Restaurant Franchising: A How-to Guide
November 16, 2016 9:05 AM
So you own or manage a restaurant. It has been going strong, and you are starting to wonder what to do next. Cash flow is good, reviews are positive, and overall, things are looking great. You are more than likely going to start thinking about opening a second location, or possibly even a third.
What you’re thinking about is restaurant franchising. If so, we have a great little primer on getting the franchise process started.
Opening just another restaurant would be the path towards becoming a chain, which could be what you want. But restaurant franchising requires more planning and preparation. When considering franchising, it would be wise to hire a restaurant consulting company to assist with the details to make your transition a successful and frugal one.
Truth be told, it is not entirely necessary for a restaurant to be successful in order for you to expand into franchising. However, it definitely helps. If you want others to be interested in purchasing your franchised locations, a thriving business will be far more appealing. Likewise, it is better if the restaurant has been around for several years rather than months. Being able to show potential buyers steady records over a longer period of time is much more comforting.
Another important aspect to consider is whether or not your business is truly ready to expand. Yes, your restaurant is successful in your current location, but that does not mean it will receive the same reception elsewhere. That is what market research is for. Do the research in the area or areas you are looking to expand. See if there is a need or desire for what you are selling. Most importantly, you will want to make sure that there is not a competing business too close to where you are looking to expand.
The next thing you will want to take into consideration is your role. It is a big step to go from owning and running a single restaurant to heading up a restaurant franchise. This change in roles means giving up a lot of the day-to-day operations you might be partaking in now as well as surrendering most of your control. Those responsibilities will fall to managers and the franchisees, who may or may not fit your ideal vision. This is another area where a restaurant consulting company can help. If you are struggling to learn your new role and identity as a franchisor, they can guide you until it becomes easier.
At its core, preparing for restaurant expansion should revolve around a business plan. Likely you started out with one when you first headed down the path of owning a restaurant, so you should know the basics. Well, get prepared to do it again. Businesses run on gut instinct alone without proper planning are much more likely to fail. Think about how you want to grow and where. This will likely change your original business model as costs will go up. With everything laid out in front of you, it becomes a matter of following through with the plan.
Restaurant expansion requires a lot of paperwork beyond the expanded and updated business model. You will want outside help with the legal aspects, of course, but the basic ideas should start with you. No one knows your business better than you. You will need to make an Operations Manual that will be the key to consistency across the board.
Within the Operations Manual, you are not only responsible for establishing how your restaurant franchises should look visually, but how they should be run. You can include detailed training and qualifications for the potential employees of the franchisees, not to mention the experience required by the franchisee themselves. High standards for the people buying your new restaurants will give you the peace of mind that they will be run smoothly, thereby increasing your own profits. Come up with a good screening process so that you know exactly who you do and do not want purchasing a location from you. Do not sell to just anyone.
It may sound contradictory, but after giving specific instructions on who should be hired and how to train them, it is advisable to step back a bit. Again, you are a franchisor and not just a business owner. Give them limits, but make sure they are not too restrictive. You likely sold to them for a reason, so trust yourself and, by extension, them. When just starting out with a few locations, it may become too easy to babysit the franchisees. But if you are successful in opening stores across the country, that simply is not feasible.
Start small and work your way up. Don’t think that just because you have your plan and your consulting firm in place that you can jump from one store to suddenly owning ten or twenty. Begin with another two or three. This type of business is a slow burn; it takes a while to start working, but eventually you’ll see the rewards of your efforts.
Diving too deep too quickly into restaurant franchising is a surefire way to spend too much money too quickly. Even if you think you have enough, even if your budget tells you have enough, don’t do it. You can never truly predict how the market will go or what the demand will be like in the future. Not only that, but your quality could suffer. Ten sloppily built locations hastily thrown together and run by less-than-ideal candidates are not going to do as well as three carefully crafted and planned restaurants. There is the risk of overloading yourself as well. If you get burned out, you will not be able to remain an effective leader, again leading to the collapse of the franchise you worked so hard to build in the first place.
Are you serious about franchising? If so, contact us for a restaurant franchising consultation.