How to Franchise Restaurant Business
Step 4: Starting a New Franchise Company Although you have an existing business and most likely an existing business or LLC, with the franchise you are also starting a new franchise, i.e. XYZ Restaurant Franchising, LLC. There are several reasons for this, but the most fundamental is to limit and limit your future franchise business from your existing restoration operations. This will also require you to disclose in your FDD financial statements for this new business unit and not the financial statements of your current restaurant operation. Frustrated with your current job and want a way out? Do you think learning how to franchise a restaurant will be a walk in the park? Do you think it`s an easy way to make money? Don`t start a restaurant franchise on a whim or to escape your current situation. So you want to be a restaurant franchisee. Big! The food franchise industry is booming – even full-service franchises are expected to grow by 6.8% in 2017. Are you planning to get into the action? Start by learning how to franchise a restaurant the right way with these 8 expert tips. This is not mandatory as there are no legal requirements for a restaurant to be profitable before franchising. However, one of the main selling points for a franchisee is that the company earns income. Franchisees want to see a restaurant that makes money over a period of several years. Franchising has also proven itself when it comes to starting a business for people who have immigrated to the United States, a move evident in one of the country`s best-known ice cream truck brands: Mister Softee.
Soft-serve truck franchisees in the early 1960s were mostly Irish, Italian, and Greek, as Eater previously pointed out, and over time, African Americans, people of Caribbean and Hispanic descent, and immigrants from the Middle East sought to become business owners through the Mister Softee brand. Mister Softee provides franchisees with delivery and parts support, financing and marketing, and training for people without experience. “As franchisors, it is also our responsibility to protect the investment of each of our franchisees,” says Sieve. “The ultimate goal of any franchise is to grow units,” and to do that, “you need to have a true partnership between the franchisor and the franchisee.” Partnerships: Existing businesses and brands can connect franchisees with suppliers to source products for restaurants. The parent company may also provide policies or specifications for the equipment necessary to perform operations. Subway, for example, offers franchisees an equipment rental option and offers to facilitate the financing of new franchisees. However, just like in the stock market, the results are unpredictable. When planning how to franchise a restaurant, keep your expectations under control. There`s a reason franchises are often less risky than starting a business from scratch.
Most franchises are based on standard operating procedures (SOPs). This means that there are strict guidelines for franchising a restaurant, including menu, management, and marketing. Sieve eventually expanded its business, operating three different restaurant brands — including La Salsa Fresh Mexican Grill and Domino`s Pizza — with a total of more than 50 restaurants in four different states. He is now Vice President of Franchise Development at Arby`s, which has approximately 3,300 restaurants across the country. Fees: Most franchises incur associated incorporation fees. For example, for someone who is a chick-fil-a franchisee, there is an upfront fee of $6,250 to $37,500. The company provides the money for launch costs, including land, construction, and restoration equipment. But the franchisee pays this over time in fees to the parent company. Chick-fil-A franchisees pay the company 15% of gross sales each month in addition to 50% of the remaining pre-tax profit. The chain has 1,464 franchises in operation.
Now at Arby`s, Sieve says his company provides guidance to franchisees throughout the process. While the Georgia-based company is looking for potential franchisees with experience in operating quick-service restaurants and certain amounts of capital before forming a partnership, it provides support from start to finish, including real estate development, construction, design and finally operations, training and advertising. Some companies even create incentives for franchising by offering special visas that allow a franchisee to maintain permanent residency in the United States, provided the franchisee invests $500,000 in the business and can create 10 new jobs in two years, as reported by the Wall Street Journal in 2014. Franchises like Subway have created a support structure for immigrants to join a business and eventually develop their own operations. In addition, the franchisor must estimate the expected average growth rate and project it for the first twelve months of the franchise`s activity. Also forecast income for the first five years or term of the franchise. Katie Jensen`s first book was published in 2000. Since then, she has written other books as well as screenplays, website content, and e-books. Rosehill holds an MBA from Arizona State University. Their articles specialize in business and personal finance. Her passion includes cooking, eating and writing about food.
You`ll need an entire team to navigate the waters and franchise a restaurant, especially if it`s your first business. As an owner, you need to be practical, especially at the beginning when training employees and managers. If this is your first franchise, you need to learn the ropes before coaching your team! As mentioned earlier, you`ll likely need to master many standard operating procedures (SOPs): from cleaning to food cost management, food assembly and the ordering system. Compared to other types of small businesses, there are significant advantages to running a franchise. Most franchisees automatically benefit from the brand awareness they operate. Signing to expand the reach of a business or concept that already has a loyal audience can allow a franchisee to take advantage of the recognition factor and ride the same wave of success. In addition, people who operate multiple units of a franchised restaurant may make higher profits because they can spread their fixed costs over multiple units, according to the Franchise Business Review. Multi-unit ownership can also allow franchisees to secure financing, retain employees, and have a greater impact on the entire brand. As with any business, you build a reputation for your franchise. This means that everyone who walks through your door should benefit from a high quality and consistent service.
A franchise is a business in which the owners grant third-party operators the right to use the company`s name, brand and model in exchange for fees or royalties and ongoing support in the form of advice or marketing. For the most popular fast food franchises, the start-up cost ranges from $10,000 to over $1 million, and the monthly fee, which is usually calculated as a percentage of gross sales, typically hovers around the 5% mark, but can be as high as 50%. Under the terms of the agreement, each franchisee offers the same goods and services for which the company is known. In the case of restaurants, franchisees serve the same menu (with occasional regional differences), display the same advertising, and use the same branding at all levels. Learn how robust restaurant franchise management software can help you effectively manage multiple franchised outlets. .