If you have a successful restaurant business and you’ve already expanded into a couple of locations, you may have given some thought to franchising your restaurant. Franchising comes with many advantages.
For starters, it can offer you more capital as you recruit franchisees to help you with your expansion efforts. You can save time as you scale your business and enter new geographical locations for a much lower investment than you would if you were to go the traditional expansion route.
As a result of these perks, you may seriously be considering franchising, but one question remains: how to create a franchise restaurant. This article explores this question and offers you some important tips on how you can go about making the move.
Table of contents:
- What is a franchise restaurant?
- Reasons to franchise your restaurant concept
- How to franchise a restaurant business
- Have a proven and profitable business model
- Have your legal affairs in order
- Think about your expansion plans
- Hire the right team
- Cross-promote your properties
- Keep your brand front and centre of everything you do
- Concluding remarks
What is a franchise restaurant?
A franchise restaurant is one that operates under the franchising concept. This means having one parent brand that is scattered throughout the country or even in international locations, offering diners the same type and quality of food wherever they may be for the same price at the same service standards.
Examples of franchise restaurants that you probably already know and have heard about include McDonald’s, Subway, Papa John’s, Domino’s Pizza and others.
This level of uniformity means that your customers will be able to expect the same offering no matter where they may be located.
It’s a great way of ensuring that you reach more people with your culinary delights as well and you’re also able to scale your business at a much faster rate.
Each of these brands has multiple locations across the world and they provide a standardised dining experience to their clientele by offering the same food in New York as they would in London.
This means that customers can easily recognise the brand and take advantage of a meal that they truly enjoy no matter where in the world they may be.
Reasons to franchise your restaurant concept
There are numerous reasons to franchise your current restaurant concepts and we’ll explore these in more depth below.
As a starting point, you’ll be required to have a much lower investment in order to grow your brand. Why? Because your franchisees will be putting up the investment capital needed to open a new location and this will mean minimising your own capital investment.
Another reason for franchising your restaurant is because of the exponential growth you’re likely to experience.
Franchising, by its very nature, takes into account capital, human resources and geography and enables a franchisor to scale up quickly in multiple markets simultaneously.
This is in stark contrast to opening one venue at a time in a painstaking manner.
The community of franchisees that build up your restaurant network can also help draw other’s attention to your brand and give it more visibility.
Furthermore, it’s important to understand the difference between owners and employees. Employees can quit at any time and don’t have a vested interest in the success of the restaurant franchise. Franchisees, on the other hand, do have a financial interest and incentive for the success of their franchise operations as they will be directly benefiting from this. Consequently, franchisors will have a network of dedicated restaurant owners each of which is more willing to implement system-wide changes for the benefit of the business.
Finally, as a restaurant franchisor, you also have the benefit of taking advantage of residual, royalty-driven income. This income is not derived from the operation of your restaurant. Instead, it is a payment made by the franchisee to the franchisor for the rights to use their brand and proprietary systems. In general, when the restaurant concept succeeds, both the franchisor and the franchisee benefit from the development because both will be helping each other, thereby creating a mutually reinforcing and beneficial relationship.
How to franchise a restaurant business
And now that you’re convinced that franchising your restaurant is right for you, it’s crucial to take a look at the steps involved in how to build a franchise restaurant. We’ve prepared a list of some of the most important ones below.
1. Have a proven and profitable business model
You will be highly unlikely to be able to franchise your restaurant if it were not successful financially. Therefore, to franchise your restaurant, you need to consider the levels of profitability you’re encountering. Also worth considering is whether your restaurant has weathered any economic storms and how you did this successfully.
Further considerations include determining what amounts of turnover you make on average and establishing if your model can be replicated successfully in different geographical locations.
2. Have your legal affairs in order
Once the above considerations have been taken into account, it’s time to get the legalities in order. You will need to speak to a franchise lawyer to help you change your business from an independent one to a franchise model.
You will also need to sit down with your legal advisor to create a detailed franchise agreement that will govern your relationship with your franchisees.
Other aspects to consider developing at this stage include creating your operations manual, reserving your intellectual property and trademarks, creating brand guidelines, etc.
3. Think about your expansion plans
You also need to give your expansion plans some careful thought. For example, you may wish to grow as quickly and as widely as possible but think about whether this is realistic or not. You may wish to start expanding to nearby locations first to test out the concept and see whether it works before dipping your feet into uncharted waters, which may include international expansion.
4. Hire the right team
As a franchisor, teamwork is possibly the most important thing to bear in mind at all times. Teamwork will be required from both your executive team and your franchisees. When the operations work together like a well-oiled machine, you’re likely to experience the most success.
Therefore, pre-screening prospective franchisees should be on your to-do list as is hiring the right executive team to help with your expansion efforts.
5. Cross-promote your properties
Since the major link of a franchise restaurant is the parent brand, which has proprietary technology, you can use this technology to cross-promote your locations. This may mean ensuring that your technology operates seamlessly across all franchise units and that you can quickly and easily collect data and ensure a culture of collaboration.
6. Keep your brand front and centre of everything you do
Your brand guidelines should be followed strictly by all franchisees in order to ensure that there is no watering down of the brand and that there is no inconsistency in its usage. This is important because it will affect your overall reputation even if it’s just one franchisee who is not consistent in brand usage.
Concluding remarks
Franchising your restaurant business can seem like a lot of hard work but it can be rewarding for a number of reasons, not least of which is the financial gains you can expect to make from expanding your business across different geographical locations.
Restaurant franchises can be highly successful and it is worth considering this as a growth and scaling opportunity for your brand. This is especially the case if your restaurant brand has already proven to be profitable and successful and you’re looking to expand it into new territories.
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