Use Quick Screen to evaluate Ice Delight’s opportunity. From the quick screen tool the criteria with the lowest potential is the market. I’verated the market as a lower potential item since they haven’t investigated in full the Florida market. They haven’t even been to Florida to look for possible locations or done any type of marketresearch. Most of the other criteria have higher potentials such as breakeven point, costs, profits and returns.
Comment on the deal. It is fair that ICEDELIGHTS has come up with an option sincetheir inability to commit to the Florida franchise. Now the franchisee would only have to make a $75,000 up-front deposit and the remaining $125,000 up front charge would not be paid until ICEDELIGHTSprovided one acceptable location and the lease was signed. ICEDELIGHTS feels that they might not be able to supply the Florida franchise with product and resources and in such case the franchiseewould have to invest in a production facility so this would require additional investment but will provide them independence in product supply. Knowing the market is fundamental to a business since theywill know in advance about competition and the needs and wants of the population but they don’t know much about the market and haven’t done any deep research on it. Besides, Compared to other franchiseopportunities, ICEDELIGHTS seems expensive for a new franchise.
The deal itself looks attractive. ICEDELIGHTS has taken a cautious approach at franchising their brand and are really committed to aquality growth. They have been very successful in the Boston area and their production techniques are impressive. There are some great aspects in the deal but there are also some downsides to it andthey will have to think deeply into it.
What are the critical risks faced by the business and by the entrepreneurs? One of the biggest risk here is that they have no firm committed...