| 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.
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