As the food and restaurant industry is bouncing back from the pandemic period, business growth is top on everyone’s minds. Restaurateurs are finally realising the need of expansion and sustainable growth, which can see them through any industry turmoil like the COVID lockdowns.
But how to stand apart from your competitors and make your business fly?
Well, a proven and conventional expansion tactic is franchising your restaurant brand.
In the Indian restaurant segment, this growth strategy still isn’t actively pursued. But it is a hidden goldmine ready to be leveraged, only if you can find the right approach.
Franchising has been the most successful mantra to expand the business faster and profitably. With just one outlet in the country many brands have grown to 1000 via the franchising model.
A good example can be Ravi Jaipuria– chairman of the privately held RJ Corp with a fortune estimated at 3.2 billion USD. He has built this empire through brand franchisees like Pepsi, Pizza Hut, KFC and Costa Coffee.
Before that, let’s understand in detail what a restaurant franchise is.
Franchising, which is an American invention from the 1800s, first became popular at Ray Kroc’s McDonald’s. The unique business model allows two separate owners to share in the operations and profits of a business, each providing support and resources.
A franchise is a business where the owners grant third-party operators the rights to use the business’s name, branding, and model in exchange for fees or royalties and ongoing support in the form of advice or marketing.
In the case of restaurant franchises, franchisees serve the same menu, set-up similar staff training and protocols, feature the same advertisements, and use the same branding across all their outlets and marketing avenues.
Some Other Key Terms:
– Franchisor: The owner of the parent company, trademarks, and products. The franchisor grants licenses for franchisees to operate their own businesses.
– Franchisee: A business owner who pays a fee to the franchisor to license the parent company’s trademarked restaurant name and concept at one or multiple locations.
– Parent company: The entity that owns trademarks and business strategies for a restaurant concept and provides support to franchisees.
Now, before you get excited about the restaurant franchise dream, there are certain aspects to take care of. Restaurant franchising comes with its own set of troubles if not attended properly.
So, below are few elements you need to know before you give out your restaurant franchise:
Know your business inside-out
The utmost vital factor is knowing and accessing your own business to its true potential. Quite a few companies have faced growth backlash if they jump too early on the franchise bandwagon.
Knowing your company’s market value, customer perception, and scope of growth are some variables that determine your franchising strategy.
Dheeraj Gupta is running the famous Vada pav chain- Jumboking in India and has amassed an empire of 100 crores in just a few years. He says “While there may be numerous things we need to get right I think the most important piece is a clear positioning.”
Know the legalities
As with any other business practices in the country, franchising your business also comes with its own legalities. You have to abide by these norms and regulations to set-up your franchises and avoid any bureaucratic troubles.
Also, it is advisable to run a legal background check on your potential partners to see their business standings and financial reputation. These factors can contribute to selecting the right franchisee for your restaurant brand.
Calculate your growth
When restaurants start their franchising phase, they’ve a clear picture of where they stand and what they want to achieve in the next 5 or 10 years.
A clear and realistic picture of your business growth helps you set targets for both parent and franchisee brands.
A detailed business plan can also easily convince your stakeholders or financial lenders. So, it becomes imperative to analyse your brand’s position from time to time.
Choose the right partner
Once all the things are sorted from your, the franchisor’s end, then comes the biggest and most crucial decision– selecting the right partner.
It is as crucial as selecting your life partner, or maybe more?
Choose a partner after performing all the necessary checks of their proposition, assets, and current market value. It becomes important to assess whether the franchisee has similar business acumen, mindset, and vision as yours.
Deepta Gupta of Bikanervala– a wide spread Indian restaurant chain which has presence at top cities and highways, pointed, “When someone comes to us for franchising we check that the franchisee has owned property and with a minimum worth of Rs 100 crore.”
Location, Training, Menu
After you’ve selected the right partner to give out your restaurant franchise, comes the time of setting-up the franchisee outlet. This outlet is an extension to your brand name, so you need to make sure of how it appears and serves the customers.
Some basic things you need to look after, along with your franchisee partner are:
Location of new outlet
The right location amidst the hustle-bustle of the city can be an instant game-changer. Choosing a location as per your target audience also comes into a factor.
This has become the unsaid norm in restaurant franchise business, to train your franchisee staff as good as yours own. Generally, the head chef and his team from the parent company train the franchisee staff and lay out do’s and don’ts of your brand.
Hiring the right staff and training them well, can ensure how quickly the franchisee outlet becomes successful.
You’re all set!
Taking care of the above points can build a strong foundation for your restaurant franchise goals. Let us know in the comments if you have any more points that one should take care of while starting their franchise business model.