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Small Restaurants Seek Big League Through Franchises

Small local restaurant companies plan to expand by franchise in 2015.

Operators want to grow quickly at minimal cost and see franchising as a way to strike while the oven is hot.

Some attended the West Coast Franchise Expo at the Anaheim Convention Center in October.

They focus on simple, popular concepts, such as pizza, ice cream and smoothies.

The latest to join the franchising fray is The Pizza Press. Its two company-owned restaurants are near Disneyland and slated to open next month in Old Towne Orange.

“We’ve had interest from Oregon, Utah and Texas,” in addition to California, said founder Dara Maleki.

He worked with iFranchise Group’s Irvine office to develop a program.

The Pizza Press franchise fee is $30,000; royalty and marketing fees are 8% of revenue.

Maleki said he planned to franchise even before he opened the first Pizza Press in July 2012.

“At the end of the day, my investors are the franchisees.”

Sweet on Expansion

Lake Forest-based Farrell’s Ice Cream Parlour Restaurants started franchising in August.

It has eight corporate locations, three of them in Orange County: Brea, Buena Park and Mission Viejo.

The Brea site does $3.5 million to $4 million in revenue, the company said.

Its franchise fee is $100,000, and royalty and marketing total 5.5%.

Also in August, Yorba Linda-based Creamistry Inc. said it would franchise. It sells nitrogen-infused ice cream.

Chief Executive Jay Yim opened in Irvine in September 2013, following that with a second company store in Cerritos this past September.

“As soon as we opened in Irvine, we were going to do this,” Yim said.

A Belmont Shores location opened in October, followed by one in Corona in November.

A Rowland Heights location is slated for December, and a Costa Mesa shop for next spring, while a franchisee is scouting Laguna Beach.

A Dubai franchisee has agreed to develop five locations, and Yim said he was close to a second such deal for 25 units in Northern California.

Creamistry’s franchise fee is $40,000 for a store and $25,000 for a kiosk, with royalty and marketing at 7.5%.

Yim worked with Franchise Marketing Systems. The Georgia-based consultant charges $24,000, plus 25% of the franchise fee for units it sells.

Yim said he and his wife Katie have invested about $800,000 into the company.

“We put a lot of focus on the infrastructure,” he said.

The franchise agreement—and the company’s commitment to it—is “the No. 1 thing,” said Michael Cho, attorney and of counsel at Palmieri, Tyler, Wiener, Wilhelm & Waldron in Irvine, and whose clients include restaurants.

Handle that, and franchising has benefits, he said.

“You don’t need as much money” to expand.

Franchise Marketing client Vitaly Café, a coffee and gelato shop at The Camp in Costa Mesa, is slated to offer franchises early next year, said founder Maurizio Cocchi.

He said he expects franchises to sell for about $20,000 to $50,000.

“We’ve had requests from Los Angeles, San Diego and Santa Barbara.”

His shop has been open 18 months.

Irvine-based cold-pressed organic juice seller Ritual Wellness Inc., which has four stores, including one also at The Camp, is not interested.

“We teach the value” of our product, said Lori Kenyon Farley, who cofounded the company with Marra St. Clair. “When you franchise, you lose the message.”

She said the company’s stores are profitable “almost immediately” and carry no debt.

The partners fund growth from investors and cash flow.

A fifth store is planned for Solana Beach next year, and the company offers local home delivery.

“It’s juice on the doorstep like an old-fashioned milk truck,” she said.

Another nitrogen-infused ice cream concept called a la Minute has two sites—in Old Towne Orange and Redlands—and no plans to expand through outside operators.

Santa Ana-based Nekter Juice Bar Inc. franchised early on but has scaled it back, the company has said. It scored lending from Irvine-based Opus Bank and investments from friends and relatives.

Franchising remains a popular option.

Rancho Santa Margarita-based Bowl of Heaven signed seven franchisees this fall for a total 58 locations in Orange County, Los Angeles, San Diego and San Francisco. It sells smoothies and acai bowls.

Company-owned and franchised stores are now open or planned in at least seven Orange County cities.

The franchise fee is $30,000, with royalty and marketing at 9%.

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