Getting a restaurant franchise is a big decision financially, emotionally, and mentally. Owning a franchise can give you great entrepreneurial experience with ready-made business processes and branding.
Before we get into details let’s understand what is a franchise.
What is a Franchise Business?
A franchise is basically an official permission by the company owners to sell their company’s goods or services in a certain area or location.
The company allows you to sell their products and charge you a flat fees and royalty along with some percentage of profit you earn by selling their products/services.
Let’s take an example from the pros- McDonalds,
McDonald owners uses franchise business as their growth strategy to reach across the globe with Glocalization (Global + Local customization). It allows people to apply for a franchise and give them proper training according to their policy and brand. In exchange, they ask a flat fees, royalty fees and a percentage of amount from the total profit you earn by selling their products.
What are the benefits of owning a Restaurant Franchise Business?
- Don’t have to worry about or spend money on branding and marketing
- Ready-made processes and training available to follow
- A well established customer base
- A steady turnover
- Great entrepreneurial exposure
- Shorter planning and opening time
- A network of peers (fellow franchise owners)
- Lower costs of bulk purchasing
- Assistance in secure funding
Now, that we fully understand what franchise business is and what are its benefits. Conduct a cost-benefit analysis for getting a new restaurant franchise. If your calculations are positive and you have finalized your decision lets see the process of acquiring it.
How to get a Large Chain Food Franchise Business?
1. Finalize a franchise you want to acquire:
You need to very carefully examine which large chain franchise you want to acquire. Given that its a large chain company there will be a lot of compliances and polices you need to abide with.
Make sure the franchise you finalize has the following things:
- A solid track record of excellent sales
- Positive cash flow
- Increasing EBITDA every financial year
- A growing market
- Able to upscale their products/services
- Guarantee of repeated customers
- Socially responsible
- Environment friendly
Also, make sure that the company has good repo with existing franchise and there are no scams, legal battles going on.
If a franchise is very popular doesn’t always mean its profitable so have a Return on Investment calculations and your finances set on right track.
2. Begin the application process
Now, that you have finalized the franchise its time to apply for it. This is a part where getting a lawyer/attorney will be beneficial.
They will look into the following things:
- Financial health
- Knowledge about franchise
- Location of your franchise
Once they are confident, they will help you out in your application for franchise business.
3. Try meeting the company officials
Before the pandemic, company officials would set up a meeting with the franchise applicant to review their interest and qualifications. However, post pandemic this has become a virtual event.
Once the company receives your franchise application they will connect with you virtually for discussion and the journey ahead.
4. Apply for financing
You must get a loan or any sort of financing for opening your franchise. If you have still not got approved for your applied loan or type of finance it is advisable to not proceed ahead as of now. Once your finance get approved to cover all your franchise fees and other expenses only then you should go ahead with the plan.
5. Sign the contract
This is the part where your lawyer can come in handy again. Once you finance and your franchise application is approved you will receive a contract from the company. Read the contract carefully with each an every clause, policies and laws pertaining to it. Get it run through your lawyer as they will be able to explain you better. Once you have the understanding of the contract sign it and make it official.
6. Finalize the location
By this time you location will be finalized and approved. Now that you have signed the contract, go out there and lease the property for your business.
7. Get training & support
Make sure to get proper training & support from the company. You’re entering to a brand and they have a certain level of quality of doing things.
Get training on the following things:
- Products and services
- Payment technology
- Sales tactics for this specific business model
The process of buying a franchise can be a long process with tones of paperwork. But it is a one time job so make sure to do your diligence for the long run.
Hope this helps you in starting your franchise business. Tell us what worked for you! Your suggestions are welcomed in the comment section below. Follow us on Instagram for more restaurant updates!