Ice Delights Case Study1. Evaluate the “deal” as presented in the case. As stated below, ICEDELIGHTS is willing to provide an acceptable option to affiliates due to their inability to immediately commit to the venture. The deal revisions allow affiliates flexibility in the timing of raising capital and funding the deal. Regardless of the timing, the situation presents concerns regarding franchisees' ability to raise the amount of capital needed to open the first three stores in a timely manner. • ICEDELIGHTS did not want to be legally tied to Florida franchising because it felt it might not have sufficient resources to accommodate franchisees. • An agreement was proposed that would provide security to the franchisee and franchisor Pay $200,000 upfront for development fees and commissions franchise for the first five stores Pay $20,000 per store opened after the first five stores Pay 5% royalties on sales • ICEDELIGHTS would then allow franchisees to use their brand and product, train franchisees and a manager per store, and provide support for location scouting and store construction. • The deal would include an option due to ICEDELIGHTS' inability to commit to the Florida franchise upfront Franchisees would pay a $75,000 deposit upfront The remaining $125,000 upfront fee would not be due until ICEDELIGHTS provided an acceptable location and the lease had not been signed The franchisee would have the opportunity to build a manufacturing facility if ICEDELIGHTS was unable to supply product to the new stores• Franchisees have two weeks to make a decision on the deal• Compared to other franchising opportunities, ICEDELIGHTS seemed expensive for an unproven concept• The profitability of the concept appeared to be very attractive to franchisees • Franchisees would need to raise approximately $750,000 in outside financing to fund the venture2. Evaluate the positive and negative characteristics of the business opportunityPositive Characteristics:• Provides potential entrepreneurs with a business opportunity in a timely mannero They would get involved in franchising before they have much to lose• Franchisees believe they have the skills needed to manage an opportunity of food franchising business The idea also seemed fun and financially rewarding • The ICEDELIGHTS management team impressed the franchisees • The product, systems and management were standardized by the franchisor • The franchisees were able to leverage the brand, ICEDELIGHTS' product, training capabilities, and real estate expertise once ICEDELIGHTS could provide support • Franchisees could obtain rights to the entire state of Florida Negative Features: • Franchise was new and not yet proven in the industry or in the potential market