Soupmaker Al Yeganeh closed his Manhatten soup shop in 2004, famous for those strict rules and the character he had inspired on "Seinfeld," so that he could focus on franchising his Original Soupman stores nationwide. The company introduced it's frozen soups to grocery stores and launched almost 40 stores in it's first two years. There is now a group of franchisees who feel they have been taken for a ride by the company.
Original Soupman opened it's first stores in 2005, using both the popularity of the Seinfeld program and trying to distance itself from it as well. While he certainly enjoyed the publicity that episode brought him, he discouraged the franchisees from mentioning Seinfeld or from saying "No soup for you."
At least eight stored have closed permanently, two others are closed for the moment. Stores in South Carolina, Pennsylvania, Colorado and Canada are closed permanently, three stores in New York city have closed temporarly and two stores have asked to be released from their contracts so that they may try staying open as a different type of business.
"They are just trying to get as many stores open as possible, and they aren't supporting them whatsoever," stated Kevin Long.Long, who's Scranton PA franchise lasted just one winter, accused the company of misrepresenting how much it would actually cost to open and run the business. He added that the company had difficulty early on with bowl and cup sizes that allowed the customer to get more soup than they had paid for and never providing the promised summer product line.
Original Soupman spokesman John Rarrick stated that many of the early problems were due to "growing pains" and that the early owners knew that there was risk involved with a new franchise idea. He added that the company has fixed the bowl sizes, delayed the plan to open 50 franchises in Britain and has exchanged the early idea of operating the stores as inexpensive carts and kiosks for hybrid stores associated with Cold Stone Creamery.
Not only are they trying to sell a product that definately does well in the cold months and terrible in the warm months, I know for me....... the prices of $7 to $11 for a 12-ounce bowl of soup doesn't have me rushing anytime soon for their store, no matter how good the soup is. I probably will stick to the "buy one can - get two free" sale at the grocery.
1 comment:
1. The issues with the franchisor are much deeper than it appears.
1. The company is undercapitalized. An investment bank retained to raise capital for the franchisor had discontinued its efforts after having received commitments for approximately 25% of the targeted capital. This was a result of the poor operating results of the company and its underlying franchisees.
2. The company has been seeking an acquiror of its operations. Throughout this effort the issues and challenges brought to the attention of the company by its franchisees have been quietly addressed but none of the problems have been resolved.
3. The misrepresentations made by the franchisor to induce franchisees to acquire territories and open up an Original Soupman outlet are many: (a) understatement of food costs; (b) co-branding with Cremalita ice cream to balance overall sales in warm months was abandoned soon after first 12 stores opened for business; (c) mandated use of cups and bowls that are 25% larger than purported serving portions, resulting in giving away 25% more product than consumer was paying for and at the same time causing an increase in purchases of product from the company to replenish inventory.
Post a Comment