A Guide To Franchising Your Restaurant
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As your restaurant business grows and thrives, you might wish to expand by opening new branches in new locations. There are a number of ways of doing this, but among the more popular is franchising. Franchising allows you to take a hands-off approach to the day-to-day affairs of new restaurants while minimising costs. But is it right for you, and how do you go about it? Let’s take a look.
Understanding Franchising
A franchise works via an arrangement between two companies. One (the franchisor) agrees that the other (the franchisee) can use its brand name, products, and services. In return, the franchisee allows the franchisor a share of its subsequent profits.
This means less financial risk for the franchisor, which will contribute much less to the startup costs of every given branch. This can allow for explosive growth.
On the other hand, there are risks to manage. What if the new company does something that jeopardises the brand? This might endanger the entire business, and thwart the success of new franchised restaurants. It’s for this reason that most franchisors place strict controls on what their franchises can and can’t do.
For example, the owner of a branch of McDonald’s can’t decide to change the menu, or even the way that the menu is presented. This is because McDonald’s understands that their value to customers stems from the reliability of its products and services. Where there’s variation, customers might look elsewhere.
Of course, not all franchises take this approach – some allow more flexibility than others.
Preparing Your Restaurant for Franchising
Before you can turn a single successful restaurant into an effective franchise, you’ll need to optimise every aspect of the business, and be sure that the success can be replicated elsewhere. This often means devising standard operating procedures, so that every new franchise can do things in exactly the same way. A single restaurant might be dependent on the talents of a particular chef – but for the franchise to be successful, those talents will need to be replicable. In some cases, this might mean replacing human creativity and judgment with rigid procedures and controls.
If systems for ordering, cooking and serving food can be easily replicated, then setting up a new franchise might be more straightforward. What really matters is the strength of the brand name – which might make the franchise more desirable to would-be franchisees.
Ensuring Compliance and Protection
Franchises rely heavily on legal expertise, since the agreements they involve need to be legally binding. This means bringing in specialised lawyers for restaurants early on. The restaurants themselves will also need to be compliant with the law when it comes to licensing, as well as health and safety.
Given the importance of branding to this business model, it’s particularly important that franchisors protect their intellectual property. If another restaurant can replicate your logo and menu without paying the franchise fee, then your business will suffer – and, if that restaurant serves substandard food, your reputation will suffer, too.
Marketing and Finding the Right Franchisees
To make a success of this business model, you’ll need to seek out the right franchisees, and thoroughly vet potential candidates. You’ll need to make sure that the restaurant owners and managers have the experience and financial stability necessary to make the restaurant work. They should also understand your brand, and have a passion for it.
