New franchise?

[granev]

Mho

hi geoff
i will let you guys give all the advise on investments , i will just listen and learn.
but i have an opinion on your situation.
i dont think that a subway in a westfield mall will conflict with one in the street ( as long as you have reasonable parking ) no matter how agressively the mall one advertises.
i am on the road a lot in my job , i eat subway a lot , but i would never try to find a park in a westfield , go into the mall , and sit in a crowded area to eat it , when i can find one on a main road , pull up out the front , and bingo.
likewise , if i am shopping at a westfield , and i am hungry , i will buy something from the mall , if there is no subway i will buy something else , i wont lose my car park to drive and find one on the street.
at westfield marion there is a KFC in the mall , and a KFC right next door outside , and i really dont believe they conflict with each other , you are either in the mall already , and if you are not , i will be damned if i am going in there for a zinger burger.
in your case , they might be 2 subways 1k apart , but both will have far greater compitition than each other
the only people you would lose are those that work in the mall , but most of them probably buy a baugette or something already , because we are all lazy !!

 

[LynnH]

GeoffW

Won't offer my 2c worth - I've never had a business, and wouldn't know what I was talking about!

But, whatever you decide, I wish you the all the very best!!!

Cheers
LynnH

 

[TheCamel]

GeoffW - someone at Centre Mangement is obviously fairly certain there will be a subway there. Take a walk past Dan Murphys...

 

[Firsthomelooker]

I'll second everyone elses comments that from a customers point of view in that I don't think there would be much cannabalising of business between the two stores. Parking at that particular westfield is so bad during the day you would be crazy to go their for lunch when you could go to the various stores by the lake with easy parking.

In terms of competition I think you should be more worried by wok it up than another subway in the mall...

edited to add... your signboard cracks me up

 

[geoffw]

GeoffW - someone at Centre Mangement is obviously fairly certain there will be a subway there. Take a walk past Dan Murphys...

Yep... the head lease has been signed by Subway Australia.

If I choose not to take it, there is a looong queue of people waiting behind me.

 

[geoffw]

In terms of competition I think you should be more worried by wok it up than another subway in the mall...

I'm not worried by them at all. The more food takeaways along the street, the better it is for all of us. (For non Canberra people- there's perhaps 8 food takeaway places in 500m- that includes a number of places oipened very recently).

When Hungry Jacks burnt down, turnover lifted marginally- and dropped slightly after it reopened.

edited to add... your signboard cracks me up

Thanks... make sure you check out the website.

 

[leicachamp]

Geoff

If i was in your shoes I would sell up. If you are just making profit now, i see little chance of you getting making more.

Your aim for buying the business was to buy properties. If you havent been doing so in the past 3 years then there has been the opportunity cost factor. The money tied up in the business could be used to fund property purchases.

Do you mind me asking how many properties you had before u started the buisness.

FYI i use to own 8 business at the same time. None of them made me much $. Now i work for someone else part-time and make $$$$$$$$ on the side with property.

It is not as glamorous, but i have more free time and more opportunities.

Thats my 2 cents worth. hope it helps.

 

[TheCamel]

Yep... the head lease has been signed by Subway Australia.

If I choose not to take it, there is a looong queue of people waiting behind me.

what is a Head lease ???

I guess its where the franchisor rents the place, and then the franchisee will take over the lease?

 

[ggumpshots]

Without knowing more details my answer might be a bit impertinent.

However ,it seems to me that whilst you may be able to extend it would be better to concentrate on subway. not from a financial point of veiw but from a mental health perspective
Are you prepared to step up the pace a couple of notches for the next few years?
You seemed shocked in the beginning at the workload of Subway and perhaps a new business might incur more unknowns .
If you had owned subway 3 or 4 years my response might well be the opposite.

 

[TheCamel]

ggumpshots - i'm not sure if you understood, it's another subway franchise..

(if you did, i apologise.. it just felt a bit ilke you didn't)

 

[kissfan]

Hi Geoff.

Haven't commented on this thread to date, been watching from the sidelines.

If it were me and if all things were equal, i.e, if you were still going to have to put in a lot of hours, still have staff issues etc etc etc, I would go for the option that I thought was going to put more dollars in my pocket. For me , it would be that simple.

Do both sets of figures on the worst possible scenario and go from there.

All the best whichever way you go.

Regards
Marty

 

[luckyone]

Hey Geoff,

Personally, if I were you, I would buy the new franchise. I'd then wait and see how much extra work it was for you. And if it was too much work, you could always sell off the worst performing one, or the one that was the hardest to manage. I think by buying the new franchise you are actually giving yourself more options. I mean, fine you'll lose some more of your free time, but that probably won't last forever. And the best thing about owning two stores is that if someone is sick at one store, you could just transfer someone over from your other store. I know that used to happen all the time with staff at the Macca's I worked at in Sydney.

Good luck with whatever you decide to do!

 

[TheCamel]

Maybe somethnig else to consider GeoffW,

The store I worked at, and in fact most of the stores owned by that owner, tended to only employer older teenagers, or people in their twenties.

Thought being - they are more responsible. sure, for the same price you might get 2 15 yos.. but they need more direction and supervision..


Of course - you have mentioned as well, that your staff seem to be doing quite well.. and you could reward them by giving them a bit of a push into management..

 

[ggumpshots]

ggumpshots - i'm not sure if you understood, it's another subway franchise..

(if you did, i apologise.. it just felt a bit ilke you didn't)

Thanks,
I have misunderstood.
I thought Geoff was going to go into some new IT testing business.

If its another subway then I guess its a matter of being able to effectively manage the workload v the expected return.
If its fun then maybe yes. If its hard work then No............nothing wrong with hard work but perhaps this will be a drain on ones ability.
It is too easy to be overextended and it sounds like Geoff has been operating at 110% most days.
If the work load isn't so intense and Capital gain is assured then I would be much more positve to suggest going forward. The fact that many others may want to buy the franchise is always a good exit to have.
Just information to toss around

 

[lizzie]

... something to consider, that was touched on, was that you paid a lot extra for "goodwill" when you bought your subway. is it possible to take up the new franchise at the discounted price, build it up for a year, then sell it for a tidy profit to reduce the debt on your current subway?

otherwise, after a year you might find both running great guns and not sell either, but instead install a manager with your "discounted by buying new" money.

 

[Mr. Fabulous]

Hi Geoff,

A few people have mentioned buying the new franchise and seeing how it goes. Not knowing how Subway operates, it might be a good 'each way' bet. You mentioned that there is a long line of people keen to buy a franchise - maybe buy it, see how it goes, if it doesn't work out, you probably won't have any trouble selling it. If it goes well, then hold onto it.

One risk may be selling it for a price that at least recoups your losses. How long have they given you to make a decision?

Mark

 

[chrispy]

Geoff

I have sat back waiting for you to lean one way or the other.

I don't know if this will help but when I am faced with such a decision I put it into property terms - if it was a new property being offered at cost then yes I would buy it, take the income for a while then work out whether it was performing as well or better than any of the others and whether it was increasing my net income.

Good luck with whatever you decide.

Chris

 

[Kevin Hockey]

Hi Geoff,

A few points....

I'd suggest you would be targeting a new/ different clientele in the shopping centre. Shopping centres in ACT are busier than other cities because Canberra doesn't have Shopping strips as such. As you know Geoff, my sons and I eat at Subways often and I've eaten at all of them in my area, just depends where we are.

I would definately be concerned about your current workload and expanding but if I was coaching you I'd also be asking you why is it consuming so much of your time. Is the problem you, are you willing to let go. If the business can't make profit without you in it, do you really want to expand further and do you really see it as your future.

Your decision has to come down to 3 things - Profitability, Servicibility and Capability. Will they both make money, can you service the debt and are you capable of managing them both. If the answer is no to any of those then you shouldn't do it.

I'd highly favour opening the next store but I also have major issues with you making little profit and you working those hours and trying to open another store. One of my franchisees recently came to us wanting to open a second franchise but we had to set him some guidelines of expectations before we would approve it. A major issue for us was his ability to step out of the office he was in and open another and there be little or no effect on his current business.

Remember - it's more important you be working on your business rather than in it. Our new Go Gecko Birkdale office which opens in a week or 2 is owned by someone who also owns 2 Video shop franchises. He is making excellent profit and works just a couple of hours a week within the business. He's now opening a real estate agency which he intends to work in full-time but within 1-2 years will also be set up to simply be managing the process there too.

Good luck Geoff, I wish you well.

Would love to talk further if you want to call me.

Kev
www.gogecko.com.au

 

[WallyB]

agree 100% with Kevin

There are a large-ish number of successful multiple franchise owners (and as you know some have publicly listed). I'd contact some of them (I'm sure some have subway franchises) meet them for coffee and ask how they manage their time. If your hours now are a hurdle- it appears they will always be a hurdle to you getting "bigger"

good luck geoff,

Wal

 

[geoffw]

Thank you everybody for your thoughts.

I'm now quite firmly vacillating.

And I'm supposed to have accepted and sent in the form.

On the one hand, if I didn't take up the new franchise, I could go back into IT, and MrsW take up managing the shop. Even with a few years absence from IT, I could get three times what MrsW earns.

That option would enable me to repay the expensive business loans more quickly, build back my IT expertise, and give me some cashflow to get back into property investing. And pay for my childrens' education. (W2 would like to spend a few months in a school in her mother's home country of Mexico. That could give her a whole new world of education). Paying off the loan would mean that income from the business could actually become worth while- well, almost.

I do realise that competition from the mall store would not be direct head on head. But there are three things I may be worried about.

1. The office blocks half way between the two sites. There are many hundreds of office workers there- it may not take much to swing them from one site to the other.

2. Intensive local advertising.

3. Probably the most serious. Staff poaching. I know that there have been instances where one franchisee has directly approached employees of another franchise- or employees of the same franchise with another franchisee- to offer them jobs. That's not my ethics, but it is not the same for everyone.

But, on the other hand, there are definite advantages to having two stores close. Borrowing of product is common. Exchange of staff would make some staffing issues less of a concern. A mall store would have limited opening hours. And I have an excellent manager, who, if I could convince him, could run both stores quite well.

I overpaid, a lot, for my store, but only found that out later. Starting a new store could balance out that mistake.

By the time the new store opens (whether I have it or not) I will have had the old store for close on three years. I'm spending more time AT the store than IN the store. So I "need" to be there. To make sure that things are run well. That things are tidy and clean, and that all the food is ready for lunch and dinner rush. And to be an extra pair of hands when we're unexpectedly busy.

Weather has a big influence. When it's cold and wet, my business goes down. But the business in a mall store goes up. So there is the potential to balance staffing.

Now where is that coin? Just when I need a tosser I can't find one