Author Topic: Anyone own a frozen yogurt franchise????  (Read 15149 times)

M5

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Anyone own a frozen yogurt franchise????
« on: August 24, 2017, 01:34:54 PM »
To be more specific, do any of you own and operate an Orange Leaf frozen yogurt franchise? We are looking at the possibility of purchasing an existing location in our town and am looking for some feedback. I know the current owner very well and know he would never intentionally put me in a bad situation, but nonetheless I will do my due diligence and ask for advice from any of you here. Mostly looking for feedback on profit margins and how easy it would be to become a semi or completely absentee owner.

We are in the VERY early stages of this so I don't have many details yet, but here is the gist of it...
Purchase price:  roughly $180k
Seller Financed:  $10k down and most likely amortize the remaining balance over 7 years w/ the option of a balloon payment after 4 years.
Location:  Don't know the exact per day traffic count, but this is on the busiest street in a city of roughly 100k people. This is in the midwest, so keep in mind that we do have winter and sales will drop over the winter months (probably Dec-Feb).
Financials:  Haven't dug into the books yet, but we are told it currently nets about $60k a year. Obviously this is complete hearsay until we see the books and tax statements.

If you are currently in this industry please give me some feedback and point out the areas I need to think long and hard about!

bwall

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Re: Anyone own a frozen yogurt franchise????
« Reply #1 on: August 24, 2017, 01:48:09 PM »
Questions to ask yourself and/or seller:

1) If it's such a profitable business, why is he selling?
2) If it's such a good business, why is he offering owner financing?
3) If it's such a profitable business, why is he selling?
4) Sales in Dec-Feb will be zero. Does the lease allow you to sell winter coats during those months?
5) If it's such a profitable business, why is he selling?
6) Is that $60k before or after a manager has been paid? Meaning, do you buy a full time job and $60k/year to show for it?
7) If it's such a profitable business, why is he selling?

I know that if my business weren't profitable, I'd be sick and/or want to spend more time with the family. I can't think of a single reason to sell a business that is profitable and 'runs itself'.

tralfamadorian

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Re: Anyone own a frozen yogurt franchise????
« Reply #2 on: August 24, 2017, 04:03:59 PM »
Questions to ask yourself and/or seller:

+1 to all these.

Pinkberry and its knockoffs in general are on the down swing.  Why do you think it's a good time to get into the industry?  Also, I believe the seasonality of yogurt/ice cream shops is much greater than a couple of months- more like it's busy for the summer and those profits need to carry you through the rest of the year. 

Article that discusses these chains with some data-
https://www.ecomcrew.com/how-to-lose-your-home-buying-a-frozen-yogurt-franchise-or-ecommerce-business/

Dee18

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Re: Anyone own a frozen yogurt franchise????
« Reply #3 on: August 24, 2017, 06:48:45 PM »
I haven't owned one, but my daughter worked at one  for a year in her college town. She said it wasn't very busy, but it is still operating.  When we were in Vermont this summer she noticed frozen yogurt at a small country store.  Turns out the Burlington, Vermont Orange Leaf had gone out of business and sold their machines cheaply to anyone who would buy them.

Where I live, Pinkberry and another chain have both closed stores.  Frozen yogurt seems to be declining in popularity and has been replaced here with craft ice cream, gourmet popsicles and donuts.
« Last Edit: August 29, 2017, 05:34:23 PM by Dee18 »

M5

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Re: Anyone own a frozen yogurt franchise????
« Reply #4 on: August 25, 2017, 07:26:52 AM »
I had never heard of Pinkberry before (must not exist in this part of the country), but it is interesting to hear they seem to be in decline. I don't have the answers to all of bwall's questions, but I do have some of them and I appreciate the points made.

As to the financing question, I specifically asked for owner financing as we do not meet the minimum criteria for an SBA or bank loan on a business, nor do we have the required 20% to put down right now. Not to mention, usually when a seller offers financing it is a good thing, not bad. There is a lot of risk involved for the seller, so they want you to succeed. I would be much more skeptical of someone who only wants to take their chunk of cash and run..

I am also well aware that the summer sales will have to carry you through the winter, which is precisely why we plan on purchasing this in March or April, rather than right now. Why does he want to sell? I'm not exactly sure but I do know he is a full time military pilot, has kids, and owns 3 other franchises, so I imagine he wants to reclaim some of his free time.

I know this particular store has been in operation for around 10 years, though I'm not sure whether or not that speaks to future popularity and longevity. I think the biggest reason it has been successful is the traffic count on that road. It seems nearly anything built in that area does extremely well. I imagine another reason is that the only competition within a roughly 5 mile radius is a Cold Stone a mile or so up the road.

Sdsailing

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Re: Anyone own a frozen yogurt franchise????
« Reply #5 on: August 25, 2017, 03:02:35 PM »

Net 60K probably means before salaries. Run like hell.

SC93

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Re: Anyone own a frozen yogurt franchise????
« Reply #6 on: August 28, 2017, 04:43:02 PM »
Please let me correct 1 thing. Owner financing does not mean what you said. Owner financing means this a lot of times..... you pay $10k down and x per month. Let's say in 18 or 48 months it comes to a point that you can't make the payments. You will say he didn't tell you things the real way they were and he will say you didn't know how to run the business correctly. Since you can't make the payments each month along with the high priced rent of the building, he has to repo the business. Now he puts it up for sale again, someone gives him $10k down and the whole thing starts over again. My buddy Orville did this with 1 business for 47 years. Finally about 2 years ago he closed the business all together because the neighborhood has gotten so bad but he made a dang good living doing this. That's also how a lot (A LOT) of cleaning franchises are ran.

My question is this, why would you want to be tied down to just yogurt?

human

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Re: Anyone own a frozen yogurt franchise????
« Reply #7 on: August 28, 2017, 05:06:24 PM »
The seller should know what the average check is and how many per day. He should also know how much labour per day he's paying and how much revenue per day (on how many checks). If he doesn't then forget it. What are the expenses? Refrigeration? Lighting? Rent?

M5

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Re: Anyone own a frozen yogurt franchise????
« Reply #8 on: August 29, 2017, 09:30:53 AM »
Please let me correct 1 thing. Owner financing does not mean what you said. Owner financing means this a lot of times..... you pay $10k down and x per month. Let's say in 18 or 48 months it comes to a point that you can't make the payments. You will say he didn't tell you things the real way they were and he will say you didn't know how to run the business correctly. Since you can't make the payments each month along with the high priced rent of the building, he has to repo the business. Now he puts it up for sale again, someone gives him $10k down and the whole thing starts over again. My buddy Orville did this with 1 business for 47 years. Finally about 2 years ago he closed the business all together because the neighborhood has gotten so bad but he made a dang good living doing this. That's also how a lot (A LOT) of cleaning franchises are ran.

My question is this, why would you want to be tied down to just yogurt?

That's quite an interesting story, and it sounds like your buddy didn't have many morals if he was willing to make his living that way. I would say the majority of sellers would not be that way, not to mention if the buyer runs it into the ground, the seller will have nothing left to recoup. Therefore, there's no way he'd be able to resell it for a value that would be worth anything. BUT it obviously happens and it seems as though it usually occurs when the business leases their space. That's probably what I dislike the most about this business and franchises in general. I want to own all the real estate I operate on. Then, if my business fails I can either sell the property or lease it out to a new business. There isn't much better than owning commercial real estate.

SC93, what are your suggestions for great businesses to run that create fairly passive income and require less than a 500k initial investment? A little background for you.. My wife and I are 24 and 23, respectively, gross about 88k per year, recently purchased a 150k home close to work, already own a rental property than cash flows about $150/mo, and currently save roughly 25k/yr of our income. Our goal is to FIRE as fast as possible, but have set basically a 10 year plan in place as a safe bet. Rather than simply put money in index fund or REITs, we would much rather take some risk and earn the greater returns of real estate or business income.

SC93

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Re: Anyone own a frozen yogurt franchise????
« Reply #9 on: August 29, 2017, 12:42:47 PM »
Morals? Well, actually he does have morals for every other thing except business. Business is business and in this case I agree. How was it his problem that no one ran the business to be profitable? He would tell them how to do it and then as always, the new owner would think he knew more than Orville and every time it turned out they didn't. That wasn't HIS problem. Usually people have these great ideas that they think will work better because no one has ever thought of doing it this way.... turns out they don't know their ass from a hole in the ground and their GRAND idea was actually a crap idea that had failed many before. Most great idea make things more complicated and don't work.

Will you borrow the $500k or do you have the $500k liquid? I can't suggest anything with borrowed money. Borrowing usually = divorce, drug problems, family malfunctions in general, suicide..... nothing good comes from it. If you have it liquid, hell, invest it, make 8%+ and when you are 50 years old you will have over $3 million. Retire and draw a small amount. You will be taking out but it will still be growing. As for a business if you have $500k liquid.... well, I have never spent over a few thousand to start a business but I am the worker bee and like starting them and usually sell them. I literally have $50k in my hand (in black box waiting to go to bank) at this minute and can't think of 1 business I'd put that kind of money in. I like making money, not taking the chance of losing it so I rarely ever put much money in to anything until I see it is going to work. When I started this appliance business I started with 1 washer/dryer set. Now I want 18 wheeler loads. It doesn't sound like you have much experience so there is no way I will guide you in to losing money. You need to start something small, get some experience and probably fail. Then start another business and take what you learned to either fail again or maybe succeed. Rarely does anyone have it all figured out on their first try. A franchise does make the odds a little better (if it is a good franchise) but it is not 100%. How about the printing business? Any interest in that? No matter what business you get in to, it will be about sales. If you are a good sales person you have a better chance to succeed. This is just my take on it and how I do things. Everyone does things different but I do not take chances.... that is actually our motto for the appliance business. Don't Take Chances. Also, I don't go by.... do what you love. If I did that I'd be in the porn business :)

bwall

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Re: Anyone own a frozen yogurt franchise????
« Reply #10 on: August 29, 2017, 02:56:49 PM »

Will you borrow the $500k or do you have the $500k liquid? I can't suggest anything with borrowed money. Borrowing usually = divorce, drug problems, family malfunctions in general, suicide..... nothing good comes from it. If you have it liquid, hell, invest it, make 8%+ and when you are 50 years old you will have over $3 million. Retire and draw a small amount. You will be taking out but it will still be growing. As for a business if you have $500k liquid.... well, I have never spent over a few thousand to start a business but I am the worker bee and like starting them and usually sell them. I literally have $50k in my hand (in black box waiting to go to bank) at this minute and can't think of 1 business I'd put that kind of money in. I like making money, not taking the chance of losing it so I rarely ever put much money in to anything until I see it is going to work. When I started this appliance business I started with 1 washer/dryer set. Now I want 18 wheeler loads. It doesn't sound like you have much experience so there is no way I will guide you in to losing money. You need to start something small, get some experience and probably fail. Then start another business and take what you learned to either fail again or maybe succeed. Rarely does anyone have it all figured out on their first try. A franchise does make the odds a little better (if it is a good franchise) but it is not 100%. How about the printing business? Any interest in that? No matter what business you get in to, it will be about sales. If you are a good sales person you have a better chance to succeed. This is just my take on it and how I do things. Everyone does things different but I do not take chances.... that is actually our motto for the appliance business. Don't Take Chances.
+100

I know many bankrupt printers and no successful ones. Thanks desktop publishing! (In the 1990's) Thanks internet! (in the 21st Century)

Sadly, in my 20's I probably wouldn't have seen the wisdom in this post. 20 years later, I couldn't agree more.

M5

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Re: Anyone own a frozen yogurt franchise????
« Reply #11 on: August 29, 2017, 04:20:04 PM »

Will you borrow the $500k or do you have the $500k liquid? I can't suggest anything with borrowed money. Borrowing usually = divorce, drug problems, family malfunctions in general, suicide..... nothing good comes from it. If you have it liquid, hell, invest it, make 8%+ and when you are 50 years old you will have over $3 million. Retire and draw a small amount. You will be taking out but it will still be growing. As for a business if you have $500k liquid.... well, I have never spent over a few thousand to start a business but I am the worker bee and like starting them and usually sell them. I literally have $50k in my hand (in black box waiting to go to bank) at this minute and can't think of 1 business I'd put that kind of money in. I like making money, not taking the chance of losing it so I rarely ever put much money in to anything until I see it is going to work. When I started this appliance business I started with 1 washer/dryer set. Now I want 18 wheeler loads. It doesn't sound like you have much experience so there is no way I will guide you in to losing money. You need to start something small, get some experience and probably fail. Then start another business and take what you learned to either fail again or maybe succeed. Rarely does anyone have it all figured out on their first try. A franchise does make the odds a little better (if it is a good franchise) but it is not 100%. How about the printing business? Any interest in that? No matter what business you get in to, it will be about sales. If you are a good sales person you have a better chance to succeed. This is just my take on it and how I do things. Everyone does things different but I do not take chances.... that is actually our motto for the appliance business. Don't Take Chances.
+100

I know many bankrupt printers and no successful ones. Thanks desktop publishing! (In the 1990's) Thanks internet! (in the 21st Century)

Sadly, in my 20's I probably wouldn't have seen the wisdom in this post. 20 years later, I couldn't agree more.
Nothing on the commercial real estate from either of you??

Will you borrow the $500k or do you have the $500k liquid? I can't suggest anything with borrowed money. Borrowing usually = divorce, drug problems, family malfunctions in general, suicide..... nothing good comes from it.
This is a terrible statement. If you prefer to only start something if you have the liquid cash, then great, but that does not mean it is bad. Hell, capitalism wouldn't exist if people only started businesses with liquid cash. As long as you aren't over extending yourself, leveraging your money is proven to be the fastest way to build wealth. This is about reaching early retirement as fast as possible, not when I'm 50. I want to have long forgotten about the need to work by that age. So, unless my household can rake in 200k a year, then investing in IRAs, index funds, etc isn't going to cut it. The risk of leveraging your money to yield 12-18% or higher on real estate or business returns far outweighs the measly 6-8% of the safe options, especially at my age.

bwall

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Re: Anyone own a frozen yogurt franchise????
« Reply #12 on: August 29, 2017, 06:10:41 PM »
Sadly, in my 20's I probably wouldn't have seen the wisdom in this post. 20 years later, I couldn't agree more.
Nothing on the commercial real estate from either of you??

Hell, capitalism wouldn't exist if people only started businesses with liquid cash.

I stand by my original quote "In my 20's I wouldn't have seen the wisdom in this post."

Commercial real estate: Sure. Nothing quite like building a shopping center or strip mall and having it sit empty. You have to pay the bank, but no one pays you. No tenants willing to sign a five year lease with a personal guarantee for the entire term. The reason that they charge high rents is because it's really, really risky and they might go out of business. In fact, many do. Look at how many REIT's went bankrupt between 2008-2010.

But, more importantly, based on your quote about the relationship of capital to capitalism, I believe that you lack a fundamental grasp of capitalism. So, let's have a short quiz: When did capitalism begin? What did it supplant? Where did the capital used to develop capitalism come from? Hint: The answer isn't 'the banks' because the fractional reserve hadn't been discovered/invented until the 20th century, which means that real people had to capitalize the banks with real capital (that's money to you and me)--this means that by definition, capitalism started with real cash. And, final question: Why didn't capitalism emerge earlier? Or later? Why did it specifically bloom when it did?

clarkfan1979

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Re: Anyone own a frozen yogurt franchise????
« Reply #13 on: August 29, 2017, 09:18:48 PM »
I've been considering buying a subway franchise. From what I have read, it's $116K to get started. However, I probably wouldn't do it until my son starts school in 5 years, in which I will have more free time.

I would like to do a franchise that is socially responsible. I feel like subway does a good job of providing healthy options and not having too much plastic waster.

M5

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Re: Anyone own a frozen yogurt franchise????
« Reply #14 on: August 30, 2017, 01:52:06 PM »
I've been considering buying a subway franchise. From what I have read, it's $116K to get started. However, I probably wouldn't do it until my son starts school in 5 years, in which I will have more free time.

I would like to do a franchise that is socially responsible. I feel like subway does a good job of providing healthy options and not having too much plastic waster.

If that's the true number, that's actually pretty good. Of course you will need working capital on top of that, but an initial startup cost of $116k is pretty cheap. Most of the franchisees I know have invested a minimum of $250k to get a location up and running.

tralfamadorian

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Re: Anyone own a frozen yogurt franchise????
« Reply #15 on: August 30, 2017, 02:56:45 PM »
Subway is known to be one of the cheapest franchises to start.  However, I don't believe that they give territories so you have to be aware that there could be a new franchise opening across the street once yours is up and going. 

SC93

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Re: Anyone own a frozen yogurt franchise????
« Reply #16 on: August 30, 2017, 04:13:59 PM »
Something like a Subway franchise I wouldn't be against.... if you have the cash to do it. But think ahead further than 1 week. You need cash for LOTS of stuff not just the $116k. Location location location. Cheap rent usually = not so good location.

As for M5, you should talk to ALL the bankrupt people, not the very FEW that have succeeded from borrowing money. Once you get older and wiser hopefully you remember these conversations and realize how right I am. So you want to retire as soon as possible, either do something really great (money won't make you really great) or pinch yourself and wake up. Getting in debt doesn't make you retire very fast. Look at it from this point of view..... show what you can do with no money before you show what you can do with money. But no one can make these decisions except you. My guess is that you will kick yourself in the ass the rest of your life for borrowing the money.

Papa bear

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Re: Anyone own a frozen yogurt franchise????
« Reply #17 on: August 30, 2017, 04:21:28 PM »
I've been considering buying a subway franchise. From what I have read, it's $116K to get started. However, I probably wouldn't do it until my son starts school in 5 years, in which I will have more free time.

I would like to do a franchise that is socially responsible. I feel like subway does a good job of providing healthy options and not having too much plastic waster.

A few subway anecdotes:

Had an old coworker that owned a few subways.  She couldn't get out fast enough. Way too many issues without being on site as the GM.

Also had a neighbor who worked in financing for a bank in the northeast.  Said the last franchise he'd ever do (and one the bank hesitated to loan to) was subway. Best he saw was Tim Hortons.




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Papa bear

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Re: Anyone own a frozen yogurt franchise????
« Reply #18 on: August 30, 2017, 04:24:11 PM »
I've been considering buying a subway franchise. From what I have read, it's $116K to get started. However, I probably wouldn't do it until my son starts school in 5 years, in which I will have more free time.

I would like to do a franchise that is socially responsible. I feel like subway does a good job of providing healthy options and not having too much plastic waster.

A few subway anecdotes:

Had an old coworker that owned a few subways.  She couldn't get out fast enough. Way too many issues without being on site as the GM.

Also had a neighbor who worked in financing for a bank in the northeast.  Said the last franchise he'd ever do (and one the bank hesitated to loan to) was subway. Best he saw was Tim Hortons.




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Oh! Forgot about another coworker, he had 2 subways.  Said they did just fine financially, but he had staffing issues too.


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SC93

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Re: Anyone own a frozen yogurt franchise????
« Reply #19 on: August 30, 2017, 10:40:10 PM »
Staffing anything these days might be the hardest thing about a business. That's why I retired from my core business.... lazy people and just got tired of messing with them.

Hey, I hope you prove me wrong when you borrow that $500k. Maybe you will start a condom patching business and be the pioneer of a thriving business...... who knows!! But what ever you do.... have fun! You only live once and it goes by faster than you think!

snacky

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Re: Anyone own a frozen yogurt franchise????
« Reply #20 on: August 31, 2017, 12:22:14 AM »
Please let me correct 1 thing. Owner financing does not mean what you said. Owner financing means this a lot of times..... you pay $10k down and x per month. Let's say in 18 or 48 months it comes to a point that you can't make the payments. You will say he didn't tell you things the real way they were and he will say you didn't know how to run the business correctly. Since you can't make the payments each month along with the high priced rent of the building, he has to repo the business. Now he puts it up for sale again, someone gives him $10k down and the whole thing starts over again. My buddy Orville did this with 1 business for 47 years. Finally about 2 years ago he closed the business all together because the neighborhood has gotten so bad but he made a dang good living doing this. That's also how a lot (A LOT) of cleaning franchises are ran.

My question is this, why would you want to be tied down to just yogurt?

That's quite an interesting story, and it sounds like your buddy didn't have many morals if he was willing to make his living that way. I would say the majority of sellers would not be that way, not to mention if the buyer runs it into the ground, the seller will have nothing left to recoup. Therefore, there's no way he'd be able to resell it for a value that would be worth anything.

I have encountered this exact strategy many times. I had a job that brought me into contact with many small business owners, and several did this. It's not common, but it's also not as rare as it should be. Find out if this seller has sold businesses before.

The general tone of the advice you've been given is to run far away from this "opportunity". I would like to add my voice to that chorus. I would advise that you work as an employee at the type of franchise you are interested in owning, while taking classes on running a small business. Small businesses fail because people jump in to a complicated position without understanding what it takes.

M5

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Re: Anyone own a frozen yogurt franchise????
« Reply #21 on: August 31, 2017, 07:09:55 AM »
Well, we have decided not to pursue this. Mostly due to not being sure we enjoy this industry and we are definitely not willing to leave our full time jobs to try it out. We will keep looking and see what new opportunities arise!

On another note, I know it is easy to assume that my level of business knowledge or knowledge in general is low or non-existent due to my age, but don't underestimate me so easily. With any business venture I have pursued or thought of I have done extensive research on the subject and then run the financial projections. Oh and written business plans before as well. So no, I'm far from an idiot and actually know quite a bit about how to run a business. And I already do it on a small scale with my farming operation. I certainly don't know or haven't experienced everything, but no one has. You just need to have enough business sense to deal with challenges successfully.

Being old doesn't necessarily make you wise, and being young doesn't automatically make you dumb and naïve either!!

SC93

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Re: Anyone own a frozen yogurt franchise????
« Reply #22 on: September 01, 2017, 11:28:23 PM »
As our heads drop and shake from side to side......

Smokystache

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Re: Anyone own a frozen yogurt franchise????
« Reply #23 on: September 02, 2017, 04:54:37 AM »
Well, we have decided not to pursue this. Mostly due to not being sure we enjoy this industry and we are definitely not willing to leave our full time jobs to try it out. We will keep looking and see what new opportunities arise!

On another note, I know it is easy to assume that my level of business knowledge or knowledge in general is low or non-existent due to my age, but don't underestimate me so easily. With any business venture I have pursued or thought of I have done extensive research on the subject and then run the financial projections. Oh and written business plans before as well. So no, I'm far from an idiot and actually know quite a bit about how to run a business. And I already do it on a small scale with my farming operation. I certainly don't know or haven't experienced everything, but no one has. You just need to have enough business sense to deal with challenges successfully.

Being old doesn't necessarily make you wise, and being young doesn't automatically make you dumb and naïve either!!

Sounds like you're doing a good job of keeping your options open, investigating them, and being willing to not pursue it if the numbers don't add up. That last step is always the tricky part - it is easy to get so excited about an opportunity that one becomes blind to significant concerns. Sounds like you may have wisely avoided that in this situation. 

JayKay

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Re: Anyone own a frozen yogurt franchise????
« Reply #24 on: September 21, 2017, 07:48:24 AM »
Article that discusses these chains with some data-
https://www.ecomcrew.com/how-to-lose-your-home-buying-a-frozen-yogurt-franchise-or-ecommerce-business/

Wow, what a sobering article.  And to think that last year I was on that same site and wondering why all these froyo businesses were for sale!

lexde

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Re: Anyone own a frozen yogurt franchise????
« Reply #25 on: September 21, 2017, 08:38:27 AM »
I think the froyo craze is somewhat dying out. I'd ask to look over all of his financials before you commit.

economist

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Re: Anyone own a frozen yogurt franchise????
« Reply #26 on: September 27, 2017, 11:24:59 AM »
My wife and I are 24 and 23, respectively, gross about 88k per year, recently purchased a 150k home close to work, already own a rental property than cash flows about $150/mo, and currently save roughly 25k/yr of our income. Our goal is to FIRE as fast as possible, but have set basically a 10 year plan in place as a safe bet. Rather than simply put money in index fund or REITs, we would much rather take some risk and earn the greater returns of real estate or business income.

M5, I think you are in a similar situation to me (27, girlfriend 25, gross HH income maybe $75k while she is working on a PHD). Every few months I have a tendency to dive into researching some business or some kind of faster way to FI. But I think a lot of it is just impatience rather than a real desire to start a business. I would just stick to what you are doing, but continuously make small improvements. If you already have a rental is there some reason you don't want to continue investing in real estate? Is there some way you can work to increase your salary growth? If you already know you can do some things well you may as well keep focusing on that.

Another thing you could do if you want to feel like you're accelerating your path to FI, is look into little, low to no cost and risk things you can do that earn money or reduce expenses. I mean things like credit card hacking, selling junk around the house, shopping around for cheaper insurance, making sure you are minimizing your taxes (if you both have access to 401k plans you can save up to $36k/year instead of your current $25k), etc. Find 3-4 things you can make a 10% improvement in and it will eventually have a big impact.

M5

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Re: Anyone own a frozen yogurt franchise????
« Reply #27 on: October 02, 2017, 04:39:45 PM »
My wife and I are 24 and 23, respectively, gross about 88k per year, recently purchased a 150k home close to work, already own a rental property than cash flows about $150/mo, and currently save roughly 25k/yr of our income. Our goal is to FIRE as fast as possible, but have set basically a 10 year plan in place as a safe bet. Rather than simply put money in index fund or REITs, we would much rather take some risk and earn the greater returns of real estate or business income.

M5, I think you are in a similar situation to me (27, girlfriend 25, gross HH income maybe $75k while she is working on a PHD). Every few months I have a tendency to dive into researching some business or some kind of faster way to FI. But I think a lot of it is just impatience rather than a real desire to start a business. I would just stick to what you are doing, but continuously make small improvements. If you already have a rental is there some reason you don't want to continue investing in real estate? Is there some way you can work to increase your salary growth? If you already know you can do some things well you may as well keep focusing on that.

Another thing you could do if you want to feel like you're accelerating your path to FI, is look into little, low to no cost and risk things you can do that earn money or reduce expenses. I mean things like credit card hacking, selling junk around the house, shopping around for cheaper insurance, making sure you are minimizing your taxes (if you both have access to 401k plans you can save up to $36k/year instead of your current $25k), etc. Find 3-4 things you can make a 10% improvement in and it will eventually have a big impact.

Yes, your situation does sound very similar. In fact, I do the exact same thing every month or two. Lol my mind is always trying to think of faster ways to FI. As far as the rentals, we have decided to stick with them for now and continue investing in them as we are able. It's not glamorous, but it is by far the fastest way to FI.

Eludia

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Re: Anyone own a frozen yogurt franchise????
« Reply #28 on: October 02, 2017, 09:38:03 PM »
We used to own a non-franchise gelato shop on Maui.  So, hot weather 100% of the year.  It was located across from one of the most popular beaches on the island. 

We paid $30K for it cash.  It was (is) a fully built out and beautiful store.  It supposedly made a small profit most months.  (I did due diligence but not well enough - keep reading.)

We owned it for 14 months and never made a profit in any month.  At first we staffed it 100% and later my wife and I worked on and off in the store in addition to staff.  It was basically a black hole for money.  Some reasons why:

Freezer repairs are expensive.  $1000+ each time. 

Employees forgetting to close freezers at night - $500-1000 in lost product each time.  Employees not showing up.  Employees stealing stuff.  Employees closing an hour early because they had a party to go to.  We generally staffed with 1 person during the day, 2 at night.  During our ownership we had _29_ employees due to firing and turnover.  Do the math on that.  It is really bad.  Our longest tenured employee lasted 4 months. 

Electric bills for 4 freezers, and then AC to keep the place cool because of 4 freezers pumping out heat was $3000 a month.  Suppliers would gouge us because we had few options.  Ice cream making equipment is expensive. 

I could go on and on. 

We did sell and got paid over 3 years.  We probably lost close to $75000 in 14 months of ownership not to mention time and effort put in.   

Are there things we could have done better?  Sure, but it would still be basically buying a 40k a year job in the best case scenario.
« Last Edit: October 02, 2017, 09:41:47 PM by Eludia »

tralfamadorian

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Re: Anyone own a frozen yogurt franchise????
« Reply #29 on: October 03, 2017, 01:30:29 PM »
Thanks for telling your story, Eludia.  The employee turnover is a real eye opener for anyone looking to get into a business that utilizes unskilled employees. 

Telecaster

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Re: Anyone own a frozen yogurt franchise????
« Reply #30 on: October 30, 2018, 04:43:05 AM »

Are there things we could have done better?  Sure, but it would still be basically buying a 40k a year job in the best case scenario.

^ This.  If you are going to buy a job, at least buy a lucrative job.  I know nothing of the fro-yo or gelato business, but it seems like there is a definite maximum on how much one store can earn.  Once you hit that point, then the only way to increase your income is open another store, which is twice the work.  If you are going to buy a job, it seems to me that you should buy a job that has big upside potential. 


lbonga1

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Re: Anyone own a frozen yogurt franchise????
« Reply #31 on: November 30, 2018, 09:48:53 AM »
This is an interesting conversation, and I actually came on the site today looking for information about franchises. I'd like to be able to own a Coffee Bean and Tea Leaf, but from my research it sounds like they're only interested in having franchisees open multiple locations $$$. The other option I'm considering is a Cheeba Hut. I live in an area with a few large colleges, and it seems like the vibe of the business would fit well.
In any case, the scenario presented by OP does not sound like it would work out well. I can't imagine taking on a business that likely has zero income for a few months out of the year. The seller might be a good guy, but in the end, it's a business and he's trying to make money (or maybe even just recover some of his losses).

runbikerun

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Re: Anyone own a frozen yogurt franchise????
« Reply #32 on: December 07, 2018, 07:04:49 AM »
As long as you aren't over extending yourself, leveraging your money is proven to be the fastest way to build wealth.

Leveraging your money is proven to be the fastest way to produce change of any kind in your wealth, positive or negative. You can lose a hundred thousand dollars far faster through leveraging.

Also: you're 23. Being old doesn't make you wise, and being young doesn't make you dumb and naive, but it does a hell of a lot to shift the scales. The moment I saw the thread title, I thought "shit, didn't I read something a few years back about froyo stores being near-guaranteed failures?" - because my decrepit thirtysomething ass has been around the block long enough to absorb useful information exactly like that. There is an ocean of information that you're extremely unlikely to have had significant exposure to at this point in your life, and it's a very bad idea to get cranky or assume people are dismissing you on account of your age. They're not; they're taking into account the fact that there are unbelievable amounts of information and knowledge you almost certainly don't have by dint of your age and the fact that you literally haven't had as much time to find and read it as someone older.
« Last Edit: December 07, 2018, 07:36:17 AM by runbikerun »

BlueHouse

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Re: Anyone own a frozen yogurt franchise????
« Reply #33 on: December 09, 2018, 06:12:32 PM »
If I were to start a service business in today's climate, I'd start a dog-walking / doggie day-care business.  I am amazed by how much money people are willing to spend on dogs. And I'm dumbfounded by the number of dog-walkers who can afford to live in my HCOL city. 

jpdx

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Re: Anyone own a frozen yogurt franchise????
« Reply #34 on: December 17, 2018, 11:55:30 PM »
If you want to be an "absentee owner" of a business you should just invest in the stock market.

soccerluvof4

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Re: Anyone own a frozen yogurt franchise????
« Reply #35 on: January 16, 2019, 04:32:28 AM »
If you want to be an "absentee owner" of a business you should just invest in the stock market.
[/quote



Amen! your employees will just steal you blind.