Quick serving restaurants (QSR) dominated the franchising industry in the U.S. in 2018. According to the Fortune 500 Ranking for 2018, food chains, like McDonald’s, Dunkin’, Sonic Drive-In, and Taco Bell are among the leading franchises in the country.
Running your own restaurant offers rewarding opportunities. Like these fast food giants, your restaurant can also reach a greater market through franchising. This a business model that allows other parties to use your business name, branding, and system in exchange for corresponding fees or royalties.
Enjoy the Benefits of Franchising
Franchising is an ideal option if you want a pathway to growth and profitability. This process also gives you the opportunity to establish your restaurant locally and abroad. Additionally, franchising your restaurant opens opportunities to aspiring entrepreneurs.
A lack of capital is one reason a business struggles to expand. But through franchising, you wouldn’t need too much capital when you open a new location. The franchisee supplies the capital to start and operate a new unit.
Another advantage of franchising is having a highly motivated management for your restaurant chain. You don’t have to recruit people to manage each of your locations. Instead, you’ll have owner-operators who are more dedicated to managing the franchise because it is, essentially, their business.
In this setting, you can expect franchisees to have long-term commitment since they are financially adn emotionally invested in your business model. They are also motivated to make your restaurant successful because their livelihood depends on it.
But how do you franchise your business?
Preparing Your Business for Franchising
Becoming a fast food franchise can be challenging, especially with tough competition. Your business must be ready, so you can achieve your goals and experience its benefits. You need to start with understanding the franchise business model as well as the costs associated with it.
You also need to design a franchise agreement because you and your franchisee should be on the same page. Consider working with a franchise consultant to help you with any legal matters and prevent potential issues.
The Federal Trade Commission (FTC) requires you to have the franchise disclosure document (FDD.) This document contains information essential to potential franchisees. It covers initial fees, estimated investment, franchisor’s assistance, financial statements, restrictions, and the like. You should update you FDD annually, according to the FTC requirements.
Although plenty of opportunities abound in franchising, not every franchise ends up successful. In some case, they fail to overcome challenges.
Your Business Must be Ready to Face Challenges
The demand for healthier fast food from American consumers challenges the fast food industry, which has a reputation for offering unhealthy fare. As a fast food restaurant owner, you should meet this demand so your business continues to get discerning customers in the door.
Develop a menu that includes healthy options for your consumers. You can offer nutritious meals and still stay true to your roots as a fast food chain.
When it comes to franchising, your business model should have efficient operations to make it more attractive to franchisees. They are likely to look for franchises that provide a proven and cost-effective system.
Your model should provide an effective marketing strategy, too. Franchisees may not handle the marketing of your business, so you need to show them your strategy can generate a high return on investment (ROI).
Franchising your business can be a lengthy and complicated process. You need to invest your time and energy on research and planning to secure success. It may take time to achieve your goals for your business, but the results will be rewarding.