Thinking about opening a restaurant? If you’re passionate about hospitality, you probably have a talent for many aspects of running an eatery. Of course, that doesn’t mean you have all the skills required to do it on your own. That’s where choosing a franchise comes in. For many aspiring restauranteurs, this business model leads to more support and a lot less stress. You’ll find some of the basics of going this route here, but the subject definitely deserves a closer look.
Here are five more things you should know about opening a franchise restaurant…
1) The costs
One of the most important things to know before entering into any business venture is the costs involved. In addition to the initial amount you’ll pay, percentages of your gross sales will go towards royalty and advertising fees. Here’s a typical breakdown:
• $15,000 – $100,000 fee upfront
• 5 – 8 percent royalty fee (ongoing)
• 1 – 4 per cent for regional advertising (ongoing)
While the initial fee can vary greatly, averages are (thankfully) around the $25,000 mark. Of course, these costs aren’t the only ones you’ll incur. You’ll need to invest in keeping the business afloat until it turns a profit, and pay for things like furniture, fixtures, and employee training.
2) What you’ll get
While the fees may sound high, franchises can actually offer great value for money—and plenty of other benefits, too. As a franchisee, you’ll enjoy an already-loyal customer base, marketing and employee-training support, and pre-existing relationships with suppliers that could lead to lower costs. That all goes without saying.
What many restauranteurs don’t grasp is how much easier the process can be when a large organization is invested in your success. Every franchisor wants their locations to take off, and they’ll do everything in their power to ensure it.
3) It’s not your brand
Here’s a crucial thing to keep in mind. When you open a franchise location, you’re not exactly buying a business. What you’re really purchasing is the right to use the brand, and the knowledge and systems that make the business run efficiently.
Of course, none of this belongs to you indefinitely. Typically, you’ll be able to use the trademark for a period of 5 to 10 years. After that, you’ll likely be able to renew—but that’s not guaranteed.
4) a good lawyer is crucial
Having a lawyer weigh-in is vital in any business venture. When it comes to franchises, there are a few things to keep in mind. First off, you want someone with the right expertise to review your Franchise Disclosure Document (FDD). But that’s not all.
If you’re setting up a Canadian location of an American franchise, you should be aware that your agreement may not be adapted for our country. If that happens, there could be tax consequences. A lawyer who has experience with franchises will be able to spot (and help you deal with) this issue.
5) Your fellow franchisees can help
One of the nice things about operating a franchise business is, you’re not alone. Other people across the country are doing the same thing, using the same brand.
To make a fully-informed decision, it’s a good idea to talk to one or more of your fellow franchisees. Ask them about their experiences and their levels of satisfaction. It’s also a good idea to get a sense of the startup costs involved, since what you’ll actually wind up paying isn’t always 100 per cent clear from the outset.
There’s no getting around it: the restaurant business can be tough. While opening a franchise isn’t for everybody, it’s a great way to get your foot in the door—and achieve success that you can build on in the future!
LOOKING FOR THE PERFECT LOCATION FOR YOUR FRANCHISE RESTAURANT? GET IN TOUCH TO LEARN HOW I CAN HELP YOU MAKE THE SMARTEST PURCHASE POSSIBLE!
