Tag Archives: Franchise

A Cool Business Model

19 Sep

A few weeks ago while visiting Dallas during its record-breaking heat wave, I came across a gem of a franchise. A cupcake shop? Taco stand? Nope, none of the above. Ice House America, as the name suggests, manufactures and franchises ice vending machines that automatically dispense cubed or chipped ice on-demand. The commoditization of such a simple product, frozen water, has proven to be a success not only for the company, but for the franchisees as well.

An Ice House America Vending machine beckons in the 108-degree Texas heat

The vending machines range in size from 30” x 30” miniature units to 200 square foot stand alone sheds with the capacity to make 6,750 pounds of ice each day, enough for 525 separate sales. According to a press release, Ice House is transforming the $2.5 billion U.S. packaged ice industry by producing ice at the point of sale providing a more cost-effective, superior product than the traditional direct store delivery pre-made bagged ice trucked from a central ice plant, and touts the smaller carbon footprint of its unique delivery model.

Ice House America’s franchised vending machines can cost up to $100,000 to get up and running, and the company suggests that franchisees take on average $90,000 – $110,000 per year, per machine. The ice business is a regional market, so the barriers to entry are pretty low, with sizeable profit potential. Since it’s founding in 2003, the company has sold more than 2,200 vending units – that’s a lot of cold, hard…ice. Continue Reading»

Not that I’m trying to get into the ice business, but one has to imagine there are myriad locations where one of these vending machines would make a killing. Campsites, beach towns, college campuses and high-traffic event venues are just a few of the areas that I imagine would have a strong demand for bulk ice.

Is ice the new gold? Probably not, but it’s still a solid investment, at least according to Ulysses Management, LLC. Ulysses, a NY-based investment firm, announced its acquisition of the Jacksonville, Florida-based Ice House America and its affiliated companies in May 2011. Whether the franchise will enrich its investors and franchisees is uncertain, but one certainly can’t disagree with the fact that the homegrown company is putting a lot of people to work and doing its part to keep the economy from “overheating”!

Job stimulus? Look to Oregon and Jersey

10 May

It’s not that often that IYSMU ventures into public policy, but given the ridiculous budget proposals and arguments amidst the near-shutdown of the federal government, I find myself thinking more and more about innovative solutions that the government could propose to a) reduce spending and raise funds or b) create jobs. I’ll spare you my budgetary opinions for another day and another post- today, it’s all about getting Americans back to work.

Here’s one for your trivia night memory bank: what wacky post-war law do Oregon and New Jersey have in common? Answer: they both require that an attendant pump your gas. By law, it is illegal to fill up your Prius with $5.21/gallon gas in the Beaver and Garden states. The somewhat logical reasons that these states have for preventing their citizens from pumping gas (in summary, we are stupid and accident-prone) mean that there are thousands of extra Shell, BP, ExxonMobil, etc employees in these states than there would otherwise be. This is a really interesting instance where a state legislature has the power to create jobs for thousands of people- imagine the possibility if every Rick Perry (definitely not going to happen) and Jerry Brown (nope) across this great nation took a page from the Oregon and Jersey playbooks and miraculously pushed through policies that required gas stations to hire attendants to pump gas!

How much could we chip off the latest unemployment rates if the rest of America adopted such ludicrous laws? Time for a quick and dirty analysis.

According to the U.S. Census Bureau, there were a whopping 116,855 filling stations in the U.S. with paid employees in 2006; that works out to roughly one gas station for every 2,627 Americans. New Jersey and Oregon account for 2.84% and 1.25% of the U.S. population, respectively; assuming an equal distribution of gas stations across the country, it can therefore be estimated that there are roughly 4,770 gas stations in these two states, each one paying attendants to huff fumes and squeeze a metal handle all day. That calculation leaves 112,084 gas stations for the rest of us, all of which require us to pump our own gas like chumps!! If each state required a gas station attendant present for 20 hours of the day, 7-days-a-week, each station could potentially support at least 3 full-time (40 hours/week) employees. We’re talking 350,000 jobs at the blink of an eye here folks!

What would this mean? For starters, those 350,000 jobs would reduce Big Oil’s profits by a cool $7 billion each year. I don’t think the average American would be too upset with that, although it would logically follow that the oil industry would respond by raising prices, which in turn would lead to higher CPI, which in turn would probably be more ruinous to our fragile economy than any stimulus those jokers up on Capitol Hill could ever write.

Would the average unemployed American really want a minimum wage job pumping gas? Probably not. Will they complain and run for the hills when hard-working immigrants ask “regular, or premium?” Absolutely.