Purchasing a Gelato Business? Here's What
to Consider
Purchasing a
gelato franchise is similar to any other franchise purchase
and demands considerable home work and due diligence on
the part of the entrepreneur.
Franchises have certain innate benefits over a start-up
type of business because they typically come packaged with
name or brand recognition, training and support assistance,
as well as assuming some (not all) of the financial risk
involved. However, the following considerations can provide
a head start in making a wise franchise selection for the
potential gelato business owner:
Overall Demand: is the demand
for the franchise operator’s products solid in your
specific area? While the franchisor’s particular gelato
product might be popular in one region of the U.S., it might
not necessarily be so in your region.
One concern for gelato retailers is combating the misconception
in the market that gelato is limited by seasonality. While
it may be partially seasonal gelato appeals to consumers
year around and can be offered with a host of complementary
products that make it a perennial favorite among consumers
Consider the Competition: the
national competition that the particular gelato franchisor
faces is critical since you will assume the competitive
risk by purchasing the franchise rights to the brand. Are
competing franchisors equal in national presence or only
dominant in certain markets?
Franchise Failure: franchisors
periodically go out of business leaving their franchisees
left completely independent. The question to ask is if you
can assume and operate the gelato business as a complete
independent. You should investigate and inquire after the
franchisor’s financial health and performance over
the past 3 to 5 years as well as the health of the overall
market.
Brand Recognition: the relative
brand recognition of the franchisor is critical since this
is one of the primary reasons that you will be committing
a significant amount of money for the right to market the
brand. A franchisor with little real brand recognition is
likely not worth the initial investment.
Training and Support Network: these
items are critical for the gelato franchisee. While it is
hoped that you have both experience with and a passion for
gelato, having the training and support of a gelato franchisor
that is experienced in producing and marketing your primary
product line is advantageous and can save a lot of development
dollars. Does the franchisor offer employee training and
development programs as well as product related guidance?
Financial
Assistance Programs: does the franchisor offer
a finance program to assist with start-up costs in terms
of site purchase/lease, equipment purchase/lease, or both?
These issues and others are business
critical concerns when deciding on a gelato franchise to purchase.
Failure to take these considerations to heart can mean the
difference between an extensive (and stressful) period of
trial and error spent trying to gain the experience that should
be provided through the franchisor.
Additionally, you must correctly assess the return on investment
(ROI) of the initial franchise licensing fee compared with
the start-up costs that would be incurred with an independent
start-up operation.
If you pay a massive franchise fee but get little in return
then it might be more cost effective to invest more up-front
for the greater long-term returns in revenue retention by
going independent. If you need a business plan, try this Gelato
Business Plan.
Want
to Get Started in The Gelato Business?
Get
an industry analysis, detailed financials and other getting started help.
