6 Things You Want to Consider Before Buying into a Restaurant Franchise in 2015

October 2015


6 things to consider when franchising a restaurant

There is so much information out there about becoming a franchisee -- what it takes to run a chain and start your own business. For those with entrepreneurial spirit and a passion for food, becoming a franchisee is an attractive option and with enough capital for an initial investment, it's an option for everyone. It can be tough to compile everything and make an educated decision so we put together a list of things to look out for when deciding on whether or not franchising a restaurant is right for you.

Franchisee complaints or praises: Have you spoken with existing franchisees to make sure you're making a good investment? Make sure you do your due diligence before signing on the dotted line and you will thank yourself later. 

Control vs lack of control: How much control are you looking for during this venture? Sometimes too much control comes with a lack of guidance which should be a big reason why you decided to join a franchise in the first place. The norm, however, is the opposite. Generally, not much control is given to the franchisee when it comes to process or supply chain. Sometimes even marketing can be highly regulated. This varies from brand to brand so make sure you know and are okay with the level of control you will get from corporate.

Location decisions: This is extremely important. Your location can mean the difference between thousands of dollars in profit if you hit it right (or wrong). It's important to understand the geographical locations your franchisor is hoping to expand to and what kind of competition are in those areas as well as what kind of broker relationships they can provide. Understanding who your target customer is and knowing how the community you're entering into caters to that audience will help immensely in driving your decision (think college town vs. quiet suburb outside the city). Be sure you have the resources available from your franchisor to be able to make these sound decisions.

Local marketing support: Especially if you're opening your first few locations, marketing is an avenue that, while time consuming, can pay off for your business. While national marketing campaigns will be coming from corporate, local marketing is often left in the hands of the franchisee. A study by Local Vox stated that the majority of marketing executives at franchise firms believe marketing is critical for the franchise's success, but 64% of franchisees are disappointed with the support they receive from franchisors. It's a good idea to go over what resources they can offer and also what kind of control they would be willing to give you. A helpful resource on how to implement local marketing strategies can be found on this episode of the Social Restaurant Podcast.

Financing Decisions: The one thing you need when purchasing a franchise is the initial investment and you can come up with that in a number of ways. Bank loans are popular, but success can vary depending on the notariety of the brand. Your franchise may also help finance your investment internally. The important thing is to think about this as you would a credit card or home loan, the lower the interest rates the better.

Their ability and willingness to innovate: This is important in any industry, but especially now in the restaurant industry. Every day you see more and more resturants implementing tablets, mobile apps or other engagement solutions. You want to make sure all of these things are on the radar of the franchise you're joining and that they have the resources to implement potential changes. If you're stuck working with archaic back-end solutions, you won't be able to keep up in the areas you can control.


There are many things that will help you succeed as a franchisee but these 6 things will allow you to lay a solid foundation. To help you find the answers to most of your questions, here are a few trusted resources you can reference when doing your research: 

Franchising.com

Franchise.org

Franchise Times

Fast Casual

 

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