Steve ,
There is a customer who comes around my cart. Loves the business and wants to partner up.
I do not know if I want a partner, but I was thinking of maybe setting up a hot dog cart franchise.
How would I go about doing that? What do I need to make sure is in the contracts?
Is this even an option for this business?
Ed
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Hi Ed,
A true hot dog cart franchise is a very complicated legal entity. Franchising requires you to file a UFDD (Unified Franchise Disclosure Document). A UFDD can cost tens of thousands of dollars for a lawyer to draft. And that’s just the tip of the iceberg.
A much simpler alternative is a licensing agreement.
If you have built a brand and not just a business (as I teach in my book Carts of Cash), you now have a valuable asset that others will pay for.
You could charge a simple licensing fee which allows someone to use your logo, colors, website, uniforms, menus, etc. on their cart for a specified time period after which they need to renew their license.
The fee could be as simple as that, or you could charge the fee plus a percentage of sales, cart rental, etc.
Licensing gives you repeat, residual income with no work on your part. It is the easiest way I know of to expand any business.
Just remember, none of this is possible unless you have built a strong brand that is recognized in your community.
Let me know what you decide to do Ed, I’m always interested in seeing how my slingers grow their businesses!
-Steve
I would say NO! I partnered up with my eldest Son when I opened my restaurant. I spent most of my time fighting against him (who hates change) when ever I needed to make a decision. We butted heads every day. My dream was not his dream. My recipes were not his recipes. I was so relieved when he finally took another job and left me on my own! If you partner up in any way, you will have that person in your “soup” all of the time AND if you license out your logo, you run the risk of them wrecking your reputation! (My own rep took a few hits thanks to my partner). I would say “PRAY HARD” about it, but unless you get a burning bush, I would RUN!
Ed,
I would be very weary of a “partnership. ” How well do you know this person… integrity, work ethic, knowledge,… Think of the time and sweat equity which you have put into your business – all of that is on the line, and what does this person bring to the table? I would be more likely to buy a second cart and have that person lease it on a weekly basis. If it doesn’t work out, you can lease to someone else or sell. There are lease agreements which can be made without using your brand and risking your own reputation and business. As you may know there are many people out there that see the sexy side of this business, but don’t realize the work that is truly involved.
In spanish there is a saying “Las medias dan calor” which means sox gives you heat. I would no try it. Good luck.
“A partnership is a permanent solution to a temporary problem.”
“Don’t do it”
Dominic
I partnered my cart, and it was a huge mistake, constant we cant sell this, we cant do that, we cant charge this, we have to charge this, setting up here isnt worth it, nothing but a constant headache, it did nothing but loose money cuz of it, and now i’m in the prosses of trying to rebuild.
Hey its been along time. But my advise would be NOT. Be there done that and all they did was steal money from me. They were my friends I thought,. We were going to go together. So it ended up I lost alot. Now I’m ata permanent spot on my own and doing great.
One reason to partner is to have someone to hold your hand for a while… The other is if you need to raise money… And you DON’T generally in this business. And everyone in business needs to read this book:
The E Myth Revisited – Why most small businesses don’t work and what to do about it.
It explains the difference between having a real business, and having work. And it’s a BIG difference. Your goal should be to build and keep value. Don’t sign your life away to a partner until after you read this book. I agree with all the “NO” warnings above.
From the book…
“As the balls continue to fall at an overwhelming rate, you begin to realize that no one cares about your business the way you do.
That no one is willing to work as hard as you work.
That no one has your judgment, or your ability, or your desire, or your interest.
That if it’s going to get done right, you’re the one who’s going to have to do it.”
note: The more you do, the less they (everyone else) will do…
That is one of my favorite business books of all time. It’s that good. Read it slingers, it will change your life. Thanks Tom!
I’ve had partners in other ventures, some worked, some were like divorces!
My question would be – what would the partner bring to the business? Expansion funds? Equipt? Prime vending real estate?
Do a pro and con sheet – then make your decision. Draw up partnership agreement if it’s a go – say Thanks – keep buying my dogs – if it’s a no go!
I’d say lease him a cart to use with a stipulation of a 10 mile no competition zone. Also, if you have your own commissary, lease him space there also. Make him pay a set up and instruction charge to get him going. If you lease the carts only and its not a franchise, you receive income without the liability.
I like the idea of requiring the lessee to take part in a training session before he goes out, whether you get payment for that or not. Great idea. Thanks William!