Franchising Lessons

April, 2009

Three years ago, Chris and Sara Lufrano turned their search for healthy fare into the Aloha Salads store in Kailua. With salads like Ono Island Ahi and Aloha Passion, their idea quickly proved itself. 

But as they expanded into new stores in Kahala, Ward and, just recently, Kapolei, the Lufranos realized their business and personal resources were stretching thin. The answer? Aloha Salads is now moving to a franchise operation in Hawaii and California.

HB: Why did you decide a franchise model was the best option?

We really do care about the product, that’s why we started this. But I can’t make every salad and when you have more stores you can’t be in every place at once. Maintaining the quality when you give someone else the responsibility, that’s always hard. The whole idea of franchising is the business works better if the owner is involved. It’s also a way to grow without having the financial means. The most expensive part is building the store; the second would be the equipment. The franchisee takes on those costs and then we get a percentage of their sales.

HB: What are the tradeoffs in franchising?

The trade-off is you still lose some control. And there can be problems. They could learn everything, then leave and open their own stores. There are some protections against that in the franchise agreement, but that would mean legal action. Also, you don’t know how they’re going to manage the business. We will interview them and get to know them and train them, but, in the end, you don’t know how they’re going to do. If you’re the owner, you can fire them, but if you’re franchising, it’s a lot more complicated to terminate the agreement.

HB: How else have you managed your company’s growth?

We’ve just partnered with Freddie Franco; he’s a contractor here in Kailua. He’s going to buy part of the company and help us build new stores. We’re also working with Girard’s in California to bottle our dressings. I’ve been making the dressings at home every morning for all the stores. We’ve been doing some bottling with a local company, but they can’t handle the volume. The bottled dressings will be used in our stores; we also sell them at Don Quijote and we’re working to get them in other stores.

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