Anyone with experience in ICE CREAM manufacturing or franchise?

June 15, 2022

by a searcher from Pontificia Universidad Católica Madre y Maestra (PUCMM) in Santo Domingo, República Dominicana

I am about to sign an LOI with an Ice Cream manufacturer and franchisor for ice cream parlors. Any guidance on where to dig deep during the diligence process would be greatly appreciated. Also, building my hypothesis on how to grow it, i am torn about the optimal mix of owned vs franchised stores...

Thanks!

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Reply by a searcher
from Texas Christian University in Fort Worth, TX, USA

Camila, congrats on finding a franchisor possibility. The franchising space, on either side, can be fun. To start your diligence, you should get a copy of their Franchise Disclosure Document (FDD). This will provide a high level of information, including store current, store AUVs, store build out costs, and fees charged to franchisees. You also need to get a good understanding of their supply chain. Do they have major vendors? What is the status of those agreements? Are they coming up for renewal soon (with increased costs to the system no doubt). Also review current corporate store P&Ls and leases. Can the leases be assigned? When do they renew? Also review their current sales pipeline. Do they have any pending sales? Any stores in development?

You’ll also want to do a good QoE on their accounting.

Regarding, corporate vs. franchised stores. That’s a risk reward balance and is up to your tolerances. More corporate stores means more bottom line revenue potentially but also more capital risk. Have at least one corporate store because it shows you have skin in the game, a place to train, and a test store/kitchen.

I hope this all helps.

Reply by a searcher
from University of Colorado at Boulder in Camas, WA, USA

I can weigh in on the manufacturing of frozen foods and can be helpful if there is a retail grocery element to this.

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