Is your restaurant ready to be franchised? So you have a successful restaurant, and you're ready to expand. Of the many ways in which a restaurant can expand, franchising is the most alluring.
As strategy goes, franchising can be extremely lucrative for a restauranteur with an already successful concept and looking to expand.
What is a franchise? - There are two different types of franchising relationships. Business Format Franchising is the type most identifiable.This type of franchise is a model where one party (Franchisor ) licenses its intellectual property, brand, the system for operating the business and rights to sell it's branded goods and services to another party(Franchisee). In return, the franchisee pays a fee and agrees to comply with certain obligations set out in a Franchise Agreement.
A franchise, when implemented correctly, can be very advantageous for several reasons:
- Selling franchises allow you to - expand rapidly across countries and continents.
- As a franchisor, you do not have to bear the development cost and risks of opening a new location, as the franchisee is typically responsible for those costs and risks.
- Through franchising, you have the potential of building a global presence quickly and at a low cost and less risk.
Is your restaurant ready to be franchised?
Due to the nature of franchising, having a reliable working business model is essential before establishing your franchise. Franchisees generally receive site selection and development support, operating manuals, training, brand standards, quality control, and a marketing strategy/material from the franchisor.
When considering to franchise your restaurant, there are four key factors to focus on to ensure a successful venture.
Four Key Factors For a Successful Franchise
1) A proven operating prototype: No one is going to want to invest in a business that is only marginally successful and a minimal proven track record. Franchise buyers expect a working proven concept that is profitable and well implemented.
2) Quality Control: As a Franchisor, you need to ensure that consumers experience the same quality, regardless of location or franchise status.
Quality control can prove to be an issue with franchising - it's all about delivering a product and experience the same way for every customer. If a customer has a bad experience at one franchise, they may assume that they will have the same experience at other locations.
3) Branding Your Concept: Franchising is about selling a brand. From an investors aspect - they are looking for a brand with a unique selling point that is not easy to imitate and disruptive to the industry (this makes the brand stand out and competitive in a listless market).
When customers step into your store or a franchisee's store, the store should be indistinguishable from each other. Everything from the service, decor, music, right down to the overall feel - must be distinct and memorable.
4) Sufficient capital: One of the most overlooked aspects of starting a franchise is the cost of launching a brand. There are many costs associated with the sale of a franchise that you need to factor in. These costs include:
- Sale commissions.
- Legal fees for Copyrights, Trademarks, writing up contracts etc.
- Cost to train and support the new franchisee.
- Research and development.
- Initial and continuing marketing and advertising costs.
Starting a budding franchise requires focus and determination to turn your first store into a working concept and establishing a brand that stands out.