Franchise Lawyer Blog

We have previously written on this blog concerning what individuals need to know about developing a franchise opportunity and how they can obtain that information. Here is an important opportunity for prospective franchisees or those seeking to enhance the growth of a franchise they already own.

The Manhattan Chamber of Commerce (MCC) , in conjunction with NYC Business Solutions and the U.S. Department of Commerce, will be moderating a panel discussion on "everything from A-Z about buying and growing your franchise."

Among the featured speakers in the Program, entitled "Franchising 101," will be Michael Einbinder, a partner in this firm.

Registration: NYC Business solutions website, click on Franchising 101.
Event Location: NYC Business Solutions Lower Manhattan Center, 110 Williams Street, 4th Floor, Cafe Space, New York, New York, 10038.
Workshop time: 8:00 AM to 10:00 AM, Wednesday, February 17, 2010.
For more information: Call 212-513-6472 or email Shelly Nicholas at snicholas@seedco.org.

Attendees will learn about domestic and international franchise opportunities and be provided with guidance to help determine for themselves if a franchise is right for them. The discussion is also intended to help understand the financing requirements of buying a franchise and discover free resources to help launch and grow a franchise. The distinguished panel includes a successful franchisee, financial professional, attorney, accountant, franchise consultant, U.S. Department of Commerce Director, NYC Business Solutions Lower Manhattan Center Director, and the MCC President.

Tuesday's New York Times (January 19, 2010), provided an obituary of Glen W. Bell, the founder of the now enormous Taco Bell franchised restaurant chain. The obituary tells the story, inspiring in this current economic climate, of Mr. Bell's invention of the crispy-shell taco and the growth of the original Taco Tia restaurant to the 5600 unit Taco Bell franchise chain currently operated by Yum! Brands.
Mr. Bell is credited with introducing mainstream America to Mexican food, an idea that seems obvious now but was undoubtedly revolutionary when he thought of it. At the time, the late 1940's, he was competing with a number of fledgling fast food chains in what The Times describes as an "emerging Southern California car culture." One of those competitors was a hamburger stand only a few miles away that was run by two brothers named McDonald. Mr. Bell recognized that he needed a hook, something to distinguish himself from the pack, and he found it in the taco. He altered the design of the traditional taco from a soft shell to a crispy shell to make it easier to sell (and eat). The rest, as they say, is history.
Mr. Bell, who served in the Marines in the Pacific in World War II, obviously did not lack for nerve, trying to sell a completely untested food in a largely untested format. But that kind of innovation has been at the heart of nearly every successful franchise concept. You have to differentiate yourself from the competition. Doing so takes nerve, because to provide something truly innovative, it has to be something that has not been done quite that way before. And no one knows how or if that is going to work.

The New York Times hosts a small business blog, which today addresses the unique set of difficulties created by entry into the restaurant business. As the writer, a former restaurant entrepeneur, notes, "...restaurants require an enormous amount of focus and the ability to coordinate a seemingly infinite number of details, many of which must be expressed as ratios and monitored constantly in order to run a successful establishment." And yet restaurants are uniquely popular as small business start-ups in general and franchise opportunities in particular.
Why? Because a successful restaurant is a magical place, vibrant, electric, humming. The coolness factor cannot be overestimated. To stand at the door greeting eager patrons to a sold out restaurant is the closest business environment there is to starring in a hit broadway play. The creative element of providing the decor, style and menu of the establishment enables the entrepeneur to take particular and personal ownership of the business.
And yet the first response that a new franchisee will likely get to the news that he or she is opening a restaurant is a cautionary tale about how most restaurants fail. However, there has been some documented writing on that subject that dismisses that assumption as an urban legend. According to actual research, restaurants, including franchised restaurants, fail at a rate that is no higher than the failure rate for new businesses in general. Generally speaking, restaurants appear to fail at a rate of 25% in the first year and 60% over the first three years. While these hardly appear to be encouraging franchise survival rates, those rates are consistent with the survival rates of start-up businesses in general.
From the point of view of the franchisee and those counselling him or her, it is essential to recognize the risks to starting a new business. Everyone has to go in with their eyes open and with as much protection as their attorneys can provide. However, there may not be anything more to fear to entry into the restaurant business, which may make the allure of success in that field even more enticing.