Need advice right away

I have written a couple of times about my situation as a Toarminas franchisee. However, I have not been able to sell my store as it does nto make a profit.

I am in the position to move my store to a new location that is set up with a full kitchen. It is currently occupied by a caterer who will stay and share the space with me. He is mostly there during the day and I don’t currently open unitl 3pm. He is in a strip type building next to a Subway sub shop. I am in a builiding with an office next to me and no foot traffic. I think the location itself is better. I can expand my menu to include fresh pastas as well as fried foods. The rent and utilities I pay now total about $2100 a month. I will be splitting about the same amount with the caterer so I will be spending about $1100 per month for a larger location.

The Franchisor has also offered to let me out of the franchise agreement, but his demand is that I not sell 24" pizzas. There are 2 other stores in my area that do sell 24" pizzas. A couple folks I talked to asked the same thing and that is “does he have some kind of patent on a pizza size?”

I can be moved and open in less than 2 weeks under a new name. But I don’t know if that is wise. 24" pizzas are about 35-40% of my business. Would you share your thoughts with me on this please. I could really use your advice here.

PS - Sales are now about $2500 a week. Franchise target FC is 36% and I run about 39% including cleaning supplies, paper products & the 4% royalty. My labor runs about 22%

Talk to the people at lloyd pans and have them make a 23 1/2 pan.
so you are not selling 24" pizzas.

What if you agree to his terms, and then sell 20" or 28" pies?

Have you gone over the franchise agreement with a fine tooth comb to make sure he is living up to each and every one of his obligations?..Also, have you looked over the prospectus to see if there was anything false and/or misleading in it that could be used to “void” the agreement?..Good luck…RCS…

His agreement will say I can’t make larger than a 16" or 18" pizza

Kyle

Fine, make sure it says 16" or 18" RADIUS and you’re good to go :). I doubt the guy knows the difference between radius and diameter. :slight_smile:

wow thats clever

Kyle,

$2500 a week in sales seems about the lowest level you could do just from opening your doors, in a decent size town. Cutting your rent in half for the month is very appealing. As well as having the option to expand your menu. How dedicated are you to the pizza shop? How much have you learned from the franchise group? What functions do they preform? Are you ready to start doing those functions yourself? Do you have a good relationship with your distributor?

Scott,

Quite frankly I have not been that dedicated. I found out early that I had been misled about the store and the money it was making. I decided that if I was not gonna get paid I wasn’t gonna work my ass off at it. I have been ruined financially by this venture. If someone walked up to me today and offered my $40,000 I would hand them the keys no questions asked.

Just as an FYI our goal as a franchise this year is to get to avg store sales of $5000 a week. Then to get to $10,000 a week. Only one store has done $10,000 in a week and it is not normal. Several stores are at $3500-$4000 a week.

As for what I have learned from them, I gotta say not a whole heck of a lot. They dropped their marketing program when I got the black book and started doing some million dollar letters with some level of success (about a 4% return) They also adopted my monthly postcard mailings to current customers. So other than collecting their 4% from me I can’t think of much they do for me.

As for functions they perform, well they did provide me a POS program, but I understand that there are a few inexpensive POS systems out there. Point of Success is one I have heard of and if I am not mistaken it costs about 500 or 600 and includes Big Daves Foodcostpro. I would probably go with something like that to start with.

I do have a decent relationship with my distributor. I asked him about pricing if I left the franchise and he told me not much would change and any changes would be pennies not dollars. They will continue to work with me if I so choose.

Hope that answers some of the questions/clarifications you were looking for.

Kyle

Hello Kyle
Man do I feel your pain since I am in a same boat with you. This franchisors have not ethics and values when it comes to taking money and some ones life dreams away. When you are intrested in them before signing they show you their best side, promise you all the help and success, and yes marketing is gona be priority by them. Soon as you sign they get your money real game begain by ignoring , droppping you down, and setting this goals for weekly sale out of you know what of their a…

Kyle, if you can get out of contract than its best thing for you, there is no point of paying them royalty from your pocket while you are loosing your shirt. If I will be you dont open any store right now specialy in your neighbourhood, you had seen its soft bussiness side . Go back to work for some good company, save money and then find non franchise pizza store with good net income that you can purchase. That is my plan once I get out of this mess. We have lost almost $ 300K inthis time with this morons.

One possitive thing come out of this is meeting good and carring friends like you on this PMQ site… people are gust so much supportive and cool.

Good luck
KEEP POSTED
Jayp

I was going to say 25"!!!

What about your current lease? Breaking it isn’t going to be an issue? What kind of notice are you required to give them?

I have been month to month since December. I talked to the landlord and he said since I was required to give him 90 day notice that he was keeping my security deposit ($1500) But I looked in the lease and there is no such requirement. So I will be talking to my lawyer.

JAYP made a comment about how franchisors give you the red carpet treatment and then dump on you. I have been on both sides of the fence over the years. In my opinion I think one of the most valuable things a potential franchisee can do is talk to as many of the existing franchisees as possible. You will usually begin to develop a pretty accurate picture of what kind of company with whom you are dealing. Franchisees can usually tell you more about the operating numbers and returns as well. Franchisors are sometimes limited in what they can legally say unless they have audited statements.
by talking to franchisees you will also get a better feel for the culture of the company. Ask questions and listen carefully to the answers both verbal and non-verbal. Try this…approach customers of these stores as they are leaving and pretend you are a new potential customer. Hey, I am thinking about eating here. How is the food and service? Not easy work and it takes time but it could save you thousands of dollars and mucho stress. Go a step further if you are dead serious and ask a franchisee for a job. Work for nothing if you have to; it will be worth it. You don’t need access to recipes or manuals, you just want to get a feel for the work and whether it suits your talents and personality.
Or, you could save time and money and go straight to a psychiatrist to find out what is messed up inside you that makes you want to get into the food business. Those of us already in the business are lost souls but that should not prevent us from trying to save others.

Landlord: "Since you << insert whatever ‘straight-faced’ assertion of malfeasance here that landlord thinks they can make stick>>, we are keeping your entire security deposit.

Tenant then writes 10-day demand letter requesting a written description of the violation behavior and reference to lease. Consequences of refusal to return full deposit or credible proof of forfeiture of said deposit is legal action in (most likely small claims) courts as well as press release to media outlets.

Kyle,

You’re in a very interesting situation. As a fellow franchisee I hate to say this, but if your company does not offer a brand that will generate sales growth then it’s not worth it to be a franchisee for that company. It gets you no where and you pay royalties for what?

I’ve read your situation and to be quite honest, I don’t think you can get much worse in the sales category. After previous posts it looks to me that this franchisor unfortunately, is not going to generate many (if any) new franchised locations in the future so the brand imaging is poor to say the least. Another thing I read was:

The Franchisor has also offered to let me out of the franchise agreement, but his demand is that I not sell 24" pizzas. There are 2 other stores in my area that do sell 24" pizzas. A couple folks I talked to asked the same thing and that is “does he have some kind of patent on a pizza size?”

If he has offered to let you out of the agreement you should try to hold your smile and give you best poker face as you sign the documents letting you out of the agreement. Once it’s signed and filed you should jump up and down like you’ve just won the lottery because you’ve probably made one of the smartest business decisions you’ll ever make. Your sales will naturally increase with the name change. Make sure you keep your phone number so that regular customers will still order from you. The best part about the scenario is that you won’t be paying royalties on these sales and you can apply the savings towards advertising to get you going more quickly into the right direction. Also, as previous posters elluded to, start selling a 26" pizza and market the Hell out of it.

-J_r0kk

Just wanted to give a quick update. I did take my franchise agreement and offering circular to a lawyer. He is a partner in the firm. He looked it over and then we walked down the hall to a colleague of his. The colleague was a lawyer for A&W restaurants in the past. He also looked at the paperwork and they agreed that since the offering circular which I was given in November of 2005 had financial statements from 1997, unaudited at that, plus since I had not been provided training and since the franchise is not doing any marketing, I could easily get out of the agreement without having to give up my 24" pizzas and without having to give up the phone numbers either.

On top of that my lawyer said that if the franchisor wants to play hardball he is willing to represent all of the franchisees in a lawsuit to pull out of the franchise and he will do it on a contingency basis!!!

My attornney was ready to rumble! Of course he is a friend of the family and knows how bad I have been burned here so he feels bad for me anyhow.

Any further thoughts are appreciated!

Kyle

Daddio has a great idea there,but I would just use same pans and advertise a 241/2’’ Pizza biggest in da area! Wow now that would seperate you from the rest and you would still be upholding the contract.

                                Niccademo