08/ 01/ 2004
by Robyn A. Friedman
Louie Di Raimondo never thought he’d make his living by hawking hot dogs. But the 50-year old entrepreneur – now known to his fans and customers as “America’s Hot Dog King” – sure could spot a niche when he saw one.Di Raimondo’s success story started about 30 years ago, soon after he moved to South Florida. As he stopped to buy a hot dog from a sidewalk vendor one day, Di Raimondo noticed a “for sale” sign on the cart. Between jobs at the time, he came up with $1,500 and bought the cart.
That was the beginning of All American Hot Dog Carts Corp. (www.allamericanhotdog.com), a $2 million business with a 12,000-square-foot showroom in downtown Miami where you can find an eclectic assortment of carts: lemonade, flower, pretzel, candy, coffee, magazine and of course, hot dog carts.
But Di Raimondo’s small business, which employs 12 and sells between 900 and 1,200 carts per year, is now at a crossroad. Anxious to expand his business and in response to requests from his customers, Di Raimondo is now considering franchising – selling cart distributorships throughout the United States. But the costs to franchise are high, so he’s waiting until the number of interested buyers reaches a point where it is cost-effective for him to move forward.
How can you know when the time is right to consider franchising?
“The first question to ask is whether the business can be replicated,” said Andrew J. Sherman, a franchising attorney in Washington, D.C., and the author of Franchising & Licensing: Two Powerful Ways to Grow Your Business in Any Economy. “Is there anything unique about the business that would make it impossible to replicate?”
Sherman said that franchising is appropriate only for certain kinds of companies; it’s not for everyone.
“If you really want to be a successful franchisor, you can’t just sell the sizzle. You’ve got to deliver the steak,” he says.
Questions to ask before you franchise:
1. Do you have a proven prototype – a business model that works?
2. Can you reduce your business to writing? In other words, is it possible for you to create an operations manual and train franchisees and their employees in the way you do business?
3. Are you willing to be involved in a long-term relationship with your franchisees?
4. Do you have sufficient capital to launch and sustain your franchising program? Franchising is not a way to get rich quick, with costs ranging between $50,000 and $100,000. According to Sherman, small-business owners should not make the decision to franchise lightly.
