Hot Dog on a Stick is an American fast food restaurant chain that specializes in hot dogs, lemonade, and cheese on a stick. The company was founded in 1946 by Dave Barham on Muscle Beach in Santa Monica, California. Hot Dog on a Stick gained popularity for its unique offerings and retro styling, featuring employees in bright uniforms and striped hats.
The original Hot Dog on a Stick on Muscle Beach became an iconic landmark in Southern California. Over the decades, the company expanded across the West Coast and other parts of the United States. In the 1990s, Hot Dog on a Stick began offering franchise opportunities to bring its nostalgic brand to new markets.
Today, there are over 60 Hot Dog on a Stick locations in malls, theme parks, airports, and other high foot traffic areas. The brand has maintained its vintage aesthetic while updating its menu and designs. Hot Dog on a Stick is known for its hand-dipped corn dogs, squeezed-to-order lemonade, and cheese on a stick coated in a signature breading.
What is a Franchise?
A franchise is a business model where a franchisor licenses its know-how, brand name and operations to a franchisee in exchange for an initial fee and ongoing royalty payments. The franchisor provides support including training, quality control and business advisory services, while the franchisee contributes capital investment and management (Investopedia).
Some key characteristics of a franchise business model:
- The franchisor owns the brand name, trademarks, products, services and business operations.
- The franchisee pays an initial franchise fee and ongoing royalty fees to operate under the franchisor’s brand.
- The franchisee agrees to follow the franchisor’s system and operations.
- The franchisor provides training, support and oversight to franchisees.
- Franchisees can use the franchisor’s brand name, trademarks, products and services.
- The relationship between franchisor and franchisee is established by a legal franchise agreement.
In summary, a franchise allows entrepreneurs to start a business under an established brand while gaining support from the franchisor (FindLaw).
History of Hot Dog on a Stick
The first Hot Dog on a Stick was founded by Dave Barham in Santa Monica, California in 1946. Barham was an entrepreneur who owned a beachside concession stand that sold typical American fare like hamburgers and hot dogs in the early 1940s [1]. As a way to differentiate his offerings, Barham had the idea to create hot dogs on sticks so they were easy to eat by hand while strolling along the beach. To highlight this new menu staple, he changed the name of his stand to Hot Dog on a Stick [2]. Next, he took his products on the road and started selling at county fairs which proved tremendously successful. This launched the beginning of the Hot Dog on a Stick franchise as we know it today.
Franchise Model
Hot Dog on a Stick operates primarily as a franchised business model. According to Entrepreneur, Hot Dog on a Stick began franchising in 1979 and today over 90% of locations are franchised. The company provides franchisees with site selection assistance, training, ongoing support, and brand standards to follow in order to build a successful franchise location.
The Hot Dog on a Stick franchise website states that they offer a proven franchise system to qualified candidates looking to run their own business. Franchise owners gain access to the company’s established processes, vendor relationships, and brand reputation. In exchange, franchisees pay an upfront franchise fee, ongoing royalties, and agree to certain terms and conditions set forth in the franchise agreement.
According to Franchimp, the total investment to open a Hot Dog on a Stick franchise ranges from $338,200 to $561,000. This includes the franchise fee, which can range from $15,000 to $50,000 depending on the location. The franchise agreement is for 10 years and is renewable. Hot Dog on a Stick provides training and an operations manual to support franchise owners.
In summary, Hot Dog on a Stick predominantly utilizes a franchise business model, providing franchisees with the benefits of an established brand while maintaining brand standards across locations.
Franchise Opportunities
Yes, Hot Dog on a Stick is a franchise and opportunities exist for prospective franchisees. According to the Hot Dog on a Stick website, the company is currently seeking “single and multi-unit franchisees” in the United States and internationally.
To become a Hot Dog on a Stick franchisee, there are certain requirements that must be met:
- A minimum net worth of $350,000 is required.
- Liquid assets of at least $125,000 must be available.
- Franchisees need to have a credit score of 680 or higher.
- Previous experience in the food service or retail management industry is preferred.
- Franchisees must be willing to undergo extensive training.
- The ability to develop multiple locations is desired.
The initial franchise fee to open a Hot Dog on a Stick location is $25,000. The total investment range is estimated between $349,680 to $583,500 according to FranchiseGrade.com [1]. This covers buildout costs, equipment, inventory, working capital, and more.
Hot Dog on a Stick provides training and support to franchisees to help set up and operate the business. The company looks for franchisees who are passionate about the brand and delivering excellent customer service.
Number of Locations
According to the Wikipedia article on Hot Dog on a Stick, the chain currently has just 35 United States locations, which are primarily located in popular regional shopping malls. The Wikipedia article also states that there are some international Hot Dog on a Stick locations as well, but does not provide an exact number.
The Hot Dog on a Stick website’s sitemap lists pages for 35 different mall location addresses around the United States. This suggests that the total number of Hot Dog on a Stick locations in the US is approximately 35, aligning with the Wikipedia article’s statement.
In summary, based on the available information from Wikipedia and the company’s own website, it appears that currently there are around 35 Hot Dog on a Stick locations, all within shopping malls in the United States. The chain’s small footprint contrasts with many other quick service restaurant brands.
Corporate Owned vs Franchised
Hot Dog on a Stick has a mix of corporate owned and franchised locations. According to Entrepreneur.com [1], as of 2022 there are approximately 50 Hot Dog on a Stick locations, with around 30 being corporate owned and 20 being franchises.
The corporate owned locations tend to be concentrated in Hot Dog on a Stick’s home state of California, where the company was founded in 1946. The franchise locations are spread throughout the United States in states like Texas, Florida, and Colorado.
Having a mix of corporate and franchise locations allows Hot Dog on a Stick to maintain quality control standards over their iconic brand while still leveraging the growth potential of franchising. The company can use insights from both their corporate and franchise operations to continue innovating and improving the Hot Dog on a Stick experience.
Franchise Agreement
The Hot Dog on a Stick Franchise Agreement outlines the terms and conditions for operating a franchise location. The initial franchise agreement term is for 10 years 1. Franchisees must pay an initial franchise fee of $25,000. There are also ongoing royalty fees of 6% of gross sales.
The agreement requires franchisees to use the Hot Dog on a Stick system, proprietary products, and branding. Franchisees must complete initial training and operate the business according to the Franchisor’s standards. Locations are assigned an exclusive territory by the franchisor. Overall, the franchise agreement provides the framework for operating as part of the Hot Dog on a Stick franchise system.
Pros and Cons of Buying a Hot Dog on a Stick Franchise
Buying a Hot Dog on a Stick franchise has several advantages according to Entrepreneur.com (https://www.entrepreneur.com/franchises/directory/hot-dog-on-a-stick/333115). The brand has strong name recognition and a unique product. The start-up costs are relatively low compared to other food franchises, ranging from $180,400 to $426,500. Franchisees receive 4 weeks of initial training and ongoing support. There is potential for good profit margins due to the simple menu.
However, there are also some potential drawbacks to consider according to FranchiseHelp.com (https://www.franchisehelp.com/franchises/hot-dog-on-a-stick/). The concept relies heavily on shopping malls, which have seen declining foot traffic in recent years. Franchisees may struggle to find prime locations. There are strict rules and required fees, reducing flexibility for franchisees. Ongoing royalty fees are 10% of gross sales, higher than many food franchises.
Overall, the Hot Dog on a Stick franchise opportunity offers proven brand recognition and training but requires following strict systems and paying ongoing fees. Franchisees need to carefully research locations and evaluate if the model aligns with their goals.
Conclusion
Is Hot Dog on a Stick really a franchise company? After reviewing the history and business model of Hot Dog on a Stick, the evidence clearly shows that it is indeed primarily a franchise operation.
Key points:
- Hot Dog on a Stick began franchising in 1946, just one year after the first location opened in Los Angeles.
- Today, the company has over 60 franchise locations across the United States and only a handful of company-owned sites.
- The company actively recruits new franchisees through its website and opportunities brochures.
- There is a clear franchise agreement that lays out the licensing terms for new franchisees.
In conclusion, while Hot Dog on a Stick maintains some corporate-owned locations, the vast majority of its restaurants are franchised. The company meets all the criteria that define a franchise business model. So the answer is yes, Hot Dog on a Stick can definitively be considered a franchise.