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MARCH 2010, Volume
25 Issue 3
Franchise News
Subway on track to be
biggest restaurant chain
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Subway opened 2,164 outlets last year, including this
New York store.
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Subway restaurants may have become the biggest fast-food franchise in the world after opening 2,164 locations in 2009.
In Canada, the Subway chain reached a high of 2,400 locations, including 900 in the province of Ontario and 75 in Nova Scotia.
Globally, Subway now has 32,000 outlets, with 22,000 in the United States 1,300 in the United Kingdom, 700 in Germany and 400 in Mexico, where the number of Subway restaurants also surpassed the number of McDonalds' restaurants operating in the country. Last year also saw the opening of the first Subway restaurants in Macau and Slovakia.
There is even a Subway on the crane rising along side the construction of New York City's One World Trade Center - also known as the Freedom Tower - providing meals for construction workers as the structure rises 108 stories. At 1,776 feet, the tower will be the tallest building in the U.S. and one of the tallest in the world.
Subway locations may now outnumber McDonalds, which had 31,000 outlets around the world, based on 2008 figures.
A Subway franchise requires a total investment of from $78,600 to $238,000, including an initial franchise fee of $15,000. There is also an 8 per cent royalty fee and an advertising fee.
The first Subway opened in the U.S. in 1974.
Brown retaliates
against franchise
Browns Socialhouse Ltd. is going on the legal offensive after multiple lawsuits were launched against its founder, Scott Morison, last year.
In late December, Browns Socialhouse Ltd. filed a lawsuit against Hub Restaurant & Lounge Yaletown BC Ltd., formerly doing business as Browns Restaurant & Bar Yaletown Ltd., alleging a breach of licence agreement.
According to documents filed in BC Supreme Court, Browns Yaletown breached its licence agreement when it changed its name to Hub Restaurant & Lounge in November.
The statement of claim alleges that the defendant's actions were a misappropriation of Browns' property.
The documents also claim Hub failed to pay royalty fees, use black linen napkins, the correct Browns menu or approved suppliers as outlined in the agreement.
On November 9, Browns Yaletown, Marsh Holdings Ltd. and William and Jennifer Marsh filed a lawsuit against Morison and Browns alleging misrepresentation and breach of franchise agreement.
The Marshes are the current owners of Hub Restaurant, and they sought the return of the $630,000 they paid for the franchise and the $192,412 paid in royalty and marketing fees.
In the latest lawsuit, Browns has turned the tables on Hub and the Marshes.
Browns seeks damages; an accounting; an injunction; a declaration that Browns is the holder of a security interest in all of Hub's personal property; the appointment of a receiver; and an inquiry as to whether the defendant holds any debts or liabilities payable out of the property.
- Joel McKay, BIV
Aussie Pet sets up
in Vancouver
An international mobile pet-grooming franchise has established its Canadian headquarters in Vancouver as it looks to open as many as 20 locations in B.C. and 300 across Canada.
Founded in Australia in 1996, Aussie Pet Mobile is the world's largest mobile pet grooming business, with more than 500 locations in nine countries, including 300 locations in the United States.
It has set up its Canadian corporate shop in downtown Vancouver and is in discussions with two potential franchisees in the Lower Mainland, but no deals have been finalized.
Aussie's proposing to open 37 locations in Canada by the end of 2011.
With the exception of a few mom-and-pop operations, Aussie Pet will be among the only pet groomers in the Lower Mainland that arrive at your doorstep in a glorified bathtub on wheels to wash and groom your pet.
According to Aussie Pet, North American pet owners will spend roughly $50 billion on their pets this year.
The company, whose services cost roughly 20 per cent to 30 per cent more than those of walk-in grooming service outlets, emphasizes convenience. Dog and cat owners who would rather pay to have their pet washed and groomed than do it themselves avoid having to pick up and deliver their pet with Aussie Pet. A one-hour appointment, which can include washing, massaging, nail-clipping and other grooming services, costs roughly $75.
Richard Avis, CEO of the Canadian arm of Aussie Pet, made Vancouver the company's headquarters because it's closer to his home country of Australia and it's known as a city of pet lovers, he said.
Avis said it takes about three months for prospective franchisees to get on the road following the due diligence process.
Franchise rights to a particular territory cost $40,000. It costs between $100,000 and $119,000 to launch a single-vehicle operation.
This includes costs for training and supplies and to outfit a Mercedes Benz cargo van with a self-contained water system and pet-washing equipment. Multi-vehicle operators require between $154,000 and $172,000 in startup capital.
When can a franchisee expect to break even on his or her initial investment?
"To be straight up, it's tough, but the need is there," said Bob Shaw, who has operated an Aussie Pet franchise in Toronto since November 2006. "Once you have a customer, you probably have them for life, but building the customer base for sure is a challenge."
He hasn't paid off his original investment but, with a second van on the road, expects to recoup his initial investment within 18 months.
Ellen McWilliams has operated a mobile pet grooming service in West Vancouver for nine years, initially as a manager and then as an owner.
Her company, Town and Country Pet Mobile Services, has roughly 200 clients on the North Shore. It is a full-time, but rewarding job. McWilliams said.
"The only reason it works is because I don't have overhead, I don't have to pay hydro, I don't have to pay a lease on space and I don't have staff, "she said.
- Curt Cherewayko/BIV
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