A Very Different Approach

GLEN ALLEN, VIRGINIA | Thursday, December 15, 2005

FoodNet has taken a very different approach to marketing a food service company. When we look at a city or town we look to bring our concepts and brands to every corner of that market. This allows us to have more representation, which in turn allows us to better support our brands. When we fully implemented our “New business model” and realized that this business model was going to work, we knew it was time to figure out how to grow our concept. We had two choices: we could take it one market at a time, build an infrastructure in each market and slowly create a brand or we could give individuals the ability to own a market for themselves. That was a simple choice for us, as John Felico put it,“My grandfather did it, my father did it, and when it was my turn, I went into business for myself as well. This company was put together by entrepreneurs and for entrepreneurs.” It was time for FoodNet to sit back again and figure how to put together a program that would empower an “Area Developer” to go out and market the entire family of FoodNet brands and services. The answer is simple; just give that “Area Developer” a cut of everything. At that moment we put together the framework of what is now called the “FoodNet Area Developer” Program, or FAD.

-------------------------------------------------------------------------------- Framework: Before we go into the specifics of the FAD program, I’d like to tell you how the FAD program was put together. We have not found another food service company that is giving an area developer the ability to make money from all the different profit centers in a defined area or territory. So there was really no frame of reference for us. But, there are certain programs out there today that allow area developers to sell a franchised concept in a given territory (Master Franchisees); there are also other programs that allow companies to sell a specific company’s line of branded products within a given territory (Food Brokers). All we did was basically combine these two programs into one. In the following paragraphs, we are going to briefly go over some of the responsibilities for each party and the flow of money. This is designed to give you an understanding of the program; keep in mind that this is not the entire program and because some of these items are commodity products, the numbers will vary from what you see here. First Location: For a FAD it all starts here. Each FAD must open one location; it can be any of our four franchising opportunities. Besides being a source of revenue for the FAD, it more importantly becomes the training ground for that territory. As a FAD you are completely responsible for the training and oversight of future franchisees in a given market. Please note that you personally will only be allowed to open one location within a market.

Restaurants/Franchising: With in your territory you will be allowed to sell all the FoodNet Family of Franchise Opportunities. You are responsible for sourcing out potential franchisees, and after the franchisee has gone through the approval process, you will assist them in getting open, handle off-site and on-site training and then you will be responsible for the oversight of that franchisee. It sounds like the lion’s share of the work, doesn’t it? We agree; that is why you will receive the lion’s share of the franchisee fees and royalties. Currently, our initial franchise fee is $15,000.00. As a FAD you will receive 66.7% or $10,000.00 of that as soon as the unit opens. Also, each franchisee pays a 4% royalty, and as a FAD you will receive 75% of that royalty or 3% of the total gross sales.

As a side bonus, because your location is in your territory and is franchised, it falls under your FAD agreement which means your franchisee fee nets out to $5,000.00 and your royalty nets out to just 1% of your gross sales.

Branded Products: As the units start to open and brand awareness starts to build business, you can start placing the FoodNet Family of Brands in a wide variety of venues. The prices are commodity-driven and the margins will change. We will supply a list of all our items and their updated prices when you request more information.

Retail Branded Products (Supermarkets): Currently we offer Dominic’s of New York® Authentic Hot or Mild Sausage and Dominic’s of New York® Hot Dogs. As a FAD, you would make from our sausage, $6.12 per case or 76.5 cents a pound. You are responsible for getting the product in the stores, POS and any other marketing fees associated with getting the product in the stores or promoting the sales of the product. Wholesale Branded Products We are very proud of our line of precooked sausages, hot dogs and Dominic Juniors®. These products can be sold in convenience stores, delis, eateries, etc. More importantly, these products give us the ability to create branded programs. Combine our Dominic Juniors® and our Dominic’s of New York® Hot Dogs, place them on a Branded Roller Grill and you have one heck of branded roller grill program. Taking all these products and placing them on a Dominic’s of New York® Express Cart gives you an operational, easily branded cart program.

On Precooked Sausage alone, a FAD will realize $10.00 a case. Also, as an added bonus to being a FAD, our precooked sausage is also sold in our franchised locations.

Your responsibility is to source out end users, supply sales material, and in some cases purchase equipment.

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FoodNet Franchising Inc.
4101 Cox Rd., #120
Glen Allen, VA

Phone: (804)273-0600
Fax: (804)273-0152

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