r2i forum

Does anybody on the forum have experience with owning/operating ice cream/frozen yogurt franchise in US such as Coldstone creamery/pinkberry/Baskin robbins etc?

My specific questions:
How did you finance it?
What was the location and did you/are you making profit?
What are the most important/critical factors for running it successfully?
Would you recommend going with brand name franchise or mom and pop type shop?

The ones that are setup in a block with a giant anchor store like Costco, or Target will have a decent amount of foot traffic and will do well. The only issue I have with a food franchise is the amount of time and effort it takes and the low payoff. One cannot hire a well paid manager who needs to manage the store and the minimum wage college students. One screwup one day in terms of quality, can do irreparable damage in the days of Facebook. I know a person who had to sell his Quiznos franchise, the pay off was too little to make a living. The coldstone next door to our place, went bellyup when the anchor store closed.

My CPA gave me a few gems of advice. she said 75% of engineers talk of starting a food franchise as a retirement plan or think of it as easy plan with easy life. It is 24x7 work 365 days, with relatively low returns. IMHO, if one were to put that much effort at work, the bonus would be 2 times this pay off.

R2MyOldWorld;463698Does anybody on the forum have experience with owning/operating ice cream/frozen yogurt franchise in US such as Coldstone creamery/pinkberry/Baskin robbins etc?

My specific questions:
How did you finance it?
What was the location and did you/are you making profit?
What are the most important/critical factors for running it successfully?
Would you recommend going with brand name franchise or mom and pop type shop?

Do they have business in winter or their profit start melting when outside it start freezing ?

No experience here. So i can't help with your questions.

I looked to invest in a sandwich franchise operations a while ago and found high rate of failures. The ones which made profit were making 20-30k profit per year or they were staffed by family members to save on labor cost.

Why icecream/yogurt franchise? Sales are seasonal to some extent and people's interest wane after few visits.

Couple of years ago, coldstone creamery was a big hit. Now they send coupons to attract customers.

Looks like sweet frog is popular this year in my neck of the woods.

With setup cost of 300-400k, 40k franchise fee and additional 7-10% license+marketing fees, these franchise deals appear to be sure profit for the company with the franchisee taking all the risk.

Also it's doubtful if one can be absentee owner to make these franchises profitable.

Good luck and let us know :)

One of our friends had a Marble Slab franchise in Dallas in a real busy strip mall. They hardly every broke even and had to close shop after a couple of years. Husband was in a fulltime job and wife was taking care of the business. They had such a high turnover that husband frequently used to take off from work to save his investment (eh...his marriage). Its a rocky road my friend (no pun intended)!!

Chakraan;463729Do they have business in winter or their profit start melting when outside it start freezing ?

Winter?? There is no such thing in southern california. We enjoy coldstone delicacies in december afternoons just as much as the summer :)

You are right, agree that icecream franchise is very seasonal in most other areas. :)

desipardesi;463730
Why icecream/yogurt franchise? Sales are seasonal to some extent and people's interest wane after few visits.

Reason for icecream/frozen yogurt franchisee compared to lets say fast food chain (like McD or Chipotle etc) is equipment cost would be less and labor costs would be less (as you dont need skilled cooks, not done any study yet but just a guess). We are just in discovery phase right now. We might end up pursuing it or dropping the idea altogether.

GutsyGibbon;463726
My CPA gave me a few gems of advice. she said 75% of engineers talk of starting a food franchise as a retirement plan or think of it as easy plan with easy life. It is 24x7 work 365 days, with relatively low returns. IMHO, if one were to put that much effort at work, the bonus would be 2 times this pay off.

Well, whole idea is to eventually get away from 'regular job' and be your own boss even if that meant some financial loss during early years.


dixit,
I heard it from many people that it has very high rate of failure and it takes a lot of involvement from owner. But there must be something about running these places with profit. After all you see them everywhere you go. Just trying to find out what is it that makes it profit making vs loss making.

R2MyOldWorld;463753Reason for icecream/frozen yogurt franchisee compared to lets say fast food chain (like McD or Chipotle etc) is equipment cost would be less and labor costs would be less (as you dont need skilled cooks, not done any study yet but just a guess). We are just in discovery phase right now. We might end up pursuing it or dropping the idea altogether.

Well, whole idea is to eventually get away from 'regular job' and be your own boss even if that meant some financial loss during early years.

A hair cut place like Great Clips is a good franchise, if multiple are taken. Many great clip franchisees open 3 or more stores, some 5, some 10 and more. These stores may generate small cash flow say about 30K to 50K a year, but when multiple are run, then the cash flow multiplies. You can run this type of business by spending maybe 4 to 6 hours per store per week.

There are no perishables in this business, there is no seasonal issues and it is recession proof business.

Desi;463754A hair cut place like Great Clips is a good franchise, if multiple are taken. Many great clip franchisees open 3 or more stores, some 5, some 10 and more. These stores may generate small cash flow say about 30K to 50K a year, but when multiple are run, then the cash flow multiplies. You can run this type of business by spending maybe 4 to 6 hours per store per week.

There are no perishables in this business, there is no seasonal issues and it is recession proof business.

Thanks. Believe it or not, this is how discussion started and we ended up with ice cream franchisee. non perishable item is the biggest plus with this business I guess.

R2MyOldWorld;463755Thanks. Believe it or not, this is how discussion started and we ended up with ice cream franchisee. non perishable item is the biggest plus with this business I guess.

Haircut saloons are pretty tough to run. There's high turnover of employees and the folks who work there do not stay for long. The good ones go independent and rent booth is nicer saloons.

The ones who work in great clips, supercuts are fresh ones out of hair cutting school. Hair cutting is highly competitive field.

Before you start a franchisee, you may want to work in one to get a first hand experience.

If all these franchisee business were higly profitable and easy money makers,then why would they even franchise them out. The concept of franchising is for someone else to take all the risk and do the hard work.

You mentioned McD earlier. They won't even consider you. They only give franchises to existing franchisee as each of them cost a few million to build and operate.

All these food franchisees don't give you exclusive right to a territory. So there's nothing stopping them from giving another franchise license just across the road. They make money in initial licensing +setup cost. And they don't lose the 7% license cost whether people will eat in your place or your competitor across the street.

And if you still want to get into it, consider buying an existing franchise than setup something new. Almost all places are saturated when it comes to fast food.

And almost all franchisees have some sort of legal case going on against the franchiser. Few years ago, a desi committed suicide after running a quiznos franchise in texas, if i remember right. That was big news. He wrote an open letter before committing suicide which caused a huge backlash.