Franchise Opportunity and Potential
We believe that franchise development will complement the Company-owned restaurant growth strategy. Growth in franchise operations is expected to occur through the development of new restaurants by franchisees and through the development of additional franchisee relationships. We expect that we will generally utilize franchise development agreements and establish franchisees in markets:
- That are located a significant distance from our California home office;
- Where we do not have the critical local real-estate expertise or detailed knowledge of the local labor force and can capitalize the experience of a locally domiciled franchisee; and
- That need to be developed more quickly than our available resources and personnel may allow.
We believe that the Cancun Grille concept will attract a strong group of franchisees with minimal sales effort. We expect that each of our developers will be required to enter into two types of agreements:
- an area development agreement, which establishes the timing and number of stores to be developed in an area; and
- a franchise agreement for each restaurant opened.
All of our franchisee agreements will require that each franchisee operate its restaurants in accordance with our defined operating procedures, adhere to the menu established by us and meet all applicable quality, service, health and cleanliness standards. We intend to enforce those high standards by utilizing such tools as mystery shoppers and unannounced quality assurance standards.
Our area development agreement will typically have a three-to five-year term, with the developer having the opportunity to enter into a renewal development agreement at the end of the term under certain conditions. The area development agreement establishes the number of restaurants that must be developed in a defined geographic area and the deadlines by which these restaurants must open, usually set in 12-month intervals.
Future plans for Cancun Grille include franchising. The popularity of franchising is growing. It is the most popular of all growth systems because it allows more people to become business owners. Franchisees get the benefit of being in business for themselves but not by themselves. A new franchise opens somewhere in the U.S. every eight minutes each business day.
Franchisees of Cancun Grille can earn what they’re worth. Thousands of franchise owners report they were held back in their jobs by company policies and supervisors that put a cap on their earnings. When you own your own Cancun Grille franchise, your efforts are rewarded and your personal income reflects it. Seventy-five percent of all millionaires in the U.S. own their own business.
- High-growth industry with tremendous upside potential
- Recession-resistant industry
- Lucrative first right of refusal franchising opportunities
- Cancun Grille® positioned to take advantage of the upswing in demand for authentic Mexican food with a Caribbean flavor
- Potential for international expansion and untapped market penetration
- Professional and disciplined management team whose corporate philosophy will guide the running and operation of Cancun Grille®
- Strategic planning for restaurant locations in areas of high density consumer traffic to attract maximum amount of customers for lunch and dinner. Thus, increasing profit ratio and overall restaurant profitability.
- Timing: The Restaurant Association forecasts that restaurant-industry sales will continue to rise in 2005, reaching a record $440.1 billion in a 14th consecutive year of growth.