How would you guys handle this.

[AdrianG]

So, as I previously posted , I’m opening a stuffed pizza joint in a mexican city called Ensenada, in Baja. There’s a not single place in the state that sells this kinda of pizza , so I would be the first. Reviews are nothing but positive and everything is looking sharp.

I haven’t open yet but trough mouth to mouth marketing , I ended up getting the attraction of some potential investors, they want me to open places over the main cities in the state (around 3). This is pretty nuts for me because again, I haven’t even open my own place yet.

I don’t want to lose focus right now , I’m excited because of the offers but I’m not sure about having a partner right now.

Thoughts?.

 

[Daddio]

It is flattering to have people want you to open several locations because you have a good product and a good concept but there are some questions you have to answer before you jump in.

What would YOUR roll be if you have to deal with more than one store?

If you are the chief cook in the organization who will be doing that at the other locations?

What part would the investors play in the daily operation of multiple locations?

If they are purely investors leaving the operating duties to you, what are their expectations for a return on the investment?

Would you be better prepared to deal with multiple locations if you had a chance to work out the start up issues in a single location?

 

[AdrianG]

Great perspective Daddio.

 

[Piedad]

Daddio, I understand your words of caution, and I agree that if the first location isn’t killer, all could be lost. But please don’t forget the old adage to “strike while the iron is hot”. What I’m suggesting is that Adrian should do some quick thinking (probably with the assistance of a lawyer and an accountant) to fashion an agreement with the investors to accept their investment capital now, and place it in a war chest for future use (maybe agree that the planning and implimentation stages for the second location will begin within a reasonable time period, something like 10 months of opening the doors of the first location). The details of how future locations will be owned (perhaps a corporate structure, with varying percentages of ownership, salary structure for administrative functions, etc.) could all be ironed out now, with only the opening of other locations being delayed. My reasoning for acting to accept their offers now rests with the knowledge that people usually stay “hot” on investing for only a limited time before they start having second thoughts. If they love Adrian, and his concept, they should feel even better about their impressions when they learn that he is truly committed to seeing every location receive his best efforts for success. My only other immediate thought is that Adrian is the brain trust that created and fully understands this concept, and he should retain full operating control of the entity, or entities, that will own the second and third locations, with only “buyout provisions” (with detailed unambiguous formulas for establishing the dollar/peso amount that would effectuate the buyout) to protect the investors and take away that management function. Opportunities to fund two additional locations don’t come often, or easily, so I would like to see Adrian act now, and not feel sorry that he didn’t later. There are additional details to be worked out now, but opportunity is a fleeting element.

 

[Daddio]

Daddio, I understand your words of caution, and I agree that if the first location isn’t killer, all could be lost. But please don’t forget the old adage to “strike while the iron is hot”. What I’m suggesting is that Adrian should do some quick thinking (probably with the assistance of a lawyer and an accountant) to fashion an agreement with the investors to accept their investment capital now, and place it in a war chest for future use (maybe agree that the planning and implimentation stages for the second location will begin within a reasonable time period, something like 10 months of opening the doors of the first location). The details of how future locations will be owned (perhaps a corporate structure, with varying percentages of ownership, salary structure for administrative functions, etc.) could all be ironed out now, with only the opening of other locations being delayed. My reasoning for acting to accept their offers now rests with the knowledge that people usually stay “hot” on investing for only a limited time before they start having second thoughts. If they love Adrian, and his concept, they should feel even better about their impressions when they learn that he is truly committed to seeing every location receive his best efforts for success. My only other immediate thought is that Adrian is the brain trust that created and fully understands this concept, and he should retain full operating control of the entity, or entities, that will own the second and third locations, with only “buyout provisions” (with detailed unambiguous formulas for establishing the dollar/peso amount that would effectuate the buyout) to protect the investors and take away that management function. Opportunities to fund two additional locations don’t come often, or easily, so I would like to see Adrian act now, and not feel sorry that he didn’t later. There are additional details to be worked out now, but opportunity is a fleeting element.

You are misunderstanding what I was trying to convey in my post. Simply put Look Before You Leap! Do the due diligence and understand what everyone is expecting from the venture. I was posing just a few of the questions that one should have answers to on an endeavor like this. I have seen a few Think Tank members who jumped too soon and ended up under water. There are others who have taken the leap and been very successful.

 

[GotRocks]

Have good attorneys, get solid contracts with everything spelled out clearly.
Or you may end up taking it in the butt!