The Benefits of Owning a Franchise Restaurant Business
We discussed in our earlier blogs why it is a great time to buy a food franchise in 2020 through 2021. Prospects continue to be bright for fast food and fast-casual franchises: Papa John’s Pizza just announced their plan to open 1,000 new stores over the next five years (1), and Whataburger hinted an offer of offering new franchising units for the first time in 20 years (2). The COVID-19 pandemic is helping boost franchise sales as unemployment grows in the restaurant industry and people are reassessing new career options. But you might be wondering, why buy a franchise business at all? What do you have to gain by buying a franchise versus running your own independent restaurant?
Here we share our thoughts on what makes franchise ownership so appealing.
When you start a restaurant from scratch, much time must go into doing market research, creating business models and developing a new menu. You also have to staff the right people and figure out who your target customers are even before you come up with your marketing plan. But that is a lot of work. It takes time to set up a decent restaurant, particularly if you plan to start amidst the COVID-19 pandemic. One of the benefits of buying a franchise business is that you can skip many of these processes. With a franchise, you do not have to build the foundations from the ground up because there are a pre-established system and business plan. “With a franchise, you have the security of a proven concept,” says Don Daszkowski from the Forbes Business Council (3). “The franchisor already went through the pains of trial and error and the expense of branding, marketing and putting systems in place.” The less time you spend on starting, you can spend more on building your business. Buying a franchise allows you to take advantage of this speed.
Less Risk, More Support
According to Joel Libava, a franchise ownership adviser and author of Become a Franchise Owner!, revenue fluctuates much less in a food franchise setting (4). “As long as you have a steady stream of customers patronizing your restaurant or food store, revenue tends to be pretty high,” he wrote on sba.gov. Additionally, franchisors assist their franchisees with marketing, real estate, among other things. Popeyes, for example, offers support and expertise not only in the menu, operations and marketing, but also in development, and profitability (5).
There’s a less overall risk when there is more support. When you buy a franchise, this assistance package is included in the upfront and ongoing fees, including a Grand Opening (4). “Good franchisors know how to put on a strong Grand Opening,” said Libava, “and if yours goes well, you won’t have to wait long for customers to line up to try (and purchase) your food.”
Moreover, Franchisors will also connect you to a Real Estate person soon after your franchise agreement is signed. Franchisees can therefore leverage extra resources and connections to secure the best location possible for your new business. According to Libava, “that alone gives you a huge advantage over an independent businessperson (without Commercial Real Estate connections) who’s trying to secure a location for his restaurant” (4).
You know exactly what you are getting when you walk into a Chick-fil-A’s or a Subway’s. That is because both have massive brand recognition. While it takes most restaurant owners years to market and establish their brand, being a franchise owner allows to you reap the benefits of the brand’s name and trademark, giving you a competitive edge and making it easier for your store to attract customers.
This is also why financing is easier when you buy a franchise. You are more likely to get a loan from banks or organizations if the business is already well established. Also, there are quite many top-ranked, affordable franchises under $25,000 you can buy if you do your research right (5).
Good Balance of Independence and Dependence
Being a franchise owner allows you to be your own boss. If you classify yourself as a hands-on worker, a natural leader and communicator, result-driven and proactive, buying a franchise offers you the benefits of being a business owner while having the needed assistance from a strong support network.
A Better Opportunity for Long-Term Growth
There is also a better growth trajectory when you choose franchising. Once you start your franchise and acclimate yourself to your role as a franchisee, you can expand your portfolio long-term, buying other franchises in different locations or different concepts. Amyn Ali, a successful entrepreneur and owner of three Wing Zones, 10 Dunkin’ Donuts and Baskin-Robbins and one Papa John’s, shared his thoughts on Entrepreneur magazine (6). “I started in franchising eight years ago. I saw great potential in franchising and wanted to be my own boss, so I bought a Baskin-Robbins and Dunkin Donuts location, which turned out to be immensely successful. I wanted to diversify my franchise portfolio, so I signed a 14-unit deal with Wing Zone, which was also the first in the city of Chicago.”
Here’s his advice for future-franchisees: “So many people want to open up their own business but fail to look at all of the pros and cons of business ownership. The most important advice that I can give is to really do your due diligence and look into your competition, the longevity of the brand, how you’re going to manage it operationally” (6).
Owning a franchise business is still hard work that comes with its own disadvantages. Success is not guaranteed, and you’ll have to invest in it long-term, just as you would with any other business ventures. That said, there are many benefits to owning a franchise as it offers you speed, support and great profits. The decision is yours.
About Goliath Consulting Group
Goliath Consulting Group with headquarters in Norcross, Georgia offers a dynamic array of business development solutions, tailored to meet the needs of each individual client – in addition to a full suite of knowledge and tools that help make restaurants more profitable, including strategic planning, menu development, project management, new restaurant development, branding, marketing, franchising, equipment, technology, evaluations, outsourcing, and more. The company also has a management division that manages full-service restaurants. Goliath Consulting enjoys a ten-year track record of creating client success among local, regional and multi-unit national restaurant chains.
Goliath Consulting Group is actively involved in the Foodservice Consultants Society International and is an allied partner of the Georgia Restaurant Association.