To franchisee's... form an association quickly.
Being experienced in the franchise world and having traveled across the country opening many stores for unsuspecting entrepreneurs, I'd highly recommend everyone investing to form a franchise association. Organizations like the AAFD are great. Read the book... The Franchise Fraud by Bob Purvin.
When you buy a Mercedes, you pay a premium price for a premium brand. If Mercedes were to charge you a premium price (in this case $50k), yet, in addition, you had to pay them a royalty each month, it dramatically changes the terms. If worse is if Mercedes requires that you purchase all fuel and oil exclusively from them. I continue to assert my concerns in the franchise model and the long-term impacts to franchisees. Consider the risks:
1) Yogurt industry has become oversaturated and is declining.
2) Tripled ended franchise agreements that only squeezes the franchisee. 1) The high price of the machine. 2) High royalty. 3) Vendor Rebates paid to the franchisor. Consider that at Subway, the franchisees control the purchasing power, while Quiznos squeezed the life out of its franchisees. One won and won imploded horribly.
3) No real exit strategy. The machines, the software, the technology, etc. are exclusive and proprietary to Next Gen. If your location sucks, how do you get out? You can't just turn the asset into cash because the machine is a useless brick without Reiys and Irvy's intervening. In my research in California, every decent location that I felt you could put a machine had a yogurt concept.
4) Changing times Consumer Trends: I find that very few malls will offer exclusives anymore. Another concept could easily come in.
5) Very few machines on the market - The purpose of a franchise disclosure document is to help a prospective investor complete due-diligence for the business they are considering investing in. If there is a dispute, there are very few resources to help the franchisee (hence the association is needed). The FTC has very few remedies to help franchisees. Is there enough transparency with current data (not the test market which didn't use the same machines), to allow a prospective franchisee to make a business decision based on real data.
6) The PASSIVE INCOME THEORY IS BULLSHIT - These are yogurt machines folks. There are stringent health code rules. This is open food requiring a decent amount of preparation, logistics, sanitization, commissary, and labor to make it all work. Unless you are Mcdonalds that uses Taylor Machines which self-clean (pasteurize) every night, then you will be working to maintain these machines. I still use yogurt machines in several of my locations and they are cleaned daily (DAILY!!).
I would just encourage any franchisee to not fall into the DRINKING THE COOLADE mentality that everything is incredible; unless it actually is. I can't tell you how many people I have worked with over they years that would always tell me things were amazing... when they weren't. Assess your reality and share your stories amongst other franchisees. This level of transparency will only help you and help others not (potentially) make a catastrophic financial decision.
