It was a great opportunity for the company inasmuch as Schmidt's was focused on the restaurant business and the catering business and not really promoting the Bahama Mama outside of their little world there. I thought we could improve on what was done outside with retailers, with restaurants, with other institutional feeders, and we have. Our sales in the state of Ohio of the Schmidt's Bahama Mama for January through August 1998 have improved by 64 percent versus January through August of 1997-a period of time we didn't have ownership last year.
How did the purchase come about?
Schmidt's actually approached us and said, 'We have an interest in selling the trademark.' It happened probably in a period of five to six weeks, from day one to closing on the deal. The trademark allows us to use the name Schmidt's, the name Schmidt's Bahama Mama and the name Bahama Mama.
There's limitations because within what we bought was this (pre-existing) licensing agreement, and our licensee, Hot N' Spicey, has exclusive rights to market the product outside the state of Ohio. That leaves us with the state of Ohio to develop and do what we need to do to make this a good deal for us.
Was timing an issue?
When you start negotiating, I think one thing that enters your mind is, 'What other players might have an interest in this?' Let's fish or cut bait. For instance, we didn't know if they had somebody else they'd go to and say, 'We've got an offer.' We didn't want to get in any bidding wars. We knew what we could pay and I think we paid as much as we could pay for the trademark and licensing agreement.
What's involved in purchasing a trademark?
You rely heavily on the legal system. You get your lawyers involved, make sure you're buying what you think you're buying . . . You want to make certain that (the trademark) is registered and there is some value that is protected . . . Once that's cleared, it's just a business deal. And certainly it's something that has to be run by the board of directors, and before that process, you want to make sure management is in agreement with what you're doing.
How much did the trademark cost?
On the advice of our attorneys, we can't disclose the selling price. When we look for an investment such as this, we look for something that there is no more than a four-year return of your money. In other words, we feel we paid maybe four times the earnings for this deal.
What benefits did you expect to gain by using the Bahama Mama trademark?
Exposure. It's a fun name. It's a good product. It's a quality product that has a good reputation in Central Ohio. What we need to do is build upon that and take it outside of Central Ohio. Product identity is so important in the marketplace today. We've been in business for 90 years and we truly do not have a recognizable trademark. Schmidt's Bahama Mama is probably our first recognizable trademark.
How are you marketing the Bahama Mama name in Ohio now?
I don't think we're doing a whole lot different than Schmidt's did, but this is our business-manufacturing and distribution. Schmidt's business is restaurants and special events. So we're much more focused, I believe, than Schmidt's could ever be because this is what we're best at.
What advice do you have for others considering buying a trademark?
Get a good lawyer . . . but don't overdo that. In making business decisions, people tend to rely too much on a lawyer or on an accountant, and that's good, but boy, you've got to know what you're doing yourself.