If you’re considering owning your own business and being your own boss, you need to also seriously consider starting with a restaurant franchise. You may have a million ideas for a unique and important business that you could start instead, but in this difficult economy you should begin with a tried and tested model first. Buying into a franchise, especially a restaurant franchise, gets you working on being an entrepreneur and learning the ropes of running a successful business with less effort and risk. If you’re a good entrepreneur you’ll have the time and funds to begin your radical new dream business after you’ve made a franchise restaurant location profitable. Save your great ideas for development when you have the capital to start it all by yourself because of your chain of smoothly-running, profit-generating restaurants.
You may feel that a franchise restaurant would never work for you because you don’t like to cook or you don’t know anything about attracting diners. However, a franchise location already has the menu, the supply chain and the branding done for you. All you need to add is your management and business operation skills and skilled employees. Unlike other businesses, a new restaurant from a popular chain creates it own buzz among diners. The visitors who fell in love with a specific chain while in another state will flock to your new business and they’ll tell their friends about it. If you open your brand new retail store or niche business, no one knows what you do or why they should pay you to do it.
Writing a business plan is key for securing financing for any new venture, but you’ll have a much easier time explaining where profits come from and how you’ll keep costs low when you’re working with a pre-existing template like a franchise restaurant. Loan officers love approving franchise locations because there’s much more concrete data on expected traffic and revenue. There’s less risk for the venture capital group or the bank to fund a franchise restaurant than there is to fund a brand new business that is untested.
Other types of franchises may appear to be just as appealing as a restaurant, but not when you consider the economy. Many niche retail franchises looked promising before the recession began, but customer demand died for a variety of services and products as their incomes fell or disappeared altogether. People still eat, no matter how much less extra spending money they have, and many franchise restaurants offer affordable food that is attractive to a cash-strapped diner. Few businesses are completely recession-proof, but the restaurant industry weathered the hit of the economy downfall much better than many other industry. All of the other industries that are maintaining profits in this economy are much harder to break into and require a highly educated or skilled workforce.
Many restaurant franchise opportunities also come with free or discounted training, support from a mentor that is succeeding with the chain and free promotional and advertising materials. The franchise company wants you to succeed with your new restaurant because a successful franchise easily pays it franchise fee every year. Starting your own business leaves you alone to deal with all of the confusing legal and financial hurdles to clear. Buying into a franchise gives you entry into a club of motivated business owners and experts devoted to furthering the brand.
Of course, you can’t blindly just decide to open a restaurant, even if it is part of a franchise. You’ll need to research what diners are eating in your chosen market and what they’d like to be eating. Opening a restaurant that no one wants to try is a sure-fire path to closing down shortly after you open. Many of the best restaurant franchises also limit where you can build your new location so you aren’t unfairly competing with another store from the same company. If you aren’t careful, they might push you into a part of town where a restaurant won’t be profitable due to low traffic or visibility. You’ll still need to know some basics of running a kitchen and food safety as well, or you won’t be able to hire and train employees properly. Even if you decide to hire a very knowledgeable general manager you’ll need to check up on them occasionally.
When you decide that you can make a franchise restaurant work, you’ve got two main choices to make to pick a particular brand. You can look for a brand based on the cuisine it serves and hope that there is a demand for it in your market, or consider brands solely based on their popularity. For example, if there are plenty of vegetarians but few dining options in your area, a soup and salad chain that focuses on fresh vegetables would be a logical choice. In small towns and other areas where consumers may be reluctant to try new things a trusted and well-known brand is usually a better choice.
Most of all, don’t forget the costs when you’re crunching the numbers to decide if a specific franchise restaurant would be profitable. The combination of franchise fees, rent, rising food costs and labor are just the beginning. Check out what each franchise offers for its fees. Brands that give you extensive training programs, local advertising on their dime or packages of equipment that save you money over making the purchases yourself are worth higher franchise fees.