Vera’s Burgershack: A Poor Broadway Performance for a Vancouver Franchise

veras-wink

In late March 2013, Gerald drew a sigh of relief as the soon to be ex-Franchisee walked out of Vera’s flagship location in Kitsilano with lease assignment in hand.  As sales figures across a number of franchised locations had sagged, the Franchisee had proven quarrelsome and unwilling to follow the Gerald Tritt Franchise System to a tee.  Even worse, the Franchisee had shown Gerald up in email discourse that took place in full view of all the Franchisees when the Franchisee pointed out that absence of inspections and adequate training from head office had led to a lack of standardized behaviour throughout the franchise system.  Gerald’s response to this rebellious insolence was to change the email settings so that a Franchisee could only reply to Gerald and not to the Franchisees at large.

Gerald’s response to this rebellious insolence was to change the email settings so that a Franchisee could only reply to Gerald and not to the Franchisees at large.

In any event, the Franchisee was gone and with him out of the way only better days could lay ahead for the Vera’s franchise system – or so Gerald had assumed.  His optimism proved to be short lived.

In the fall of 2012, while warring with the aforementioned troublesome Franchisee he had approved the sale of the Broadway location to the youngest Franchisee ever.  The Broadway location had had a troubled history in that in recent years it had not been that profitable.  Of course, profitability from the Franchisees perspective is quite different from that of the Franchisor.  While a store Franchisee (location owner) can be barely paying the bills or even losing money hand over fist, the Franchisor will always take their cut off the top of every transaction that goes through the till. From Gerald’s perspective, franchise fees generated by this location read ‘just fine’ on the profitability meter.  In any event, the location had changed hands repeatedly over the past five years.

Notwithstanding new ownership, the Broadway location lagged at the bottom of the Vera’s locations’ monthly sales rankings being in front of only the Aberdeen Mall location.  As ‘victory has a thousand fathers and defeat is but an orphan’ as quoted by John F. Kennedy, Vera’s head office and the Franchisee began to blame each other for the location’s poor performance.  The details of the relationship between Gerald and the outgoing Franchisee remain murky but without doubt it was fractured.  The Franchisee blamed Gerald for a lack of training while Gerald blamed the Franchisee for being unable to operate the location in a professional manner – a typical Franchisor-Franchisee dialogue where systems are found wanting and Franchisee’s bank accounts drained.

By the fall of 2013, the negative reviews online were stunning in their criticism of the Broadway location’s operations with some of the reviewers going so far as to accuse the Franchisee of tax fraud because of its “cash only” policy.  Inexplicably, Vera’s Head Office failed to take steps to revoke the franchise and allowed Vera fans’ to part with their hard earned cash to pay for what appeared to be a substandard product and experience.  The negative reviews continued to pile up online yet Vera’s Head Office appeared, at least on the surface, to do little to intervene to protect the brand.  Other Franchisees began to express concern that brand integrity was being compromised yet Vera’s Head Office failed to revoke the location although, based on online reviews as a starting point, sufficient grounds may have existed for such action.

While it is uncertain when Vera’s Head Office began to sour on the Franchisee, it is clear that a scant 3-4 months after buying the Broadway location,  the Franchisee had seen enough of the Vera’s franchise model and listed the franchise for sale for $275,000.00.   Over the next twelve months the listing price inched downwards to the low $200s, as there were no takers.  As 2013 turned to 2014 and the online reviews went from the sublime to the ridiculous, the Franchisee finally had a taker to assume control of the troubled location.  Some reports suggest the sale price as low as $40,000.00 meaning the Vera’s Brand was worth little more than restaurant equipment at this location.  Other reports say the sale price came in between $100,000 to $120,000.00 meaning the Vera’s Brand was worth equal to the equipment and leasehold improvements leaving little value to goodwill.  At this location, instead of becoming a smash hit, the Vera’s Burgershack brand became a Broadway flop.

At this location, instead of becoming a smash hit, the Vera’s Burgershack brand became a Broadway flop.

veras-wink

 

Chewy Junior – A New Addition to the Canadian Franchise Scene

chewy

Chewy Junior, a cream puff franchise from Asia (do they come from anywhere else?) has just launched their first Canadian flagship location in Vancouver.

This light article at Wayne Out There sheds some light on the Chewy experience.

Part of the Chewy Junior story is founder Kevin Ong’s repeated failure in business.  Failure in business will typically lead the casualty in one of two directions: a) towards eventual success if they recalibrate and don’t quit or b) towards a jaded life of anger towards the world that has wronged them (or so they believe).  Based on our quick review, it looks like Chewy may be on the former, not the latter path.

There is no question that the Chewy Junior product offering is both unique in the market (there aren’t that many cream puff shops in your average block) but also further unique in that they offer a very high quality product with an amazing display.  A quick look in the new flagship store display fridge and the customer will find it very difficult to resist taking a box home.

Wagers are already on as to whether or not such a concept will succeed, but before you wager, make sure you both see and eat one because from our first reports, experiencing is believing.

“…experiencing is believing.”

Stay tuned for more on Chewy Junior and other Vancouver franchises.

chewy

Vera’s Burger Shack: The Dawn of a Burger Empire?

Part 1 in a 4 Part Series

veras-wink

According to local folklore and Vera’s Burger Shack’s own PR machine, Vera’s got its start back in 1977 when a lady named Vera Hockfelder opened a seasonal burger stand in West Vancouver and gained a cult following by preparing hand pressed burgers with secret seasoning spice.In 2000, Vera sold out the West Vancouver burger stand to Gerald Tritt who brought in local sports star Noah Cantor a year later to help him open the first year round location in Kitsilano. In the following years, Gerald & Noah opened locations on Denman and another on Davie St in downtown Vancouver. By the second half of the 2000s, Gerald and Noah were selling new franchised locations on Commercial Drive and Main St to a longtime employee and the Denman and Davie locations to other franchisees eager to jump into the burger craze.

By the time of the 2010 winter olympics, Vera’s had 16 locations and all seemed well with Vera’s empire. Its founders had been voted in as members of the top 40 under 40 in Business in Vancouver (BIV) and had been offered a buy out in excess of 3 million dollars. Its founders refused the offer on the basis that the “sky was the limit” in terms of growth and that a 1000 store franchise was in their sights.

However, the franchise’s growth had been fueled by the stimulus spending associated with the Olympic infrastructure and the burger craze sweeping North Amercia As the Olympic construction ended at the same time as the discretionary spending habits of a lot of Vera’s burger fans. The Vancouver economy was about to get a whole lot tighter and the business model that Vera’s operated with in the late 2000s began to stumble with the founders’ former golden touch beginning to rust at the edges.

veras-wink

Next in 4 Part Series: Shortcomings in the Vera’s Burgershack Franchise System

Blenz Coffee General Manager Mark West Runs Second Simultaneously Competing Franchise Look Tea

If allowing their GM Mark West to own his own competing coffee franchise My Cup while attempting to look out for the best interest of Blenz Franchisees wasn’t odd enough, Vancouver’s Blenz Coffee has now allowed him to kickstart a brand new competing tea franchise as well – LOOK Organic Tea

Mark West launches Blenz Competitor LOOK Organic Tea

Mark West launches Blenz Competitor LOOK Organic Tea

On February 10th of this year, the VCSFA published an article about the sudden sale and subsequent splitting of the Blenz Library Square corporate store.  We noted that it was a very interesting business decision to give up such a prime location that was previously used for training new Blenz Franchisees.

More interesting than the actual sale of such a useful corporate asset was the mystery of what would be opening right next door to the store that they had just sold off to a new Franchisee.  Here is a question we asked in our article published nearly five months ago:

Has Blenz protected the current owner of this Library Square location from a potentially competing business opening right next store?  There is not hint of what kind of business will be moving in to the former training space.  What if it turned out to be another coffee shop or tea shop?

Will wonders never cease?

Not only did a tea shop open right next door that competes directly with the Esprit line of Blenz premium teas that Blenz Franchisees are forced by contract law to sell, but the name of the man receiving all franchise inquiries at LOOK Tea is the very same name on the Blenz franchise inquiry page – Mark West. In addition, although the page has recently and mysteriously become un-clickable at the My Cup website, Mark West was also the name on the My Cup Coffee and Tea franchise inquiry page.  Thankfully we saved a screen shot of this. It’s also interesting to note that Mr. West no longer lists the Georgia and Seymour My Cup location which directly competes with three different Blenz locations.   The following are screen shots are from those respective pages:

join-us-LOOK

Want a LOOK Tea Franchis? Call Mark West!

 

Want a Blenz Franchise? Call Mark West!

Want a Blenz Franchise? Call Mark West!

Want a My Cup Franchise? Call Mark West!

Want a My Cup Franchise? Call Mark West!

 

Until the launch of LOOK Organic Tea took place in a retail space that literally shares a physical wall and ‘support’ staff and leadership with a Blenz location (Shawn Pattison of LOOK also works for Blenz the Canadian Coffee Company), the camp was divided as to whether or not Blenz was looking out for the best interests of its Franchisees.

The camp is no longer divided.

 

The Dangers of Buying a Franchise Business (in British Columbia)

The sign on the side of the road reads: “Danger! Beware!”

We receive continual requests for advice from people who are getting close to the point of buying a new business – specifically a franchise business.  The majority of these people are not coming from a business background and are looking for something that their family can operate or a place to invest some extra money that has the potential of generating more money than their conservative investments.  Others still are looking to buy as a way of making a career change – they are sick of their jobs.

Most have already been ‘sold the dream’ in their minds before they even find us.

Danger!  Beware!

Today we would like to publish a kind of summary article with hand picked articles just for you.  If you truly read these articles before you purchase a franchise business, you will be in a better position than anyone we know.  You will be in a very unique and powerful position.

So don’t just skim these articles.  Learn them.  If you can’t understand something, we can help you reach out for help from a professional advisor on each topic.

We truly wish you the best and most prosperous business future

General Education

True Stories that hit close to home

Purchase & Sale

We hope that the hand-picked articles found in this post have helped you tremendously to make the best possible investment.

As always, don’t hesitate to contact us at info@vcsfa.ca.

Yet Another Prestigious Blenz Closes: Pacific Centre on Granville

Blenz Investor Alert: Danger!

Blenz Pacific Centre Shuts its doors

Blenz Pacific Centre Shuts its doors

If you were considering investing in the once powerful and quickly growing Blenz Coffee, and you noticed that they were losing prestigious retail location after prestigious location every few months, you might be wise to do a little extra research.

Blenz loses location to another clothing retailer

Blenz loses location to another clothing retailer

The sudden closure of the Blenz Coffee at Pacific Centre this week is just one of now many in a string of closures over the last 24 months.

You can read all about the different closures here:

Blenz Coffee Bayswater

Blenz Coffee Burrard and Robson

Blenz Coffee St. Paul’s Hospital: It was owned by a Franchisee, then by the Burrard Hotel, then suddenly all signs of Blenz disappeared and they now sell JJ Bean)

Blenz Coffee Cambie @ 17th

Blenz Coffee Hastings @ Howe

But it doesn’t end there.

Another red flag that started waving a few months ago that should have raised a few eyebrows was the sudden and quiet sell off of what was previously their pride and joy: the Library Square Corporate Training Centre where they hosted public events and tried out innovative drink ideas.  Within a flash it had been halved in size and sold off to a fresh new ‘franchise partner’.

Another even more devastating blow to the brand are the growing number of lawsuits against the former Vancouver coffee powerhouse including one filed by a small group of franchisees and another by a previous head office employee.

Will Blenz Coffee be able to pull out of the obvious tailspin?  Will Mark West, be able to save the day?

Stay tuned for more news on Blenz Coffee and other coffee related news.

Vancouver Franchise 1-800-Got-Junk? Celebrates 25 birthday

Anyone interested in the franchising business model, especially in the Vancouver area, should take keen interest in this article written about the history and success of the famous junk company 1-800-Got-Junk?, and not just because it was birthed here.

For the entrepreneurs, the most intriguing part of the article will be the David and Goliath aspect of how Brian Scudamore put his own challenges aside and courageously went the road less travelled.  For the person who tried this path and lost for whatever reason, there is a deep-rooted, heart-warming and tear-jerking sense of ‘way to go, kid’ – like how you feel when the underdog hits the home run in a movie.  It is usually followed by a kind of depressing feeling as we think about how much money we lost trying to travel a similar road (or even roads…).  One thing is certain and that this is one of the most inspiring entrepreneurial stories because of the perceived ‘simplicity’ of the business.  Anyone could start a business picking up garbage, couldn’t they?  How is this any more revolutionary than the guy who picks the cans out of my recycling bin (without my permission please note) every Wednesday evening?  For the student studying business, this should be their first chapter example.  They should pose this question in bold italics at the top of the opening page.  Then, they should have Brian Scudamore come in and blow their minds open with what it was really like building a large company.  It would not be surprising if ninety percent of the students in that class were to drop out and change majors while the other 10% went on to build similarly inspiring companies.

Anyone considering any kind of business, should pay special heed to the following extraction from the article:

“When the time came to franchise, well-meaning friends and colleagues said junk removal could never be franchised.”

This is the first lesson learned in every business.  Avoid well-meaning friends and family at all costs.  Thankfully Mr. Scudamore was able to block out their noise.

Another important part of this story is how Scudamore was quoted as feeling like he was getting more out of building his business than from attending school.  Our current education system is very much like our well-meaning friends and family.  It tries to do the best it can but it’s built by people who are incubated and hatched in school where they where they set goals to eventually teach in them and ultimately retire from them.  They do their best to teach the stuff they should but they fail quite notably to teach finances and business – especially in the arena of creativity and boldness.  At what point were any of us encouraged to be different from each other?  There are countless stories of getting penalized for such behaviour, though.

Franchising, as many have learned from reading our articles, is a very different business model compared to the corporate structure.  The successful franchise (over the long term) is able to create legitimate win-win relationships.  In a successful franchise, the Franchisee feels content when their Franchisor is making money because they are making money too.  Although we have not even begun to investigate the satisfaction level of 1-800-Got-Junk? Franchisees, we would not be surprised if we discovered just such a synergy.

We look forward to hearing stories of successful franchising as 1-800-Got-Junk? grows.

 

British Columbia Law Institute (BCLI) Releases Report on a Franchise Act in British Columbia

Members of the VCSFA had an opportunity to meet with Greg Blue of the British Columbia Law Institute (BCLI) approximately one year ago where we had the chance to hear more about the plans for a proposed Franchise Act for BC.  We created this post shortly after this meeting.

At this point, it was in the ‘consultation phase’ where feedback was being gathered by stakeholders in the franchise industry.  To read the original document, you can click this link and download it directly or go to the Franchise Act Project page at the BCLI.

We are pleased to announce that the conclusions from the consultation phase have now been compiled into this document: Report on a Franchise Act for British Columbia which can also be viewed/downloaded from the BCLI project page above.

In the near future, we will write a report with our feedback on the report.

The VCSFA would like to extend our most sincere thanks to Greg Blue and all the others who contributed to this worthwhile project as it has already contributed to the exposure of the oftentimes questionable nature of the Franchise-Franchisor relationship in general, but especially in BC, and will most certainly help any potential buyer (who does their due diligence) avoid some of the common pitfalls prevalent in the industry,

 

 

Why Quiznos is Going Bankrupt and What You Can Learn From It

Franchising is set on a pedestal in the minds of business minded people and customers alike as a dream model – a goal to reach as it were.  For some people, to franchise your business means you are validated by the business world.  To open hundreds of stores means you are awesome.  To open thousands?  Now you’re a rock star, baby.  But wait!  While your business groupies marvelled at your copying-and-pasting skills, your lovely, innocent, country bumpkin girlfriend who was always there for you got neglected on the way to your stardom.  That’s quite sad.

Some people believe that franchises are started by directors with abusive and even predatory business goals but most believe they start out innocently but are then corrupted by the sudden infusion of cash in their banks created by their army of burger flipping, latte steaming, foot-long wrapping worker bees.

You choose what you believe.

The Franchisees of Quiznos in the USA may now have to figure out how to walk on their own two feet while proceedings for the funeral of their corporate franchise mother ship get underway.  Will their Landlords extend expiring lease renewals now that their never-failing rent guarantor has failed?  Will the owners be able to sell their stores and recuperate the hundreds of thousands they spent to buy the business name and systems?  Will this bankruptcy ultimately mean the doom of Quiznos in Canada?  What buyer would purchase a franchise that may no longer be a franchise?  How much goodwill value is left in the brand?

This article in the Business in Vancouver publication summarizes the situation at Quiznos best as ‘…struggling with high debt, angry Franchisees, and increasing competition.”  Many of the angry Franchisees apparently sued the head office for failing to support them and for overcharging them for supplies.  Quiznos settled out of court for $95 million.  And just a few years later – good bye, sugar pie.

But it makes sense.  When a lawsuit is filed against a Franchisor, its roots didn’t magically grow like Jack’s beanstalk, especially if the lawsuit involves more than one Franchisee as it did in this case.  The Franchisees had to have been angry enough to fight against their own ‘fear of the Franchisor’ and start meeting privately to come up with a plan – a sort of revolution.  Money was taken from them unfairly so they went to get it back.  They paid for support that they didn’t get so they went for a court imposed refund – and they got it.  It would be interesting to ask the Franchisees who chose not to fight how they feel about their decision now.

One of the most interesting quotes from the BIV article on the topic is the following:

All except seven of its nearly 2,100 restaurants are independently owned and operated by franchisees and will not be affected by the bankruptcy, the company said in a statement.

How they will not be affected by the bankruptcy is nothing short of a very large mystery.  To remove a stigma of this size from a brand is a formidable task – regardless of where the bankruptcy is filed.  Think about Jack in the Box.  Stigmas are sticky.

So what can we learn from the woes that are sweeping over Quiznos?  Here are a few points to consider:

  • If Quiznos was focused on helping the Franchisees make money instead of finding ways to take it from them, none of this would have happened.  They would have had Ambassadors of the Brand instead of Assassins of the Brand.  Win + win = win  (Note: this formula still works in 2014)
  • If there are a bunch of Franchisees going after the Franchisor, you should probably be concerned.  Deeply concerned.
  •  ‘Too big to fall’ Franchises don’t exist (although McDonald’s might admittedly be trickier to topple).  The bigger they are the harder they fall – eventually.

Blenz Ranked as Lawsuit of the Week by Business in Vancouver (BIV)

Blenz Ranked as Lawsuit of the Week by Business in Vancouver (BIV)

Well respected and well read local business publication Business in Vancouver not only picked up on the court filing made by three former Blenz Franchisees against its former Franchisor, but ranked it as their ‘Lawsuit of the Week’ – and rightfully so.  Blenz has enjoyed for many years a natural windfall of sales produced by loyal customers who feel warm and fuzzy about the ‘local Canadian brand’. No doubt the very presence of this filing surprised the author.

Although the BIV article covers fairly well the claims of hindered store sales and lease renewal problems common to the three plaintiffs, a $6.00 download of the very large filing reveals that it didn’t even touch upon one of the most devastating claims against the Franchisor – Kormi’s doomed, mandatory, and very expensive renovation and surrounding events.  This part of the claim alone covers pages and pages and, if these claims are proven in a court of law and picked up by local media (ie. Steele on your Side), they will certainly have the potential to evaporate a good percentage of the ‘warm & fuzzy’ mentioned above.

767_seymour_from_front_left

It is also noteworthy that there was no mention of the first court filing of 2014 against Blenz by Elizabeth Jacobo.  Reports from those who have read this filing indicate that it is on par or even more potentially devastating to the Vancouver brand than the claims found within the Taylor, Sahdra, Kormi suit.

Read our March 14th report of the growing number of lawsuits Blenz is facing in 2014.

Check back regularly for updates on this and other similar stories.