Franchising is a popular method for expanding business. Through a licensing relationship a franchisor, or business owner, essentially sells a franchisee the rights to open a new business location. For instance, the Wendy’s franchise has many franchise locations, all of which were sold to various franchisees across the country. Once the Wendy’s franchise finds a new franchisee, the franchisee is granted the right to build their own location using preexisting systems, regulations, etc.
Franchising is an attractive business model for anyone new (or not) to the industry. Unlike an independent business, which requires growing from the ground up, a franchise comes with a pre-established, and usually successful, operational system. Through extensive training programs, franchisees learn all the ropes behind the business, eliminating the daunting trial and error process. Not to mention, a franchise comes with brand recognition is built right in.
FRANCHISING IS AN ATTRACTIVE BUSINESS MODEL FOR ANYONE NEW TO THE INDUSTRY.
Anyone looking to purchase a franchise will be given a Franchise Disclosure Document (FDD). It’s imperative that any franchisee fully understand the components and contents in any business’ FDD. Consisting of 23 different parts, the FDD, a legally mandated document, outlines different key pieces of information involved in franchise purchase. For instance, a Franchise Disclosure Document tells the interested franchisee more about the total fees and costs associated with purchasing the franchise of their choice.
The overall intention of the document is transparency. Both the company and franchisee need to be on the same wavelength in order for the purchase and future management of the business to run smoothly. Click here to see a more in-depth description and analysis of the Franchise Disclosure Document.
Pinot’s Palette is a one-of-a-kind studio where customers can spend time painting and sipping wine with friends. Initially a favorite destination for birthdays and celebrations, Pinot’s Palette has become a go-to creative outlet for relaxation and fun.
The first Pinot’s Palette location was a quiet, local studio in Houston, TX and opened in May of 2009. Initially, the founders of Pinot’s Palette, Craig, Beth, and Charles, intended to host wine and painting classes three nights a week. As word spread, and more customers attended each night, the franchise began to expand from cost to coast and even internationally.
Today, Pinot’s Palette has created over one million paintings with its customers. No matter the occasion, Pinot’s Palette has become a unique activity to celebrate life’s special moments. With the mission of bringing art to the masses, the Pinot’s Palette founders are devoted to creating an entertaining and enriching experience.
Franchising Since 2010
Craig Ceccanti, Managing Member.
Charles H. Willis II, Managing Member.
Mary Elizabeth “Beth” Willis, Managing Member.
Terri McCulloch, Senior Vice President, Sales and Marketing.
Doug Van Tassell, Franchise Development Director.
Joshua Rohloff, Franchise Marketing Coordinator.
When a prospective franchisee signs a Franchise Agreement, they must pay an initial franchise fee of $22,500 for a One Room Studio and an initial franchise fee of $27,500 for a Two Bedroom Studio. For those that are franchising a second or subsequent studio, they may pay a deduced rate. The franchise fee for a second or subsequent One Room Studio is $17,500 and $22,500 for a Two Room Studio.
Financing for a Pinot’s Palette franchise purchase depends on the availability of funds, the franchisee’s creditworthiness, and the conditions of the market in the franchise area. If the franchisor decides to extend a financing plan to the prospective franchisee, it will be limited to the amount of the Franchise Fee. Mutually, the repayment period will likely be limited to one year’s time wuth an interest rate of 10 percent annually.
Training and Assistance
Before the Franchised Studio may open, each franchisee must complete all initial training requirements to the satisfaction of the franchisor. The franchisor will bear the cost of all training (both instruction and necessary materials) for the initial program. The franchisee will pay for all other expenses incurred during the training period. Management personnel must also complete the initial training program in order to successfully meet the franchisor’s standards and requirements for providing this information to other employees. In the instance that the franchisor feels the franchisee or managers have not met the requirements, they may require that additional managers attend and complete the program again.
Franchisees must pay an Artist Training Fee of $500 per day, in addition to the actual costs of lodging, food, and travel arrangements for an artist trainer. Initial artist trainers conduct between 32 to 35 hours of training over a four-day period.
Location of the Pinot’s Palette franchise
If the franchisee does not already possess a location at the signing of the Franchise Agreement, the franchisor will provide procedures for locating and obtaining approval of a site. All franchisees must use the real estate leasing broker or agent designated by the franchisor to find a suitable area. Typically, in this instance, franchisees are given up to three months to find a location. In the event that the franchisee fails to find a location, the franchisor may terminate the Franchise Agreement without refund of any paid fees.
In order to request the review of a proposed site, the franchisee must submit a site approval package, which includes a trade area, marketing research, an option contract, letter of intent, among other crucial components. Once this package is received, the franchisor will take 20 business days to approve or disapprove the proposed location. If the location is acceptable, it is the franchisee’s responsibility to secure a lease, which must be submitted to the franchisor prior to its signing.
Given the nature of a Pinot’s Palette franchise, it is the franchisee’s responsibility to obtain all necessary alcoholic beverage licensing and permits, among any other necessary documents for alcohol consumption in the Franchised Studio. The franchisee is responsible for complying with any federal, state, or other local laws and regulations related to the sale and consumption of alcohol. In the instance that additional permits are required, the franchisor will grant an additional three months to open the Franchised Studio.
The franchisor estimates that the time period between the signing of the Franchise Agreement and the start of studio operations should take between three to six months. Certain factors such as site location, obtaining financing, and obtaining necessary permits may affect this timeline.
Term of Agreement and Renewal
The initial term length for a Pinot’s Palette franchise is ten years from the Effective Date noted on the Franchise agreement. Franchisees may also renew their franchise agreement for a second term of ten years.
Restrictions on What the Franchisee May Sell
All products sold and offered at any Pinot’s Palette studios and mobile studios must meet the franchisor’s then-current standards and specifications. Prospective franchisees must purchase and use all fixtures, furnishings, decor, signage, software, and other materials required in the training Manuals. The franchisee may not sell any products or services or use the studio to sell any unapproved products or provide any unapproved services. The franchisor may disapprove of any products or services based on the franchisor’s desire to consolidate services.
If a franchisee wishes to purchase products or services not previously approved by the franchisor, they must submit a written request for approval of the product. Franchisees must also pay a charge for the evaluation and testing of the desired products. Once the products are reviewed, the franchisor will provide approval or disapproval within a six-month period.
Item 9 of the Pinot’s Palette FDD outlines the franchisee’s obligations under the franchise and other agreements. These obligations include site selection, pre-opening purchases, site development, initial and ongoing training, opening obligations, fees, and many others. A more detailed list of these obligations can be found in the full FDD and Franchise Agreement.
At the end of 2017, Pinot’s Palette had a total of 143 locations across the country.