A Practical Guide to Franchising Your Restaurant

Looking at global restaurant chains like KFC and McDonald’s, it’s hard to imagine that these giants began with single outlets. Yet they did; Kentucky Fried Chicken was but a single roadside eatery manned by Colonel Sanders himself 70 years ago.

So, yes, your fledgling restaurant can blossom into a North America-wide, or even global, food franchise. All you need is to perfect that starter outlet to become the template for your international expansion.

You may have reached that stage in the growth of your restaurant, where you’re contemplating taking your brand beyond the four walls of your city, county, or state. Here is a roadmap to achieving your dream.

Why Franchise?

Before we get into the intricacies of implementing franchising, let us first define the term. Franchising is the concept of a business, in this case, a restaurant, giving a third party the right to operate under its brand. It is a shortcut for a restaurant to establish a presence in a given locale without undertaking a huge capital outlay in building or hiring premises, engaging staff, etc.

For the franchisee, it is a shortcut into business ownership. They don’t have to develop a business model, create a brand and menus from scratch, etc. It is, at least in theory, a win-win for all involved. If you’re a restaurant owner looking to open franchises in different locations, here is why such a move could prove beneficial:

Motivation: Getting a restaurant manager who is motivated enough to boost the business’s performance, or even stay long enough to make this a possibility, is a challenge. Manager turnover rates in restaurants are quite staggering, and a lot of the dissatisfaction has to do with the pay. Having a franchise owner in place of a restaurant manager goes some way to eliminating this problem. You will have an individual working as hard as possible to make the venture profitable as he has a direct stake in its success.

Time & Resources: Opening a franchise is far less involved than opening a restaurant from the ground up. You don’t have to redesign or build your outlet, buy or hire equipment, and embark on the process of recruiting staff. All this will be taken care of by the franchisee. The fact that you don’t have to trouble your head with all those calculations and undertakings means you can expand much faster. You can even open multiple franchises at the same time.

Common Challenges of Franchising

While it may appear to be easier than building an outlet from scratch, franchising is not without its difficulties.

Before you decide to plant a franchise anywhere, you need to develop a plan for expanding through a given region over a given period. Even before you consider that, you need to think about how viable it is to franchise your brand.

It would help if you also came up with a business model that you will replicate across franchises and a fee structure that will make sense for both you and the franchisees. You will need to draft a franchising contract to govern the relationship between franchisor and franchisee.

You will also need to formulate a training schedule and a procedural checklist to ensure your standards are maintained. The right amount of support will need to be provided to franchisees to help them live up to their potential.

Investing in enterprise POS software is necessary for managing multiple locations and implement standards/procedures across the entire franchise. Each franchise should utilize the same POS version, which allows the different locations to communicate with one another if necessary. Additionally, all ordering trends and inventory reports are stored on the cloud for franchise owners to access anywhere.

Tips for Franchising

Bring in hired help: One of the ways restaurant owners deal with this unwieldy list of loose ends that needs to be tied is to bring outside help. There are franchising companies and consultancies that exist to help you navigate the franchising waters successfully.

Borrow cash: Expansion, particularly if you’re contemplating expansion on a national scale, can be quite capital intensive. If you limit your financing to your savings, you may significantly slow down your rate of growth. You can instead use your properties as collateral to secure a reasonably priced facility from your local bank.

Develop standards: Standards can be established by staff training as well as by developing a franchise manual. The manual will guide franchisees on opening and operating their outlets to reflect your brand in the best possible light. Automating your business procedures will go a long way to easing the standardization of your daily operations.

No Shortcuts to Success

Opening franchises may seem like a quick ticket to national and global success. Getting your franchise off the ground is not an easy undertaking. It needs careful planning and scrupulous execution of your franchising plan for you to become the next great restaurant chain.

If you have any questions, please ask below!