Are the corporate franchises sufficiently funded?

There has been a lot of comments/blame about owners not having sufficient funds to keep their stores open, create the proper marketing and get them through the lean times. But, on the flip side, do the actual corporate franchises themselves have enough money to survive this year?

I believe a lot of the money franchises made last year were through franchise sales rather than actual product sales (dinners sold). Now, if the sale of stores grinds to a halt and is no longer an income stream will the corporate offices be able to make it through this year?

And to add to that, what about franchises like MealMakers, My Girlfriend’s Kitchen and others which have made a mark, but have yet to achieve a national following. Will they have enough money to still be franchises at the end of the year? Will they still be supporting their owners at the end of the year?

There are rough times ahead for owners, but let’s nor forget that we might actually see some franchises closing as this year unfolds. So can the corporate offices handle that hit and what will they do to finically support and fortify themselves?

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6 Responses to “Are the corporate franchises sufficiently funded?”

  • MA Owner:

    Excellent post!

    I honestly don’t believe that the MGFK & Mealmaker sized ones will make it through the year– they need to sell franchises to make money. And sure even if they don’t sell franchises they don’t collect much in royalties. IF they have corporate owned stores that do well I suppose they could make it through the year though. But if their franchisees don’t do well, yet they do, well, that seems a bit odd/fishy…

    In the Bay area we have a few regional MA franchises. I don’t see them opening up stores aggressively anymore… the ones that had been announced a few months back on their sites were announced and now theres no more new ones since. I’d imagine that these smaller regional ones make money the same way– by selling franchises. Correct me if I’m wrong though– regional franchisors could have a different model.

    My biggest concern is SS– of the two largest MAs (DD & SS) SS’s franchises seems to be selling much faster than DD, and those who do make money don’t seem to make much. Does anyone know how many of their franchisees actually make money? It doesn’t seem like many– although many of the franchisees work really hard. Based on comments about SS on the Franchise Pundit website they’re in for a rocky road (their franchisees call them crooks– what a great relationship). Also does anyone know if they really are signing any new franchisees? I’d be surprised if they were, but you never know because of their size. I heard they’re telling new franchisees that they had picked the wrong set of owners in the beginning. Sure maybe they should have had better capitalized owners (who could make it through 1 year of not making money), but they also should have set the requirements.

    I doubt franchisors will be getting many 35K checks this year… curious as to how THEY plan to make it through…

  • mysterymiss:

    The MGFK in my area just closed, that leaves us with 1 where there were 4.

  • mysterymiss:

    In answer to Tuckerbox’s original question my gut tells me that some of the smaller franchisors will not make it through the year in tact.

  • In conjunction with store closures I full expect to see a couple of franchise closures this year. I don’t see how some of the smaller ones will be able to stay in business. Their owners won’t be generating much in royalties so they will have little capital to work with. Once that happens they will find themselves in the same predicament as the owners, they have no customers and they won’t be able to afford doing business.

    Just as stores will lose competitors so will franchises, but will there be a benefit? Will local stores see new customers as stores close? It hasn’t happened yet so I don’t see how franchises will benefit. I can easily see a domino effect. As soon as one franchise goes out of business I suspect it will take several others with it. That may literally be the final nail that scares customers away for good. Once the franchises themselves start to go under I don’t see customers having and confidence in investing their money in a corporation that very likely could be gone the next day.

    I wonder if Dream Dinners and Super Suppers are now sitting there saying “That could never happen to us” just like so many of those store owners out there…

  • mysterymiss:

    Tuckerbox, I’m sure the answer is ,”yes”

  • mysterymiss:

    At the risk of pointing people to the Supper Thymes website. It would seem that ST ownership has decided that adding “10 new franchises to the network” is the magic number needed for them to survive the year.
    Good Grief!
    They are STILL trying to bilk honest hard working folks out of their life savings. Preying on their desire to work for themselves and own their own business (not a real possibility being a franchisee) and get out of corporate America so they are not “working for the man.”
    Remember a franchisor makes money off of the franchsiee whether or not the franchsiee makes moneys by collecting royalties. I have yet to hear about a franchisor (ST in particular) refusing royalties or refunding royalties to franchisees.
    I hope that folks find this blog and others and heed the warnings and wisdom that is found here written by folks like Tuckerbox & others about the MAK concept.

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