Before making the decision to buy a restaurant franchise, it helps to get solid advice from as many sources as possible. Ideally, this advice would come from people that have been there, done that, and own the t-shirt.
From our wide network of restaurant franchisees (some of whom are multiple unit owners) we have compiled the following top tips for buying a franchise:
The franchise business will be an extension of who you are, so you need it to align with your personal interests, your style, and your overall Modus Operandi. You are going to end up living and breathing this brand for hopefully many years to come, so it needs to speak clearly about who you are and what you represent.
Melissa Eva, Franchising Manager at Recipe Unlimited shares, “ A great example of this is The Burger’s Priest franchise. One may assume it is merely another classic cheeseburger burger joint, but truly what sets it apart from others is not only the fresh (never frozen) patties, fries and fresh topping all made to order, but also its cult-like following attributable to its edgy, sometimes cheeky yet aways indie brand personality. Therefore this brand personality would really need to resonate with a franchisee in order to allow them to bring it to life within their own location.”
Networking and connecting with other franchise owners is a great way to learn the ropes. They will likely have gone through many challenges and learned valuable lessons along their journey. Getting first-hand accounts of their experiences will hopefully shed light on some of the areas that you needed insight on before making your decision.
Perhaps you’ve gotten as far as looking over the restaurant franchise agreement. Study this document backwards and forwards. Make sure you are very clear on expectations from both sides. Do your due diligence, ask lots of questions and clear up anything you may not understand.
This should go without saying, but you need to have a keen understanding of the financial commitment required to get things up and running. Then, you need to have a clear understanding of what your financial forecast needs to be so that you can continue to excel.
“Don’t just review the numbers on paper,” advises Melissa Eva. “Understand what informs those numbers. For example, when reviewing annual sales try to understand guest volumes, average check value, and sales mix breakdown such as dining in, take out, delivery platforms etc. This will give you a better understanding of the work that goes into achieving those numbers. Understand your controllables such as food and labour costs, so that you have a good idea of how to manage these. Don’t forget to have a good sense of rent expense as well as ongoing franchise-related fees such as royalties and advertising contributions.”
Your upfront and ongoing costs need to be clearly assessed and understood so that there are minimal surprises as you go through the ownership process.
The franchise business wants to get into a relationship with someone that has a heart for it to succeed. You need to make sure you fit those criteria. Franchise restaurants require significant amounts of time and dedication to be successful. Just because the franchise itself has a proven track record, it doesn’t mean that the brand name will do all the work. You need to know the level of your own commitment—and be comfortable with going that extra mile to really drive the success of the brand. There’s no question that having an established brand at your back provides significant benefits and advantages. But the rest of the story needs to start with you as the owner because ultimately, you are the boss and you are directly accountable for that location’s success.
Some people get involved with franchise businesses thinking that a franchise won’t be as much work as a startup restaurant. That’s not entirely the case, and it’s probably the wrong attitude to bring to the table. It is important to understand that operating a restaurant is not just a business, it’s a lifestyle. Running any restaurant is a lot of work, whether it’s a franchise or not. The location’s success is largely driven by how much effort the owner is willing to put into it.
You will learn many things along your journey. You will experience aspects of ownership that will not meet your expectations, and then some aspects that will surpass your expectations completely. If you are able to approach each scenario with an open mind and a humble curiosity, you’ll have an edge over the competition. You’ll likely end up having a lot more fun in the process, too.
Have questions about franchising? Please fill out our online inquiry form to start the conversation with our Franchising Team.
Despite the massive challenges that the restaurant community is currently facing, the Recipe Franchising Team would like to extend our message of reassurance. Having been in business for over 137 years, we are confident we can get through this challenging time just like many others in the past. We take pride and ownership in the well being, health and safety of our franchisees, associates and customers. Recipe Franchising is looking towards the future with hope and continuous growth. With the challenges at hand, The Recipe Franchising Team has adopted a new process that we like to call "Frictionless Franchising", a way for you to meet, research, investigate and explore new franchising opportunities with us from the comfort of your home. We want to make sure that we are always here to answer your questions, inquiries, and help anyway we can. Please do not hesitate to contact us.
Stay healthy and stay safe.
The Recipe Franchising Team