hawaii- he gets to run this location while little brother Robert mans the New Haven locale- Jesus explains, right now he's at a crossroads with his business and he's hoping to figure out what is the best way to replicate the Soul de Cuba concept on a national level and become one of, if not, the first chain of Cuban eateries.
But before this Afro-Cuban enclave takes the world by storm, it's important to consider where it came from and who the Puertos are.
Though Jesus has a lengthy background serving in the international relations field- he came to New Haven through Paul Newman's Association of Hole In The Wall Camps to serve Thailand, Southern Africa and Japan- his family's past is deep rooted in Cuban cuisine.
Coming to the Tampa area of Florida, at the turn of 19th century, Jesus' great grandfather Santiago Gonzalez settled in Ybor City, which is the oldest Cuban-American community in the U.S.
The Puerto's family established themselves in Ybor and became well-known bakers. Even today, Robert says, they have a cousin who has taken up the baking trade in Ybor.
Generations of Afro-Cubans from the Puerto lineage have contributed to the flavor and style of Sol de Cuba and when speaking of franchising in terms of a restaurant "concept" it's sort of impossible to do so because the mantra of the restaurant is anything but trendy, stylish or en vogue. There's no "concept" per-se because it's real, right down to the family photos, which adorn the walls and even the cigar box tops that decoupage the bar top- yes, the Puerto family was also cigar rollers in Ybor City.
By way of food, diners can delight in the traditional marinated pork, a famous Cuban dish called lechon asado where the meat is marinated 24 hours in mojo- a creamy blend of citrus, oregano and garlic- before cooking.
But also on the menu, there are dishes that aim to highlight the unique Afro-Cuban heritage that the brothers share. Jesus explains that in addition to meals bearing the namesake of their past, it's the paintings of Afro-Cuban spirituality and respect for family that really puts the soul in Soul de Cuba.
Rabo encendido, traditional oxtail stew shares a place on the menu with Abuela's sopa de frijoles negros and less conventional dishes like Robert's pollo Soul de Cuba.
Cooking for almost half his life, Robert has taken the reins of the business from behind the stove and says he continues to try to represent the Cuban and Afro-Cuban cultures with his food while also taking into consideration the importance of creating new dishes with more contemporary ideals.
Before the rest of the world has the opportunity to delight in the wondrous multi-sensory experience of Sol de Cuba, which wakes your mind and taste buds simultaneously, take advantage of dining in the New Haven location where it all started (283 Crown St., New Haven; 203-498-cuba).
The Spread: Lunch entrees $11-$16, sandwiches $7-$9, appetizers $7-12, dinner entrees $12-$21.Signature: Soul de Cuba offers jars of homemade mango salsa and bottles of honey balsamic vinaigrette dressing and mojo marinade for sale in store, and soon on participating supermarket shelves. Also, make sure to order the Puerto family recipe sangria or a classic Cuban mojito.
Beyond the food: Monthly, you can come enjoy drum nights at as the restaurant is turned from a dining space to a dancing frenzy. Check souldecuba.com for dates.What we ate: Pollo Soul de Cuba, $18 (Marinated chicken breasts (overnight) pan fried and served with Chef Robert's special salsa of mango, black beans, red onion and rum, served over arroz blanco and plantanos maduros.
What we thought: Soul de Cuba is the epitome authentic and represents the best of New Haven's multicultural cuisine. If you're interested in having some imported wines or Cuban influenced drinks, this is one the city's most romantic spots to do so. If you're dining, Soul de Cuba is known for making traditional Afro-Cuban food with a contemporary twist- evidence of its success is the sweet and hearty Pollo Soul de Cuba.

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Francorp News

NutriPure Beverages, Inc. Acquires Moneymaker 1 LLC (Inka Grill Franchise Systems) as 2nd Wholly-Owned Subsidiary
13 Aug 2008 09:00 AM ET
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NEWPORT BEACH, Calif., Aug 13, 2008 (BUSINESS WIRE) -- NutriPure Beverages, Inc. (Pink Sheets:NUBV) announced today that it has acquired Moneymaker 1 LLC, a Nevada corporation, and that Moneymaker 1 is now a 100% wholly-owned subsidiary of NutriPure Beverages, Inc. Moneymaker 1 LLC, which will now change its name to Inka Grill Franchise Systems ("IGFS"), owns the nationwide franchising rights to the Inka Grill restaurant, recipes and products, and an agreement is already in place with a major franchising firm to take the concept nationwide. The existing management team of Inka Grill Franchise Systems will remain in place and will continue to run the day-to-day operations of IGFS, with NutriPure providing funding, management oversight, and additional resources as needed. This acquisition has been structured in the form of a stock-for-stock transaction in which current NutriPure shareholders and management remain in control of the company and IGFS shareholders are assured a sizeable ownership position regardless of whether IGFS remains a subsidiary or is eventually spun off as a separate entity.
This announcement follows last Friday's release in which NutriPure announced the finalization of its purchase of XND Technologies, Inc., giving NutriPure two separate and complementary wholly-owned subsidiaries in the "healthy water/healthy food" industries. XND is bringing to market a complete line of Nu2O nutrient-enhanced bottled water products using a patented technology that is more efficient and less costly than any other currently in use. This "cold-fill" process also saves energy and allows organic nutrients to be added to water without adding masking flavors, colors or sweeteners, yielding premium enhanced clean and pure water products. Nu2O products will compete with currently available products such as VitaminWater and SmartWater, and will include formulas that provide vitamin support for general health, a diet formulation for weight watchers, an immune booster, an energy and fitness drink, and additional products to be announced later.
NutriPure's CEO Kenyatto Jones commented that "We have been working toward this day for a long time, and we are very excited to announce that NutriPure now owns two separate and distinct subsidiaries, one water-focused and one food-focused, that will operate independently and can simultaneously work together to create and expand new markets for one another." For more information visit www.nutripurebeverages.com.
Safe Harbor Statement: This release contains forward-looking statements with respect to the results of operations and business of NutriPure Beverages, Inc., which involves risks and uncertainties. The Company's actual future results could materially differ from those discussed. The Company intends that such statements about the Company's future expectations, including future revenues and earnings, and all other forward-looking statements be subject to the "Safe Harbors" provision of the Private Securities Litigation Reform Act of 1995.
SOURCE: NutriPure Beverages, Inc.
CONTACT: NutriPure Beverages, Inc.
Kenyatto Jones, CEO, 866-202-5256 Copyright Business Wire 2008 -0- KEYWORD: United States
North America
California INDUSTRY KEYWORD: Health
Fitness & Nutrition
Restaurant/Bar
Retail
Food/Beverage
Other Retail SUBJECT CODE: Merger/Acquisition

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Don Boroian - How to Buy and Manage a Franchise

The American Dream with a Safety Net:
An Introduction to Franchising
Fred DeLuca needed cash. At seventeen, he was ready for college, but unless he raised some
money fast, he knew he couldn’t cover his first-year expenses at Connecticut’s University of
Bridgeport. As it would turn out, DeLuca’s solution for financing his college education would
lead to one of the biggest franchising success stories of the late eighties and early nineties. But
back in 1965, all he wanted was a financial fix.
DeLuca approached a wealthy family friend for the money. He recalls hoping that Peter
Buck, a nuclear physicist, would “reach into his pocket and pull out a big stack of hundred-dollar
bills.” Instead, Buck offered something more valuable – a business proposition. Instead of a gift
or loan, he would give the youngster $1,000 to open a submarine sandwich shop. And so Pete’s
Submarines of Bridgeport was born.
After a slow start (and a name change), the partners added fifteen more sandwich shops
in the following eight years. The chain had potential for further growth, but the traditional
method of building and operating company-owned stores was proving to be slow and costly.
The choice of an alternative wasn’t hard to make. McDonald’s and Kentucky Fried Chicken,
among others, had set an excellent example by franchising, and it was in that direction that
DeLuca turned to expand his business.
More than twenty-five years after it was started as a collegiate money-making venture,
this submarine sandwich idea has truly paid off. DeLuca and Buck’s business has become the
pacesetter among sandwich chains, setting a growth standard believed to be untouched by even
mega outlet food giants such as McDonald’s or Domino’s Pizza. In a single year – 1988 –
Subway, as the franchise is now called, opened more than one thousand outlets, a feat never
previously accomplished by a single chain.
Of course, opening a sandwich shop isn’t a rocket-scientist type of proposition. All one
needs is money (which, as has been demonstrated, can be someone else’s) and desire. Even
making that shop a success isn’t a superhuman task. Combine hard work, a good product, and a
reasonably decent location, and you can be the local roast beef and salami king. But to establish
and successfully duplicate such a store a few thousand times across the country and around the
world takes more than a profitable outlet (or even a few such outlets). It takes one of two things:
(1) Nearly unlimited capital (quite literally in the billions of dollars) to finance such growth; or
(2) the proven, synergistic power of franchising.
Chapter One
Compliments of Francorp Connect, Inc. 7 www.francorpconnect.com
So if you happen to have a couple of billion dollars lying around in a family trust, or a
friendly banker whose loan checks come preprinted with nine zeros, then what follows will
likely not be of much interest to you. But if you have a desire to become part of – or simply
learn more about – franchising, the successful and growing form of business the U.S.
Department of Commerce has called “the wave of the future”, this book is the source you’ve
been looking for.
As franchising has grown in prominence and performance, it has attracted wide coverage in the
media – some positive, some negative; some aimed at potential franchisees, some at franchisors;
some purely analytical, some philosophical and esoteric. But what was missing was a
comprehensive, easy to read (and perhaps fun to read) book that tied it all together – a book that
combined practical and useful information for both franchisees and franchisors with unbiased
reporting and interpretation of the development and influence of franchising. The challenge,
then, is to fill this information gap.
This book sets out to be the only book anyone (be they franchisees, franchisors, or even
just curious consumers) needs to read about franchising. And that’s not just a boast or some
lofty goal – it is our personal mission as authors.
Perhaps it sounds too simple: anyone with any interest in franchising. But it’s true. This book
was written with the widest possible variety of readers in mind. Whether you are interested in
purchasing a franchise (that is, becoming a franchisee), developing an existing business into a
franchise (becoming a franchisor), or simply learning more about the form of business
responsible for more than one-third of all retail sales in the United States, this book will inform,
educate, and perhaps even amaze you.
Do you dream of becoming your own boss but are wary of striking out on your own?
We’ll help you assess whether you’re ready (financially and emotionally) to become a
franchisee. Are you ready to buy a franchise, but not sure which one to choose? We’ll give you
some valuable advice to help narrow which franchises are best suited to you.
Perhaps you own a small (or even not so small) business and are considering expansion.
We’ll help you answer two questions of paramount importance when it comes to considering a
franchise program: (1) Is your business franchisable? and, (2) if so, what is the best way to go
about it? The fact is times have never been better to consider expansion through franchising, for
anyone who owns or operates a successful business. There is definitely an audience of qualified
potential franchisees available. Big corporations, including many Fortune 500 companies, are
stripping away layers of middle managers with layoffs and early retirements. Add to this pool of
Why This Book?
Who Should Read This Book?
Compliments of Francorp Connect, Inc. 8 www.francorpconnect.com
talent the growing number of executives whose jobs have been “leveraged” out of existence (due
to buy outs, mergers, and other corporate reshufflings), and you have an experienced and
professional class of people ready for a new challenge. For many of these people – and others
ready for a change – franchising is the best choice.
Joe’s brother, John Mancuso, is a good example of a new breed of franchisee. He owned
and operated a small machine shop in Hartford, Connecticut, for the past half dozen years. He
also was a customer of the local Physicians Weight Loss Center in Hartford, and trimmed down
from a hefty 270 pounds to close to 210 pounds. He was thrilled with his weight loss -- so much
so that he sold his machine shop and used the proceeds to acquire the franchise location where he
had lost weight. Rather than start a new business in an area that interested him (but in which he
had no practical experience), he bought the franchise and the national reputation and source of
knowledge that went with it – a franchise that he knew was effective, because it helped him lose
weight.
John had never anticipated being involved with franchising, but at the age of forty, he too
came to marvel at the power of the concept. (But, as you’ll learn later in this book, John lost
more than just weight. That was another motivation to write this book.)
Franchising is a broad term that described a relationship between two or more parties. In
general, the purpose of this relationship is to distribute goods and/or services. The two primary
types of franchise systems in the United States are product or tradename franchising and
business-format franchising. Product or tradename franchising is franchising in its most limited
form: A manufacturer grants another party a license to sell goods produced by the manufacturer.
Principal examples of this form of franchising include sales of cars through dealerships, gasoline
through service station, and soft drinks through local bottlers.
For the purposes of this book, we will almost always be discussing the other type –
business-format franchising. We will refer to it by the simpler term franchising. Under
business-format franchising, a business owner or manager (the franchisor) allows someone to
market products or services using her name, trademark, and most importantly, her prescribed
business format – thus the name business-format franchising. (Frequently – in fact, usually – the
products sold are not provided by the franchisor.) In return for use of the name and system, the
franchisee – as that person or organization is called – pays a fee and, usually, an ongoing royalty
(in the form of a percentage of sales). Moreover, the franchisee pays all the costs of going into
business. The effect of business-format franchising is to make it less a system of distribution
than a system of proliferation or expansion.

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Franchise Demand

Creativity, flexibility carry franchises through tough times
National Restaurant Association SmartBrief 08/15/2008
Despite a sour economy, companies are finding ways to make their franchises grow, taking advantage of lower real estate prices and changing the way they market themselves. Even franchisors in industries that have stayed in demand, such as education and cruises, are coming up with new ideas for growth. Entrepreneur.com (08/13)

Americans Squeeze Wallets

Americans squeeze wallets to afford food, energy increases
NFIB SmartBrief 08/15/2008
Americans have lowered their standard of living to pay the inflated costs of food and energy, according to this analysis. July's consumer price index rose faster than anticipated, setting a 17-year record with prices 5.6% higher than the same month last year. Energy prices rose 29.3% and food prices increased 6%. MSNBC (08/14)

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Google is King

Nielsen: Nearly 60% of Web Searches on Google
Dec 27, 2007
-By Mike ShieldsGoogle is nudging toward claiming 60 percent of all Web searches conducted in the U.S., according to the latest figures from Nielsen Online.In November, the Mountain View, Calif.-based company accounted for a dominant 57.7 percent of all searches, or over 4.2 billion searches in total. Roughly a year ago, Google’s search share fell just below the 50 percent threshold, though Nielsen says that it has recently made some changes to its reporting methodology that make true year over year comparisons unavailable at this time.Meanwhile, it would appear that longtime number-two search player Yahoo is slowly losing traction among Web users, despite revamping its product significantly in 2007. The embattled Sunnyvale, Calif.-based portal handled nearly 18 percent of searches, while in previous months its share had surpassed the 20 percent mark.Microsoft’s MSN/Windows Live Search product, which has long struggled to reach double digits is search share, accounted for 12 percent of all searches in November, found Nielsen.