Ready to Franchise? Read This First!
Last updated on July 26th, 2022 at 11:59 am
Thinking about franchising your restaurant? While the risks are big, the reward can be enormous. Franchising takes a lot of planning to pull it off successfully. Determining the best time to franchise when your product is in demand, but not over-saturating the market can be a daunting task. I can’t help you decide when the time is right, but I can provide you with three things to get the ball rolling if franchising is on your mind.
1. Kick up your marketing. It’s time to focus on the business end of your restaurant. Consider hiring another employee to manage the everyday tasks and focus on building your brand. Broaden your target market beyond local patrons and start thinking about how you want your brand to appear to potential franchisees interested in investing in your company.
2. Get into the weeds. Details people, they make the world go ‘round. In order to franchise your restaurant successfully, you need to design a business model that can be re-produced by multiple franchise owners. In the beginning, each franchise should be operating in an identical manner. (Once your business is established, you can consider regional variations, but we’re not there yet.) Set up standards from food items to napkin designs, this way each franchise adheres to your vision for your brand.
3. Do your homework. Don’t be afraid to ask for help. In fact, I encourage it. You want to make investing in your company easy and worth the effort. Show potential investors that your business has credibility, a proven track record of success, and a recognizable brand. Do your research to determine what other owners with similar business models are offering in terms of loyalties (a 15% ROI seems standard, but what do I really know?). Hire a lawyer to draw up a franchising contract that covers franchise fees, your cut of the revenue, and any other information that you deem pertinent.
It’s tough to oversee a large restaurant base without hiring a ton of resources and putting the capital up front. Franchising provides a growth opportunity without those restrictions, since franchisees do most of the “heavy lifting”. With the right planning and conditions, your franchise can be a success. If you’re leaning towards franchising, check out this pros and cons sheet and more resources online at Small Business Administration.