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Benefits of Opening a Restaurant Franchise

A restaurant franchise can be an accessible and efficient point of entry into the restaurant industry. Before you sign on the dotted line, however, it’s important to understand how franchising is different from independent restaurant ownership. When you go into the process with a full understanding of the benefits, it’s easier to maximize available resources and ensure your new venture is a success.

What is a restaurant franchise? Tips for owning one

A restaurant franchise is a type of business where a parent company (franchisor) licenses its brand and business model to independent entrepreneurs (franchisees) who want to open a new branch location. The franchisor typically provides access to the company’s name, branding elements, standard operating procedures, training materials, support network, and food supply chain. In return, the franchisee pays initial franchise fees and sends a weekly or monthly royalty fee — usually a portion of gross sales — to the parent company.

Restaurant franchises are everywhere; chances are, you’ve eaten at one recently. The model is popular among fast food chains, including Taco Bell, Burger King, Pizza Hut, Del Taco, and Dairy Queen. Walking into a fast food franchise restaurant, you’d never know it wasn’t corporate-owned. The decor, menu, and service are usually similar from branch to branch.

Why would you want to try franchising rather than starting an independent restaurant? Some investors choose this path to diversify their holdings; others want a relatively safe way to test out the restaurant business, even if they don’t have a food-service background.

Not sure if franchise restaurants are right for you? Before you take concrete action, validate the concept with these action steps:

  • Check the details. Investigate the operations for your top-choice franchises, and look into the numbers to get an idea of your projected return on investment.
  • Speak to current franchise owners. Meet with a variety of owners to chat about the reality of owning a franchise. Does the parent company have strict rules regarding food prep? Are the provided resources adequate for a person who’s franchising for the first time? Is the owner happy? Is the business profitable? You’ll come away from these conversations with a better understanding of the franchising experience.
  • Analyze the local market. Conduct market research to determine if your area can support another franchise location. Interview or survey residents about preferred restaurant brands and identify holes in the market. Allow plenty of time for this step — it can help you gauge whether a new restaurant will succeed or fail.
  • Investigate the parent company. Franchises come in all shapes and sizes; you can buy into a multinational brand or a smaller chain. To make sure the parent company is set up for long-term success, examine the financial data, business practices, and executive profiles in detail. If you see any red flags, it may be more prudent to invest in a brand with a longer track record.

Benefits of opening restaurant franchises

Restaurant franchising isn’t the right fit for everyone. However, if you’re looking for a proven business concept with an existing audience, this model can give you a head start in the food business. Before you make a final decision, consider the benefits of franchising.

Easier financing

Will you need to seek funding for your new restaurant venture? You aren’t alone — the initial franchise fees can add up quickly, and many franchisors also specify the liquid cash required of owners. The good news is that you may have an easier time getting a small business loan for a franchise than for an independent business. Franchises are often considered a safer investment because they come with a proven business model and established brand recognition.

Proven business plan

Franchising solves one of the biggest challenges of opening an independent restaurant: finding a viable concept. With a franchise agreement, you don’t need to write the business plan, identify a target market, select food items, or design a kitchen and dining layout. The bulk of the planning is already done for you — and better yet, it’s already been vetted and tested at other locations. If you aren’t someone who sees a start-up as a fun challenge, the predetermined nature of franchising may suit you well. Follow the provided roadmap and you have a good chance of success.

Operational guidance

Franchisors provide a high level of guidance for owners, which eliminates much of the trial and error involved in opening a restaurant. Not sure what properties are best? Chances are the parent company has a set of guidelines to streamline your real estate search. Don’t know where to buy food? You likely have preferred access to specific suppliers. This existing expertise helps you get off to a smooth start and reach profitability faster.

Established brand

It’s hard work to build a food brand from the ground up — especially if you’re new to the process and the restaurant industry. A franchise comes with an established brand that customers know and trust. In fact, people in your area may already be familiar with the food and the menu.

Existing brand recognition saves you a great deal of money and legwork. You won’t need to register the name, get a trademark, or develop a logo and visual brand elements. More importantly, you can capitalize on an existing audience to start getting business right away — no need to build a reputation first.

Marketing support

Marketing can be overwhelming for new restaurant owners, particularly those without promotional experience. As a franchisee, you’ll be able to leverage the existing regional and national marketing activities of the parent company. Many franchising agreements also include access to predesigned assets, campaigns, and strategies, so you don’t have to develop your own. The franchisor will also take care of the menu design and connect you with approved decor and furniture suppliers. With these decisions already made, you’re free to focus on profits.

Built-in support network

When you open restaurant franchises, you immediately become a part of an owner network. In other words, you don’t have to go it alone — there’s always someone to reach out to with questions or concerns. And because they’ve been through the same process, they can provide highly targeted advice and support.

The community aspect of franchising is so powerful, in fact, that many parent companies establish formal networking tools. That way, you can access insights, best practices, and success stories from owners around the country. If you take advantage of these resources, you’re automatically set up for long-term profitability and success.

Want to learn more? Our team has your back!

Whether you decide to open a restaurant franchise or strike out on your own, Grubhub is here to support you. Become a restaurant partner and you’ll get access to more than top-notch food delivery and takeout services — we offer a wealth of resources to guide you through the process of restaurant ownership. With our useful tools for marketing, promotions, and technology, we help you expand your high-level strategy to the digital space.

Ready to learn more? Get started with Grubhub.

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