Ice Delights Case Study1. Evaluate the “deal” as presented in the case. As noted below, ICEDELIGHTS is willing to provide an acceptable option to franchisees due to their inability to immediately commit to the business. The revisions to the agreement give franchisees flexibility in their timing of raising capital and financing the agreement. Regardless of the timeline, the situation raises concerns about the franchisees' ability to raise the required amount of capital to open their first three stores in a timely manner. • ICEDELIGHTS did not want to be legally tied to the Florida franchise because they felt they could do it. do not have sufficient resources to accommodate franchisees.• An agreement was proposed that would provide security for the franchisee and franchisoro Pay $200,000 up front for development fees and franchise fees for the first five storeso Pay 20 $000 per store opened after the first five storeso Pay 5% royalty on sales• ICEDELIGHTS would then allow franchisees to use their brand and products, train franchisees and one manager per store, and provide support for research store locations and construction. • The deal would come with an option due to ICEDELIGHTS' inability to commit to the Florida franchise up front. Franchisees would make a deposit of $75,000 in advance. The remaining initial fee of $125,000 would not be due until ICEDELIGHTS provides an acceptable location and the lease is signed. The franchisee would have the option to build a production facility if ICEDELIGHTS was unable to supply the product to the new stores• Franchisees have two weeks to make a decision on the deal• Compared to other franchise opportunities , ICEDELIGHTS seemed expensive for an unproven concept • The profitability of the concept appeared to be very attractive to franchisees • Franchisees would need to raise approximately $750,000 in outside financing to finance the business2. Evaluate the positive and negative characteristics of the business opportunity. Positive Features: • Provides potential entrepreneurs with a timely business opportunity. They would be involved in the franchise before they had much to lose. • Franchisees believe they have the skills to run a food franchiseo The idea also seemed fun and financially rewarding• ICEDELIGHTS management team impressed franchisees• Product, systems and management were standardized by the franchisor• Franchisees were able to leverage ICEDELIGHTS' brand, product, training capabilities and real estate experience once ICEDELIGHTS could provide the support • Franchisees could obtain rights to the entire from the State of Florida Negative Characteristics: • The franchise was new and not yet proven in the industry or potential market