When you franchise your restaurant, you allow an independent investor to buy into your business, selling the license to use your brand name, operations, products, and knowledge. The independent owner provides the initial investment and signs the restaurant lease agreement and various service contracts.
Full Answer
What do you need to know to franchise a restaurant?
When looking at how to franchise a restaurant, you want to see what works at your location and package it in easily understood documents for franchisees. You likely already have guidelines for training, food preparation, and other crucial tasks. These documents will serve as the foundation of your SOP.
What makes a franchise business successful?
Having a big, well-known brand behind you can do wonders for your franchise business. And if it is a recognizable brand, your future customers already know who you are and what your business does when you open.
Is the food sector the best for franchising?
The food sector is the largest sector in the world of franchising. If you have worked in food-service, it’s a sector worth investigating if you’re looking to buy a franchise. That’s because you kind of know what you’re in for.
How much does it cost to open a retail franchise?
Like the food franchise sector, the hours in retail tend to be long, and almost always include working 6-7 days a week. As of this writing, investment amounts for some of the smaller retail franchises begin around $130,000 while larger operations can easily top $500,000.
What is a franchise restaurant?
A franchise restaurant is a turnkey restaurant concept that you can purchase from a franchisor. In exchange for an initial investment and ongoing royalty payments, franchisees have access to the franchisor’s proprietary processes, software and hardware – like a restaurant POS, training, recipes, supplier relationships, equipment, real estate expertise, marketing and more to set them up for success.
How much does it cost to start a restaurant franchise?
What it costs: Total franchise restaurant startup costs range anywhere from $50,000 to $6,000,000. While you can find franchises on the lower end of the spectrum, most popular chains start in the $200,000 to $300,000 range.
What is franchise fee?
What it gets you: The franchise fee is a one-time fee for access to the restaurant’s name, training, website, software access and startup inventory.
What does total startup cost mean?
What it gets you: Total startup costs give you access to use the brand, management systems, training and support in marketing, equipment, inventory, marketing, staffing, support for your restaurant’s grand opening and more—basically everything you need to get the business off the ground.
What does royalties do for restaurants?
What it gets you: These royalties allow you to keep licensing the restaurant’s brand and maintain access to corporate resources.
Is buying a franchise cheap?
Buying a franchise isn’t cheap, but it gives you the framework for a turnkey restaurant that’s already proven to be successful. Here’s what you need to know about how to buy a restaurant from a franchisor, including a breakdown of the startup and ongoing costs associated with investing in a franchise restaurant.
Do franchisors owe fees?
After you pay startup costs, you’ll owe ongoing fees to the franchisor to be able to keep using their license and resources. All franchisors charge royalties, and some also charge a marketing fee on top of that.
Why start a restaurant franchise?
Many people enjoy spending time with others while dining on tasty food. Also, nearly half of American adults view dining out as an essential part of their lives, and 64% of adults eat out at least once per week.
Why do people invest in franchises?
People invest in a franchise because it is a turnkey operation. New franchisees expect to receive successful business out of the box. Your restaurant needs to be this model.
What training do franchisees need?
Headquarters training: Franchisees will need to visit your location to learn the basics. Most training programs will include classroom teaching to grasp company culture and history, operations, and reporting. It should also include hands-on training in a mock restaurant
What is franchise ready?
A franchise comes ready to go out of the box — that is one of its most appealing qualities. You will need to put in the effort to account for all aspects of your business before starting new locations.
How many franchises failed between 1991 and 2010?
The Small Business Administration found that nearly 17% of franchises failed between 1991 and 2010. Are you confident that you know how to franchise a restaurant?
Why do you need to empower your franchisees?
But at the same time, you will need to empower your franchisees so that they can handle online concerns specific to their restaurant. Your franchise business model needs to include tactics and community management.
What happens if you don't have proper documentation for a restaurant?
Without proper documentation, you can end up in dispute or lose the rights to certain aspects of your business.
What is franchise restaurant?
Franchise restaurants allow individual investors to purchase rights to the name, business model, and branding of a restaurant, in exchange for a portion of each store’s sales.
What is the agreement between a franchisee and a franchisee?
Franchisors and franchisees enter an agreement in which the franchisee agrees to pay the parent company monthly fees—usually a portion of their gross monthly sales—in exchange for continued use of the branding, advertising, and products developed by the franchisor. Franchisors also often provide restaurants with business support, to ensure that franchised stores succeed.
How much does it cost to open a Chick Fil A?
Chick-fil-a has relatively low franchise costs of $10,000, and provides everything franchisees need to open a store. That said, franchisees are expected to know how to run a business already, and are given little support toward success. Monthly fees also equal a whopping 50% of gross sales for leased restaurants, and 15% for restaurant owners.
What is franchisee access?
Franchisees purchase access to a proven business model, that likely already has brand recognition. Even if you bring a new franchise to an area, the brand is likely identifiable thanks to the regional or national marketing campaigns run by the parent company.
What is start up fee?
Start-up fees refer to the initial costs of opening a franchise restaurant. Potential line items include building or renting a space for the restaurant, purchasing paper and plastic products, hiring and training a crew, and advertising your opening.
What is the key to restaurant success?
As an investor, potential profitability is key. Where a restaurant is located often determines its success, but certain brands and business models are built to thrive in any market.
Is it easier to open a franchise or build a brand?
Opening a franchise may seem simpler than building a brand from the ground up. But it still requires franchise costs and start-up fees, and some franchisors require investors to have a minimum net worth.
