Quote: (03-14-2014 08:37 PM)hervens Wrote:
Quote: (03-14-2014 02:57 PM)Dr. Howard Wrote:
Ironically timed news as we were just talking Quiznos yesterday http://online.wsj.com/article/BT-CO-2014...09888.html
I think you guys need to put a put a bit less focus on the big picture, and scale down a little
The real question we should be asking is: Can you buy a domino's, or a Quiznos, or a Subway for 80-400k and realistically expect to make 100k+ in revenue.
For instance, in a high foot traffic street in the heart of downtown of my metropolitan, they have a restaurant space up for rent at 5k/month. How realistic is it to say that if you spend 150k to open up a subway in that space, you can get enough customers to turn in 90k+/year.
We should focus a bit more on the smaller picture, and a bit less on how well the stocks of Quiznos are doing.
Let's play a little hypothetical game. It's called "What Happens When My Franchisor Goes Bankrupt?" How well do you think your franchise will be doing when the franchisor company has difficulties in maintaining its supply chain due to burdensome debts? Or scales back advertising even though a portion of your royalties go to its mandatory ad fund? Or when you can't get out of your franchise agreement without giving up the restaurant completely because the Bankruptcy Court allows the DIP franchisor to reaffirm its contracts, and your lease contains covenants tying the location to the franchise, or the franchisor is your landlord? Or when you can't afford to sell the restaurant because nobody wants to buy a franchise that sits in Chapter 11, and "fair market value" for a store sale as defined in your agreement is a standard multiplier of revenues that have plummeted due to cutbacks?
Bottom line: if you think about this business at all, you need to think about "big picture" issues like the health of your franchisor. These are generally 10-25 year contracts you're entering that are grossly one-sided. Do your homework.