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Isaiah Jones
Isaiah Jones

How To Buy A Franchise Restaurant



Restaurants are one of the most common types of franchises, and worth considering if you are interested in franchising a business. While franchises come with certain benefits, such as name recognition and some level of built-in consumer demand, buying a restaurant franchise can be complicated and does not guarantee success.




how to buy a franchise restaurant


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Understand the industry. Increase your odds of success. Learn how restaurant operations and customer preferences have dramatically changed over the past year with insights from over 2,000 restaurant operators and guests.


What it costs: Total franchise restaurant startup costs range anywhere from $50,000 to $6,000,000. While you can find franchises on the lower end of the spectrum, most popular chains start in the $200,000 to $300,000 range.


If you want to enjoy the lifestyle and revenue that owning a restaurant gives you, without having to do the heavy lifting of coming up with a concept, creating recipes, or focusing on marketing, investing in a franchise could be a great option for you.


When most people think of a franchise business, they first think of burgers. Or pizza. Or coffee (and donuts). Or tacos. There are, of course, many different markets in which franchises thrive, but the success and growth of numerous fast-food behemoths have made it so that, if you were to play a game of word association and offered up "franchise," most people would probably instantly respond: "McDonald's."


But your first thought shouldn't be your last one. When deciding whether to purchase a restaurant franchise, you must focus on the characteristics of the business from a franchisee's perspective. Only that can determine whether this industry is the right one for you.


Familiar financing. Traditional lending sources are well-schooled in the real estate and equipment needs of a fast-food operation, which may ease the challenge of getting the funding you'll need. Better still, lenders like the often-high revenue that a typical food franchise offers.


Clear track records. Many food franchises have multiple units and have been operating for a while, which means you can have a clear sense of what is and isn't working before you decide whether to get involved.


High initial investment. Most food franchises require significant funding to start. Prep stations, sinks, stoves, ovens, grease disposal systems, venting requirements, customer seating, and bathroom areas are just the start.


Labor challenges. Most food businesses rely on a significant number of low-paid employees. As a result, turnover can be very high. In fact, recruiting and retaining is typically a food franchisee's top challenge.


Quality of life. You're often the first to arrive and the last to go home. The employee challenges can be so frustrating that they are the main reason owners cite for wanting to leave the industry. Then there's the issue of what a person smells like after spending long hours each day in a food franchise. It's not exactly a classy perfume.


Carefully think through what is required of a food franchisee: the investment, the daily and weekly tasks, the hours. Do you have the skills required to succeed? Will that work be worth the returns you can reasonably expect, based on your research? Only by making these many considerations can you know whether becoming a restaurateur is right for you.


Jeff Elgin has almost 20 years of experience franchising, both as a franchisee and a senior franchise company executive. He's currently the CEO of FranChoice Inc., a company that provides free consulting to consumers looking for a franchise that best meets their needs.


While you will handle day-to-day operations, you will get help from the parent company with everything from designing your location to developing protocols. Since you belong to a larger family of restaurants, you will have to comply with certain guidelines dictated by the franchisor.


Typically, one of the hardest parts of starting a restaurant is developing the concept. With a franchise, that work is done for you. Joining a pre-existing company means you automatically benefit from brand recognition, corporate support, menus and other resources that have been developed for you. Likewise, being part of an established brand can mean group purchasing power to get you cheaper ingredient prices than if you were starting from scratch.


Overall, choosing to open a franchise restaurant is like starting a business backed by immeasurable support. You gain advice and feedback from fellow franchise owners in your network; previously developed and tested menus with a ready audience; help with back-of-house operations; and more.


This website is not a franchise offering. A franchise offering can be made by us only in a state if we are first registered, filed, excluded, exempted or otherwise qualified to offer franchises in that state, and only if we provide you with an appropriate franchise disclosure document. Follow-up or individualized responses to you that involve either effecting or attempting to effect the sale of a franchise will be made only if we are first in compliance with state registration or notice filing requirements, or are covered by an applicable state exclusion or exemption. The following states regulate the offer and sale of franchises: California, Florida, Hawaii, Illinois, Indiana, Kentucky, Maryland, Michigan, Minnesota, Nebraska, New York, North Dakota, Rhode Island, South Dakota, Texas, Utah, Virginia, Washington and Wisconsin. If you reside, plan to operate or will communicate about the franchise in one of these states, you may have certain rights under applicable franchise laws or regulations.


While the restaurant business, as glamorous and lucrative as it may seem from afar, is tough. For first-time restaurateurs, who have little insight or experience into the industry, acquiring a franchise of already established restaurant seems like the best way to step into the restaurant space since the brand name is already established and the market share is set. Now the question that comes to mind is, how do you buy a restaurant franchise and how do you decide if that is the correct franchise for you. Here we have for you a detailed piece regarding how to buy a franchise restaurant and things to consider before signing the contract so that you are sure about it. But before deciding that you want to open a restaurant franchise, take a look at the pros and cons of owning a restaurant franchise.


Before buying a restaurant franchise, you need to know which type of restaurant franchise to buy. Many restaurants give their franchise in exchange of a royalty fee, but before signing the contract, you need to know if the restaurant format will even work in the location you want to open the restaurant in. Thus it is best if you research your local market beforehand, understand what type of restaurant format works where and then decide which restaurants to reach out to in order to open your franchise outlet, for example, a QSR will work best in a busy market area with a high footfall like a shopping street or a university campus. On the other hand, fine dining will work best in a posh locality.


Once you have finalized which restaurant format you want to for, next is deciding the restaurant franchise model you want to deal with. There are different ways in which companies give their restaurant franchise. These are classified into different models. These models include:-


Based on the model and the restaurant company you choose, different franchise outlets will entail different costs. You will have to pay a royalty fee to the franchisor and depending upon the terms laid down in the Franchise Agreement; there may be additional costs. Create a budget for yourself and stick to it. If you feel that a restaurant franchise is exceeding your budget but has a very good ROI, have some sources to procure funds from handy, but take the final decision after considering all your financial risks.


Apart from budget constraints, take a look at your other restrictions as well. These will include things like finalizing vendors and suppliers, restaurant staff hiring and training, restaurant technology, etc. Consider everything wisely and see what extent of support the franchisor is willing to offer before you purchase the restaurant franchise.


Now that you have done your end of the research, the next thing is finding the right franchisor and going through the Franchise Contract. Involve a lawyer in this process for legalities like the royalty fee, payment tenure, etc. and only go for the franchise which meets all of your criteria.


Starting a restaurant business is never easy. It does not just require a good amount of investment, but it also needs the complete attention, passion and hard work to create an identity in the foodservice market. For people who are just stepping into the Restaurant Business, it is often suggested they take the franchise route. It is comparatively easier, since the Franchisor Brand is already established, has standards in place, and also a set market share. However, there are certain challenges also in Franchise Restaurants.


You are passionate about food and you know you have a lot to offer to the food and beverage industry. In addition, the idea of running your own restaurant or food franchise sounds exciting and just the right step in your career. It, therefore, makes sense to be considering a franchise opportunity in the form of a new restaurant Downtown, an ice cream parlor in a mall, or a fast food franchise on the East Coast.


The franchise fee is a lump sum paid to the franchisor, or parent company when a contract is signed. The initial franchise fee is paid right at the start of the agreement in order to establish the franchise relationship and for the franchisee to receive the initial services agreed upon, such as training, materials for marketing support, and any other branding collateral needed.


Although the franchise fee can vary between franchisors, some offering a lower franchise fee than others, it is still one of the key areas used to attract investors and is generally kept at a low cost. When buying a franchise from other franchise owners, this one-off fee will appear as a transfer fee, and similarly, upon renewal of your franchise agreement, you will have to pay a renewal fee. These are all typically fixed but there might be rare cases where the franchise fee can be negotiable. 041b061a72


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