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Old 07-11-2018, 01:16 AM
 
Location: Silicon Valley
2,747 posts, read 1,209,866 times
Reputation: 5047

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Hey CD. Thanks for posting. I met with a potential partner today. Neither of us has meaningful restaurant experience, hence the question, but the location isn't advertised yet, and I know the property manager of that property. My #1 is team, Her #1 is location.

Having lived in Chicago for a bit, everyone knew there was a Hamburger University. When a recruiter for McDonalds came to speak to our class (honors accounting) she was summed things up quickly. She said, I know none of you are going to go home to your parents and celebrate your new degrees by telling them you got a job at McDonalds, but keep us in mind for later on, we have lots of good careers. We were all going to firms.

At any rate, the advice is well heeded. We have a location that popped up that's not available to the market yet. It's a great location for a nice restaurant. Still that doesn't change the fact that neither of us has restaurant experience, and if the franchise training is more like....this is how we bend you over, you're on your own to make it work, then I'm very glad I asked the question.

We've both done well, in a sense. We're both accounting consultants for too long, so permanent roles are going to be tough and significant steps back. We both feel the industry is....underestimating the influence foreign country accountants are having now that we're all getting closer and closer to IFRS and abandoning US GAAP. Both believe integrity in the industry has wanted, and there's no point working in something that inherently you're not going to be proud of. We've worked together on a few assignments and have done well together...but we would like to do that not in accounting and not for the man.

We both became paper multi-millionaires through investments. Neither of us can liquidate easily. She's in minority stakes in several family based partnerships for real estate investments that have done well in multi-units. I'm realizing that selling my appreciated properties will likely cost me a wife as she fears I'll want to run around and be foolish. Both of us have almost all of our stocks in SEP-IRAs, which we can't touch for 20 more years. If we turn off the regular self-employment income, we might not even be able to borrow against our properties.

We're like rich poor people.

We both got some on the side though. Enough for a franchise or something else. We both agreed today that putting ourselves at risk on a restaurant, something we know nothing about, would be pretty stupid. The place will be a good opportunity for someone else. Plenty of ideas though. Her independent lean is check cashing and short term loans. (She has cousins) Mine is for property management of HOAs. Still, if we're going to do this...the idea of something flashier was lucrative.

I guess we're both doing the midlife crisis thing.
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Old 07-11-2018, 09:08 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
20,785 posts, read 37,451,783 times
Reputation: 20777
Here is a list of franchises Good and Bad.

https://www.forbes.com/best-worst-fr.../#248946562699

As a commercial property owner... My restaurant spaces have the highest turnover and the worse repairs / abuse / highest daily use of property (and are a liability exposure). And the locations are GREAT (next door to a 1200 person factory without any food service, and employees get FREE $14 local meal vouchers for every 4 hrs of overtime).

These guys will sell you a franchise...
https://www.franchiserankings.com/re...oker-suppliers
https://www.sba.gov/blogs/what-franchise-broker

Run the numbers / do a market survey and come back here.
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Old 07-12-2018, 02:36 PM
 
Location: The Triad (NC)
26,841 posts, read 57,851,863 times
Reputation: 29235
Quote:
Originally Posted by artillery77 View Post
There's a spot that's going to open up in a plaza we know.
Are YOU Vietnamese?
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Old 07-12-2018, 05:09 PM
 
Location: Silicon Valley
2,747 posts, read 1,209,866 times
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Quote:
Originally Posted by MrRational View Post
Are YOU Vietnamese?
No, but some call me half. My potential business partner is, and my wife...a fairly high percentage of my friends...lot of my supply chain. I'll rent my property to anyone, but only advertise in the Viet paper.

Kid's school is 4% White. I won't be selling cheese logs in PBR dive bars anywhere near here.

Basically, I don't get asked to anyone's chơi hụi...but I have been asked to ask on behalf of my wife.
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Old 07-13-2018, 01:13 PM
 
Location: The Triad (NC)
26,841 posts, read 57,851,863 times
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Quote:
Originally Posted by artillery77 View Post
No, but some call me half. My potential business partner is, and my wife...
Will the Vietnamese neighborhood support a franchise business?
(vs a locally grown and capitalized one)


In my view an insular community negates 90% of the reasons to go franchise.
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Old 07-13-2018, 02:59 PM
 
Location: Silicon Valley
2,747 posts, read 1,209,866 times
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Quote:
Originally Posted by MrRational View Post
Will the Vietnamese neighborhood support a franchise business?
(vs a locally grown and capitalized one)


In my view an insular community negates 90% of the reasons to go franchise.
Surprisingly, the corner supports 3 pizza franchises. There's also a Subway. Three of the four have been there 10+ years. The restaurant turnover is very rare on the corner and non-existent in the target plaza.

The location could be made to be very cute, with outdoor seating currently in place. It is a coffee place currently.

There's enough real Vietnamese restaurants that I wouldn't expect a Vietnamese chain to do well. Franchise tea places have done well, but there's way too much competition at the moment. However, a nearby Bill's Cafe has opened up and is doing amazingly well despite not being anything close to ethnic. There's a drought of....non-Asian restaurants in the area. Also, it's very difficult for places to go upscale. There's a narrow range of acceptable pricing on familiar foods. The price sensitivity on the familiar is tough to get around. It never fails to amaze me how a table full of people making 6 figures can be unhappy with someone for choosing a place that dares to charge too much for their Pho.

We become the once a month when you get that craving for something with good ambiance. A place to bring a date for something a little different. Something baked, a culinary treat, a bit of wine...a place to try something new and meet up with friends in a socially acceptable manner that doesn't require trotting downtown or going to Santana Row.

The thought behind the franchise was three-fold:
1. An existing name would bring in some demand for others, visiting or otherwise, who may be looking for other food.
2. I've heard, but don't know for sure, that equipment discounts are given to franchisor with some of the costs absorbed by the parent company. Having audited Hobart, I can imagine it makes sense that bigger purchasing groups can buy in bulk, save on costs and warehouse it....or even have the manufacturer sit on it. I don't know how much that is worth though.
3. Ideally, bringing on a chef who we could partner with and go it alone would be the best alternative. However we don't have that person. Given our lack of experience, we're wary of not knowing what we don't know. The hope is that a franchiser would fill in the gap. Once established, we could take our experience and apply it to future restaurants.

Right now, Google tells me you can choose from Denny's, Carls Junior or Costco food court for American food. They missed McDonalds, Burger King and Wendys.

A lot of companies here provide food for their employees. In the spirit of fairness, admins often juggle the food served so that no one group is over-represented. Treats are often brought to important meetings. Having an alternative that's good, and our combined network, could really bring in a good catering business. But before we get there, we need to properly establish a source.
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Old 07-14-2018, 01:42 PM
 
5,412 posts, read 3,386,979 times
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Quote:
Originally Posted by artillery77 View Post
Hey CD,

There's a spot that's going to open up in a plaza we know. It was previously a semi-naughty Vietnamese coffee place that got pinched for illegal gambling. It has nice road visibility, decent parking and with the faux generic 7-11 masquerade to the side, comes to about 4000 sf total.

The corner is Vietnamese, but with very few restaurants. The area is having a population boom of high density housing being built as a major train station is being put in nearby. To the north is a large Chinese population, but there are many restaurants catering to the crowd there. The rest is a mix of Filipino, Indian and Vietnamese. While the neighborhood has historically been 1st generation, the new units are being bought by 2nd generation tech workers. The average family income for the zip code is approximately $144K and rising.

Currently to the west is nothing, and where the station is being built with industrial beyond it, so the plaza, while full, didn't really get overbuilt. More retail and residential mixed is expected at the station site.

Pretty sure I know the area but I won't tell. "Boom of high density housing" is an understatement.


I don't think this is a mid-life crisis. I think you're an entrepreneur evaluating an opportunity.


The only happy franchise operator I've met was at Chick-fil-A.
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Old 07-23-2018, 11:38 AM
 
Location: Silicon Valley
2,747 posts, read 1,209,866 times
Reputation: 5047
Quote:
Originally Posted by fluffythewondercat View Post
Pretty sure I know the area but I won't tell. "Boom of high density housing" is an understatement.


I don't think this is a mid-life crisis. I think you're an entrepreneur evaluating an opportunity.


The only happy franchise operator I've met was at Chick-fil-A.
I couldn't bump you for a bit, but thanks. Someone will make money there, no doubt.
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Old 07-23-2018, 01:28 PM
 
9,291 posts, read 11,142,948 times
Reputation: 12464
Quote:
Originally Posted by PamelaIamela View Post
My research showed that for the average investor franchises are risky money pits, ball and chains, or both, but rarely good investments.. except for the parent company.
YMMV
I had a friend that owned 30 Dominos pizza stores. Yes it made great money but she sold it and vowed never again to own any franchise. You are enslaved to a bully (parent company).

She was charged by the box (if you buy 5000 boxes then you obviously made 5000 pizzas) so you get charged for fees based on the boxes. Parent company doesn't care if the boxes got wet or infested with ants and had to be thrown out. They forced their ingredients on you even if you could source better quality locally for less money. Company loved losing money campaigns like $5-6 pizza nights. Literally you could be making 50 cents on a $6 pizza and the parent company could care less and then charged you for advertising the money losing idea!
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Old 07-26-2018, 02:29 AM
 
403 posts, read 148,303 times
Reputation: 490
They also make you buy their kitchen equipment at full pop. If your area starts booming they will open up a corporate location down the road, stealing your sales, employees, etc. Plus, you have to worry about what thousands of other employees of the company might do to hurt the brand name. (John Schnatter of Papa John's....)

I'd open up an independent location of my own over a franchise every time, especially if it's in the food business. Buy your own equipment at auction, run your own specials, buy your own ingredients, and pay no franchise fees.
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