Hard Franchise Lesson

Sunday, December 03, 2006

The FBI isn't the only force that can wipe out five families. A former Brooklyn businessman claims his successful Fratelli Ravioli mom-and-pop chain was destroyed by franchising, and now warns entrepreneurs about how this business venture can whack your finances. "I want to knock down the concept that franchising has little risk," says Larry Vivola, who, with his brother, ran the popular ravioli and Italian food store started by his parents 28 years ago. "The industry brainwashes people into thinking it is safe." Certainly Vivola, his family and the families of four franchisees thought there was little risk in 2001 when Fratelli decided to take its popular Brooklyn chain national. For the first few years, the Vivolas were living the American dream - expanding successfully and winning awards from Entrepreneur Magazine and the Brooklyn Chamber of Commerce and appearing on the Food Network. Vivola and his parents sold their homes to finance corporate offices, warehousing space, supplies and working capital. Vivola thought he was going to be the next McDonald's. But the royalty payments the four franchising families owed to Fratelli central wiped out the newcomers' profits - and in some instances, the franchisees stopped making the payments. Some franchisees grew disenchanted as their wishes to add menu items popular in their communities were rebuffed by Vivola. At the same time, Vivola's request to add items he found popular were not adopted by the franchisees. Tensions grew. To cut expenses, the franchisees skimped on quality and portions, damaging the fine Fratelli reputation the family honed over decades. "This is not a case of sour grapes," Vivola says. "Franchising is the real culprit giving people a false sense of security." Michael H. Seid, co-author of "Franchising for Dummies" and founder of his own franchise consulting firm, agrees that franchising is risky. "Franchising is never a guarantee of success," he says. Last month, all five Fratelli locations closed and each of the five families lost everything. Franchising left such a bad taste in Vivola's mouth that he has gotten out of the food business altogether. He moved to Arizona two months ago and works as a small-business consultant for Bizultant.com.

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Fratelli Ravioli
31 Browne St.
Brooklyn, NY

Phone: (718)222-3094
Fax: (718)855-9690

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