Jason Madsen met the owner of Zuka Juice, when he was only twenty-one years old and decided to explore franchise opportunities at that time.
As part of his due diligence, he hired friends and relatives to stay in front of Zuka Juice stores to count the number of customers in order to get an accurate sales revenue estimate.
Colorado Springs seemed to be the perfect place for Jason to start his franchise operations because it had the correct demographics of people with disposable income, who would be good target customers for a new juice franchise.
To establish his new business required that Jason invest $155,000 to get started. For this young man, this amount was a fortune, and things did not go well. Only ten days after opening his first store, a blizzard struck Colorado. Suddenly the pressure was on. Jason needed to make sure the first store would survive before opening a second and third store, which was part of his original plan.
The demands on his time in the first months were extraordinary. He worked to the point of exhaustion to open and manage two new stores in a single month. One thing that worked in his favor is that Jamba Juice made the decision to acquire Zuka juice.
When the Zuka named change to Jamba, the brand had more clout and Jason Madsen became part of the transition team. However, there was no guarantee of success in the transition and sales at Zuka stores plummeted immediately by 50% after the name change.
Madsen recommends that potential franchise owners talk to existing franchise holders. Simply by asking them the question of “Would they do it again?” is very illuminating. Make sure a legal team reviews the documents especially the Uniform Franchise Agreement. Franchise fees cut deep into the profits of a business. The marketing fee of 2% to 2.5% plus profit sharing means that the total cost of the ownership of a franchise can be as high as 12% of total profits. Franchisees need to know what training they get for this fee, what advertising support, and what other support they get from the company for paying this fee.
Starting a Franchise: The StartUp Experience
- Enhanced DVD
- ISBN: 978-1-62102-473-6
- Run Time: 80 Minutes
- Copyright Date: 2011