How to establish an effective franchisee network
Expanding your business through franchising requires...
Everyone needs to eat, and joining a restaurant franchise makes sense for anyone wishing to combine their passion for food with satisfying their entrepreneurial dreams. However, there are some fundamental best practices that you must follow to make a success of your restaurant endeavor.
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Source an appropriate location
It can be challenging to lease or purchase appropriate real estate to open a restaurant franchise, and delays at this stage will significantly affect your costs and the timeline for becoming established.
Consider asking your prospective franchisor to lease you space. Some franchises provide franchisees with a restaurant on a turnkey basis, and this can expedite your setup process. If your franchisor is unable to lease you the space that you need, check whether there are any size or layout constraints that you should know about that will drive your search for suitable real estate. They may be willing to involve themselves in negotiations with landlords to help you acquire the space that you need.
Before you finalize the lease, make sure you can obtain suitable building permits to conduct any work that is needed to adapt or renovate the space to suit your purposes. This includes any modification to heating, ventilation, plumbing and mechanical systems that is necessary to transform the building into a restaurant.
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Understand what territory protection you will be provided
Ask your prospective franchisor what proximity protections they will implement to offer you exclusivity in your local market. This should be detailed within the franchise disclosure document, but if it is not expressly stated, make sure that you understand and are comfortable with the possibility that another franchisee may move into your territory, reducing your market share and increasing competition.
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Ask about restrictions and obligations
Some franchises mandate that food products are sourced directly from them through a central contract, while others will allow their franchisees to source their own products as long as they meet specific criteria.
Ask about certifications and licenses such as liquor licenses, food handling certificates and health department clearances. You must comply with all licensing requirements and certifications of your state as well as those mandated by your franchisor, and the costs and time frames associated with this often exceed expectations.
Check whether your prospective franchisor will provide uniforms and appropriately labeled menus or whether you will be responsible for sourcing these yourself. If you must supply your own menus, ensure that you understand what must be included, such as listing the calories for each menu item.
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Understand the timelines
Most restaurant franchisors specify that the new location must be operational within a certain period of time, so make sure that you understand what that timeline is and confirm it is achievable before joining as failing to achieve deadlines can have financial repercussions.
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Seek professional advice
It can be helpful to seek professional advice, and there are plenty of legal, financial and business advisors experienced in franchising who will be happy to help you. If you have any concerns, consult with these experts and take their advice into account.
