You got to be careful if you don’t know where you’re going, because you might not get there.
– Yogi Berra
Franchisees Deborah Williams and Richard Wilshans have waged a four-year legal battle against their franchisor, The Coffee Beanery. They claim that they thought it would be nice to open a coffee shop in Annapolis, MD. Their first choice was Starbucks – but Starbucks doesn’t offer franchises. So they went to sales presentations for the Coffee Beanery, and were sold. While there, the Coffee Beanery execs allegedly “upsold” them to their super-duper “Cafe” concept which – unlike their traditional mall store – could be located in a strip center and had an expanded food menu.
Three months after opening, their Annapolis CB Cafe was bleeding money. They called in the attorneys and their battle ensued. Four years and hundreds of thousands in legal fees later, they have not yet gone to trial. The franchisees allege (among other things) that they were fraudulently induced into opting for the flawed cafe concept instead of the traditional, proven mall concept.
The franchisee’s first and most critical mistake being motivated by the romantic notion of themselves as proprietors of an upscale Cheers-Meets-Starbucks coffee shop, and failing to begin their planning process with a strategic business and market strategy.
Let’s say, for instance, the franchisee’s initial decision was firmly based on the fact that their research indicated regional malls with particular demographics and traffic volume generated an average of $X million in coffee revenue for specialty coffee shops. And let’s say that the mall in Annapolis did not have a gourmet coffee shop and would grant them a good location and exclusivity. There’s no way that a sales person could have convinced them, in one afternoon, that they should add sandwiches and locate in a strip center 2 miles away. But because their initial decision was somewhat arbitrary in the first place, they were easily diverted.
It’s an important lesson: Don’t just open the business you think would be fun (or good for your image) to run or because it fits with your country club image – open the business that there’s a consumer demand and a specific market need. That way, if you’ve determined that this market needs a coffee shop and someone suggests a full cafe instead, you probably won’t just say “OK. We’ll do a cafe.”
Know where you’re going. That way, you’ll know when you get there.
Relentless marketer Sean Kelly is a 20 year veteran of the franchise industry, and founder of the award-winning marketing firm IdeaFarm. In 2006, he founded the FranBest franchise networkbest franchise opportunities, the top new franchises, franchise marketing, franchise public relations and small business marketing. Contact him at seankelly[at]ideafarm.net.