Generation Next Franchise Brands Offers New Business Model For Reis & Irvy's Vending Machine Owners

Posted On: 1/10/2019

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SAN DIEGO -- Generation Next Franchise Brands Inc. announced the launch of 19 Degrees Corporate Service LLC, a new investment vehicle for its network of current and future frozen soft-serve frozen dessert vending machine owners.
 
19 Degrees Corporate Service LLC will initially launch with 48 secured locations strategically placed throughout the country. Each vending machine contributed to the investment fund as a single unit will receive its pro rata share of profits on a quarterly basis, according to the company.
 
Generation Next said the new model will offer machine owners to switch from active to passive income and a more even distribution of revenue.
 
Since each machine will be one of many, the company explained, which levels out revenue fluctuations, variability in location performance, and seasonality concerns. Additionally, faster installation of vending machines as owners are now not tied to a small geographic circumference.
 
It also includes a maintenance program provided by CSA Servicer Solutions that includes spare parts, consumables and cleaning supplies on each technician's vehicle.
 
Access to a newly designed back-office portal that will allow members of the fund to remotely access each kiosk's sales performance in "real time", as well as software features used to guide the fund's performance.
 
Dannon, Generation Next's exclusive supplier of frozen consumables, will be promoting flavors at the locations owned by the new 19-Degrees fund. Officials said Dannon is currently developing specifically for this program an aseptic packaging line, eliminating the need for refrigeration in vehicles or onsite.
 
To date, Generation Next said 90 of the company's Reis & Irvy's franchisees have expressed interest in joining the program, representing more than 300 kiosks that could potentially be added to this fund. The company said it has identified and secured the first 48 locations in areas it does not have franchisees including entertainment venues, military bases, malls, hospitals, government facilities, educational institutions, family fun centers, corporations and casinos.
 
Some notable locations that will be receiving kiosks in February to kick start the program are Fort Gordon Military Base in Augusta, GA, Paradise Cinema IMAX in Memphis, TN, Great Lakes Crossing Mall in Auburn Hills MI and Ellis Hospital in Schenectady, NY.
 
The company will receive a service fee on gross receipts equal to 12%, as well as an administration fee of 1.5% of gross receipts.
 
In some ways this was a no-brainer, there are franchisees that want to represent the Reis & Irvy's brand in the field and there are some franchisees that prefer a business opportunity that is less hands-on," Generation Next chief executive Nick Yates. "This new passive income program allows us to cater to both, something I believe both our franchisees and shareholders will appreciate."
 
The legal structure will be that of a Limited Liability Co., whereby each member will receive their portion of LLC taxable income allocation through the issuance of a Schedule K-1. Separately, the Schedule K-1 provides the Members the amount of cash and property distributions made to the Member, as well as a roll-forward of each Member's capital account. Furthermore, the Company will file composite state returns, with required withholdings, where applicable, with the members filing in additional states.