2009 Recovery Act
(click on title to view article online)
About the ARC Loan Program
ARC loans can be used to make payments of principal and interest, in full or in part, on one or more existing, qualifying small business loans for up to six months. ARC loans provide an immediate infusion of capital to small businesses to assist with making payments of principal and interest on existing debt. These loans allow borrowers to redirect cash flow from making loan payments to investing in their businesses, to help sustain the business and retain jobs. For example, making loan payments on existing loans with proceeds from an ARC loan can allow a business to focus more funds on core operations, such as buying inventory or making payroll.
ARC loans are interest-free to the borrower, carry a 100 percent guaranty from the SBA to the lender, and require no fees paid to SBA. Loan proceeds are provided over a six-month period and repayment of the ARC loan principal is deferred for 12 months after the last disbursement of the proceeds. Repayment can extend up to five years.
The best candidates for ARC loans are small businesses that in the past were profitable but are currently struggling, yet have been making loan payments or are just beginning to miss loan payments due to financial hardship.
ARC loans are made by commercial lenders who are SBA participants. The SBA will pay these banks a monthly interest rate throughout the term of the loan. Lenders can find more information here. Non-SBA lenders can easily become SBA participants by working with their nearest SBA district office. Businesses interested in applying for an ARC loan should first contact their current lender.
ARC loans will be offered by some SBA lenders for as long as funding is available or until September 30, 2010, whichever comes first.
Friday, May 29, 2009
Thursday, May 28, 2009
EMBARGOED To 1 PM U.S. plan for auto dealer, RV relief
May 28, 2009
EMBARGOED To 1 PM U.S. plan for auto dealer, RV relief
(click on title to view article onlin)
Star report
The U.S. Small Business Administration plans to offer government guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat and other dealerships under a new pilot program announced in Kokomo today by SBA Administrator Karen Mills.
The so-called dealer floor plan financing will be available beginning July 1, according to Mills.
She announced the new program during a visit to Howard County with Ed Montgomery, President Barack Obama’s director of recovery for auto communities and workers.
“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” Mills said. “Floor plan financing can offer some dealerships the opportunity to get through these tough economic times by allowing them to keep their inventory and cash flow intact, as well as save the jobs these small businesses provide.”
Floor plan financing is a line of credit that allows dealers to borrow against their inventory, and then repay that debt as they sell their inventory or borrow against the line of credit again to add new inventory.
-Indystar.com
EMBARGOED To 1 PM U.S. plan for auto dealer, RV relief
(click on title to view article onlin)
Star report
The U.S. Small Business Administration plans to offer government guaranteed loans to finance inventory for eligible auto, recreational vehicle, boat and other dealerships under a new pilot program announced in Kokomo today by SBA Administrator Karen Mills.
The so-called dealer floor plan financing will be available beginning July 1, according to Mills.
She announced the new program during a visit to Howard County with Ed Montgomery, President Barack Obama’s director of recovery for auto communities and workers.
“Countless small businesses, including dealerships, across the country are facing significant challenges as a result of the uncertainty in the auto industry,” Mills said. “Floor plan financing can offer some dealerships the opportunity to get through these tough economic times by allowing them to keep their inventory and cash flow intact, as well as save the jobs these small businesses provide.”
Floor plan financing is a line of credit that allows dealers to borrow against their inventory, and then repay that debt as they sell their inventory or borrow against the line of credit again to add new inventory.
-Indystar.com
Friday, May 22, 2009
Congratulations to my Son!
Congratulations to my son Carson upon his graduation on May 9 from the University of Central Florida Rosen College of Hospitality Management. Carson is currently working for JW Marriott in Orldano.
Thursday, May 21, 2009
Meridian Valuation Services
Looking for a business valuation, equipment appraisal or equipment brokerage? Check out Meridian Valuation Services. I have known and worked with Ed for many years and can highly endorse his professionalism, hard work and honesty.
Click HERE to view the website.
Click HERE to view the website.
Wednesday, May 20, 2009
25 Worst Franchises to Buy
25 Worst Franchises to Buy
Submitted by Mr. Blue MauMau on Sat, 2009/01/24 - 08:35
LEXINGTON, Ky. (Blue MauMau) - Sub shops, car care and quick printers dominate the list of worst franchises to buy, according to a Small Business Administration list given to lenders.
Blue MauMau once again gained access to this banking list and is publishing it to help inform franchise investment decisions. Taken straight from an SBA's loan performance list covering the years from 2000 to 2007, this is the list that the agency provides loan officers of its most trusted lenders and banks throughout the country.
This is how the list is used. It is a quick filter of loan risk, of what franchise brands to navigate around and what looks less risky. For example, with a 48% failure rate on SBA loans, Mr. Goodcents Sub has the dubious honor of being at the top of worst investments. Compare the 48% to another sub chain, Subway's, which had only 4% failures out of 1,974 disbursed loans.
The good news for Quiznos is that it didn't make the worst 25 list. However, it was #26, worthy of a dishonorable mention. Blimpie, a sub maker that belongs to Kahala Corp's group of franchising firms, ranked considerably worse at #5.
The loan officer and the franchise buyer realize that there are thousands of franchise opportunities to buy from, so why mess with the riskiest? Unless there is a miraculous reason why concepts with high failure rates are a great investment, the franchise buyer may want to move to other brands with lower failure rates.
Each franchise brand listed has Small Business Association loans with at least 51 disbursements, a substantial number. Having larger figures for the disbursement of loans filters out most of the small franchise systems. What is left is largely major franchise brands with the worst failure rates of nearly 115 big brand concepts.
These are the worst franchise brands, where franchise owners struggled more than others to pay back their SBA loans. To put it another way, this group is the lowest performing quintile (20%) by loan failure rate of major franchise brands in the SBA list.
So here it is: The list of 25 of the worst franchise investments, ranked from worst to bad, from the viewpoint of being a lender of SBA loans and wanting to ensure the best chance of having the loan repaid by franchisee borrowers.
Click HERE to view the list/online article.
Submitted by Mr. Blue MauMau on Sat, 2009/01/24 - 08:35
LEXINGTON, Ky. (Blue MauMau) - Sub shops, car care and quick printers dominate the list of worst franchises to buy, according to a Small Business Administration list given to lenders.
Blue MauMau once again gained access to this banking list and is publishing it to help inform franchise investment decisions. Taken straight from an SBA's loan performance list covering the years from 2000 to 2007, this is the list that the agency provides loan officers of its most trusted lenders and banks throughout the country.
This is how the list is used. It is a quick filter of loan risk, of what franchise brands to navigate around and what looks less risky. For example, with a 48% failure rate on SBA loans, Mr. Goodcents Sub has the dubious honor of being at the top of worst investments. Compare the 48% to another sub chain, Subway's, which had only 4% failures out of 1,974 disbursed loans.
The good news for Quiznos is that it didn't make the worst 25 list. However, it was #26, worthy of a dishonorable mention. Blimpie, a sub maker that belongs to Kahala Corp's group of franchising firms, ranked considerably worse at #5.
The loan officer and the franchise buyer realize that there are thousands of franchise opportunities to buy from, so why mess with the riskiest? Unless there is a miraculous reason why concepts with high failure rates are a great investment, the franchise buyer may want to move to other brands with lower failure rates.
Each franchise brand listed has Small Business Association loans with at least 51 disbursements, a substantial number. Having larger figures for the disbursement of loans filters out most of the small franchise systems. What is left is largely major franchise brands with the worst failure rates of nearly 115 big brand concepts.
These are the worst franchise brands, where franchise owners struggled more than others to pay back their SBA loans. To put it another way, this group is the lowest performing quintile (20%) by loan failure rate of major franchise brands in the SBA list.
So here it is: The list of 25 of the worst franchise investments, ranked from worst to bad, from the viewpoint of being a lender of SBA loans and wanting to ensure the best chance of having the loan repaid by franchisee borrowers.
Click HERE to view the list/online article.
Tuesday, May 12, 2009
Starting Over—as an Entrepreneur
Starting Over—as an Entrepreneur
For laid-off or worried workers, launching a business may seem the best path to survival. Here are the stories of five people who are taking that route—and the lessons they’ve learned so far.
By KELLY K. SPORS and RAYMUND FLANDEZ
Tough times breed a different kind of entrepreneur.
With the economy tanking, lots of people are striking out on their own. Some never thought of starting a business until they got laid off. Others kicked around the idea but never found the time or the passion to pursue it. Now, launching a start-up seems like a better bet than taking on an endless job hunt.
Call them entrepreneurs by necessity. And while some of them have waited years preparing for just this moment, others may not be quite so ready or eager to make the move.
“I think we’re going to see a lot of businesses started by people who otherwise would not have started businesses” in better times, says Bo Fishback, vice president of entrepreneurship for the Ewing Marion Kauffman Foundation, a Kansas City entrepreneurial-research organization. “Necessity-driven entrepreneurship can be a powerful motivator.”
This new crowd faces lots of obstacles. Banks and investors are handing out a lot less money these days, especially to first-timers. What’s more, necessity entrepreneurs have often done less of the spade work than other entrepreneurs—in part because they weren’t thinking that a layoff was imminent. And the fragile economy makes just about any new company a chancy proposition.
So, how are these new entrepreneurs faring? To get a sense of it, we talked to five people who recently started—or tried to start—new ventures because their job picture changed. We found that they often had to struggle to find their footing and adjust to the demands of entrepreneurship. But most also found an unexpected passion for flying solo.
Here are their stories....
Click HERE to view the rest of the article.
For laid-off or worried workers, launching a business may seem the best path to survival. Here are the stories of five people who are taking that route—and the lessons they’ve learned so far.
By KELLY K. SPORS and RAYMUND FLANDEZ
Tough times breed a different kind of entrepreneur.
With the economy tanking, lots of people are striking out on their own. Some never thought of starting a business until they got laid off. Others kicked around the idea but never found the time or the passion to pursue it. Now, launching a start-up seems like a better bet than taking on an endless job hunt.
Call them entrepreneurs by necessity. And while some of them have waited years preparing for just this moment, others may not be quite so ready or eager to make the move.
“I think we’re going to see a lot of businesses started by people who otherwise would not have started businesses” in better times, says Bo Fishback, vice president of entrepreneurship for the Ewing Marion Kauffman Foundation, a Kansas City entrepreneurial-research organization. “Necessity-driven entrepreneurship can be a powerful motivator.”
This new crowd faces lots of obstacles. Banks and investors are handing out a lot less money these days, especially to first-timers. What’s more, necessity entrepreneurs have often done less of the spade work than other entrepreneurs—in part because they weren’t thinking that a layoff was imminent. And the fragile economy makes just about any new company a chancy proposition.
So, how are these new entrepreneurs faring? To get a sense of it, we talked to five people who recently started—or tried to start—new ventures because their job picture changed. We found that they often had to struggle to find their footing and adjust to the demands of entrepreneurship. But most also found an unexpected passion for flying solo.
Here are their stories....
Click HERE to view the rest of the article.
Monday, May 11, 2009
Price of cup of Coffee Rising--What's Next?
Shortages stir coffee and sugar prices
By Javier Blas and Jenny Wiggins in London
Published: May 10 2009 22:30 Last updated: May 10 2009 22:30
Caffeine addicts face higher prices for their daily fix as the wholesale cost of both coffee and sugar rise sharply because of poor crops and robust demand.
“We are in a dangerous situation,” Andrea Illy, chief executive of Italy’s leading coffee company, told the Financial Times, warning that prices could “explode” due to supply shortages.
His comments echo those of other industry players – and point to a sharp shift in sentiment among analysts.
Until recently, it was widely assumed that the global economic crisis would damp consumption and prices for coffee. However, that forecast proved wrong, since demand for coffee has remained high, even while consumers have moved from cafés to home drinking.
International coffee prices last week hit a seven-month high, rising to $1.28 per pound, up 22 per cent from their December low, in New York trading.
Meanwhile, the spot price of Colombian coffee – which commands a premium because it is sought by gourmets – jumped to almost $2.20 a pound, a 12-year high, due to supply constraints.
The crop in Colombia was damaged by heavy rains and the scarcity of supplies from the country is now “absolute”, says Néstor Osorio, head of the International Coffee Organisation.
Kraft, owner of the Maxwell House coffee brands, raised retail prices on its Colombian blend by almost 19 per cent last month due to the rising prices of Colombian coffee beans. Nestlé declined to comment on whether it has been raising prices on Nescafé.
Separately, sugar prices in New York and London rose last week to their highest in almost three years. White sugar prices rose above $450 a tonne, a 52 per cent gain from mid-December, as traders bet that India, the world’s largest consumer, will require hefty imports to compensate for the failure of the local crop.
Swings in Indian sugar output, which move the country back and forth from exporter to importer, are a critical factor in global prices. Traders forecast that the country’s output will drop 40 per cent to about 15m tonnes in the 2008-09 season, well below the country’s consumption of about 23m tonnes a year.
Peter de Klerk at London-based sugar merchants Czarnikow said that importing countries will “need to see retail prices rise to match the surge in the cost of sugar in the wholesale market”.
Traders said that the mood at last week’s sugar dinner in New York, the industry’s annual gathering, showed the market is bullish overall. At present, the International Sugar Organisation predicts a second consecutive market deficit in 2009-10.
By Javier Blas and Jenny Wiggins in London
Published: May 10 2009 22:30 Last updated: May 10 2009 22:30
Caffeine addicts face higher prices for their daily fix as the wholesale cost of both coffee and sugar rise sharply because of poor crops and robust demand.
“We are in a dangerous situation,” Andrea Illy, chief executive of Italy’s leading coffee company, told the Financial Times, warning that prices could “explode” due to supply shortages.
His comments echo those of other industry players – and point to a sharp shift in sentiment among analysts.
Until recently, it was widely assumed that the global economic crisis would damp consumption and prices for coffee. However, that forecast proved wrong, since demand for coffee has remained high, even while consumers have moved from cafés to home drinking.
International coffee prices last week hit a seven-month high, rising to $1.28 per pound, up 22 per cent from their December low, in New York trading.
Meanwhile, the spot price of Colombian coffee – which commands a premium because it is sought by gourmets – jumped to almost $2.20 a pound, a 12-year high, due to supply constraints.
The crop in Colombia was damaged by heavy rains and the scarcity of supplies from the country is now “absolute”, says Néstor Osorio, head of the International Coffee Organisation.
Kraft, owner of the Maxwell House coffee brands, raised retail prices on its Colombian blend by almost 19 per cent last month due to the rising prices of Colombian coffee beans. Nestlé declined to comment on whether it has been raising prices on Nescafé.
Separately, sugar prices in New York and London rose last week to their highest in almost three years. White sugar prices rose above $450 a tonne, a 52 per cent gain from mid-December, as traders bet that India, the world’s largest consumer, will require hefty imports to compensate for the failure of the local crop.
Swings in Indian sugar output, which move the country back and forth from exporter to importer, are a critical factor in global prices. Traders forecast that the country’s output will drop 40 per cent to about 15m tonnes in the 2008-09 season, well below the country’s consumption of about 23m tonnes a year.
Peter de Klerk at London-based sugar merchants Czarnikow said that importing countries will “need to see retail prices rise to match the surge in the cost of sugar in the wholesale market”.
Traders said that the mood at last week’s sugar dinner in New York, the industry’s annual gathering, showed the market is bullish overall. At present, the International Sugar Organisation predicts a second consecutive market deficit in 2009-10.
Thursday, May 7, 2009
The Mao Case
I have recently read a mystery by Qiu Xiaalong called The Mao Case which was an entertaining and an enlightening look at modern China through the tale of Inspector Chen who recites chinese poetry and Confucious sayings while solving complex and polically sensitive murder cases. A great read for any one with a modicum of interest in modern China, its history, culture and political envirionment. This is a special treat!
Click here for more information on the book.
Wednesday, May 6, 2009
Ritter’s buyer retools chain
Ritter’s buyer retools chain
Turnaround plan goes beyond frozen treats
Sat. May 02 - 2009
Sam Stall
Special to IBJ
This St. Patrick’s Day, Tru-Foods LLC executive Gary Occhiogrosso got an object lesson in why his company’s acquisition of Ritter’s Frozen Custard either could be a great opportunity or a royal pain—or both.
He visited the chain’s ill-starred 10450 Allisonville Road location on a blustery March day. The shop, which sits in the middle of an empty field and offers only picnic table seating, closed in 2008 when its previous owner threw in the towel. Now it was being readied to reopen under new management.
Apparently the store’s potential customers just couldn’t wait.
“It was obvious that they weren’t open, yet people were pulling into the parking lot,” said Occhiogrosso, TruFoods’ chief development officer. “I hadn’t tasted the product at that point, but when I tasted it I knew immediately why everyone was passionate about it and addicted to the stuff.”
Indianapolis residents have been passionate about the company’s handmade frozen custard ever since it debuted almost two decades ago. But while the ice cream is sweet, the story of the former momand-pop company’s attempts to morph into something grander is decidedly bitter.
Now, New York-based Tru-Foods, which bought the company in May 2008 for an undisclosed price, is trying to get the formula right.
TruFoods plan includes finding more and better-financed franchisees; rationalizing the systems needed to run a successful location; making the point of entry a bit less pricey; and creating more reasons for people to visit stores.
The company also wants to drive lunchtime traffic by serving food. Some locations have begun selling Nathan’s Famous hot dogs, and TruFoods is working on an expanded relationship with Westbury, N.Y.-based Nathan’s that would roll out hot dogs, chicken fingers and French fries chainwide.
TruFoods specializes in buying and turning around underperforming brands. The company’s other holdings include Arthur Treacher’s Fish & Chips, Pudgie’s Famous Chicken and Wall Street Deli.
Even while making changes, TruFoods wants to stay true to the original concept, which Chicago expatriate John Ritter and his wife, Bonny, launched in Franklin in 1989. At the time it was a novelty—frozen custard made fresh each day inside a retrolooking circular building with outdoor (and only outdoor) seating.
Customers lined up, and soon the company was off to the franchising races. By 2000, when Saul Lemke became CEO, the chain boasted 18 locations. By 2005—its peak—there were 60.
But along with growth came problems. Lemke, who acquired control in 2003 (with the Ritter family retaining a major stake) was at the time roundly criticized by some franchisees for expanding too quickly while neglecting day-to-day operations.
By the time the Ritter family reacquired control in 2004, installing John’s son Bob as CEO, there were 53 units—a number that by November of 2007 had dwindled to 48 in nine states.
Steve Delaney, a partner in SiteHawk Retail Real Estate (and former owner of several ice cream shops), said many factors may have contributed to the chain’s troubles, including a lack of well-heeled franchisees, a comparatively high cost of entry, and competition.
“They were on the cutting edge of the boom in fresh, gourmet, handmade ice cream when they first came out,” Delaney said. “But then there were several imitators,” such as Culver’s Frozen Custard and Maggie Moo’s. “So the competition increased dramatically.”
It didn’t help that opening a traditional Ritter’s location could be quite expen sive. Once an operator acquired the land, then built and fitted out the distinctive structure, startup costs could soar past $500,000. This for a building that had few alternative uses and no interior seating—meaning that locations in colder climes must close during winter.
Reviving expansion
Under TruFoods, the number of locations has slipped to 33. The new owners are determined to revive expansion, but not by franchising to operators unlikely to succeed.
“Number one, it’s about selecting proper franchisees,” said TruFoods’ Occhiogrosso. ”Proper franchisees are people who have the mindset that agrees with our mission statement, of putting the best prod uct out there and creating an enjoyable and memorable experience. Not just selling franchises for the sake of selling a franchise.”
A trickier question is addressing the store’s often idiosyncratic locations and store designs. In its pre-TruFoods days, the company experimented with strip mall locations that offer all the amenities missing from traditional stores—chief among them indoor, all-weather seating. But there’s a problem.
“Oddly enough, they don’t perform as well financially as the freestanding units,” Occhiogrosso said. “Because this isn’t just about selling ice cream. It’s about summertime and making memories and creating moments with your neighbors. You’re selling the entire experience.
“The minute you move the concept indoors—not in all cases but in some cases—you become like any one of the hundred competitors that are out there.”
The company will try to capture the best of both worlds by offering franchisees a new, modular building that looks pretty much like a traditional Ritter’s, but costs less to build and features a drive-through.
It’s also exploring growth on a new front. TruFoods said it might offer Ritter’s frozen custard in some form to convenience stores—a thorny proposition, since the product is made in small batches several times a day.
The last component of the TruFoods approach is to further infiltrate the markets where the chain already has a presence: Indianapolis, Houston and Dayton, Ohio, as well as Tampa, Orlando, Fort Lauderdale, and West Boca, Fla.
The bottom line is that while there’s definitely demand for the product, it can’t perform up to par until the franchising system is ironed out.
“When you’re in the franchising business, that’s very different from being in the frozen custard business,” Occhiogrosso said. “And sometimes franchisers, or founders of concepts, are challenged crossing that bridge between being in the ice cream business and being in the franchising business. We are in the business of putting people into a cash flow vehicle whereby they operate the system and the system runs the business.”
Franchisee closes
That effort comes too late for longtime franchisee Bill Osler. A couple of months ago, he shuttered his Hilton Head, S.C., Ritter’s after five years of operation—a period, he said, that was punctuated by (among a great many other problems) relentless difficulties with getting supplies in a timely manner. That and overly optimistic estimations of what the sales of his business would be.
“They said it would be in the $300,000 to $350,000 range,” Osler said. “I assumed they knew what they were talking about. But it never came close to that. The sales were never what they represented.”
Bob Ritter, the former CEO, now is Ritter’s director of franchise development. In Indianapolis, he’s concentrating on getting several dormant locations running again. Resurrection of the Allisonville Road store was this year’s biggest achievement.
“Nationally, I would have to say we’d like to do 20 (new locations) in the next couple of years,” Ritter said. “In Indianapolis I think we could do another four or five—reopening some and adding a couple.”
Though TruFoods has helped drum up leads, finding franchisees for anything these days is tough. Ritter says the biggest challenge, not surprisingly, is securing financing. He sees a lot of people who already own businesses and want to diversify, and others who have been downsized and are looking for a new line of work.
Career change
One recent franchisee is 30-year-old Josh Austad, who was formerly based in Minneapolis as an operations manager for Northwest Airlines. He took a buyout package when the company merged with Delta and used it to purchase an up-andrunning Ritter’s in Palm Harbor, near Clearwater, Fla.
“I got lucky because I was buying an existing location,” Austad said. “A lot of the up-front costs that you would have if you actually had to construct a building or renovate a space, I didn’t have to do.”
Austad hadn’t even heard of Ritter’s until he started investigating business opportunities. He wasn’t put off by the chain’s small size or limited (five stores, including his) Florida presence. Quite the opposite, in fact.
“I liked the fact that it was small,” Austad said. “I didn’t want to be store No. 1,000. I didn’t feel like I’d get the personal attention I need, because I’ve never owned a business before.”
Austad hopes to open a second location within five years.
Bob Ritter is optimistic there will be many more opportunities for expansion. The distinctive custard that caused customers to flock to his parents’ Franklin store still is the company’s biggest selling point.
“The brand following is so strong,” Ritter added. “In most markets that we’ve gone into, we get voted best ice cream in those markets. We got voted best ice cream in Detroit by the Detroit Free Press, and we only have one location there, in the suburb of Brighton. That says a lot for the brand and the marketing, and without a doubt about the product.” •
Turnaround plan goes beyond frozen treats
Sat. May 02 - 2009
Sam Stall
Special to IBJ
This St. Patrick’s Day, Tru-Foods LLC executive Gary Occhiogrosso got an object lesson in why his company’s acquisition of Ritter’s Frozen Custard either could be a great opportunity or a royal pain—or both.
He visited the chain’s ill-starred 10450 Allisonville Road location on a blustery March day. The shop, which sits in the middle of an empty field and offers only picnic table seating, closed in 2008 when its previous owner threw in the towel. Now it was being readied to reopen under new management.
Apparently the store’s potential customers just couldn’t wait.
“It was obvious that they weren’t open, yet people were pulling into the parking lot,” said Occhiogrosso, TruFoods’ chief development officer. “I hadn’t tasted the product at that point, but when I tasted it I knew immediately why everyone was passionate about it and addicted to the stuff.”
Indianapolis residents have been passionate about the company’s handmade frozen custard ever since it debuted almost two decades ago. But while the ice cream is sweet, the story of the former momand-pop company’s attempts to morph into something grander is decidedly bitter.
Now, New York-based Tru-Foods, which bought the company in May 2008 for an undisclosed price, is trying to get the formula right.
TruFoods plan includes finding more and better-financed franchisees; rationalizing the systems needed to run a successful location; making the point of entry a bit less pricey; and creating more reasons for people to visit stores.
The company also wants to drive lunchtime traffic by serving food. Some locations have begun selling Nathan’s Famous hot dogs, and TruFoods is working on an expanded relationship with Westbury, N.Y.-based Nathan’s that would roll out hot dogs, chicken fingers and French fries chainwide.
TruFoods specializes in buying and turning around underperforming brands. The company’s other holdings include Arthur Treacher’s Fish & Chips, Pudgie’s Famous Chicken and Wall Street Deli.
Even while making changes, TruFoods wants to stay true to the original concept, which Chicago expatriate John Ritter and his wife, Bonny, launched in Franklin in 1989. At the time it was a novelty—frozen custard made fresh each day inside a retrolooking circular building with outdoor (and only outdoor) seating.
Customers lined up, and soon the company was off to the franchising races. By 2000, when Saul Lemke became CEO, the chain boasted 18 locations. By 2005—its peak—there were 60.
But along with growth came problems. Lemke, who acquired control in 2003 (with the Ritter family retaining a major stake) was at the time roundly criticized by some franchisees for expanding too quickly while neglecting day-to-day operations.
By the time the Ritter family reacquired control in 2004, installing John’s son Bob as CEO, there were 53 units—a number that by November of 2007 had dwindled to 48 in nine states.
Steve Delaney, a partner in SiteHawk Retail Real Estate (and former owner of several ice cream shops), said many factors may have contributed to the chain’s troubles, including a lack of well-heeled franchisees, a comparatively high cost of entry, and competition.
“They were on the cutting edge of the boom in fresh, gourmet, handmade ice cream when they first came out,” Delaney said. “But then there were several imitators,” such as Culver’s Frozen Custard and Maggie Moo’s. “So the competition increased dramatically.”
It didn’t help that opening a traditional Ritter’s location could be quite expen sive. Once an operator acquired the land, then built and fitted out the distinctive structure, startup costs could soar past $500,000. This for a building that had few alternative uses and no interior seating—meaning that locations in colder climes must close during winter.
Reviving expansion
Under TruFoods, the number of locations has slipped to 33. The new owners are determined to revive expansion, but not by franchising to operators unlikely to succeed.
“Number one, it’s about selecting proper franchisees,” said TruFoods’ Occhiogrosso. ”Proper franchisees are people who have the mindset that agrees with our mission statement, of putting the best prod uct out there and creating an enjoyable and memorable experience. Not just selling franchises for the sake of selling a franchise.”
A trickier question is addressing the store’s often idiosyncratic locations and store designs. In its pre-TruFoods days, the company experimented with strip mall locations that offer all the amenities missing from traditional stores—chief among them indoor, all-weather seating. But there’s a problem.
“Oddly enough, they don’t perform as well financially as the freestanding units,” Occhiogrosso said. “Because this isn’t just about selling ice cream. It’s about summertime and making memories and creating moments with your neighbors. You’re selling the entire experience.
“The minute you move the concept indoors—not in all cases but in some cases—you become like any one of the hundred competitors that are out there.”
The company will try to capture the best of both worlds by offering franchisees a new, modular building that looks pretty much like a traditional Ritter’s, but costs less to build and features a drive-through.
It’s also exploring growth on a new front. TruFoods said it might offer Ritter’s frozen custard in some form to convenience stores—a thorny proposition, since the product is made in small batches several times a day.
The last component of the TruFoods approach is to further infiltrate the markets where the chain already has a presence: Indianapolis, Houston and Dayton, Ohio, as well as Tampa, Orlando, Fort Lauderdale, and West Boca, Fla.
The bottom line is that while there’s definitely demand for the product, it can’t perform up to par until the franchising system is ironed out.
“When you’re in the franchising business, that’s very different from being in the frozen custard business,” Occhiogrosso said. “And sometimes franchisers, or founders of concepts, are challenged crossing that bridge between being in the ice cream business and being in the franchising business. We are in the business of putting people into a cash flow vehicle whereby they operate the system and the system runs the business.”
Franchisee closes
That effort comes too late for longtime franchisee Bill Osler. A couple of months ago, he shuttered his Hilton Head, S.C., Ritter’s after five years of operation—a period, he said, that was punctuated by (among a great many other problems) relentless difficulties with getting supplies in a timely manner. That and overly optimistic estimations of what the sales of his business would be.
“They said it would be in the $300,000 to $350,000 range,” Osler said. “I assumed they knew what they were talking about. But it never came close to that. The sales were never what they represented.”
Bob Ritter, the former CEO, now is Ritter’s director of franchise development. In Indianapolis, he’s concentrating on getting several dormant locations running again. Resurrection of the Allisonville Road store was this year’s biggest achievement.
“Nationally, I would have to say we’d like to do 20 (new locations) in the next couple of years,” Ritter said. “In Indianapolis I think we could do another four or five—reopening some and adding a couple.”
Though TruFoods has helped drum up leads, finding franchisees for anything these days is tough. Ritter says the biggest challenge, not surprisingly, is securing financing. He sees a lot of people who already own businesses and want to diversify, and others who have been downsized and are looking for a new line of work.
Career change
One recent franchisee is 30-year-old Josh Austad, who was formerly based in Minneapolis as an operations manager for Northwest Airlines. He took a buyout package when the company merged with Delta and used it to purchase an up-andrunning Ritter’s in Palm Harbor, near Clearwater, Fla.
“I got lucky because I was buying an existing location,” Austad said. “A lot of the up-front costs that you would have if you actually had to construct a building or renovate a space, I didn’t have to do.”
Austad hadn’t even heard of Ritter’s until he started investigating business opportunities. He wasn’t put off by the chain’s small size or limited (five stores, including his) Florida presence. Quite the opposite, in fact.
“I liked the fact that it was small,” Austad said. “I didn’t want to be store No. 1,000. I didn’t feel like I’d get the personal attention I need, because I’ve never owned a business before.”
Austad hopes to open a second location within five years.
Bob Ritter is optimistic there will be many more opportunities for expansion. The distinctive custard that caused customers to flock to his parents’ Franklin store still is the company’s biggest selling point.
“The brand following is so strong,” Ritter added. “In most markets that we’ve gone into, we get voted best ice cream in those markets. We got voted best ice cream in Detroit by the Detroit Free Press, and we only have one location there, in the suburb of Brighton. That says a lot for the brand and the marketing, and without a doubt about the product.” •
Monday, May 4, 2009
Top 10 Reasons to Start a Business in a Recession
Brad Sugars: Startup Basics
Top 10 Reasons to Start a Business in a Recession
More publicity. Less competition. Talent waiting to be scooped up. Here's why starting in a recessed economy may give your business a better shot.
By Brad Sugars February 25, 2009
URL: http://www.entrepreneur.com/startingabusiness/startupbasics/startupbasicscolumnistbradsugars/article200342.html
Do you have one good reason to start your business right now?
How about 10?
Regardless of what people around you (including the media) may say, right now is the best time to get into business. Just go back and look at the economic slowdowns throughout history. Most recessions in the post-World War II era last an average of 10 months, followed by growth cycles that last an average of 50 months.
What this means for the startup is there's no better time than right now to get going and start pursuing your business dreams--in anticipation of the next period of growth.
So with a nod to David Letterman, here are my top 10 reasons you should start your business now--despite the current downturn:
1.Everything is cheaper.
Let's face it: There is great value right now in this and in world markets. This is the right time for fantastic deals in virtually every category, from land and equipment to commercial office space, personnel and labor. As asset prices have been knocked down, there is no better time to get into the real estate or financial markets, or even heavy equipment and construction. Some people have waited years to find value in these markets--and now that time has come.
2.You can hire more and better-qualified people.
In an era when even Microsoft is laying off, you can find great resources at affordable rates. Thinking about getting your high-tech startup off the ground? There are plenty of engineers waiting to be hired. Thinking about forming a professional services firm? There are many accountants and attorneys looking for their next opportunity.
3.People are looking to change suppliers.
From a cost perspective, everything is on the table for most companies. Even if your prices are higher, if you can come in with greater value, you have a good chance at winning new business. You also have the advantage of being the new kid on the block when it comes to pitching your products and services. Many companies are desperate to find new partnerships with new companies that have a different, better or more innovative way of delivering those products and services.
4.Ownership equals tax incentives.
Business ownership offers a variety of tax benefits that aren't available to employees. While taxes should never be the sole reason to go into business for yourself, it should be one reason to add to you "benefits of business ownership" list.
5.Family and friends don't want to (or can't) invest more money into the stock or real estate markets.
That means they may be willing to finance a portion of your new venture, or the expansion of an enterprise that has proven itself over time. The main benefit is that they know you and have a relationship with you--and if you have a solid business plan that delivers real numbers, your chances of raising the capital you need increase exponentially.
6.Suppliers are giving better credit.
Because the credit markets have virtually shut down, the B2B credit flows are keeping money circulating out of sheer necessity. That means a bullish outlook for companies looking for good terms on stock and/or inventories. The main advantage is that all parties have more incentive than ever for finding true win-win situations that allow for cash and stock flow. When everyone is looking to survive, great deals can be had.
7.You can get good PR by showing you are going against the trend.
The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your "alternative" view of the market.
8.You can buy everything you need at auction.
In addition to everything being less expensive, you can find great deals at auctions, especially in terms of any large equipment and office furnishings. Auctions are also a great place to find hardly used or "gently" used restaurant and bar supplies at great prices. These days, you may even be able to get deals on fleets of vehicles and trucks for a delivery service or hauling or construction company.
9.You can find great "low money" or "no money" down deals.
This is simply being aware of good opportunities others have buggered up, and finding deals where you could get an entire business simply by taking over a lease (along with all the equipment). Many business owners want out at any cost, meaning you can negotiate great win-win deals that allow the current owners an escape while giving you an opportunity to turn around what could be, if run right, a very viable business.
And finally . . .
10.You've lost your job, and you have to do something.
Sometimes, the best business decision is the one you are forced into, and the incentive (as well as need) for income is often enough to push those previously "on the fence" to strike out on their own. There's nothing wrong with being in this position; it simply means there is greater urgency to do something that will start to generate income as quickly as possible.
There you have it: my top 10 reasons to start your business in a recession. After all, the odds are on your side that the expansion will be many times more robust than the present slowdown.
There's no better time to start than the present, especially if people around you are more comfortable with their own list of reasons why they shouldn't start pursuing their own business dreams right now. It only means you'll be facing a lot less competition.
Brad Sugars is Entrepreneur.com's Startup Basics columnist and the writer of 14 business books including The Business Coach, Instant Cashflow, Successful Franchising and Billionaire in Training. He is the founder of ActionCOACH, a business coaching franchise.
Top 10 Reasons to Start a Business in a Recession
More publicity. Less competition. Talent waiting to be scooped up. Here's why starting in a recessed economy may give your business a better shot.
By Brad Sugars February 25, 2009
URL: http://www.entrepreneur.com/startingabusiness/startupbasics/startupbasicscolumnistbradsugars/article200342.html
Do you have one good reason to start your business right now?
How about 10?
Regardless of what people around you (including the media) may say, right now is the best time to get into business. Just go back and look at the economic slowdowns throughout history. Most recessions in the post-World War II era last an average of 10 months, followed by growth cycles that last an average of 50 months.
What this means for the startup is there's no better time than right now to get going and start pursuing your business dreams--in anticipation of the next period of growth.
So with a nod to David Letterman, here are my top 10 reasons you should start your business now--despite the current downturn:
1.Everything is cheaper.
Let's face it: There is great value right now in this and in world markets. This is the right time for fantastic deals in virtually every category, from land and equipment to commercial office space, personnel and labor. As asset prices have been knocked down, there is no better time to get into the real estate or financial markets, or even heavy equipment and construction. Some people have waited years to find value in these markets--and now that time has come.
2.You can hire more and better-qualified people.
In an era when even Microsoft is laying off, you can find great resources at affordable rates. Thinking about getting your high-tech startup off the ground? There are plenty of engineers waiting to be hired. Thinking about forming a professional services firm? There are many accountants and attorneys looking for their next opportunity.
3.People are looking to change suppliers.
From a cost perspective, everything is on the table for most companies. Even if your prices are higher, if you can come in with greater value, you have a good chance at winning new business. You also have the advantage of being the new kid on the block when it comes to pitching your products and services. Many companies are desperate to find new partnerships with new companies that have a different, better or more innovative way of delivering those products and services.
4.Ownership equals tax incentives.
Business ownership offers a variety of tax benefits that aren't available to employees. While taxes should never be the sole reason to go into business for yourself, it should be one reason to add to you "benefits of business ownership" list.
5.Family and friends don't want to (or can't) invest more money into the stock or real estate markets.
That means they may be willing to finance a portion of your new venture, or the expansion of an enterprise that has proven itself over time. The main benefit is that they know you and have a relationship with you--and if you have a solid business plan that delivers real numbers, your chances of raising the capital you need increase exponentially.
6.Suppliers are giving better credit.
Because the credit markets have virtually shut down, the B2B credit flows are keeping money circulating out of sheer necessity. That means a bullish outlook for companies looking for good terms on stock and/or inventories. The main advantage is that all parties have more incentive than ever for finding true win-win situations that allow for cash and stock flow. When everyone is looking to survive, great deals can be had.
7.You can get good PR by showing you are going against the trend.
The media loves aberrations, and if you are optimistic by expanding or getting into business now, you would be in that category. That means you can generate some great PR by demonstrating your "alternative" view of the market.
8.You can buy everything you need at auction.
In addition to everything being less expensive, you can find great deals at auctions, especially in terms of any large equipment and office furnishings. Auctions are also a great place to find hardly used or "gently" used restaurant and bar supplies at great prices. These days, you may even be able to get deals on fleets of vehicles and trucks for a delivery service or hauling or construction company.
9.You can find great "low money" or "no money" down deals.
This is simply being aware of good opportunities others have buggered up, and finding deals where you could get an entire business simply by taking over a lease (along with all the equipment). Many business owners want out at any cost, meaning you can negotiate great win-win deals that allow the current owners an escape while giving you an opportunity to turn around what could be, if run right, a very viable business.
And finally . . .
10.You've lost your job, and you have to do something.
Sometimes, the best business decision is the one you are forced into, and the incentive (as well as need) for income is often enough to push those previously "on the fence" to strike out on their own. There's nothing wrong with being in this position; it simply means there is greater urgency to do something that will start to generate income as quickly as possible.
There you have it: my top 10 reasons to start your business in a recession. After all, the odds are on your side that the expansion will be many times more robust than the present slowdown.
There's no better time to start than the present, especially if people around you are more comfortable with their own list of reasons why they shouldn't start pursuing their own business dreams right now. It only means you'll be facing a lot less competition.
Brad Sugars is Entrepreneur.com's Startup Basics columnist and the writer of 14 business books including The Business Coach, Instant Cashflow, Successful Franchising and Billionaire in Training. He is the founder of ActionCOACH, a business coaching franchise.
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