Which of the two options do you think has the most potential to franchise as a franchisee ?

Which of the two concepts do you think has the most to franchise as a franchsior?

Use figures from the case and your assessment of the market potential of each to support your decision.

- Which of the two options do you think has the most potential to franchise as a franchisee? - Coney Island Cookery or Susannah's Seafood Emporium? - Which of the two concepts do you think has the most potential to franchise as a franchisor? - MyYoMy or Nino's - Use figures from the case and your assessment of the market potential of each to support you decision. - AUV (Average Unit Volume) - Is the number going up or down? Total Revenue of System/Total number of Outlets Example: Coney Island 2013=$710million/8902013=$797,752perstore - Revenue Per Square Ft. Total Revenue Per Year Per Store/Square Ft per store 2013=$797,752/2,500 $319 / square ft A couple of Metrics to Consider - Operating Margin (Revenue - Cost of Goods Sold - SGA)/Revenue Example: Coney Island (550350150)/550=9 Percent By 2016, V\& ] Holdings had grown into a multi-state franchising business (in Wisconsin, Michigan, Minnesota, New York, and Massachusetts) with more than 120 restaurants, 4,000 employees, and approximately $90 million in annual revenues. The franchises included: - Burger King - Auntie Anne's - a pretzel store - Pizza Hut - Hagen-Dazs ice cream - Coffee Beanery It was all run from Daniel-Carter's headquarters on Milwaukee's Brown Deer Road, where 30 employees worked and generous amounts of laughter and hard work filled the offices. Why not declare victory and go on a permanent vacation? "I'm not going where success has been," Daniels-Carter said. "I'm going where it's going." The Evolution of an African-American Businesswoman It was 1982. Ronald Reagan was the president. Michael Jackson's album, Thriller, was selling millions of copies. And the United States economy was in a recession. Valerie Daniels-Carter was looking for a business opportunity that would be a long-term success. As a child, she had run small businesses: a lemonade stand and a service walking small children home from school. After college she had a great job at a bank but her plan had always been to own her own business. She had been saving the money to do it for years. Daniels-Carter had her eye on a major fast food chicken chain when her brother, John Daniels, a lawyer, told her that Operation PUSH, the national nonprofit founded by the Rev. Jesse Jackson, had reached an agreement with Burger King to increase the participation of African Americans in all areas of the hamburger chain's business. Burger King was one of a number of corporations that Rev. Jackson confronted, pressing them to hire more African Americans, and advertise with African-American advertising agencies. Rev. Jackson estimated that the Burger King agreement could have a $500 million economic impact. To capitalize on this opportunity, Daniels-Carter and her brother merged the initials of their first names to form V\&J Foods. In 1984, using her savings and an investment from her brother, DanielsCarter opened her first Burger King restaurant in her hometown of Milwaukee. She worked behind the counter. She took time to learn the lessons that managing a restaurant teaches. Then she began to grow, adding more and more restaurants. In 2014, Daniels-Carter and four other African-American entrepreneurs formed Partners for Community Impact and became part owners of the Milwaukee Bucks, the city's franchise in the National Basketball Association. In October 2014, Daniels-Carter told the Milwaukee Business foumal that she and her partners wanted to help rebuild the team to help make Milwaukee a more appealing place to live. "Part of attracting individuals to Wisconsin is what does the city have to offer? Is it a forwardthinking city?" she told the newspaper. By 2016, V\&) Holdings had grown into a multi-state franchising business (in Wisconsin, Michigan, Minnesota Now Korkwand Massachusetts) with more than 120 restrumants 4.000 earmplowees ind Valerie Daniels-Carter had been traveling across the states, visiting some of the 120 restaurants she owns through her Milwaukee-based company, V\& J Holdings. After more than 30 years of owning franchises, she was considering a new direction. Instead of buying another franchise - she already owned well-known franchise stores, including Burger Kings and Pizza Huts - she was thinking about becoming a franchisor. It would take several years to develop and test ideas, but she knew she could create a restaurant business and sell it to other entrepreneurs. Daniels-Carter wanted to create opportunities that had not existed when she was a young AfricanAmerican businesswoman breaking into franchising. She wanted to create an opportunity for new entrepreneurs that they could learn quickly. She already owned two businesses that she could franchise: MyYoMy, a frozen yogurt store, and the restaurant Nino's Southern Sides. But Daniels-Carter also had another project in mind. She wanted to expand the breadth of her franchises, and she was interested in seafood restaurants. Demand for seafood was rising, and many communities lacked local restaurants. Several national seafood chains had franchise opportunities, and Daniels-Carter wanted to expand in downtown areas and inner city communities. She would have to figure out which project to focus on - or whether she could do both. And if she did both, she would have to do two things: - develop a plan for becoming a franchisor of a restaurant, and - pick a national seafood chain that she could invest in. She wanted to create new entrepreneurial opportunities in new places. She just needed to figure out the best way to do it. But in the United States, it was Isaac Singer who planted a fertile franchising seed in the 1800 s with his sewing machine. Singer sold licenses that let buyers sell the machines and teach people how to use them. The license fees gave him the money he needed to manufacture more machines. In 1968, Herman Petty became the first African American owner of a McDonald's franchise in Chicago. It was the first of his nine stores. And in 1972, Petty cofounded the National Black McDonald's Operators Association. In 1970, Brady Keys, a former player for the National Football League's Pittsburgh Steelers, became the first African-American owner of a Burger King, in Detroit. By 2016, there were "more than 800,000 franchise establishments representing 300 lines of business. More than 9 million people work at locally owned franchises in neighborhoods across the country," according to the website, - OurFranchise.org, which was launched by the International Franchising Association to showcase "the positive attributes of the franchise industry by telling the stories of local franchise owners, employees and their communities," The news for African American-owned franchises was not as good. A 2011 report from the International Franchise Association looked at data from 2007 and found that African-Americans - who comprised 12 percent of the population of the United States - owned 4.9 percent of franchised businesses. In addition, 2.9 percent of all businesses owned by African-Americans were operated as franchises. More recent estimates appeared in a USA Today article on Daniels-Carter in 2016 that noted: "African-American owners make up just 3\% of franchise owners, according to Eric Stites, CEO and Managing Director of the Franchise Business Review, an independent franchise market research firm, based on a survey of 27,000 franchises over the last 18 months." Miriam Brewer, senior director of education and diversity for the International Franchise Association, who was quoted in the article said that African-Americans face several barriers in the franchising industry, including lack of knowledge about franchising and less access to capital. However, there are a number of African-American franchisees, among them: - Homer Roberts, who owned an Oldsmobile car dealership in 1923 Philanthropy and Faith: Reinvesting in Local and Global Communities A tenet of Daniels-Carter's faith was that everyone has a God-driven purpose. "It's not just about financial success, it's about the totality of life," she explained. "And if you can't put the pieces to life together - family, personal, work and spiritual - if you can't pull all that together and have a whole life, then you're missing part of who you are." Daniels-Carter had invested a great deal of her time, energy, and money into Milwaukee. Working with government and nonprofit partners, including another brother, Bishop Sedgwick Daniels, pastor of the city's Holy Redeemer Church, she donated money to build an educational and social services complex. Her favorite part of the complex was the Mother Kathryn Daniels Conference Center for Community Empowerment and Reunification, which opened in 2004 in an African-American neighborhood. Named after Daniels-Carter's mother, the center housed a Boys and Girls Club, a credit union, and a clinic that provided affordable health care. The center's gym was named after DanielsCarter's husband, Jeffrey Alan Carter Sr. He died in 1999, and Kathryn Daniels passed away a year later - two losses that compelled Daniels-Carter to become stronger. The complex also offered educational programs, housing services, and social services. Nearby, an empty factory building was being turned into a business incubator for start-up companies. Another building was to become an arts center. A member of the Church of God in Christ (COGIC), Daniels-Carter served as the jurisdictional supervisor for COGIC's Kenya East Africa Jurisdiction Department of Women. This initiative includes a "self-sustainability project," essentially a microloan program that helped women and orphanage directors start poultry farms. To launch the poultry farms, 18 farmers received chicks, food and other supplies. A facility was built where the chicks were thised. Once the chicks had grown into chickens, the farmers sold them. Participants were also required to help other women establish businesses, encouraging both generosity and community networking. More women were being recruited and the program was being expanded so that the farmers could also raise fish and pigs. Option 1 - Invest in a Seafood Franchise in Urban and Inner City Markets Daniels-Carter was also interested in opening seafood restaurants. The demand for seafood was high and had room to grow. "Over the past two decades, per capita consumption of seafood products in the U.S. has ranged from a low of 14.6 pounds per person in 1997 to a record high of 16.6 pounds in 2004. Since 2004, U.S. annual consumption of fish and shellifish has gradually decreased to 14.6 pounds per person in 2014," according to SeafoodHealthFacts.org, a joint project of Oregon State University; Cornell University; the universities of Delaware, Rhode Island, Florida, and California; and the Community Seafood Initiative. Often consumers who wanted fish had to cook it at home or leave their local market areas to get it. And as more people moved back to downtown areas, Daniels-Carter expected to see growing demand there. There was also potential in inner city communities among African-American residents. DanielsCater was looking at opening restaurants in Milwaukee and Detroit. "We feel there is a huge opportunity to grow in these markets," Daniels-Carter said. Optimism was running high in the seafood restaurant industry as more consumers sought to eat healthier food that also tastes good. Fish offers weight-conscious Americans a low-fat, low-carb meal with valuable omega-3 fatty acids. In a retail environment saturated with hamburgers, pizza, and chicken, seafood stood out as a different choice. While fried seafood might not be healthier, grilled seafood offered a more nutritiously sound option. Daniels-Carter looked at all the national franchises in this arena. Two franchises - Susannah's Seafood Emporium and the Coney Island Cookery - laid out the opportunities and challenges in the seafood restaurant industry. Both franchises are excited about the ready availability of Alaska pollock, a mild flavored white fish. NOAA, the National Oceanographic and Atmospheric Administration, reported that "During 2014, pollock made up 64% of the total groundfish catch off Alaska. The pollock catch for 2014 was 1,442,840 metric tons (t), up approximately 0.05% from 2013." In 2012. NOAA had also warned, however, that warmer ocean conditions were "less favorable" for - Nicole Enearu who owned two McDonald's restaurants in the greater Los Angeles area and ran the operations for 13 other McDonald's that were owned by her mother, Patricia Williams - Magic Johnson, former NBA star, and the owner of movie theater and restaurant franchises - Maurice Welton, an Edible Arrangements franchisee - Clayton Turnbull, CEO of the Waldwin Group, a Dunkin' Donuts franchisee - Venus Williams, tennis star and juice franchise owner - Omar Simmons, a graduate of Harvard Business School, who owned more than 50 franchised Planet Fitness health clubs Choosing a Franchise - and Financing It Given the hundreds of choices of franchises, entrepreneurs have to decide: Which one is best for me? To come up with an answer, entrepreneurs have to consider their personal preferences, assess their professional strengths, and crunch a lot of numbers. To increase their chances of success, entrepreneurs should have relevant business and management experience as well as passion for the industry they are choosing and enough humility to do the grunt work that their franchise may require. Companies will publish the criteria they expect franchisees to meet. For example, the minimal financial requiruments to open a Burger King in 2015 were: - a net worth of at least $1.5 million - $500,000 liquid capital In 2013 some 662 million pounds of farm raised fish and shellfish were produced in 2013. "In the United States, the amount of fish and shellfish harvested from the wild annually is about 7 times greater than the amount produced by domestic aquaculture farms. Pond raised catfish represents a little over half of the total farm raised seafood products produced annually in the U.S. Other important domestically produced aquaculture products in order of the quantity produced include: crawfish, trout, oysters, salmon, tilapia, striped bass, shrimp, clams, and mussels," Some analysts pointed out that seafood restaurants might also face competition from companies such as Blue Apron that deliver raw meal-in-a-box ingredients to consumers' homes. Fish was a popular choice, and some consumers might enjoy experimenting with new recipes in the comfort of their own kitchens. One national seafood franchise reported its 2914 average profits per store by tiers: Top-third franchise restaurants = gross sales of $1,386,419 Middle-third restaurants = gross sales of $938,420 Bottom-third restaurants = gross sales of $694,048 Coney Island Cookery Founded in 1962 in Brooklyn, the Coney Island Cookery (CIC) offered "classic" fried seafood. With a vintage 1950s decor, CIC restaurants harked back to a time when consumers could eat what they wanted without feeling guilty. Investment: $700,000 to $800,000 Required liquid assets: $360,000 Net worth required: $900,000 Franchise fee: $20,000 Royalty: 6% of sales Option 2 - Yogurt and Southern Food - A Franchisor Experiment Daniels-Carter could franchise her MyYoMy frozen yogurt and Nino's Southern Cooking restaurants. She wanted to demystify the business to create an opportunity "for individuals that have entrepreneurial spirits where the cost of entry would not preclude them from being able to realize their dream." "I'm doing it from the perspective of: 'When I went into business, I didn't have that.' And that's what MyYoMy and Ninos are really all about." When she entered "the franchising world it was very limited. Zero to almost no women and minorities." Thirty years later, she wanted to lay out a welcome mat, or as she said, an opportunity map, for other entrepreneurs. "If I don't do it, who will?" Frozen Yogurt There were two MyYoMy stores. One was a stand-alone store in Milwaukee that opened in 2012. The other one was in a strip mall in the nearby suburb of Foxpoint. It opened in 2015 . To bulk up softer sales in winter, when fewer people buy frozen yogurt, the MyYoMy stores sell Goody Gourmet's popcorn, a product made by Jacqueline Chesser, another local African-American entrepreneur. "Nowadays, customers aren't just coming in for the frozen yogurt, but also for these franchises' 'chill' store settings. Trending away from the outdated ice-cream parlor environment, modern froyo [frozen yogurt] stores include high-end furniture, Wi-Fi, flat-screen televisions, and live musical performances," according to the International Franchise Association's FranchiseHelp.com website. Frozen yogurt sales were strong in the 1980 s when franchises like TCBY and 1 Can't Believe It's Yogurt were popular, according to the website FranchiseHelp.com. But in time, sales bottomed out. "According to the Agricultural Marketing Resource Center, retail sales of frozen yogurt fell between 1998 and 2003 , while ice cream sales grew by 24%," FranchiseHelp.com savs. adding: Investment: $700,000 to $800,000 Required liquid assets: $360,000 Net worth required: $900,000 Franchise fee: $20,000 Royalty: 6% of sales Advertising fee: $5,000 Susannah's Seafood Emporium Founded in 1970 in Scarsdale, New York, Susannah's was a reliable, suburban favorite. It offered fried food in a low-key setting. In 2011, the chain updated its look and its menu. Investment: $950,000 Required liquid assets: $400,000 Net worth required: $850,000 Franchise fee: $35,000 Royalty: 4.5% of sales Shorewood, which opened in 2014, and the other in Milwaukee proper, which opened in 2015. The restaurants menus included collard greens, green beans, pinto beans, fried corn yams, okra, and macaroni and cheese. Customers could also order chicken, pork chops, and fried catfish. "Despite the name, the restaurant sells more than soul food side dishes," the Milwaukee Journal Sentinel reported in a restaurant review. "Three pieces of fried chicken were at the center of one weekday dinner. Breast, thigh and wing; hot, crisp and juicy. It was deep-fried perfection." Locally, Nino's faced competition from Daddy's Soul Food and Grille, Maxie's, and other restaurants. But Nino's was carving out its own niche with its take-out option and moderate prices, Other southern food franchises were also pursuing opportunities for growth. Among them was Huddle House, which serves breakfast, lunch, and dinner at any time of day. With 400 restaurants in place or in development, the company was "in the midst of a plan to significantly accelerate unit growth over the next three to five years." Part of its strategy was to focus on small towns where competitors such as the International House of Pancakes (IHOP) had no stores. This kind of comfort food also received a plug from Nestle Professional, "If there's one thing you can count on in this competitive, rapidly changing, trend-driven food service environment, it's consumer demand for comfort food. Classic favorites like barbecue, roast chicken, meat loaf, ahd macaroni and cheese continue to attract fans, even in venues like cutting-edge college dining halls where there may be dozens of other options on offer, from sushi to salad bars." According to the 2014 Restaurant Industry Report released by Mazzone and Associates: "For large players such as McDonalds, profit margins at company-operated restaurants can be as high as 15.020.0% due to the large economies of scale the organization has access to. However, the profit margin of a small enterprise that operates only one restaurant will be much lower. In 2014, the average QSR [quick service restaurant] obtained a profit margin of 5.0% of revenue, up from a low of 3.6% during the recession of 2009. This explains the high turn-over rate of businesses and the highly competitive nature of the industry. Typically, an operator's major costs are food and beverages purchased for sale and wages paid, and if these are not managed skillfully an operator's profit margin will take a hit." V\&j Holdings Valerie Daniels-Carter, president John Daniels, chairman of the board Est. 1982 First restaurant: Burger King, 1984 Headquarters: Milwaukee, Wisc. Regional Office: Rochester, N.Y. Restaurants: Burger King Pizza Hut Auntie Anne's (partnership with former NBA player Shaquille O'Neal) Hagen-Dazs Coffee Beanery MyYoMy Frozen Yogurt. Nino's Southern Foods 120 restaurants 4,000 employees Education: Lincoln University (MO.), BS, Business Administration Cardinal Stritch University, M.S. Management, 1983; Honorary Doctor of Humane Letters, 2006 Career: First Wisconsin National Bank - retail and commercial lender MGIC Investment Corporation (mortgage insurance company) - auditor in the financial "Black female franchise owner battled 'cement ceiling' in quest for success," USA Today, February 11,2016 "When Valerie Daniels-Carter tried to franchise her first Burger King in the early 1980s, there weren't many other African-American women in the sector - and she didn't exactly find a 'welcome mat,' she said. "At times, she recalled, it felt less like she was up against a 'glass ceiling' than a 'cement ceiling.'" "Hard Work and Charity," by Valerie Daniels-Carter, The New York Times, August 25, 2012 "My parents instilled a strong work ethic in my siblings and me. "In first grade, I walked four kindergartners to and from school and made $1.25 a week. I was only a year older than them, but I was tall and looked older than I was. Their parents thought I offered some measure of protection. A couple of years ago, I became reacquainted with one of those girls. "As a preteen, I started arranging my two younger brothers' work assignments. They cut lawns and shoveled snow. I'd price the jobs and distribute a schedule to their clients. In my teens, I worked for the parks system and managed a restaurant for a food vendor at Summerfest, a music festival. Later, I served on and was president of the boardof the parent organization, the Milwaukee World Festival. "My father died in my senior year in high school. While attending Lincoln University in Jefferson City, Mo., I worked several jobs to help my mother pay my way. I was a disc jockey, a supermarket cashier and an assistant to a professor in a chemistry lab." "Mega Franchise Owner Valerie R. Daniels Carter Named a Women of Power Legacy Award Winner," Black Enterprise magazine, January 21, 2014 "Black Enterprise has brought together thousands of women who are serious about making power moves at the annual Women of Power Summit, now in its ninth year. Executives, entrepreneurs and innovators network, bond and share ideas that help them move their businesses, their careers and their personal lives forward. They also honor the leaders among them, those outstanding women who receive the coveted Legacy Award. "Joining the group of this year's esteemed honorees is Valerie R. Daniels-Carter, president and CEO of V\& H Holding Cos. Inc., ranked No. 33 on the Black Enterprise Industrial/Service 100 list with $88 Coney Island Cookery Founded in 1962 in Brooklyn, the Coney Island Cookery (CIC) offered "classic" fried seafood. With a vintage 1950 s decor, CIC restaurants harked back to a time when consumers could eat what they wanted without feeling guilty. Investment: $700,000 to $800,000 Required liquid assets: $360,000 Net worth required: $900,000 Franchise fee: $20,000 Royalty: 6% of sales Advertising fee: $5,000 Susannah's Seafood Emporium Founded in 1970 in Scarsdale, New York, Susannah's was a reliable, suburban favorite. It offered fried food in a low-key setting. In 2011, the chain updated its look and its menu. Investment: $950,000 Required liquid assets: $400,000 Net worth required: $850,000 Franchise fee: \$35,000 Royalty: 4.5% of sales Susannah's Seafood Emporium Corporation Investment: $950,000 Required liquid assets: $400,000 Net worth required: $50,000 Franchise fee: $35,000 Royalty: 4.5% of sales Advertising fee: 1.1% of sales Restaurants 2013500 restaurants in 30 states, 270 of these are company-owned 2014490 restaurants in 30 states, 265 of these are company-owned 2015+95 restaurants in 30 states, 265 of these are company-owned Total sales from all restaurants: Stand alone restaurant size: 3,000 square feet Required parking spots: 3438 Exhibit 4 Options for Becoming a Franchisor The franchise options that Daniels-Carter is considering. 1. Projected MyYoMy Financials Initial investment: $240,000 - $400,000 Net-worth requirement: $350,000 - $400,000 Liquid cash requirement: $40,000 Initial franchise fee: $30,000 Ongoing royalty fee: 4% of gross revenue Ad royalty fee: 3% of gross revenue 2. Projected Nino's Financials Initial investment: $190,000 - $680,000 Net worth requirement: $400,000 Liquid cash requirement: $200,000 Initial franchise fee: $30,000 Ongoing royalty fee: 6% of gross revenue Ad royalty fee: 2% of gross revenue - Which of the two options do you think has the most potential to franchise as a franchisee? - Coney Island Cookery or Susannah's Seafood Emporium? - Which of the two concepts do you think has the most potential to franchise as a franchisor? - MyYoMy or Nino's - Use figures from the case and your assessment of the market potential of each to support you decision. - AUV (Average Unit Volume) - Is the number going up or down? Total Revenue of System/Total number of Outlets Example: Coney Island 2013=$710million/8902013=$797,752perstore - Revenue Per Square Ft. Total Revenue Per Year Per Store/Square Ft per store 2013=$797,752/2,500 $319 / square ft A couple of Metrics to Consider - Operating Margin (Revenue - Cost of Goods Sold - SGA)/Revenue Example: Coney Island (550350150)/550=9 Percent By 2016, V\& ] Holdings had grown into a multi-state franchising business (in Wisconsin, Michigan, Minnesota, New York, and Massachusetts) with more than 120 restaurants, 4,000 employees, and approximately $90 million in annual revenues. The franchises included: - Burger King - Auntie Anne's - a pretzel store - Pizza Hut - Hagen-Dazs ice cream - Coffee Beanery It was all run from Daniel-Carter's headquarters on Milwaukee's Brown Deer Road, where 30 employees worked and generous amounts of laughter and hard work filled the offices. Why not declare victory and go on a permanent vacation? "I'm not going where success has been," Daniels-Carter said. "I'm going where it's going." The Evolution of an African-American Businesswoman It was 1982. Ronald Reagan was the president. Michael Jackson's album, Thriller, was selling millions of copies. And the United States economy was in a recession. Valerie Daniels-Carter was looking for a business opportunity that would be a long-term success. As a child, she had run small businesses: a lemonade stand and a service walking small children home from school. After college she had a great job at a bank but her plan had always been to own her own business. She had been saving the money to do it for years. Daniels-Carter had her eye on a major fast food chicken chain when her brother, John Daniels, a lawyer, told her that Operation PUSH, the national nonprofit founded by the Rev. Jesse Jackson, had reached an agreement with Burger King to increase the participation of African Americans in all areas of the hamburger chain's business. Burger King was one of a number of corporations that Rev. Jackson confronted, pressing them to hire more African Americans, and advertise with African-American advertising agencies. Rev. Jackson estimated that the Burger King agreement could have a $500 million economic impact. To capitalize on this opportunity, Daniels-Carter and her brother merged the initials of their first names to form V\&J Foods. In 1984, using her savings and an investment from her brother, DanielsCarter opened her first Burger King restaurant in her hometown of Milwaukee. She worked behind the counter. She took time to learn the lessons that managing a restaurant teaches. Then she began to grow, adding more and more restaurants. In 2014, Daniels-Carter and four other African-American entrepreneurs formed Partners for Community Impact and became part owners of the Milwaukee Bucks, the city's franchise in the National Basketball Association. In October 2014, Daniels-Carter told the Milwaukee Business foumal that she and her partners wanted to help rebuild the team to help make Milwaukee a more appealing place to live. "Part of attracting individuals to Wisconsin is what does the city have to offer? Is it a forwardthinking city?" she told the newspaper. By 2016, V\&) Holdings had grown into a multi-state franchising business (in Wisconsin, Michigan, Minnesota Now Korkwand Massachusetts) with more than 120 restrumants 4.000 earmplowees ind Valerie Daniels-Carter had been traveling across the states, visiting some of the 120 restaurants she owns through her Milwaukee-based company, V\& J Holdings. After more than 30 years of owning franchises, she was considering a new direction. Instead of buying another franchise - she already owned well-known franchise stores, including Burger Kings and Pizza Huts - she was thinking about becoming a franchisor. It would take several years to develop and test ideas, but she knew she could create a restaurant business and sell it to other entrepreneurs. Daniels-Carter wanted to create opportunities that had not existed when she was a young AfricanAmerican businesswoman breaking into franchising. She wanted to create an opportunity for new entrepreneurs that they could learn quickly. She already owned two businesses that she could franchise: MyYoMy, a frozen yogurt store, and the restaurant Nino's Southern Sides. But Daniels-Carter also had another project in mind. She wanted to expand the breadth of her franchises, and she was interested in seafood restaurants. Demand for seafood was rising, and many communities lacked local restaurants. Several national seafood chains had franchise opportunities, and Daniels-Carter wanted to expand in downtown areas and inner city communities. She would have to figure out which project to focus on - or whether she could do both. And if she did both, she would have to do two things: - develop a plan for becoming a franchisor of a restaurant, and - pick a national seafood chain that she could invest in. She wanted to create new entrepreneurial opportunities in new places. She just needed to figure out the best way to do it. But in the United States, it was Isaac Singer who planted a fertile franchising seed in the 1800 s with his sewing machine. Singer sold licenses that let buyers sell the machines and teach people how to use them. The license fees gave him the money he needed to manufacture more machines. In 1968, Herman Petty became the first African American owner of a McDonald's franchise in Chicago. It was the first of his nine stores. And in 1972, Petty cofounded the National Black McDonald's Operators Association. In 1970, Brady Keys, a former player for the National Football League's Pittsburgh Steelers, became the first African-American owner of a Burger King, in Detroit. By 2016, there were "more than 800,000 franchise establishments representing 300 lines of business. More than 9 million people work at locally owned franchises in neighborhoods across the country," according to the website, - OurFranchise.org, which was launched by the International Franchising Association to showcase "the positive attributes of the franchise industry by telling the stories of local franchise owners, employees and their communities," The news for African American-owned franchises was not as good. A 2011 report from the International Franchise Association looked at data from 2007 and found that African-Americans - who comprised 12 percent of the population of the United States - owned 4.9 percent of franchised businesses. In addition, 2.9 percent of all businesses owned by African-Americans were operated as franchises. More recent estimates appeared in a USA Today article on Daniels-Carter in 2016 that noted: "African-American owners make up just 3\% of franchise owners, according to Eric Stites, CEO and Managing Director of the Franchise Business Review, an independent franchise market research firm, based on a survey of 27,000 franchises over the last 18 months." Miriam Brewer, senior director of education and diversity for the International Franchise Association, who was quoted in the article said that African-Americans face several barriers in the franchising industry, including lack of knowledge about franchising and less access to capital. However, there are a number of African-American franchisees, among them: - Homer Roberts, who owned an Oldsmobile car dealership in 1923 Philanthropy and Faith: Reinvesting in Local and Global Communities A tenet of Daniels-Carter's faith was that everyone has a God-driven purpose. "It's not just about financial success, it's about the totality of life," she explained. "And if you can't put the pieces to life together - family, personal, work and spiritual - if you can't pull all that together and have a whole life, then you're missing part of who you are." Daniels-Carter had invested a great deal of her time, energy, and money into Milwaukee. Working with government and nonprofit partners, including another brother, Bishop Sedgwick Daniels, pastor of the city's Holy Redeemer Church, she donated money to build an educational and social services complex. Her favorite part of the complex was the Mother Kathryn Daniels Conference Center for Community Empowerment and Reunification, which opened in 2004 in an African-American neighborhood. Named after Daniels-Carter's mother, the center housed a Boys and Girls Club, a credit union, and a clinic that provided affordable health care. The center's gym was named after DanielsCarter's husband, Jeffrey Alan Carter Sr. He died in 1999, and Kathryn Daniels passed away a year later - two losses that compelled Daniels-Carter to become stronger. The complex also offered educational programs, housing services, and social services. Nearby, an empty factory building was being turned into a business incubator for start-up companies. Another building was to become an arts center. A member of the Church of God in Christ (COGIC), Daniels-Carter served as the jurisdictional supervisor for COGIC's Kenya East Africa Jurisdiction Department of Women. This initiative includes a "self-sustainability project," essentially a microloan program that helped women and orphanage directors start poultry farms. To launch the poultry farms, 18 farmers received chicks, food and other supplies. A facility was built where the chicks were thised. Once the chicks had grown into chickens, the farmers sold them. Participants were also required to help other women establish businesses, encouraging both generosity and community networking. More women were being recruited and the program was being expanded so that the farmers could also raise fish and pigs. Option 1 - Invest in a Seafood Franchise in Urban and Inner City Markets Daniels-Carter was also interested in opening seafood restaurants. The demand for seafood was high and had room to grow. "Over the past two decades, per capita consumption of seafood products in the U.S. has ranged from a low of 14.6 pounds per person in 1997 to a record high of 16.6 pounds in 2004. Since 2004, U.S. annual consumption of fish and shellifish has gradually decreased to 14.6 pounds per person in 2014," according to SeafoodHealthFacts.org, a joint project of Oregon State University; Cornell University; the universities of Delaware, Rhode Island, Florida, and California; and the Community Seafood Initiative. Often consumers who wanted fish had to cook it at home or leave their local market areas to get it. And as more people moved back to downtown areas, Daniels-Carter expected to see growing demand there. There was also potential in inner city communities among African-American residents. DanielsCater was looking at opening restaurants in Milwaukee and Detroit. "We feel there is a huge opportunity to grow in these markets," Daniels-Carter said. Optimism was running high in the seafood restaurant industry as more consumers sought to eat healthier food that also tastes good. Fish offers weight-conscious Americans a low-fat, low-carb meal with valuable omega-3 fatty acids. In a retail environment saturated with hamburgers, pizza, and chicken, seafood stood out as a different choice. While fried seafood might not be healthier, grilled seafood offered a more nutritiously sound option. Daniels-Carter looked at all the national franchises in this arena. Two franchises - Susannah's Seafood Emporium and the Coney Island Cookery - laid out the opportunities and challenges in the seafood restaurant industry. Both franchises are excited about the ready availability of Alaska pollock, a mild flavored white fish. NOAA, the National Oceanographic and Atmospheric Administration, reported that "During 2014, pollock made up 64% of the total groundfish catch off Alaska. The pollock catch for 2014 was 1,442,840 metric tons (t), up approximately 0.05% from 2013." In 2012. NOAA had also warned, however, that warmer ocean conditions were "less favorable" for - Nicole Enearu who owned two McDonald's restaurants in the greater Los Angeles area and ran the operations for 13 other McDonald's that were owned by her mother, Patricia Williams - Magic Johnson, former NBA star, and the owner of movie theater and restaurant franchises - Maurice Welton, an Edible Arrangements franchisee - Clayton Turnbull, CEO of the Waldwin Group, a Dunkin' Donuts franchisee - Venus Williams, tennis star and juice franchise owner - Omar Simmons, a graduate of Harvard Business School, who owned more than 50 franchised Planet Fitness health clubs Choosing a Franchise - and Financing It Given the hundreds of choices of franchises, entrepreneurs have to decide: Which one is best for me? To come up with an answer, entrepreneurs have to consider their personal preferences, assess their professional strengths, and crunch a lot of numbers. To increase their chances of success, entrepreneurs should have relevant business and management experience as well as passion for the industry they are choosing and enough humility to do the grunt work that their franchise may require. Companies will publish the criteria they expect franchisees to meet. For example, the minimal financial requiruments to open a Burger King in 2015 were: - a net worth of at least $1.5 million - $500,000 liquid capital In 2013 some 662 million pounds of farm raised fish and shellfish were produced in 2013. "In the United States, the amount of fish and shellfish harvested from the wild annually is about 7 times greater than the amount produced by domestic aquaculture farms. Pond raised catfish represents a little over half of the total farm raised seafood products produced annually in the U.S. Other important domestically produced aquaculture products in order of the quantity produced include: crawfish, trout, oysters, salmon, tilapia, striped bass, shrimp, clams, and mussels," Some analysts pointed out that seafood restaurants might also face competition from companies such as Blue Apron that deliver raw meal-in-a-box ingredients to consumers' homes. Fish was a popular choice, and some consumers might enjoy experimenting with new recipes in the comfort of their own kitchens. One national seafood franchise reported its 2914 average profits per store by tiers: Top-third franchise restaurants = gross sales of $1,386,419 Middle-third restaurants = gross sales of $938,420 Bottom-third restaurants = gross sales of $694,048 Coney Island Cookery Founded in 1962 in Brooklyn, the Coney Island Cookery (CIC) offered "classic" fried seafood. With a vintage 1950s decor, CIC restaurants harked back to a time when consumers could eat what they wanted without feeling guilty. Investment: $700,000 to $800,000 Required liquid assets: $360,000 Net worth required: $900,000 Franchise fee: $20,000 Royalty: 6% of sales Option 2 - Yogurt and Southern Food - A Franchisor Experiment Daniels-Carter could franchise her MyYoMy frozen yogurt and Nino's Southern Cooking restaurants. She wanted to demystify the business to create an opportunity "for individuals that have entrepreneurial spirits where the cost of entry would not preclude them from being able to realize their dream." "I'm doing it from the perspective of: 'When I went into business, I didn't have that.' And that's what MyYoMy and Ninos are really all about." When she entered "the franchising world it was very limited. Zero to almost no women and minorities." Thirty years later, she wanted to lay out a welcome mat, or as she said, an opportunity map, for other entrepreneurs. "If I don't do it, who will?" Frozen Yogurt There were two MyYoMy stores. One was a stand-alone store in Milwaukee that opened in 2012. The other one was in a strip mall in the nearby suburb of Foxpoint. It opened in 2015 . To bulk up softer sales in winter, when fewer people buy frozen yogurt, the MyYoMy stores sell Goody Gourmet's popcorn, a product made by Jacqueline Chesser, another local African-American entrepreneur. "Nowadays, customers aren't just coming in for the frozen yogurt, but also for these franchises' 'chill' store settings. Trending away from the outdated ice-cream parlor environment, modern froyo [frozen yogurt] stores include high-end furniture, Wi-Fi, flat-screen televisions, and live musical performances," according to the International Franchise Association's FranchiseHelp.com website. Frozen yogurt sales were strong in the 1980 s when franchises like TCBY and 1 Can't Believe It's Yogurt were popular, according to the website FranchiseHelp.com. But in time, sales bottomed out. "According to the Agricultural Marketing Resource Center, retail sales of frozen yogurt fell between 1998 and 2003 , while ice cream sales grew by 24%," FranchiseHelp.com savs. adding: Investment: $700,000 to $800,000 Required liquid assets: $360,000 Net worth required: $900,000 Franchise fee: $20,000 Royalty: 6% of sales Advertising fee: $5,000 Susannah's Seafood Emporium Founded in 1970 in Scarsdale, New York, Susannah's was a reliable, suburban favorite. It offered fried food in a low-key setting. In 2011, the chain updated its look and its menu. Investment: $950,000 Required liquid assets: $400,000 Net worth required: $850,000 Franchise fee: $35,000 Royalty: 4.5% of sales Shorewood, which opened in 2014, and the other in Milwaukee proper, which opened in 2015. The restaurants menus included collard greens, green beans, pinto beans, fried corn yams, okra, and macaroni and cheese. Customers could also order chicken, pork chops, and fried catfish. "Despite the name, the restaurant sells more than soul food side dishes," the Milwaukee Journal Sentinel reported in a restaurant review. "Three pieces of fried chicken were at the center of one weekday dinner. Breast, thigh and wing; hot, crisp and juicy. It was deep-fried perfection." Locally, Nino's faced competition from Daddy's Soul Food and Grille, Maxie's, and other restaurants. But Nino's was carving out its own niche with its take-out option and moderate prices, Other southern food franchises were also pursuing opportunities for growth. Among them was Huddle House, which serves breakfast, lunch, and dinner at any time of day. With 400 restaurants in place or in development, the company was "in the midst of a plan to significantly accelerate unit growth over the next three to five years." Part of its strategy was to focus on small towns where competitors such as the International House of Pancakes (IHOP) had no stores. This kind of comfort food also received a plug from Nestle Professional, "If there's one thing you can count on in this competitive, rapidly changing, trend-driven food service environment, it's consumer demand for comfort food. Classic favorites like barbecue, roast chicken, meat loaf, ahd macaroni and cheese continue to attract fans, even in venues like cutting-edge college dining halls where there may be dozens of other options on offer, from sushi to salad bars." According to the 2014 Restaurant Industry Report released by Mazzone and Associates: "For large players such as McDonalds, profit margins at company-operated restaurants can be as high as 15.020.0% due to the large economies of scale the organization has access to. However, the profit margin of a small enterprise that operates only one restaurant will be much lower. In 2014, the average QSR [quick service restaurant] obtained a profit margin of 5.0% of revenue, up from a low of 3.6% during the recession of 2009. This explains the high turn-over rate of businesses and the highly competitive nature of the industry. Typically, an operator's major costs are food and beverages purchased for sale and wages paid, and if these are not managed skillfully an operator's profit margin will take a hit." V\&j Holdings Valerie Daniels-Carter, president John Daniels, chairman of the board Est. 1982 First restaurant: Burger King, 1984 Headquarters: Milwaukee, Wisc. Regional Office: Rochester, N.Y. Restaurants: Burger King Pizza Hut Auntie Anne's (partnership with former NBA player Shaquille O'Neal) Hagen-Dazs Coffee Beanery MyYoMy Frozen Yogurt. Nino's Southern Foods 120 restaurants 4,000 employees Education: Lincoln University (MO.), BS, Business Administration Cardinal Stritch University, M.S. Management, 1983; Honorary Doctor of Humane Letters, 2006 Career: First Wisconsin National Bank - retail and commercial lender MGIC Investment Corporation (mortgage insurance company) - auditor in the financial "Black female franchise owner battled 'cement ceiling' in quest for success," USA Today, February 11,2016 "When Valerie Daniels-Carter tried to franchise her first Burger King in the early 1980s, there weren't many other African-American women in the sector - and she didn't exactly find a 'welcome mat,' she said. "At times, she recalled, it felt less like she was up against a 'glass ceiling' than a 'cement ceiling.'" "Hard Work and Charity," by Valerie Daniels-Carter, The New York Times, August 25, 2012 "My parents instilled a strong work ethic in my siblings and me. "In first grade, I walked four kindergartners to and from school and made $1.25 a week. I was only a year older than them, but I was tall and looked older than I was. Their parents thought I offered some measure of protection. A couple of years ago, I became reacquainted with one of those girls. "As a preteen, I started arranging my two younger brothers' work assignments. They cut lawns and shoveled snow. I'd price the jobs and distribute a schedule to their clients. In my teens, I worked for the parks system and managed a restaurant for a food vendor at Summerfest, a music festival. Later, I served on and was president of the boardof the parent organization, the Milwaukee World Festival. "My father died in my senior year in high school. While attending Lincoln University in Jefferson City, Mo., I worked several jobs to help my mother pay my way. I was a disc jockey, a supermarket cashier and an assistant to a professor in a chemistry lab." "Mega Franchise Owner Valerie R. Daniels Carter Named a Women of Power Legacy Award Winner," Black Enterprise magazine, January 21, 2014 "Black Enterprise has brought together thousands of women who are serious about making power moves at the annual Women of Power Summit, now in its ninth year. Executives, entrepreneurs and innovators network, bond and share ideas that help them move their businesses, their careers and their personal lives forward. They also honor the leaders among them, those outstanding women who receive the coveted Legacy Award. "Joining the group of this year's esteemed honorees is Valerie R. Daniels-Carter, president and CEO of V\& H Holding Cos. Inc., ranked No. 33 on the Black Enterprise Industrial/Service 100 list with $88 Coney Island Cookery Founded in 1962 in Brooklyn, the Coney Island Cookery (CIC) offered "classic" fried seafood. With a vintage 1950 s decor, CIC restaurants harked back to a time when consumers could eat what they wanted without feeling guilty. Investment: $700,000 to $800,000 Required liquid assets: $360,000 Net worth required: $900,000 Franchise fee: $20,000 Royalty: 6% of sales Advertising fee: $5,000 Susannah's Seafood Emporium Founded in 1970 in Scarsdale, New York, Susannah's was a reliable, suburban favorite. It offered fried food in a low-key setting. In 2011, the chain updated its look and its menu. Investment: $950,000 Required liquid assets: $400,000 Net worth required: $850,000 Franchise fee: \$35,000 Royalty: 4.5% of sales Susannah's Seafood Emporium Corporation Investment: $950,000 Required liquid assets: $400,000 Net worth required: $50,000 Franchise fee: $35,000 Royalty: 4.5% of sales Advertising fee: 1.1% of sales Restaurants 2013500 restaurants in 30 states, 270 of these are company-owned 2014490 restaurants in 30 states, 265 of these are company-owned 2015+95 restaurants in 30 states, 265 of these are company-owned Total sales from all restaurants: Stand alone restaurant size: 3,000 square feet Required parking spots: 3438 Exhibit 4 Options for Becoming a Franchisor The franchise options that Daniels-Carter is considering. 1. Projected MyYoMy Financials Initial investment: $240,000 - $400,000 Net-worth requirement: $350,000 - $400,000 Liquid cash requirement: $40,000 Initial franchise fee: $30,000 Ongoing royalty fee: 4% of gross revenue Ad royalty fee: 3% of gross revenue 2. Projected Nino's Financials Initial investment: $190,000 - $680,000 Net worth requirement: $400,000 Liquid cash requirement: $200,000 Initial franchise fee: $30,000 Ongoing royalty fee: 6% of gross revenue Ad royalty fee: 2% of gross revenue