Caution Always Needed
Re-Printed from http://www.unhappyfranchisee.com
“…I realized three months after closing that the concept was flawed from the beginning, but marketed and sold as “a proven concept.” Kelly Digby
[Please read the disclaimer at the bottom of this post]
Name: Kelly Digby
Location: Findlay, Ohio
Franchise owned: Supper Thyme USA, Meal Assembly
Time period of ownership: 18 months
Franchise fee: $35,000
Marketing/other fees: Royalty: 6% weekly Marketing: 1.5% weekly paid directly to HO (for national advertising), plus $1500/month local or 2% of sales whichever is greater.
Current Status: Ex-Franchisee
Total investment to date: $450,000 loss plus
What’s your background? What were you doing prior to owning your franchise? I have 30 years experience in the professional culinary field owning my own Personal Chef, catering and baking usiness; in addition to working in various restaurants. I worked for a now defunct subsidiary of Kitchen Aide as a culinary instructor for their home based culinary class subsidiary called Inspired Chef. I called it pamper chef on steroids. We gave upscale culinary classes in-home along with selling gourmet foods, small appliances and gadgets. I then added culinary team building to my repertoires. I trained with a company that does strictly culinary team building. I also worked in retail stores doing cooking demonstrations, culinary classes and private culinary instruction.
When did you decide you wanted to own your own business? Describe the process you went through to determine which franchise to buy. It was the classic story of wanting out of the corporate America “rat race”, that propelled me to start looking for a small business idea, not to get me out of CA, but to get my husband out.
Our boys were grown and I was looking for a business my husband & I could operate together. I love the culinary business. My own Personal Chef business grew out of my desire to do something to help busy Mom’s get a great dinner on the table every night for their families with as little hassle and fuss as possible. My husband found the Personal Chef concept in the Wall Street Journal and showed it to me because he thought, “You might be interested in this and it’s something you’d be good at.”
It was and I was. I went to Personal Chef School, took private culinary classes in California, joined an association and hung out my shingle. It was perfect because I could make my own hours, help busy Mom’s and it was satisfying for me! The added bonus was when we moved, which we did frequently with my husband’s company, I could take MY job with me.
I virtually opened a new business every two years when we moved. It was great actually, because I made sure I never made the same mistake twice, and I could reinvent & revamp my business every place we moved. I learned loads of “business stuff” through the process. So, when it came time to find something to open as a small business I was ready!
We actually initially bought a Cold Stone Creamery Franchise, but due to unforeseen circumstances, we had to sell the franchise it before we opened. When we started to look again, my friend had told me about this place in Collegeville, Pennsylvania in the town we had just recently moved from that she thought I might be interested in. It was called the Food Experience (it’s now closed), it was the first time I was ever introduced to mass producing meals for families in the Meal Assembly (MA) concept format. This sounded great because it included the Mom in the process with no mess to her kitchen!
It sounded perfect, so we investigated further. In my search I found websites like Easy Meal Prep and through talking to Mr. Easy Meal Prep, I was convinced this was the business that would perfectly marry my husband’s background in food manufacturing accounting and my culinary expertise. We spent countless hours researching and at ever turn we were told by different people representing different segments of the industry (i.e. franchisors and independent “experts”) what a great and viable industry this was and that it had unlimited growth potential.
Then the decision turned to whether we should open as an independent or a franchise operation. We had had a bad experience with the franchising process with Cold Stone Creamery, so we took some time to weigh both options. We made numerous phone calls to talk to operating Supper Thyme, USA franchisees, talked to the founders of Supper Thyme, USA, the Willenborgs, multiple times.
Once we made the decision to go with a franchise, we looked for one that gave us the most freedom. That company happened to be Supper Thyme USA. I remember starting the due diligence by making phone calls to franchisees while working in Las Vegas at a huge culinary team-building event. We took many months writing a business plan and finished doing our due diligence, we signed the franchise agreement papers and set about opening our little retirement business.
How did you first learn about the general concept? What did you find appealing about this type of business? I heard of the concept through my friend, it appealed to me because as an operating Personal Chef business I wanted a way to reach more Mom’s and be more economical for them. My Personal Chef business targeted working Mom’s, but not all working mom’s could afford my services. I wanted to reach the “every Mom.”
While my Personal Chef business met a specific need for a specific group, I wanted something with a broader appeal, and I was tired and worn out from carrying all my equipment to each house I worked at! It was a neat idea that the Mom’s came to my store, and just assembled entrees to take home and freeze, and use at their convenience. I thought it was the perfect solution to my dilemma of wanting an affordable alternative to my Personal Chef business that gave Mom’s the opportunity to prepare meals for their families without all the necessary mess & hassles that went along with it! It was a No fuss, no muss, Mom centered, affordable solution for getting meals for on the table for their families.
How did you first hear about your specific franchise? What attracted you to the company? I researched all the companies, sent out formal inquiries to each one I found. Supper Thyme USA was one of the first to answer my inquiry with a personal phone call. I was personally talking to the founders of the company, which appealed and impressed me. I actually had access to the founders of the company whenever I needed something. That personal connection to the founder of the company was very important to me. It was one of the things I found lacking in our experience with Cold Stone Creamery. I never met the owner or even the upper management of Cold Stone Creamery; we dealt exclusively with an Area Developer. It was very impersonal and cold.
I found the founders of Supper Thyme USA to be very personable and warm…….until we signed the papers and handed them our check. It was a small company that we thought was on the rise and we had a ground floor opportunity. We specifically chose Supper Thyme, USA because we wanted a smaller franchise that enabled us to have a personal connection with the founders of the company; I perceived that to be a plus.
Describe the company’s sales process and your interaction prior to becoming a franchisee. When we went to the “Discovery Day” in Omaha, which was a couple hour affair that we flew in for on a Friday and flew out the next morning but I think that’s pretty much standard practice for every franchisor. Everyone at HO was very warm and welcoming. They seemed to consciously make an effort to create a personal feel in their interactions with us as prospective franchisee. We were made to feel like a member of their extended family; it wasn’t until the blush wore off that I realized that they were masters at making you “feel” things with no real substance behind it. Once we were done with a part of the process, we were “handed off” to the next contact person designated for that part of the process of getting us opened. Of course, in hindsight I understand the marketing manipulation that occurred not only to us but also to hundreds of others in this industry. They were “selling” their particular “brand” to a consumer (my husband & I as the franchisee).
How was the company’s training and pre-opening support. Was it a positive experience? Training was for four days in Omaha at the corporate store (that is now closed due to lack of business). There were actually more franchisees training than there were customers at each session, we worked 3-4 sessions. The training seemed hurried and not organized or professional. Pre-opening support was just a series of phone calls back and forth, there was no person to person on site contact until 2 days before we opened. At the two day count down the liaison showed up to “help” with Grand Opening. It was not a positive experience, but then I don’t know if you can ever call an opening of a new business a positive experience. I know I felt lost and alone a lot of the time with my calls not being answered or returned in timely fashion. We also got little or no direction in the build out phase from corporate. We were given a list of equipment suggestions, but no clear direction as to why we needed certain pieces of equipment or quantities of equipment required. We ran over on the companies projections on build-out phase by $80,000.
What marketing and promotional guidance, programs & support were provided? Were they effective? Why or why not? Every quarter we received a marketing CD with quarterly programs, ads & marketing ideas. None were market specific or immediately usable. I had to spend literally hours on the phone or on my computer redesigning ads or creating my own. Marketing support was and still is non-existent, when we would have our quarterly visits we were told that “We don’t understand why our sales aren’t better or getting better, you are doing everything right!” We spent thousands of dollars each month on focused advertising and got no positive or sustained results. HO could not tell us what we were doing wrong if anything or what differently we could do to do to get people through our doors on a consistent basis, in fact they would refer us to other stores by telling us to “call other stores in the network to see what they are doing that works.” That was done repeatedly, we found ourselves on the phone constantly with other stores in our network trying to figure out what to do to get customers in the doors and how to get our retention numbers up. Again no clear direction from HO was forthcoming. We got lots of promises, but no results.
How was your grand opening and your first year as a franchisee? It did not even come close to meeting our expectations. We spent more money than we were required on marketing. We had multiple open houses and tastings. All that happened is that we gave away a LOT of free food. We were in debt from the very start by $5000-$10,0000 each month.
Was owning this franchise what you expected? Why, or why not? I have been in the food business a long time and I knew the hard work and long hours involved. What I was unprepared for was the letdown of not having all of your hard work and effort rewarded. All we got from our hard work and effort was huge amounts of debt and the intimate knowledge of how bankruptcy works.
Was the ongoing support what you expected? Why or why not? The support was non-existent for any real purpose or positive outcome. We talked to our liaison in person once a quarter and for the last 2 months every month via phone, (she was terminated for lack of funds 2 months after we closed). Those meetings were very unproductive & unsatisfactory because we heard the same thing every time. “You’re doing everything right, we don’t know why your numbers are not getting better.” If we dared ask a pointed question we got lectured by our liaison about how they were doing all they could for us in HO and we should be happy for all of the “things” they did for us and there was a good team at HO working on our behalf. We got no constructive direction or support from HO. They kept telling us that the reason was because they were developing a great website for us. We were paying 6-7.5% a month in royalties for a website.
What were the positive aspects of your experience? For me life lessons and experiences are always positive. It may not be apparent immediately what the positive outcome is but I discover one eventually. I met a lot of great people and formed some very good friendships through my association with Supper Thyme USA. My most positive aspect was the healing process that took place after I stopped feeling ashamed and embarrassed about my business’ failure. I was able to find places to post my experiences and help other people come out of their ‘failure fog.” It helped me realized that there are a hundreds of people going through what I went through. The revelation for me was that I could help them by walking through the process with them.
When did things start to go wrong? What was it that made you an unhappy franchisee? The initial problem was the lack of information and meaningful communication from HO about how much operating capital franchisees would need. The told us initially that $35,000 in operating capital was needed for our first year. We were also told that within 3-6 months we would be profitable.
In the 18 months we were opened, I never received a paycheck. I virtually paid Supper Thyme USA to work. We were told we could run this business part-time, only 20 hours a week; I spent 60-80 hours a week running and marketing our business. My husband spent the same amount of time running the business a week. We never broke even, let alone turned a profit once in 18 months.
After 18 months of putting $5,0000-$10,0000 a month of our own money into the business through home equity loans and credit cards, and personal retirement funds, we decided we could no long financially afford to operate our business. We were financially and emotionally literally tapped out and drained. We got no suggestion from Ho, no one called to offer assistance, as we floundered, even though they knew our financial situation (that was one of the things we discussed with out HO liaison every quarter in person and once a month via phone).
They took their marketing fee and royalties without fail every week. If there was not enough money there, we were contacted immediately to see why not and to make sure the funds were available to them. My point is that HO and their employees always got paid…..we as the franchisees didn’t.
When I realized three months after closing that the concept was flawed from the beginning, but marketed and sold as “a proven concept,” I was very upset. What also upset me was the cavalier attitude of the HO when a store closed. Their mind set was “out of sight out of mind”. In other words, the founder at one point said, “we just don’t talk about stores that have closed because it’s just wasted energy. We choose to focus on the ones who are opened,” except in the final an analysis they didn’t even focus on the stores that remained opened.
Have you tried to resolve your issues with the franchisor? What was the outcome? No, we did not try to resolve or communicate with our franchisor, I mentioned their unwillingness to communicate with franchisees that were closing. Once you give them notification, they immediately cut you off from the backend function of the HO website. You are left to close and figure things out on your own and alone.
What is your current situation? What would you like to see happen at this point? We are in the process of filing for bankruptcy, we lost our retirement fund, our home, cars, savings. We are still in the process of assessing where we are at this point, but actively trying to rebuild our life. We were people who always paid our way and did it early, this for us has been a very bitter pill to swallow. Our reputation along with our financial security has been stolen from us.
Do you think that the franchise concept is a viable? Under what conditions?
The Meal Assembly concept is a flawed and failed concept. Sadly and unfortunately for me, I didn’t realize it until $450,000 later. The meal assembly industry should remain a cottage industry; it is not a viable franchisable concept. It cannot withstand competition. The industry, six years after it’s inception, is still in a constant state of redefinition and evolution trying to find its equilibrium. I believe it is a futile act because I believe the MA industry is no longer relevant to today’s consumers. There are just too many choices out there for consumers to choose from. Super Markets & restaurants can do what MA’s attempt to do cheaper and more efficiently.
The MA industry is not now nor ever was a “proven system.” The industry is defined by a concept that was never able to be fully and completely vetted before wannabe competitors flooded the market with creative imitations. Every new MA did it the same as the guy before him. It was a matter of another franchisor “creatively borrowing” the idea from the other while one after the another companies rushed into the marketplace to grab their piece of the “tummy pie.” It is a dandy idea, but not a viable business.
I think it is a wonderful and dandy idea, but it is not a concept that was been properly vetted or had a proven system for success in place by ANYONE of the franchisors before it was sold by every Tom, Dick & Harry as such.
Meal assembly is an industry that is rife with inaccurate information about its success or failure. You cannot easily find out how the major franchisors are doing because they hide the stores that close by posting them as temporarily closed for remodeling or something as equally creatively dishonest. The associations out there exist to make money off of the independents and the independents fare just as badly as franchisees. This is a cottage industry that may work great as a novelty store in some markets.
A MA operation cannot sustain itself with any kind of competition in its market; there just aren’t enough customers to go around. There are just too many other cheaper products out there available to consumers. MA do not offer any product that has a “got to have it” aspect or appeal to it.
What mistakes did you make? Looking back, what would you have done differently? I’m not sure any of the things we did were wrong based on the information available to us at that time. I thought or was led to believe by my franchisor that it was my failure because of business inexperience or acumen. I was told repeatedly that there was nothing wrong with the model that it was my problem that I closed, not STUSA or the concept. I wish I could say I would have had the brains not to go into this business at all, but I can’t honestly say that. I do wish we had waited for another 6 months and taken more time and dug a little deeper, but that is my hindsight talking.
How has your franchise investment decision affected your life? After 25 years of marriage, my husband and I are starting over with nothing but our love for each other to keep us going. We have had to relocate for my husband to secure a job. Filing for bankruptcy is embarrassing, and a humbling experience. I am learning a lot about living in stealth mode. I don’t answer the phone or the door anymore.
What advice would you give to prospective franchise owners? What questions should they ask? warning signs should they look for? That is the $65,000 question.
- Make sure you turn over EVERY rock, do your due diligence, then do it again.
- Talk to many, many franchisees, independents. At the time we opened, franchisees were hesitant to tell you the full truth of their financial situations; if they had been we may have made a different choice.
- Look for closures, within the particular franchise you are looking at as well as other franchises within the industry you are considering. Again, you are at the mercy of the integrity of the franchisor to release closure information to you. Franchisors tend to not disclose information that you don’t have the foresight to ask for.
- Study the industry you are considering in depth.
- Ask lots and lots of question and then ask them again!
Kelly Digby
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Re-Printed with thanks from http://www.unhappyfranchisee.com