That made it hard to meet the benchmarks for sales, profit and advertising spending that the venture capitalists wanted. To start the franchise process, the owners were shocked to learn, they would have to shell out $24,000 to $40,000 to prepare the necessary legal documents.
And $50,000 set aside for marketing was eaten up by last-minute building costs. That was particularly frustrating for Benhard, who runs a marketing and public relations business in addition to his Kookie Krazy duties.
"I just know we could be the next big thing if we had the money to get the word out," he says.
Kelley also owns another business, an insurance agency.
Business consultant Roberto Barragan, president of the nonprofit Valley Economic Development Center, and public relations practitioner Colleen Farrell say low-cost steps could help Kookie Krazy succeed in its current location and position itself for expansion when the economy turns around. Already, "it is organized in a way that can be hugely successful and imminently franchiseable," Barragan says.
Here is a summary of their recommendations:
* Raise additional money. Barragan advises the owners to go back to their original 20 investors to raise enough money to spend $5,000 each month during the crucial summer season for marketing. The message should be that the small sum is needed so the shop achieves the success it needs to move to the next stage.
* Consider a loan. The business would probably qualify for a small loan of $20,000 to $35,000, such as the ones offered by Barragan's organization. The owners say they are hesitant to take on more debt but don't want to lose the $400,000 invested in the store so far for want of a modest sum to pay for marketing.
* Postpone franchising. Barragan recommends they hold off on actively pursuing franchising until the economy improves. He suggests they turn to an angel investor toward the end of the year to fund the franchise paperwork fees.
* Continue landlord negotiations. Barragan echoed the owners' concern about diminished foot traffic. "I am dealing with a lot of businesses going through tough times right now," he says. "And the ones hanging on are the ones who have landlords who are working with them, landlords who are smart enough to understand it's better to have a business there and collect some rent and defer some rent than to have an empty space."
