Since opening its first location seven years ago, Giggles N’ Hugs, Inc. (OTCQB: GIGL) has consistently demonstrated the immense market demand for a healthy alternative to traditional family-friendly restaurant and entertainment venues. As the first and only restaurant that brings together high-end, organic food with cutting-edge entertainment for children, the company’s concept has been a hit amongst families in its target areas. As a result of this popularity, GIGL has since expanded to three locations throughout Greater Los Angeles, and this success is catching the attention of a growing number of potential franchisees.
“Since opening our first location in Southern California in 2008, we’ve received strong interest from franchisees seeking to take our concept into new markets,” Joey Parsi, founder and chief executive officer of GIGL, stated in a news release. “While franchising has always been a component of our long-term growth strategy, we chose to establish a strong foundation… by initially focusing on perfecting our experience at company-owned locations.”
Despite the company’s reluctance to commit to franchise locations early in the development of its concept, GIGL’s recent performance in the competitive Los Angeles market has driven expanded interest in franchise opportunities. According to its news release, the company has received interest from franchise operators in nearly every major U.S. city, as well as those in international markets – including Europe, Latin America, the Middle East, Asia and Australia.
Though GIGL hasn’t yet agreed to any franchise locations, increasing interest has pushed the company to estimate the potential financial benefits presented by these opportunities. In particular, GIGL expects to receive licensing fees ranging from ‘several hundred thousand dollars to millions of dollars’, in addition to ongoing royalties of as much as eight percent of gross sales.
“[T]his strategy provides a great complement to our core company-owned growth initiatives,” stated Philip Gay, chief business development officer of GIGL. “Based on my extensive personal experience in senior leadership positions with several highly successful enterprises that have benefited from franchising, I believe GIGL is well-positioned for long-term success in this arena.”
If the company decides to pursue growth through franchising, it will gain improved access to an industry that’s posted strong financial growth in recent years. According to a report by IBISWorld, the domestic chain restaurant market has recorded annual growth of 3.8 percent for the past five years, accounting for approximately $104 billion in revenue in 2014. The report also highlights the importance of franchise agreements to this growth, demonstrating the commercial viability of this proven strategy in the national restaurant industry.
As GIGL continues to weigh the strategic advantages offered by pursuing franchising opportunities, the company is in a strong position to record considerable market growth in the future. For prospective shareholders, GIGL’s innovative and highly marketable restaurant concept provides the company with a platform upon which to promote sustainable returns.
For more information, visit www.gigglesnhugs.com/investor-relations/
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