The business opportunity to purchase an ICEDELIGHTS franchise for expansion into the Florida market.

Mark, Paul, and Eric are young graduate students with limited to no knowledge of how to run their own business, especially a food retail company like ICEDELIGHTS. While a franchise is generally less risky than running a start-up, I think they should look into a smaller, less costly deal for their first business. Also, they still have not been to Florida to observe the market that they are willing to invest so much time and money into. With so much ambiguity involved in the market, a restrictive deal by the parent company, and a lack of experience and knowledge of the business and its market, Mark, Paul, and Eric should not rush into securing this deal just yet.  

For the business to be successful, several things must happen. First, the initial stores must be able to create and fill a market demand for gelati almost immediately. With new stores opening every year, it is imperative that sales grow quickly and substantially. In the case that the demand is created, ICEDELIGHTS must rely on the fact that future competitors will be slow to enter and current competitors will continue to remain unsuccessful in their ventures. For ICEDELIGHTS to meet their expected growth forecasts, they must remain relatively uncontested for the first couple of years while they establish strong brand equity in Florida. They still lack the funding necessary to begin the venture, thus Mark, Paul, and Eric must acquire the necessary funds soon or their company will never even get off the ground, and they will lose their $75,000 deposit. The product must be perceived as one of high quality offered at a price which the consumer will seek value in. Operations between the parent company and the franchisee must run smoothly. There is no room for error concerning product purchasing and delivery. Also, the franchisee must rely on the parent company’s ability to locate and purchase premier real-estate throughout Florida. Finally, Mark, Paul, and Eric must rely on their own abilities to learn the business quickly and be able to adapt to a growing and changing market. As the number of stores increases, they will be have to focus on many outlets with tons of challenges, rather than center their attention on running only one or two stores flawlessly. Therefore, many problems will be outside of their control, so they must rely on the hiring and training of successful, competent managers who will be able to handle responsibility for their respective stores. In the case that one store faces a health violation or bad publicity for any reason, the effects could quickly saturate the brand across the entire Florida market.

I would not go through with this deal due to the reasons mentioned above. The management team of Mark, Paul, and Eric is young and inexperienced. They may not have the ability to handle the types of problems that can and will arise with the running of a new venture such as this. The deal with the parent company is disadvantageous to the franchisee given its rigid structure of expansion and limited amount of control granted to the franchisee for acquiring the product and store locations. The risk factors are too great at this point. They still have not secured financing. They are very unsure of the market, especially considering they have not even researched it yet. They do not have the capability of managing 30 stores and all of the employees stretched over the entire state of Florida. Before going forward with this venture, I think they should locate a fourth partner with more management experience, secure more financing, and try to restructure the expansion part of the deal with the parent company.