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nolang

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First I would like to say hello to everyone. I have read a lot of the post here and find them very informative.
A little background: A little over a year ago I purchased a “franchise” pizza business (5 total stores in the chain on different sides of town). Prior to me taking over the business it was actually sold to another person and at the last minute the buyer backed out. Leading up to the sale the previous owner had been here 15+ years and his last 6 month of owning it he let it run to the ground. Poor customer service, running debt up and simply running out of food. So the sales declined drastically. My question is I have been running it none stop and trying everything that I know to bring life back to it. I still struggle with purveyors only excepting cash and basically everyone treating me as if I am the previous owner. I have not taken a pay for over a year and I’m really feeling like its pointless. So back to the question, what do I need to look at if I would like to change the name, get out of a “franchise” telling me what I have to do, which they do not offer me anything in return. My thoughts is to basically start over with fresh menu, concept and brand. Any thoughts would be very appreciated.
I just don’t want to go another year beating my head for no reason. Was the boat already sinking when I got on board.
 
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Did you sign a contract with the franchise? If so what are the implications of violating that agreement?
 
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There is no Franchise Agreement in place as of right now. It is all a verbal agreement that I will follow there recipe, concept etc… (A friend of a friend type of arrangement) My biggest worry is that after changing the name after such a long period of time, business will drop. I do roughly between 25 and 30,000 a month now. But I have no freedom to make more because I follow the concept I have now. Also other stores run ridiculous coupons specials etc… That really make no sense and I have to honor their deals.
 
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Sound like you are caught between a “rock and a hard place”…If the situation you are in is a “sinking ship” you will have jump overboard and swim away…

The idea that sales will drop is a real fear…They probably will…But with a clean image/start and some effective marketing you can win back that business in short order…

If I can give you any advice, do not do a change “half ass”…Or some folks will not believe you and go elsewhere…Fresh decor, fresh branding, fresh recipes, etc., etc…

Good luck…

PS…There is tons of help here…Both from current members who will chime in and in the archives…And when you disagree with something, just step back and let it go…Then absorb all the good info you get and soldier on…
 
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Thank you for the feed back so far:

Royster I appreciate your one advice. Don’t do anything half way. That has been the problem the whole time with the previous owners. Do it cheap and don’t worry about quality. Everything from the floor to the food. I have done every type of begging to get previous customers back, but they simply refuse and go down the street.

Here is a thought just not in the Pizza biz but any biz…

Why don’t all of the independent business get together and form one corporation. If not for any other reason but to have buying power that the big 3 have. I am sure a lot of the business’s have a lot in common with the ingredients that they use. Do we not all buy flour. Imagine the yearly savings? Just a thought.
 
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  1. Five stores is not a franchise. It is a small local chain. If there is no agreement to operate under the name and no franchise agreement you are free to do what you want. Perhaps there is some obligation to use the recipe as long as you use the name but…
  2. It sounds to me like you get nothing from the organization in the way of cost savings and plenty of headaches from the recent history. Is there shared marketing?
  3. Since there is no “franchise agreement” the seller does not control your destiny and in particular can not take the phone number. The phone will not stop ringing when/if you make a change.
 
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We went thru a similar situation back in the 90"s. We were part of small chain / Franchise with around 5 or so stores and we did not feel we were getting any benefit from being part of the group. There was a loose franchise agreement in place but it was termed a "license agreement ". We decided to to jump ship and go out on our own. Within the first 6 months our sales dropped 30% and the franchise owner guy filed a 1 million dollar lawsuit against me. Good times 😦 But within 18 months our sales were back to even and I settled the lawsuit for $5000. ( $20000 in attorney fees BLEHH ) . Within 3 or so years we realized it was the best decision we had ever made even though it was rough at first.
 
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Go Big, or Go Home. You say you haven’t been able to take anything out, so either make wholesale changes to the name, the product, the ownership entity, etc. etc., or list it with a business broker, take your lumps and move on. You’re just compromising your mental and fiscal health by laboring on under this yoke of disfunction. What things would you do if you were starting from scratch…new dough recipe?, new sauce recipe?, an unafilliated name out front?. You apparently benefit very little from the local chain name, and in fact have probably been disserved by that relationship (cash only purchases), so get yourself a divorce (maybe check with an attorney first for a quick opinion, not accompanied by any research budget…i.e. cheap) and move on. The pain of short-term decreased sales may be real, but I’m convinced that, if you want to continue to own this place, you need to make some big changes…NOW.
 
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Okay, first I would like to say thank you for all of the feed back that I have received. I have decided after a lot of thought to go for it and make the change. I know it will not be tomorrow but I would like to start making plans to basically start from scratch. But first I will need to have the cash to make the change/ changes. I’m thinking that I should try and have enough cash flow to sustain me for at least 6 months plus have the cash to do it right and not half ***. It will probably require a complete over haul of the building and image. I basically have everything else as far as equipment and opening inventory goes.
Any thoughts will be appreciated since I have never came up with my “own ideas”. Ill probably use some of the ideas that are already working at my location and get rid of the ones that don’t. Again thank you for your comments and I look forward to hearing more.
One last thing, I believe that PMQ’s Think Tank is just off the hook. The people here have been nothing but supportive, and the wealth of knowledge is just priceless.
Thanks again.

Now where to start?
 
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I suggest that you start by thinking about your local market and what the opportunities are for the position of your business and how the location and facilities lend themselves to realizing the opportunity you choose.

“Quality, Price & Service: Pick any two” has been my tag for posts for some time. A little trite, but with a solid underlying truth. Who do you want to be? Different markets lend themselves to different business models. The layout and capacity of your store may limit your choices. Competition in one quadrant of the matrix my leave an opportunity in another. The nature and cost structure of indy stores leans toward the Quality/Service vs price especially if there are nationals in the market with lower costs than you have and a price driven marketing plan.

Once you choose a direction/market position to shoot for, many of the other choices regarding menu, marketing plan, hours of operation etc follow. The menu will also drive your choices about possible equipment needs.
 
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You have made the toughest decision in deciding to reinvent the store. Now you will want to interject your creative side in bringing about a store, a menu, a business plan and a commitment to that total new image and concept.

You didn’t tell us if you are currently a delivery only, delivery and pick-up or sit down service operation. If you have enough space to offer sit down service, you should consider it (or maybe only seating without table service?). When I say consider it, I don’t mean that I endorse it…only that it should be in the conversation. And if you have enough space for table seating, and decide to move in that direction, you will probably want to learn about the prospects for a beverage license that, at least, lets you serve beer…pizza and beer, what could be more natural. And how about your pizza “style”? Would Neapolitan Style, New York Style or New Haven Style be something that would sell in your market (and are there others that already sell those styles)? How about a new sauce (there are zillions of recipes online that you can test)? And your dough could be the single biggest change to consider…again there are plenty of dough recipes available through the internet and through the Dough Doctor (Mr. Lehman) here on the Think Tank. Don’t limit yourself…if you are going to make The Big Move, consider everything, but try to utilize your current equipment if possible.

I wish you all the luck possible, and I’m sure you can see that we are supportive.
 
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A little insight as to what my market consist of:
I have the big 3 pizza places with in a quarter of a mile of my location, one being two blocks away ,with other mom and pops around.
My customers are low income. So my peak days are around the 1st and the 15th of each month.
Currently I do offer pick up (30%) and delivery (65%) only, i do have seating for up to twenty people. I try not to have dine (5%) in for the simple fact that I have had to spray for bed bugs twice this year already. I took away public restrooms because of the drug problem I have been having and other illegal activity that was taking place in restrooms. When the health department comes in and questions it they are very understanding as to why and kind of look the other way.
The neighbor hood is kind of rough but for the most part I don’t have any major problems. My current customers don’t want me to close down and a very supportive.
Hours of operations is basically 10 am to 12 am except Friday and Saturday then we are open till 1.
As far as with the business relationship I have with my customers I do have some competitive pricing but where I try and excel is in customer service and quality product cause you just cant put a price on that.
Lunch time is a hit or miss on most days, majority of sales come from slices and a soda.
As for the menu we only have one type of crust. Thin cracker. We serve all the other basics, variety of subs, spaghetti, lasagna, chef salad, side salad, chicken wings, dessert bites.
I have a lot to consider and right now its really over whelming. But have started on a business plan trying to figure out what will work and what wont.
As always thank you for your thoughts on my problem and the support that you have given.
 
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