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Do You Want to Grow Your Company Bigger? Then Use Franchising

23 minute read

A new restaurant is open in Riga, capital of Latvia, and it is one of a kind in the Baltics. The customers do much of the work for the waiter in this restaurant. In fact, , there is no waiter in the classic sense. Clients order their own meals from a tablet, and take wine from the wine dispenser. The employee only brings the food and clears the table.

The founder, Peteris Ozols, has been in the hotel and restaurant business for 23 years. He opened the restaurant after a thorough analysis that pointed out the weak spots that take the most time and labor in a restaurant. The result paid off – 40% of labor costs are saved in this restaurant! Customers can taste 60 wines by glass, and the dispensers keep the right temperature, the wine maintains its quality for up to two weeks.

Beer lovers can visit Easy Beer, a bar created with a similar concept, which has 200 beers in the selection.

Interesting drink dispensers are not the only thing that sets Easy Wine and Easy Beer apart from other Riga restaurants. The owners aim to grow Easy Wine and Easy Beer into a Europe-wide restaurant chain through franchising. Currently, the first restaurants are being opened in Warsaw and Paris, with negotiations ongoing across the pond for locations in Los Angeles and New York.

Before opening the first Easy Wine in Riga, the team worked hard for two years discussing in great detail what kind of beers and wines to choose; what is the equipment, where and at which temperature to keep the drink; what type of furniture and interior design style; what types of food selection, atmosphere, customer service, etc.. They also put down the requirements for employees, and details of the overarching business model for all locations.

This is how the concept that combines good vibes and the newest bar technology came into being.

The franchisee pays 5% from the turnover, in addition to a one-time starting fee of 23,000 euros. That gets them the wine or beer dispensers, training in restaurant management and customer service, and of course, the franchise book that has all the information.

Additionally, the team has calculated how much money should go where, and how much profit the restaurant should produce.

College Hunks Hauling Junk – even junk removal can be franchised

If Easy Wine’s business model, along with their drive for rapid expansion, is a perfect example of the benefits of franchising. The beauty of franchising is growing the company with small means and fast, regardless of the industry. Sometimes it can even happen worldwide.

The USA moving and junk removal company College Hunks Hauling Junk grew 100 times bigger in about a decade, but it all started very simply. Working in his mother’s suburban furniture store over summer holidays and doing home deliveries to clients, Omar Soliman realized that a lot of people asked him to take away their old furniture, and were willing to pay for it.

Borrowing his mother’s old truck, Omar asked his old friend Nick Friedman to join him. They printed out flyers, handed them out in the neighborhood, and executed their first orders the next day. Initially, it was only a summer job and they both continued their studies in the university. In 2004, they won the prestigious Rothchild Entrepreneurship Competition with their business plan. This had the two cornerstones of College Hunks Hauling Junk’s business model thoroughly described: a company has to grow through franchising, and be more effective than its competitors due to a central ordering center.

Only after spending some months in an office as wage workers did the young men decide to become entrepreneurs. For the sake of a strong Sales and Loyalty Center, they moved the company from Washington to Florida, where telemarketing is high-level. The call center works 7 days a week, takes the orders, and distributes them between franchisees. 70% of the work comes to the company via call center. By 2018, the company had more than 100 locations around the US, and they extended their operations abroad, firstly to Canada.

The franchisee has to initially lay out between 90,000 and 200,000 dollars, depending on whether they want to handle moving, junk removal, or both. The starting fee also covers the operating costs for the first six months.

The oldest operating McDonald’s restaurant is a drive-up hamburger stand at 10207 Lakewood Boulevard at Florence Avenue in Downey, California. It was the third McDonald’s restaurant and opened on August 18, 1953. It was also the second restaurant franchised by Richard and Maurice McDonald, prior to the involvement of Ray Kroc in the company. Image credits: Wikipedia

Becoming a franchisee is an exciting way of growing a company that could be used much more than it has been until now – especially considering the McDonald’s success story that has become synonymous with franchising. Unfortunately, franchising is far from being riskless – in some respects, it is more risky than starting your own company.

What are the critical questions that, when answered, help grow through franchising – why not bigger than McDonald’s?