by diana netherton 12 Replies latest jw friends
Hello,
There's a sub place that I know will make a killing where I live...the Subway here is ALWAYS
full and this place offers much better fare; fresher ingredients and real cuts of meat.
Anyway, it looks like the start up costs are around 100,000...has anyone here ever
done something like this? Do banks lend money for these ventures? I would like to
do something else..getting a bit tired of my profession.
I know franchise law is a huge topic. You have to research the particular venture in great detail. Google is a good place to start. I would suggest consulting a lawyer and accountant once you are interested. It would be very important to get in touch with other franchise owners in your area and even competitors. If no one will speak to you locally, try a wider geographic area.
Sounds entrepreneurial and admirable to take on business risk after being a Witness.
I heard subway is a good moneymaker.
you're probably looking into a 15 year loan.
on top of the $100,000 you're gonna need an extra cushion for payroll and extra inventory
The more well known and stable the franchise is, the better chance for favorable financing. Banks are not lending like they did, but there are a lot of programs out there to provide additional assistance, expecially if you are a minority, a woman, handicapped, or some combination of the above. Check with the Small Business Administration in your locality. You can get a lot of help online but if you have an office near you, there is nothing better than getting a personal interview and getting to know the people who can assist you.
In a franchise, you are really "operating" it as opposed to creating it. You're basically paying for the development that went into getting the product to where it is today. I recently read that some successful franchises like McDonalds command 1-2 million dollars in fees alone to get started, and in many cases that does not include the land, building, etc.
By the way, Subway is actually number 1 in the world when it comes to the number of locations. They passed McDonalds a couple of years ago. I was never a fan of Subway but I see how they do make a lot of money when they get $5 for a sub roll, a couple of slices of thin meat and cheese, a few veggies, and that's about it. They must have a gross margin of like 70-80% on most of the things they sell.
As was mentioned above, talk to others in the industry and especially the competition. Ask them why they didn't choose the one you are looking at. You want to find out where the warts are before you buy. And of course, a good accountant and lawyer WITH KNOWLEDGE OF RETAIL FOOD SALES is a requirement. Ask them who some of their clients are for references.
Best Wishes (and send me some discount coupons when you get started).
Rub a Dub
I set up a salad bar on my own, that was similar to a franchise chain and refinanced my house for the money needed. It was very hard work and I made no money, despite the place being hugely popular. On the other hand, it was great to get to know all the people in the area and we made some great friendships that last to this day.
If you join a franchise, make sure it is worth the fees. Chains like Subway do excellent research into location, menus, production lines etc. The branding is a huge drawcard, and buying power can mean the ingredients are cheaper. However, smaller franchises can provide very little and hence not be worth the fee.
There was a coffee franchise next to us and the owner eventually dropped the franchise and renamed. He was paying a fee, and got nothing in return, as it was too small to have any branding or buying power benefits.
Check out the franchise you are considering in several other locations and see how they go. Speak to the owners to find out what their experience has been. I have seen great sub restaurants next to Subways that are empty, despite offering great menus and better prices, simply because people are sheep and go to the place that they recognise.
If you have not been in the industry, a franchise can be a good way to start, if it is well run. The owners can show you the best techniques, should know the best places to get ingredients, teach you how to forecast the correct amount to prepare each day. Wages and waste are the two features that will make or break you, so guidance with that is critical. If you choose not to go with a frachise but go out on your own instead, than I strongly recommend you work in the industry as an employee for at least a year to learn exactly what is involved.
I have worked with various franchise fast food operators in a variety of markets. The big name places all seem to do pretty well in general. I would say the most important factor is picking the right location for your operation. For example, the town I live in is not very supportive of restaurants in general - I've seen several come and go in the last 15 years, including a Wendy's. Subway however has done quite well - they are always busy. I guarantee that a "fancy" sandwich place wouldn't make it here though - the locals are cheap and seem to have a dislike for anything 'pretentious'. So look around at what seems to do well in a particular place before you commit to a location. Too much competition makes for a difficult environment, but too little can also be a negative. When I head out for lunch, I don't always know where I'm going - I just drive to the area where all the restaurants are and then decide. If you are off by yourself, you lose that traffic.
Subway is a hard competitor...cheap ingredients and they were listed as having one of the lowest franchise fees, the last time I looked, around 7%. Most chains in good locations make money, but I think you have to have the capital yourself plus a loan, but id research that.
One of my previous accounting jobs involved a restaurant. It was not a franchise operation. My employer was really a real estate company but we had this vacant restaurant space in one of the builidngs and somebody had the bright idea that we should operate ourselves. Six years and half a million dollars later they sold it to somebody that knew what he was doing.
I think a franchise, if its a good one, offers better chances, but it promises to be a lot of work and a steep uphill climb the first year or two. That said, if you like the idea of being in charge (as opposed to doing the boss's bidding all day) it may be workable. If you want help crunching numbers shoot me a PM.
Dad and I considered that franchise. He liked the fact that the menu didn't require a fryer or a grill. Also a small footprint for lower rent. We contacted them and started to go through the paperwork about the time he got sick. I trashed that stuff years ago. I wish I culd remember what we liked and what we didn't about that franchise.
Franchise...... You are paying for a name and a cheesy logo, worst of all you are paying to give someone a percentage of your hard earned profits...
Make your own subs!!! Keep your own profits!!
You have SEEN the most important element - potential, but its important for us to realise this is the most insignificant step. The best product, in the most apt location, at the right price, in the most perfect financial climate, wrapped in a silk that was rolled on the thighs of a virgin... wont make a dollar......if its just in your head! The best books have never been written, the best poetry never whispered , the best art never painted and the best ideas never realised.
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