Boston ice cream chain gets in new licks via the franchising route
It's 10 o'clock on Saturday night in Boston, and the line in front of the Steve's Ice Cream store runs down the block and around the corner. Inside, residents of the state with the highest per capita consumption of ice cream are eagerly paying $1.80 for a large cup of homemade Oreo or honey walnut ice cream with a mix-in of Reese's cup, granola, or coconut folded into the middle of the confection.
This scene could soon be repeated at 23 stores planned or opening in Texas, New York, Florida - throughout the United States - since Steve's, Massachusetts' answer to the ultimate in ice cream, started franchising stores in February, a few weeks after Steve's was purchased by Integrated Resources. With the financial backing of the New York-based conglomerate, Steve's is expected to open 500 stores over the next four years.
Franchising, in general, is showing strength in the country - and not just in upscale ice cream. Total sales of franchisers and franchisees in the US increased 11 percent in 1983 over '82, and projections indicate a 9 percent increase this year, says Peter Fischer, an analyst with the Washington-based International Franchise Association, a trade group.
''Judging by recent trends,'' says Andrew Kostecka, a franchise specialist at the Department of Commerce, ''franchising can look forward to increasing growth for the remainder of the 1980s.''
Besides ice cream, what are the current trends in franchising?
Women are entering franchising in increasing numbers, as both franchisers and franchisees, Mr. Kostecka says. Growth of US-spawned frachisees outside the US is strong, up 9 percent in 1982.
The increased average age of autos on US roads and the decline of auto dealerships and service stations have created an opportunity for auto repair or tuneup franchises. Strong growth is also expected in franchising computer stores , retail phone centers, auto leasing, parcel delivery, dental care centers, and home furnishings.
What kinds of things should a potential franchisee look for when evaluating a franchise opportunity?
''Get all documentation,'' says Paul Curry, a Boston-based franchise consultant. Mr. Curry was previously a fast-printing franchiser and now owns 10 Steve's outlets, including the one at Boston's Faneuil Hall (the highest-grossing ice cream store in the world, he says). Other points:
* Since 1979, the Federal Trade Commission has required the franchiser to give the potential franchisee specific information on 21 main points needed to decide whether to buy the franchise.
* One should talk with other franchisees. Curry says to ask, ''Have they (the franchisers) given you everything they promised you?'' and ''Would you do it again?'' Also ask to see their profit-and-loss statements. What problems did they encounter that were not presented to them by their franchiser?
* Then a business plan for getting a loan should be prepared. A person should have a minimum of 30 percent from his own unencumbered cash to invest. This varies with the franchiser, says Mr. Fischer; most offer partial financing. The total franchise investment can ''range from several thousand, up into the millions of dollars,'' he adds.
You will need the loan and your own 30 percent to cover the franchise fee, equipment and product, and start-up working capital (for salaries while training , prepayment of rent, and other expenses until revenue can cover them).
To go into business by yourself, says Curry, ''you have to be an expert in real estate, finance, advertising, and buying.'' As a franchisee, your franchiser provides this expertise.
For those wanting to learn more about specific franchises, he suggests the ''Franchise Opportunities Handbook,'' available from the Superintendent of Documents, US Government Printing Office, Washington, D.C. 20402, for $7 prepaid. It lists franchise offerings.