KEEPING THE AIR IN BLIMPIE

Keeping the Air in Blimpie

Keeping the Air in Blimpie

What Are The Major Advantages Of Franchising For A Firm Such As Blimpie?

Blimpie is not the first company to move to co-branding of franchises. Co-branding of franchise outlets has helped several franchises stand out in especially competitive and crowded fields. On a busy road in Columbus, Ohio, for example, an all-in-one Shell Oil/Charley's Steakery/ TCBY caters to shoppers who want to fill their cars and their stomachs in one stop. The advantages are that the company will deal with the financial aspect of the business. The applicant to become a franchise pays a fee and possibly other fees in the future but the major portion of the assets are handled by the parent company. The parent company would provide training for employees, thus saving the franchiser money. Blimpie franchisers can focus on their location and not in the overall company aspect.

A third new concept was 'Smoothie Island', which was launched through Maui Tacos in 1998. Smoothie Island's menu featured beverages blended with frozen yogurt and fruit. In addition to opening standalone units, including such nontraditional locations as airports, health clubs, and grocery stores, Blimpie also planned to cobrand Smoothie Island with both the Maui Tacos and Blimpie concepts—both in dual-branding and tribranding formats. By mid-2001 there were 80 Smoothie Island units located in the United States, Puerto Rico, and four other countries.

By the turn of the millennium, Blimpie International was struggling. Net income had fallen steadily throughout the second half of the 1990s. A main factor in this decline was that the subfranchiser rights to the Blimpie Subs chain had largely been sold by the mid-1990s, thus bringing a halt to what had been a steady stream of income. As Blimpie's struggles continued, investors showed little interest in the company, and the price of the company's stock sagged. Seeing little benefit in being a publicly traded firm, Blimpie joined the growing ranks of restaurant companies fleeing the public market. In October 2001 a private investor group led by Jeffrey K. Endervelt, owner of the 44-unit Blimpie of California subfranchise, agreed to buy Blimpie International for $25.7 million. The transaction was completed in January 2002, whereupon Endervelt took over as chairman, president, and CEO, and Conza, who was a partner in the investor group, remained involved at the company but in an advisory capacity. Although Blimpie remained ...