Full access to Entrepreneur for $5

Small Wonders

Due to their affordability and flexibility, kiosks are a hot option in franchising.

Opinions expressed by Entrepreneur contributors are their own.

Freedom and flexibility. Those are the two major reasons Michael Haith, president of Maui Wowi Inc., says the smoothie franchise is operated out of kiosks rather than stores. "[Kiosk] franchise owners and operators have a low-investment cost, a high return and flexibility to go when and where they want with minimal risk," Haith explains. "If a location doesn't work, they can move it somewhere else."

Jeff and Jill Summerhays, the founders of Maui Wowi, realized the power of kiosks when they first started the company in 1983. "They wanted the freedom to work weekends and the ability to take their cart to concerts and festivals, as well as the option to leave the cart in fixed locations," Haith explains. Since then, kiosks have become a huge presence in the franchise world, as malls and other venues have recognized the benefits these small-scale outlets offer.

"We've been in business for 30 years, and we get more and more inquiries every day," says Jeffrey J. Morris, the founder of All A Cart Manufacturing Inc., a manufacturer of carts, kiosks and mobile vending vehicles whose clients include Arby's, Pizza Hut and McDonald's.

Morris believes the slowdown in the economy is actually helping to increase his business. "Some malls, the ones that are maybe dropping off in popularity due to increased competition, are suddenly scrambling for opportunities to bring [shoppers] in," Morris explains. "Where they might have previously prohibited carts or kiosks, they're now realizing that, to stay in business, they have to be flexible and offer these types of locations."

According to Morris, mall developers are also warming up to carts and kiosks for another reason: an increase in cash flow. "This is valuable real estate. If you have an 8- or 10- or 12-square-foot kiosk producing several hundred or thousand dollars per square foot, suddenly it becomes a lot more attractive than a philodendron plant or a bench," he says.

Economic factors make kiosks attractive to franchisees as well. "The start-up cost is really low," says Patricia Norins, publisher of Specialty Retail Report, a Norwell, Massachusetts-based magazine aimed at cart and kiosk operators. "You can get into business for an initial start-up of anywhere from $5,000 to $15,000, so a lot of people are able to open their first retail business with a credit card. You don't even need a traditional line of credit from your bank."

Morris agrees. "The franchisees are seeing this as an opportunity, because not everybody has a half-a-million dollars to invest," he says.

Maui Wowi's Haith adds that kiosks generally require less staff than a storefront, and boast lower rents, lower overhead and lower operating costs. "I believe it's the reason our franchise is expanding so quickly," he says. "We're now adding one to two franchise owners a week."

Tom Scarda, a Maui Wowi franchisee since last year, takes full advantage of his locations' mobility-he operates two kiosks at the Jacob Javitz Convention Center in Manhattan and two at the Jones Beach Amphitheater on Long Island. "I can go where the people are instead of waiting for people to come to me," he says.

Scarda moves his carts throughout the convention center and amphitheater during the week. On weekends, he'll take one of his carts to a local street fair or private party. This Christmas, when New York's winter will make it nearly impossible for him to serve up smoothies outside, Scarda will be moving his operation into a mall.

But Scarda's not concerned if weary shoppers don't take a shine to his smoothies. "If it doesn't work out," he reasons, "I simply pull it out and move on."