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In Focus EyEs WidE OpEn: COldstOnE CrEamEry What it takes to be a (successful) franchisee. Iness, the risks of owning a small business and whether-love the internet!!! With very little effort you canquickly understand the definition of a small business,the impact of small business on the economy of theUnited States, the advantages of owning a small busi you’re a promising candidate to be a small business owner. Some serious soul searching will help determine whether starting a small business is for you and what form that small business should take. Are you an idea genera- tor with the talent and resources to execute or are you an astute entrepreneur with an eye for opportunities when presented? Regardless of your personal inclination and the path chosen, due diligence is required. Due diligence requires the development of a business model and build- ing a coterie of support in terms of a banker, lawyer and accountant to help navigate the complexities and chal- lenges of being a small business owner. Due diligence re- quires an understanding of market vagaries and preparing for the worst. Sounds pretty daunting, doesn’t it? Nobody said it was easy but as you’ve been told repeatedly, success requires commitment and lots of really hard work, and even then there are no guarantees. In 2002 we saw an opportunity to invest in a rapidly grow- ing franchise concept that was making its way east from Ari- zona, Cold Stone Creamery. 10 years and 5 stores later we are a multi-unit operator in South Florida. In 2003 Cold Stone Creamery advisable to comb through the UFOC with the help and advice was the fastest growing ice cream concept in the United States with of an attorney conversant in contracts. Then ask yourself the fol- aspirations to reach 1000 stores nationwide. In 2012 Cold Stone lowing questions: Creamery is enjoying healthy growth globally while back in the United States the Cold Stone Creamery brand is well established and F As a franchisee are you prepared to give up control of your in the mature stage of its life cycle. In 2011, according to QSR, there enterprise and investment for the privilege of investing in were 1049 stores nationwide, 36 fewer than the previous year. someone else’s (great) idea and endeavor? As with any franchise concept that hits the ground running, over F As a franchisee are you prepared to follow all the rules a period of time there will necessarily be attrition. Stores close for established by the franchisor as they pertain to every countless reasons – poor planning, inexperience, unrealistic ex- element of the business (operations, purchasing, market- pectations, excessive debt, poor locations, a significant economic ing etc)? downturn etc. One reason for failure that receives too little atten- F As a franchisee do you understand and are you prepared to tion, however, is the recognition on the part of the franchisee (small accept the consequences if your performance does not business owner) that the partnership relationship with the franchi- meet franchisor explicitly enumerated criteria? sor is weighted heavily in the franchisor’s favor. The first clue is evi- dent when the prospective franchisee has the chance to review the The concept may be great in terms of product, service and po- UFOC (Uniform Franchise Offering Document) otherwise known tential ROI but if you don’t understand and embrace the franchi- as the FDD (Franchise Disclosure Document). It is required by law see/franchisor relationship your success will be uncertain. that the UFOC be provided to prospective franchisees and its con- Small business is the backbone of the US economy and as we tents are regulated by the FTC (Federal Trade Commission). Fran- struggle to rebound from a devastating economic downturn small chisors that distribute UFOCs containing unreliable, misleading business is where the opportunities abound. Do your homework, or untrue information are subject to civil penalties. “know thyself ” and enjoy the fruits of your labor. We did. Most UFOC’s are complex and lengthy documents that spell out the minutiae of the franchisee/franchisor relationship. It is Ruth Spiegel is the Owner of Cold Stone Creamery. www.OpportunityWorld.com Opportunity World • September/October 2012 57


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