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Start Me Up! These Five Young Brands are Off to the Races

August 10, 2009 by by Kerry Pipes, FranchiseUpdate

Starting up a new company is risky business, even in a healthy economy. Despite the troubles and fears that have plagued the economy and business world in the past year, many new franchise concepts have hung out shingles, and others that were just barely off the ground are thriving today.

We talked with top executives from five "new" franchise concepts about where they came from and how they've made it work--amidst the challenges, and against the odds. Each is characterized by a unique, innovative product offering, and for some, a distinctive delivery approach. As you'll see, these entrepreneurs believe in their brands, and are not letting anything--especially the headlines--get in the way of their continued growth.
Game Time
About two years ago, David Pikoff and his brother, Stuart, began seriously talking about going into business together. They thought about buying a franchise, but couldn't find a concept they liked. "We're both fun guys, we love kids, and we love games," says Pikoff. "So we thought, 'Why not create our own game franchise?'"

The brothers' innovative idea was a mobile video game theater that brings the party to the customer. They dubbed the concept Games2U. Pikoff, the company's co-founder and CEO, says he's seen nothing else like it.

"People have to go to the Main Event or Dave & Buster's for games and recreation, and that, plus food and beverage, can be expensive," he says. "It's a lot less expensive to have the games come to you."

So they bought a couple of trucks and outfitted them with games--all kinds of platforms like Wii and PlayStation, and all kinds of games like Guitar Hero and Halo 2. And to top it all off, they also offered laser tag. "We ran the trucks ourselves for the first few months. It was a great experience for observing, learning, and thinking about how to develop and market the company," he says.

In March 2008, they sold those two trucks to their first franchisee and have been franchising ever since. As of this June, they had 36 franchises open and operating, and another 100 sold and in the process of launching. Pikoff says they handle all sales internally, but do have two deals with area developers in San Francisco and Portland, Ore.

Pikoff believes the concept is gaining traction for a number of reasons. First, he says, "Games2U allows parents to have their kids feel like a rock star for a day, at a very reasonable price." He also sees kids, games, and parties as being immune to recessions. "Parents are always going to have money available to make memories with their kids."

The biggest obstacle so far? Not surprisingly, financing. Pikoff says it's been tough for prospects to obtain the capital they need to become franchisees. "I'd say two out of every three prospects we have can't secure financing," he says, adding that he does the best he can to point them to the SBA and other funding resources.

To keep their momentum going, Games2U recently added a new, lower-cost franchise option. Until now, franchisees had to purchase either a Mercedes-Benz Sprinter van or a truck with a trailer, which were then prepared inside and out to serve as rolling Games2U vehicles. This spring, the company launched it G3 party van option--a portable game room that allows franchisees to get on board for nearly half the cost ($85,000, compared with $150,000 and up).

"Our goal is to sell 300 franchises by the end of this year, and I think we can do it," says Pikoff. "We have a unique concept, a solid infrastructure, and a focus on support for the franchisees." Oh yes, and a universe of game-hungry kids.