Monday, August 25, 2008 6:38:38 PM
Point is, this does not seem to have worked, most likely because it is just too expensive. I know they are quoting 1.6M in capital on the website. Now I know why. I don't know much about the finances of franchising, but maybe what has happened is the potential franchisees have looked at the economics of it and it just does not work for them. Remember a franchise is not really a technological thing. It is a brand thing, a convenience thing, an experience, whatever. Technology serves to support those things, technology is not the franchise. Anyway, after 2 years of trying, it seems to not have worked. The other thing that is perhaps hurting them is their financial vulnerability. Does not transmit the right message to people about to fork over 1.6M. Clearly, if franchising had worked, they would have grown as per the original plan with no problems, as franchises fund more corporate stores.
So I believe uWink has said they are going to emphasize "franchising/licensing" to use their exact words. OK, I think we can modify that to read "licensing". The franchise dude is flotsam and/or jetsam in the new company and should be replaced by a Director of Sales. Licensing gives them the flexibility to provide customers with exactly what they want, without having to conform to the confines of a "franchise" concept. Mr. franchise may be deeply experienced in the art of franchising, but he will not fit in with this and may not be highly technological.
Probably the use of the phrase "franchising/licensing" is to soften the blow of the strategic shift. Franchising and licensing are actually two different things. uWink tried to combine them together, and it did not work. Hence the "showcase" concept.
It disappoints me that they did not choose to control their cost to survive within a 3-restaurant operation, as I see no reason why they could not do this. I also see money spent in the wrong areas, with no emphasis on the R&D staff.
As a result, I think the only way now to play this is to let the cards fall over this next quarter, and then look for a low after the deck gets reshuffled.
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