Considering Franchising Your Eatery? Here’s What You Need To Know

If you’re thinking of growing your business, franchising your restaurant concept may be a great way to expand.

By franchising, you create a blueprint for replicating your restaurant. In exchange, franchisees pay you a one-time franchise fee along with on-going royalties. In essence, others pay you to grow your brand!

Here is a rundown of several key things you should know about franchising before deciding if it is right for your business. 

Signs That Point To Franchising

Successful franchising allows you to grow your brand faster, with less capital, and without the need to manage day-to-day operations at each location. Here are some good indicators that franchising is a viable expansion strategy for you and your business.

  • Your business is easy to recreate. The elements that made your restaurant a hit have wide appeal and can be replicated at other locations.
  • Your business model is profitable. One good sign that your restaurant can be franchised is if you are operating (and profitable) at more than one location already.
  • You are willing to change focus. As a franchisor, you would spend most of your time working on recruiting, training and supporting franchisees, rather than the hands-on aspects of running a restaurant.

Franchising: A Labor of Love

The most successful franchisors are engaged and committed to the success of each one of their franchisees.

In addition to the recruitment process, you’ll need to spend time helping your franchisees secure a great location, help them with selecting the best vendors to work with, and prepare them for their store opening. Once they open their doors, you’ll want to stay on-site for some time to help them work out any kinks.

Understanding The Costs

While franchising can cost less than opening multiple locations, there are some costs involved with developing your franchise structure, as well as on-going operational costs to build and support your franchise network.

  • Development. There will be fees for evaluations, registrations and the preparation of your Franchise Disclosure Document (FDD) and Franchise Agreement. You will want to consider hiring a franchise consultant and franchise attorney to help guide you through this important process.
  • Operation. While franchisees are responsible for the operation and management of their own individual stores, there are a handful of costs that you may be responsible for covering. You can expect to cover recruiting and training costs for new franchisees, as well as marketing for the brand. There will also be yearly regulatory fees, taxes and audits. As you add more units to your franchise network, you may need to hire additional staff to help you support your franchisees.

Choosing The Best Franchisees

The growth and success of franchising your restaurant depends on the franchisees that you choose to grow the business. Therefore, it’s important to be diligent and thorough when recruiting franchisees. 

An ideal restaurant franchisee will have both the necessary capital and experience in the foodservice industry. They must also be trusted to accurately represent your brand, and demonstrate a passion for hospitality.

Taking the next steps in growing your business is an exciting venture! Use these insights to help guide your decision on whether franchising is right for your business.

Read “5 Signs That It’s Time To Expand

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