The 5 Biggest Mistakes Restaurants Make When Building A Franchising Model
Now that your business is running smoothly, and has become very successful; you are ready to make the leap into restaurant franchising. Opening multiple locations give your company the opportunity to expand into new territory generating more profit. This can be a great step for your business if done correctly.
Remember “good things come to those who wait.” You do not want to rush into this decision without a thorough plan, and an established execution. If the franchise management doesn’t communicate well with the employees or provide a well-understood guideline, the model could fall apart.
Franchises are popping up all over and seem to be thriving in our economy. It’s a great time to jump on board. Just be wary of the possible mistakes a lot of failed companies have fallen victim to
Not Having Enough Capital
The restaurant franchising business takes a lot of capital to start. When you are beginning the process you have to make sure your current business can withstand the added funding, and make sure your franchisee know exactly what they are getting into.
Do You Have Enough Money to Invest?
If your current restaurant doesn’t have enough money in the budget to cover pop-up expenses, then you may not be able to keep up with your franchisees to make sure they are keeping a good appearance and following the franchise rules. One bad franchisee location can make the whole restaurant chain look bad.
Are You Upfront With Your Franchisees?
Being upfront on day one is very important when bringing others on board. Many companies have failed because they minimized the cost of owning a franchise. Give them a breakdown of costs and even possible pop up project cost so they are fully prepared. The funding for the franchise is going to focus on the costs you give, if you underestimate they may not be able to remain open. The business will go south if your franchisee feels you were not honest and they can not trust you.
Expanding to Quickly
So many franchises have failed because they simple expand way too fast. Trying to expand too quickly can lead to restaurants failing and closing down. Without proper franchising management due to rapid growth, you may not be able to see arising issues within enough time to correct them.
When your franchises close rapidly it looks bad for the company as a whole, and you can lose a lot of business.
Keep in mind you have to spend money to make money. This will be the case for franchising your restaurant. If you expand your chain to quickly chances are good you were not ready for the finances that come with it. Leading you to underbudget and not have enough money to keep up with the demands.
Opening Businesses in Bad Locations
Location is a huge part of a business’s success. Being close to busy areas, bus stops, and local shops are key in restaurant franchising. If you allow a franchise to open in a secluded area, or a location without easy access your setting it up for failure.
Make sure your business is also located in a safe neighborhood with lower crime rates. You don’t want your franchisees to be put out of business due to robberies or have any of your employees hurt.
Being a Negligent Boss
Be respectful to your franchisee. Being their go-to for franchising management, it is important for you to provide helpful guidance and advice. You want them to succeed, so you need to understand they are your equal and your partner. Never look down at your employees or the way they run their restaurant, if you notice something you would like changed remind them of the contract guidelines and always offer your assistance.
You never want to turn a blind eye to any issues or put off any concerns. Remember the success of the franchise is your success, if they fail you go down with them. Always
Failure to Properly Train
You are the master, that’s why you are starting the franchise. You know what works in the restaurant business to make it successful and what doesn’t. No two businesses are alike, in turn, no two managers manage the same way.
You know how to manage your restaurant to make it run, keep it bringing in customers, and continuing to make money. Fully train all of the people you bring on board so they can learn your techniques, your tactics, and your secrets. To be successful, all of your restaurants need to run alike.
Poor Franchise Agreements
Your franchise agreement is your guarantee whoever is running the restaurant is going to adhere to your demands. Here you list your restrictions, obligations, permission, and expectations these are all legally binding making sure every franchise is going to be a replica of the original.
Being too loose or too precise in these agreements can cause a lot of disputes between the franchisor and franchisee. You do not want to leave a lot of room for the franchisee to completely change the look and feel of your restaurant, but you also don’t want them to be scared to try and make little changes to better fit the crowds or locations they are in.
Tips For Success:
You are now educated on some of the biggest mistakes you can make when starting a franchise. Let’s take a look at what you can do to fix these mistakes to be successful.
- Communication is key to success
- Stick to the terms of the agreement at all times
- Be kind to employees and customers
- Be positive and enthusiastic
- Create an outstanding team with guidance and training
- Keep your eye on details, the smallest things can make the biggest difference
It’s no surprise starting a chain of restaurants can build you a great reputation, increase profits, and bring you success, but without great franchising management skills and with a lack of involvement even the best restaurant franchising chains can sink.