The Righteous H
New member
- Jul 17, 2010
- 0
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Need your input guys. My brother has an idea for a fast food franchise in his region that would more or less mimic something we have on the east coast but better fit it to the personality and values of the people where he now lives. He sees pentup demand, based on what I have seen of the place, I believe it is there.
He’s got no time to run it, as his job incentivizes him to work just about 7 days a week. He’d work 8 days a week if he could.
He wants me to basically give it a go on his behalf and he will pay for it (he’s loaded and his money is sitting in a savings account because he doesn’t trust stocks or bonds) - I’ll be going to business school in 1 years time and I’m itching to leave India fairly soon, so I can either go traveling or I can do this project with my brother. I think either or would be fine with me.
He’s willing to fund it initially and give me 50 percent of the business in exchange for my sweat equity. He’s got more capital to put in himself if the concept, which was his idea, works and also plenty of potential capital from his existing business partners who are also cashed up, love the idea, but do not have the time to do it themselves. So lets assume seed capital is sorted.
My background is real estate investment so I’ll help him pick those sites which he will own separately from the business and rent to us. We see this as a very important decision as it will greatly effect revenue, but that is my department, and I have lots of experience there. We’re thinking of a test case with two stores at least (we want people to see us as a franchise, even if only locally). He’s happy to own that land and rent it out to someone else if our project fails.
I’m primarily worried about two things: 1) Will the concept work (we believe it will) and 2) execution. I need advice on the execution part. I do not anticipate competition to be a great problem in the near term. With regards to new entrants, If we are first, it is unlikely that someone else will follow soon. In terms of initial cash outlay I was thinking 1 million for the two stores (exclusive of the price of land) would be more than adequate.
So, I need general advice on any of the following topics - right now I am in India so I want to educate myself as much as possible:
1. What’s the best way to replicate an exisiting franchise cheaply, efficiently.
2. Learning the business, I was considering getting a part time job at the business we would replicate just to spy and see what I can learn about the business before I commit his money and make any mistakes and sunk costs. Good idea or waste of time? I wonder if they will be impressed by my CFA candidacy? My buddies dad, who owned Blue Cross and Blue Shield for NY, once told me that he learned everything he ever needed to know about business running his family bar up to his early 30’s. So I figure i’d do the same for a bit part time.
2. Are there companies/consultants that specialize in helping you source, create, and design a franchise? It would be great if I could just hire someone to basically give us a whatever we need to start going in terms of of POS, food sourcing, retail design etc. I don’t need anyone expensive, but just “Hey, here’s 50 grand, take our concept and order whatever we need and ship it to us. Thanks.”
I imagine there must be a whole industry that does this? I just do not know what it is called. If not then one of you should create it. Basically I want the sourcing capacity that a big franchise could give us, without having all the strings attached via using their brand. (Bargaining power of suppliers) I’d rather pay a one time fee to get these things done and test the concept.
4. My brother has close ties with local contractors to build it. I’ve got good experience to make sure we don’t get hosed.
5. Any good books to read. Any good research, stats, etc on what kind of money franchisees and franchises earn. I’d really like to get a good idea of the good and the bad and the ugly of the finances there.
6. We are also considering just taking the easy way out and buying a franchise from an existing player. My brother’s theory is that basically rich people need income but do not want to work so they get these franchises to keep them wealthy. We are trying to understand the advantage and disadvantages of going it alone or with the franchise.
Feel free to flame away and thanks in advance!
-CT
He’s got no time to run it, as his job incentivizes him to work just about 7 days a week. He’d work 8 days a week if he could.
He wants me to basically give it a go on his behalf and he will pay for it (he’s loaded and his money is sitting in a savings account because he doesn’t trust stocks or bonds) - I’ll be going to business school in 1 years time and I’m itching to leave India fairly soon, so I can either go traveling or I can do this project with my brother. I think either or would be fine with me.
He’s willing to fund it initially and give me 50 percent of the business in exchange for my sweat equity. He’s got more capital to put in himself if the concept, which was his idea, works and also plenty of potential capital from his existing business partners who are also cashed up, love the idea, but do not have the time to do it themselves. So lets assume seed capital is sorted.
My background is real estate investment so I’ll help him pick those sites which he will own separately from the business and rent to us. We see this as a very important decision as it will greatly effect revenue, but that is my department, and I have lots of experience there. We’re thinking of a test case with two stores at least (we want people to see us as a franchise, even if only locally). He’s happy to own that land and rent it out to someone else if our project fails.
I’m primarily worried about two things: 1) Will the concept work (we believe it will) and 2) execution. I need advice on the execution part. I do not anticipate competition to be a great problem in the near term. With regards to new entrants, If we are first, it is unlikely that someone else will follow soon. In terms of initial cash outlay I was thinking 1 million for the two stores (exclusive of the price of land) would be more than adequate.
So, I need general advice on any of the following topics - right now I am in India so I want to educate myself as much as possible:
1. What’s the best way to replicate an exisiting franchise cheaply, efficiently.
2. Learning the business, I was considering getting a part time job at the business we would replicate just to spy and see what I can learn about the business before I commit his money and make any mistakes and sunk costs. Good idea or waste of time? I wonder if they will be impressed by my CFA candidacy? My buddies dad, who owned Blue Cross and Blue Shield for NY, once told me that he learned everything he ever needed to know about business running his family bar up to his early 30’s. So I figure i’d do the same for a bit part time.
2. Are there companies/consultants that specialize in helping you source, create, and design a franchise? It would be great if I could just hire someone to basically give us a whatever we need to start going in terms of of POS, food sourcing, retail design etc. I don’t need anyone expensive, but just “Hey, here’s 50 grand, take our concept and order whatever we need and ship it to us. Thanks.”
I imagine there must be a whole industry that does this? I just do not know what it is called. If not then one of you should create it. Basically I want the sourcing capacity that a big franchise could give us, without having all the strings attached via using their brand. (Bargaining power of suppliers) I’d rather pay a one time fee to get these things done and test the concept.
4. My brother has close ties with local contractors to build it. I’ve got good experience to make sure we don’t get hosed.
5. Any good books to read. Any good research, stats, etc on what kind of money franchisees and franchises earn. I’d really like to get a good idea of the good and the bad and the ugly of the finances there.
6. We are also considering just taking the easy way out and buying a franchise from an existing player. My brother’s theory is that basically rich people need income but do not want to work so they get these franchises to keep them wealthy. We are trying to understand the advantage and disadvantages of going it alone or with the franchise.
Feel free to flame away and thanks in advance!
-CT