Our office was recently approached by an individual who had bought development rights to a sub/pizza franchise for the Indy metro area. It was a small franchise - 42 units nationally - and virtually no presence in the Midwest. The owner had simultaneously opened two units in Indianapolis last spring at a cost in excess of $900,000. Unfortunately, they were losing money at a very brisk rate and the owner could not keep the doors open.
The main lessons from this tale are three fold:
Don't assume that a concept that is popular on either the east or west coast will successfully transfer to the Midwest or vice versa. Be very aware of the regional cultural and taste differences.
It costs a great deal of money to establish a new concept in a new area! Be prepared for the operating losses until your concept catches on with the public.
Don't double down on your bet. Open one store and see if you can establish the concept and then grow if your first unit prospers.
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