24self video franchise
Discussion
Just wondering if there is anyone out there with any experience of www.24selfvideo.co.uk/ as a franchise or specific comments on the industry. Im off to meet said persons on Monday with a view to starting one up.
Be very careful would be my advice - not of that particular company (in fact never heard of them before despite 6 years in that industry) but of the industry in total.
BBI 'owns' that industry worldwide (38% when I left) and has massive influence. But also the movie & game (game is very big) industry is one of personal contacts and politics. Also remember most rentals now are done on revenue share (as much as 60% gross to the license owner). They also have loads of those style 'vending machines' (cost circa £40k if I remember).
But more importantly the role of physical delivery of entertainment is reducing significantly for three reasons A) more competition from other forms of leisure time/expense (pubs/pistonheads/holidays etc,, B) easier delivery (postal rental options) and C)newer technologies (sky+, VOD, web etc).
Also remember that movie rental is the cheapest form of entertainment and hence works well in bad times and poorly in good times. It's also very weather related (sunny = no business, rainy = good business), and very related to social equity (well off professionals consume far less than less well off etc). Site selection is key, and the big boys have that much easier. Also look at what both Tesco & Sainsburys are doing with BBI....
Remember your sales will also be highly related to the content - good year for movies = ok sales, bad year = bad sales. Completely out of your control so will need to be able to weather such times. Also consider the content stock levels to be able to give "trip assurance" to anybody trying to rent the #1 movie on a Friday night - you'll need a lot... And then understand that after 6-8 weeks you'll only need 20% of what you had - where and how can you exit the surplus stock to recover costs? (indeed are you allowed to sell surplus stock? there are VERY strick rules re rental & resale)
Balance my views with others - I left working within that industry for many reasons - but go in with your eyes open and really research your market and site...
Best wishes...
BBI 'owns' that industry worldwide (38% when I left) and has massive influence. But also the movie & game (game is very big) industry is one of personal contacts and politics. Also remember most rentals now are done on revenue share (as much as 60% gross to the license owner). They also have loads of those style 'vending machines' (cost circa £40k if I remember).
But more importantly the role of physical delivery of entertainment is reducing significantly for three reasons A) more competition from other forms of leisure time/expense (pubs/pistonheads/holidays etc,, B) easier delivery (postal rental options) and C)newer technologies (sky+, VOD, web etc).
Also remember that movie rental is the cheapest form of entertainment and hence works well in bad times and poorly in good times. It's also very weather related (sunny = no business, rainy = good business), and very related to social equity (well off professionals consume far less than less well off etc). Site selection is key, and the big boys have that much easier. Also look at what both Tesco & Sainsburys are doing with BBI....
Remember your sales will also be highly related to the content - good year for movies = ok sales, bad year = bad sales. Completely out of your control so will need to be able to weather such times. Also consider the content stock levels to be able to give "trip assurance" to anybody trying to rent the #1 movie on a Friday night - you'll need a lot... And then understand that after 6-8 weeks you'll only need 20% of what you had - where and how can you exit the surplus stock to recover costs? (indeed are you allowed to sell surplus stock? there are VERY strick rules re rental & resale)
Balance my views with others - I left working within that industry for many reasons - but go in with your eyes open and really research your market and site...
Best wishes...
Thanks for your comments.
The franchise is £7.5k, however setup costs are going to be around £100-120k.
they are claiming 30-40% profits (£60-£90k) on turnover based on 3000-5000 members. Store is accessible 24hrs but staffed for 10hrs a day or so. 4% royalties on turnover payable to the franchise.
Dont know how many members to expect in reality. Going to speak to current stores on that one but its early days in UK.
The franchise is £7.5k, however setup costs are going to be around £100-120k.
they are claiming 30-40% profits (£60-£90k) on turnover based on 3000-5000 members. Store is accessible 24hrs but staffed for 10hrs a day or so. 4% royalties on turnover payable to the franchise.
Dont know how many members to expect in reality. Going to speak to current stores on that one but its early days in UK.
Speak to the store in Didsbury, South manchester. Its been there roughly 18 months has a good demographic spread (students, former students/young professionals, middle class families and council house denizens all within 1 mile).
There again you may want to speak to a store in a less obviously prosperous earlier.
What buy back clauses are there for the capital equipment if it all goes tits up?
There again you may want to speak to a store in a less obviously prosperous earlier.
What buy back clauses are there for the capital equipment if it all goes tits up?
Our independant DVD rental place has one. Must say it spends most of its time bust at the linux prompt! Wish they designed them fault tolerant with remote monitoring! Whats worse is they have two, but one slaves off the master and its always the master that goes bang!
Like the idea mind. Very popular in europe.
Like the idea mind. Very popular in europe.
maddog-uk said:
Like the idea mind. Very popular in europe.
One of the reasons these are popular in Europe is to do with employment & retail laws. In various countries it's not legal to sell / rent product over the weekends, in the evening etc - hence 'vending machines' which get around this...
Oh and don't forget vandalism - I've seen them superglued up, the keys / screens set fire to, entire machines tipped (rope around tied to truck).
Also remember that the transactions are actually 'customer not present' due to no signature - so be aware of the fraud issues (bizzarly there is a nice upside if you do your research well - which can earn you lots with the banks).
Your assumptions on members (little low but depends on your location and how many competitors) and rental turns (1.07 per month) aren't too bad. BUT I urge you to think and understand stock levels and churn very very carefully. If a unit costs £30 you'll have to do 9 rents - which is a month at perfect turn arounds - to cover the unit purchase cost let alone general opex & capex costs. But then factor in the 'trip assurance / satisfaction' of getting the hot movie when they want and your stock levels are going to be very chart driven. In which case you need a revenue share deal - start thinking 50% gross revenue to the rights owner.
Also remember - it would be very easy for one of the big boys to 'special offer' you out of business (purely hyperthetical of course m'lord), take care!
Have you thought about contacting a bank to put some machines in their 24 hour lobbies? Train stations for commuters? Head offices of large companies could also work very well...
*Info based on historic knowledge and is likely to have changed due to time, inaccurate knowledge and fading memory - use at own risk. No animals have been harmed in the making of this post.
>> Edited by tvrforever on Sunday 14th November 07:02
Yep, well, went to the Didsbury store and several others in the area. Spent an hour or so with the UK marketing manager, they want to get 300 stores in UK.
they had about 1700 members after 12 months. Blockbusters then opened up down the road of one got 6000-10000 withing weeks or opening.
However, for £100k investment you dont start getting that back until maybe yr 3 if you have a good location. They do the demographics for you on a site and help find premises. They are working on getting space in supermarkets and also housing easynet or coffee machines in the store too but nothings sorted there yet.
It is a good idea but you'd do it for a career change rather than an investment opportunity.
There are other options www.mb24.co.uk ....to be continued.
>> Edited by dimmadan on Sunday 14th November 22:03
they had about 1700 members after 12 months. Blockbusters then opened up down the road of one got 6000-10000 withing weeks or opening.
However, for £100k investment you dont start getting that back until maybe yr 3 if you have a good location. They do the demographics for you on a site and help find premises. They are working on getting space in supermarkets and also housing easynet or coffee machines in the store too but nothings sorted there yet.
It is a good idea but you'd do it for a career change rather than an investment opportunity.
There are other options www.mb24.co.uk ....to be continued.
>> Edited by dimmadan on Sunday 14th November 22:03
dimmadan said:
Yep, well, went to the Didsbury store and several others in the area. Spent an hour or so with the UK marketing manager, they want to get 300 stores in UK.
they had about 1700 members after 12 months. Blockbusters then opened up down the road of one got 6000-10000 withing weeks or opening.
Would be very surprised it they manage to add another 300 stores into the UK overall market - it's already fairly saturated (remember BBI had 900+ in the UK at one time and currently has 700+). Do you know what track record their snr staff have in the industry? (e.g. time @ BBI, Apollo, Choices, Hollywood etc)
Still very intrigued re the stock provision and exit strategy - do you have to manage this and establish contacts and contracts?
you decide which films to stock and how many. however, what you can do is 'rent' say 10 copies of the blockbuster off them for a month or so and maybe buy only 3-4 for stock. Also, they will buy back stock you dont want later for £1 less than retail. The ones bought back they pass on to other new stores seeking stock. On av. you hold 4k titles in stock.
Currently customers are spending £3.20-£3.50 per trip in all stores and on average rent out 15-26 times a year.
This franchise wont be a goer for me, but interesting investigating none the less.
Currently customers are spending £3.20-£3.50 per trip in all stores and on average rent out 15-26 times a year.
This franchise wont be a goer for me, but interesting investigating none the less.
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