Co-branding helps franchisees by balancing the two concepts' differing labor and food costs, Steinberg says. Green Leaf's customers select from fresh salad greens, fruits, dressings, toppings, and other ingredients that employees assemble into salads. Its relatively high food and labor costs are offset by Bananas, which requires a shorter and less expensive list of ingredients and can be operated by fewer employees, Steinberg says.
Green Leaf's and Bananas are usually found in places with high foot traffic such as airports and shopping malls. These locations tend to generate irregular surges of customer demand compared to other restaurant locations. For instance, airport restaurants' rush periods are tied to aircraft schedules. "Because of that, you really need somebody that knows how to operate a restaurant, keep inventories straight, and use labor correctly," Steinberg says. "We really like to gravitate toward people with restaurant experience."
Green Leaf's and Bananas are in 40 locations,and the chain should grow by four more this year. Steinberg says they are also investigating a new concept, a Bananas-only kiosk, which calls for much less space, inventory, equipment, and labor."We're going to try to see if we can roll out a couple more kiosks this year, "he says.
Some franchise organizations haven't been around long enough to find out the full extent of their potential. One of those is UNITS Storage, a Charleston, S.C., provider of mobile storage and moving containers that just started franchising in 2006. The sales figures reported by franchisees so far are encouraging, says John Steeves, chief operating officer. "We're finding numbers that would equate to the million-dollar revenue mark somewhere between years five and six," he says.
Mobile storage itself is still a young industry, with many potential business and residential customers still unaware of its advantages. Businesses often use portable containers to help with records storage because it's cheaper than adding office space. Restoration and construction industries similarly find containers convenient, safe,and less expensive for on or off-site storage. Residential customers tend to employ the containers to help with relocations, parking a container in their driveway, and packing it themselves, then having UNITS pick it up for temporary storage or moving to a new home. That lets them save considerably over conventional pack-and-move services.
The newness of the concept supports its rapid growth in sales. "We're seeing high growth numbers in the 200-plus percent range within a five-month period," Steeves says. UNITS leverages the quality of its steel-framed containers to differentiate its offering as more secure and watertight than competitors."We've invested a lot of funding into making our container what it is today," Steeves says.
Franchisees like the opportunity to grow a sizable business with substantial assets without having to wait a long time. "It ramps up very quickly because of the need for storage," Steeves says. The typical franchisee is a former executive-level corporate employee who may have been downsized. Strengths in executive management or sales and marketing are particularly desirable, he says.
In 2010, Steeves plans to add from 13 to 15 franchise territories to the nearly 40 already opened. They also are introducing a robotic delivery system that can be operated from a distance, reducing the safety risks employees run when delivering containers. "Once the economy is turned around, we hope to be close to the 100 mark by 2013," he says.
As these examples indicate, franchises with potential for $1 million in annual sales are often businesses operating out of retail storefronts. These types of businesses tend to have higher investment requirements than concepts that can operate from home offices or vehicles.That shouldn't be too surprising,notes Bisio. "There is a connection between investment and gross return," he says.
Another business truism is that more sales don't necessarily translate into more profits. Businesses with sizable fixed costs, for instance, will generally offer lower profit margins than some other opportunities such as home-based consulting businesses.
Another consideration with a business operating out of a retail location is that it can be more involved to grow a great deal after initial ramp-up, Bisio notes. Often, that may require finding, acquiring, and building additional locations instead of just hiring moreemployees, leasing a few more trucks or putting in more hours.
Franchises with high sales volume also can offer special advantages. Investing in fixed assets, such as land and buildings, helps the owner of a business build its value, for instance. Barriers to entry are often higher and competitors fewer. And a well-padded top line can help remedy a multitude of other problems.
But in the final analysis, Bisio says, the best place to look for a million-dollar franchise is not in listings of opportunities. "In many ways, finding businesses that will get to $1 million is not that hard, but it requires dedication," he says. "At some point, you may want to quit. Then the challenge is less about finding the opportunity and more about finding the internal fortitude to get to where you want to go."
